London Professional Fire Fighters Association v. Corporation of the City of London, 2013 CanLII 52299

1510-10-PE London Professional Fire Fighters Association, Applicant v. Corporation of the City of London, Responding Party.

BEFORE: Mary Anne McKellar, Chair, P. LeMay and Pauline Seville, Members.

APPEARANCES: Cathy Lace, Nadine Blum, Jim Holmes, Sue Casey and Phillip King for the applicant; Carolyn Kay, Carolyn Cornford Greaves, Adriana Hagan, Patty Malone and David Lazenby for the responding party.

DECISION OF THE TRIBUNAL: August 8, 2013

Introduction

1. This is an application under the Pay Equity Act, R.S.O. 1990, c. P.7, in which the Applicant (“the Association”) objects to a Review Officer’s decision not to make an order that the responding party (“the City”) increase the pay equity adjustment paid to the Communication Operator (“CO”) job class.

Background

2. The Association represents non-managerial employees of the London Fire Department. The CO is a female-dominated classification within the Association’s bargaining unit.

3. A CO complained to the Pay Equity Commission in 2006 and an order issued in August 2007, pursuant to which the Association and the City entered into negotiations for a new pay equity plan for the Association’s bargaining unit.

4. The Association and the City agreed on written Terms of Reference for the pay equity negotiations and those Terms of Reference were executed on January 29, 2008. The signatories to the Terms of Reference for the City were the three designated individual management members of the Joint Pay Equity Committee (“JPEC”) constituted under the terms. Similarly, the signatories for the Association were its three designated individual members of the JPEC. The Terms of Reference did the following: set up the JPEC; identified its membership; permitted each of the City and the Association members to retain at its own expense a consultant who could attend meetings but not vote; and specified in some detail the mandate of the JPEC:

5. Mandate

A. The mandate of the Joint Pay Equity Committee (JPEC) will be as follows:

(i) To recommend for approval by the Employer [the City] and the Association, a gender neutral comparison system, including a questionnaire; a rating tool, including factor and subfactor definitions; a scoring system, including a form to record ratings and rationales; and factor weightings.

(ii) To determine the method of job content collection from current incumbents, their supervisors and the applicable members of Fire Administration, and for positions which no longer exist.

(iii) To determine training or orientation required for incumbents, their supervisors and the applicable members of Fire Administration in completing the questionnaires.

(iv) To develop a joint communication strategy. (All communications shall be approved expeditiously by the JPEC before release).

(v) To determine gender designation of job classes as per the Pay Equity Act.

(vi) To identify potential male comparators.

(vii) To determine the final evaluation of all female bargaining unit positions and all potential male comparator positions.

(viii) To determine internal reconsideration procedures and oversee the release of provisional ratings to incumbents and their supervisors, and process of reconsideration.

(ix) To recommend groups of job classes to be considered of comparable value as per the Pay Equity Act (banding).

(x) To review calculations of any salary adjustments based on those comparisons, and any retroactivity required to achieve and maintain pay equity.

(xi) To recommend the process for maintaining the system for use with new positions and positions or job classes which have changed.

(xii) To recommend for approval the format and content of the pay equity plan covering the period January 1, 1990 to the present.

(xiii) To reach decisions by consensus.

B. [omitted]

5. Although the Terms of Reference contemplate the JPEC members for the City and the Association each recommending for approval certain items, there is no indication in the document as to which individual(s) or entity had authority to approve those items for either party.

6. Eighteen months after the Terms of Reference were signed, the JPEC had concluded its work. By this point, two of the originally designated City representatives on the committee had been replaced by other people. A Pay Equity Plan (“the Plan”) had been drafted. The Association members of the JPEC had authority to bind the Association. Insofar as the City was concerned, the negotiations had been the subject of various updates to the City’s Board of Control (“BOC”). The BOC had recommended that the Plan be implemented, and City Council had directed that that occur. Prior to the affixing of final signatures to the Plan, a dispute arose between the parties as to what it required in terms of pay equity adjustments to the CO job class. The Plan was not executed and the City, with the agreement of the Association and without prejudice to either party’s position in this litigation, implemented adjustments in accordance with the City’s understanding of what was required.

Issues Before the Tribunal

7. The threshold question before us is whether the Plan that Council directed be implemented is binding on the City. The secondary issue, which only arises if the first question is answered in the negative, is, what if anything can or should the Tribunal do with respect to settling the Plan.

Decision

8. We find that the Plan is binding on the City, and that it requires an hourly adjustment be paid to the incumbents of the CO job class.

Positions of the Parties

9. The Association says that the Plan is binding because all the steps that the Association understood would be required to finalize it had been taken, and asks that the Tribunal direct it be fully implemented. The Association says that the failure to implement it completely amounts to bargaining in bad faith on the City’s part and it seeks various remedies in respect of this assertion.

10. The City says the Plan is not binding for a couple of reasons. One is that it has not been properly ratified by the City. The second is that its terms do not reflect what the City negotiated with the Association. The City says that we can essentially rectify the Plan to give effect to what the parties intended to achieve in their negotiations.

Reasons for Decision

11. We deal first with the question of ratification of the Plan.

12. The City members on the JPEC apparently had authority to bind the City to the Terms of Reference as they executed that document on its behalf. Furthermore, although the gender neutral comparison system was to be recommended for approval pursuant to section 3.A.(i) of the Terms of Reference, that does not appear to have occurred until after: all the job classes and their gender predominance had been identified; evaluations had occurred; male comparators had been determined; and a formal plan had been prepared. The Terms of Reference also contemplate that the pay equity plan that results from the JPEC’s work must be recommended to some other individual(s) or entity for approval on behalf of each party.

13. The City’s Managing Director, Corporate Services & Chief Human Resources Officer, Veronica McAlea Major, provided her testimony in chief in the form of a prepared statement that she adopted under oath. This statement sets out her view that the person with the authority to bind the City to the Plan was its Chief Administrative Officer (“CAO”), and that the Plan was only provided to the BOC and City Council for informational purposes. She did not inform any of the City’s members on the JPEC, nor the Association’s members on the JPEC, of what her view was regarding the requirements for approval. If they turned their minds to the question, all of the JPEC members understood that any pay equity plan they came up with had to be approved by the BOC and Council. None of them understood, prior to the conclusion of their negotiations, that any further approval or ratification was required. Indeed, following Council’s direction to implement the Plan, the Association and City staff engaged in a series of discussions about how pay grids in the collective agreement should be amended in accordance with the requirements of the Plan.

14. Ms McAlea Major’s view of the ratification or approval process for pay equity plans is based on her understanding of the City’s Civic Administration By-Law. The version of it in effect as of February 2009, and for the period of time relevant to the matters at issue in these proceedings, set out the role of the Civic Administration, and the Chief Administrative Officer as follows:

15. The role and responsibility of the officers and employees of the Corporation, having regard to section 227 of the Municipal Act, 2000, is,

(i) to implement Council’s decisions and establish administrative practices and procedures to carry out Council’s decisions;

(ii) to undertake research and provide advice to Council on the policies and programs of the municipality; and

(iii) to carry out other duties required under any Act and duties assigned by the Council or the Board.

10. The role and responsibility of the Chief Administrative Officer is,

(a) to be the head of the Civic Administration;

(b) to be directly responsible and accountable to Council and to exercise the powers and perform the duties which, from time to time, are lawfully assigned to or vested in the position by Council; and

(c) to act within the purpose of any and all executive limitations issued by Council.

11. Nothing in this By-law authorizes or empowers the Chief Administrative Officer to exercise or encroach upon the authorities or powers of the Mayor as Chief Executive Officer of the Corporation, Council, or the Board [of Control] or upon the statutory duties of appointed officers of the Corporation.

12. Without restricting the generality of section 10 of this By-law, the Chief Administrative Officer shall not fail to:

(i) coordinate and direct, where appropriate, the compilation, consideration, preparation, and presentation of recommendations to Council for its adoption, and propose by-laws and resolutions to give effect to such recommendations as are adopted by Council;

(ii)

(n) coordinate and direct collective bargaining with all employees and recommend to Council agreements concerning wages, salaries, fringe benefits, and working conditions, and upon approval by Council, direct the administration of such agreements.

15. There is no need to reproduce section 227 of the Municipal Act, referred to in the By-law as its language is for our purposes identical to the language that appears in section 7 of the By-law.

16. Ms McAlea Major’s view is that section 12(n) of the By-law requires that memoranda of settlement for renewal collective agreements be approved by Council. Pay equity agreements, notwithstanding they are bargained collectively (i.e by the City and the Association on behalf of the whole of its bargaining unit) and deal with wages, do not require Council approval. She further suggested in her prepared statement that because Council approval was not required, the CAO was not obliged to follow Council’s direction and implement the Plan because Council could not over-rule the By-law. This reading seems to us to ignore that section 12 of the By-law tells the CAO what to do, it does not tell Council what to do, and it also seems to ignore section 227 of the Municipal Act. When cross-examined on this issue, Ms McAlea Major suggested that the CAO was not obliged to follow Council’s direction because Council had given that direction under a misapprehension as to the cost implications of doing so, however she agreed that the direction was not made conditional on any cost considerations, and it was not subsequently rescinded. Overall, Ms McAlea Major’s interpretation of the By-law insofar as it relates to ratification requirements for pay equity plans seems idiosyncratic, and is neither well supported by the language of the By-law itself, nor shared by anyone else concerned with this set of pay equity negotiations, if their conduct is anything to go by.

17. Excerpts of the agendas from the BOC meetings on September 24, 2008, October 30, 2008, and February 11, 2009 show that under subject headings identified as either “2008 Fire Negotiations Proposals for a Renewal Collective Agreement” or “Update on 2008 Fire Negotiations” information was provided (ostensibly from the CAO but actually from the Department under Ms McAlea Major’s leadership) respecting the status of pay equity negotiations.

18. The CAO gave the BOC a further verbal update on pay equity on March 9, 2009. By letter dated March 10, 2009, the City Clerk advised the CAO as follows:

I hereby certify that the Committee of the Whole, meeting in camera on March 9, 2009, resolved:

That the Civic Administration BE DIRECTED to negotiate the optimum resolution to an outstanding pay equity issue; it being noted that the Board of Control heard a verbal update from the Director of Human Resources and the City’s outside legal counsel with respect to this matter.

19. All of the above updates preceded the JPEC’s preparation of a pay equity plan based on its work. That document had been prepared, however, by the time that the BOC met on May 13, 2009, when it was extensively briefed on the subject of “London Professional Fire Fighters Association Communications Operator Pay Equity Settlement”. The recommendation that was requested of, and given by the BOC was the following:

That, on the recommendation of the Chief Administrative Officer, Civic Administration BE DIRECTED to implement the Pay Equity Plan between the Corporation of the City of London and the London Professional Fire Fighters Association (attached at Appendix “A”).

20. The “Appendix A” material presented to the BOC and identified as the Pay Equity Plan consisted of three things: the Plan, and two Appendices to it (the Job Evaluation Plan dated March 2008 and the Pay Equity Analysis dated March 2009).

21. By letter dated May 26, 2009, the City Clerk advised the CAO of the following recommendation of Council:

I hereby certify that the Committee of the Whole, meeting in camera on May 25, 2009, resolved:

That, on the recommendation of the Chief Administrative Officer, the Civic Administration BE DIRECTED to implement the Pay Equity Plan between The Corporation of the City of London and the London Professional Fire Fighters’ Association (attached as Appendix “A”).

22. Again, the materials comprising Appendix “A” consisted of the Plan and its two Appendices.

23. The Association and the City were developing a pay equity plan. Once negotiated, it would bind the City, the Association, and all the employees in the Association’s bargaining unit, and would prevail over and be incorporated into the collective agreement, as provided for in section 13 of the Act:

24. (9) A pay equity plan that is approved under this Part binds the employer and the employees to whom the plan applies and their bargaining agent, if any.

(10) A pay equity plan that is approved under this Part prevails over all relevant collective agreements and the adjustments to rates of compensation required by the plan shall be deemed to be incorporated into and form part of the relevant collective agreements.

24. The City and the Association are parties to the pay equity plan, and they are parties to the collective agreement. Both contracts are agreements that apply “collectively” to all those individuals on whose behalf the Association bargains, and both the Act (section 14) and the Labour Relations Act, 1995, S.O. 1995, c.1, as amended, (section 17) stipulate that a duty to bargain in good faith applies to both sets of negotiations. Where the pay equity plan impacts the rate of compensation (wages or salary and benefits) paid to bargaining unit employees, one of the terms and conditions of employment that the collective agreement also specifies, the Act requires that pay equity adjustments for female job classes in bargaining units prevail over and are incorporated into the collective agreement. Absent some special definition, the term “collective bargaining” in section 12(n) of the Civic Administration By-law seems to us broad enough to encompass negotiations between the City and Union that are intended to lead to a pay equity plan. Furthermore, the subject lines of the initial updates given to the BOC seem to have characterized the pay equity process as at least a subset of collective bargaining negotiations. Additionally, as will be seen later in this decision, the dispute that ultimately arose about what the terms of the Plan recommended by JPEC meant were informed by the assumptions of committee members that they were bargaining pay equity adjustments the way they had always bargained compensation increases under the collective agreement.

25. In all of the above circumstances, it is not surprising that JPEC members may have thought that the approval or ratification process for the Plan would mirror the approval process applied to memoranda of settlement reached during bargaining for a collective agreement.

26. Not only did the City not tell the Association that a different ratification or approval process than applied to renewal collective agreements was required to finalize a pay equity plan, on the evidence before us, both testamentary and documentary, its members on the JPEC in fact represented to the Association members that the Plan they came up with would need to be approved by the BOC and Council. Additionally, the City’s consultant appeared to have the impression that was the requirement as well, based on the content of her April 3, 2009 Briefing Note to her client. The City cannot now insist that the requirements are different. The Tribunal’s jurisprudence is clear that the obligation to make clear the precondition of ratification falls on the party claiming the precondition (Pembroke (1991), 2 P.E.R. 157).

27. In any event, regardless of whether the Plan had as a matter of law to be approved by the BOC and/or Council or not, the fact is that the CAO did submit the Plan to BOC and Council, and he did seek and receive a direction to implement it. Having done so, it seems to us that the CAO is, under the Municipal Act and the By-law, bound to do just that.

28. In short, the City cannot rely on a failure by the CAO to ratify the Plan as a reason for not implementing it.

29. We now turn to address the question of whether the Plan need not be implemented because its terms are (and we are paraphrasing the City’s arguments here) so fundamentally different from what the parties (or at least the City) thought they were agreeing to.

30. As noted, Council approved a Plan comprising three documents: the Plan itself, and two appendices that it incorporated by reference. One of those Appendices (Appendix 1) is the Job Evaluation Plan and it is not pertinent to the issue before us, so we will say no more about it.

31. The Plan contains provisions dealing with the following items listed in the Table of Contents:

32. The Employer

33. The Establishment

34. Job Classes Covered by the Plan

35. Method of Comparison

36. Results of Comparisons in Bargaining Unit (Job to Job Method)

37. Results of Comparisons throughout Establishment (Job to Job Method)

38. Pay Equity Adjustments Required

39. Differences

40. Implementation

41. Further Information

42. Section 7 of the Plan dealing with “Pay Equity Adjustments Required” provides:

Pay equity comparisons and adjustments were determined based on job rates (maximum hourly) as at January 1, 2007, as shown in Appendix 2.

Only the Communication Operator position requires a pay equity adjustment. The remaining female positions are paid at or above the male comparator rate for their band. The positions of Payroll and Records Clerk and Clerical Coordinator were also paid at the appropriate rate. For the period beginning June 5, 1996, the comparator for the Communication Operator is the Mechanical Technician.

The parties have identified a comparator that generates a zero adjustment for the period of time prior to the date of creation of the Mechanical Technician position on June 5, 1996. Notwithstanding, a lump sum adjustment will be made and distributed proportionally to all Communication Operators who occupied the position for any part of the relevant period prior to June 5, 1996, based on hours worked.

33. The evaluation of the female CO job class placed it in Band 5 of the pay scale, along with a male job class, the Mechanical Technician, and a gender neutral job class, the Public Information Coordinator. For the purposes of pay equity therefore, all three job classes are comparably valued. Appendix 2, “Pay Equity Analysis” is a spreadsheet that sets out compensation information for each of the job classes evaluated. The information for Band 5 is set out below:

Similar Value Group

Band Width

Job Title

Gender of Job Class

Total Points

Work Hours/

2007 Job Rate

2007 Job Rate

Pay Equity Rate

Pay Equity Adj.

From

To

Spread

Week

Annual

Hourly

Hourly

Hourly

10

763

823

60

Supervisor of Apparatus

M

801

40

$88,318.00

$42.46

9

702

762

60

8

641

701

60

Asst Supervisor, Apparatus Div.

M

691

40

$84,638.00

$40.69

7

580

640

60

Firefighter

M

633

42

$73,598.00

$33.70

7

580

640

60

Supervisor of communications

F

633

40

$64,638.00

$40.69

$31.85

$0.00

7

580

640

60

Mechanic

M

620

40

$82,430.00

$39.63

7

580

640

60

Electronics Technician

M

606

40

$66,238.00

$31.85

6

519

579

60

5

458

518

60

Communication Operator

F

503

42

$58,096.00

$26.60

$31.85

$5.24

5

458

518

60

Public Information Co-ordinator

GN

488

40

$68,458.00

$32.91

5

458

518

60

Mechanical Technician

M

479

40

$66,238.00

$31.85

4

397

457

60

3

336

396

60

Administration Clerk-Training

F

371

40

47,770.00

$22.97

$21.30

$0.00

3

336

396

60

Administrative Co-ordinator

F

366

40

$77,401.00

$37.21

$21.30

$0.00

3

336

396

60

Stores Clerk

GN

362

40

$57,523.00

$27.66

3

336

396

60

PCP Maintenance Helper

M

357

40

$44,304.00

$21.30

2

275

335

60

Clerk-Stenographer

F

333

40

$44,597.00

$21.44

$20.29

$0.00

2

275

335

60

Traffic Maintenance Painter

M

330

40

$42,203.20

$20.29

34. The terms of the Plan on its face are not ambiguous. Hourly rates of job classes were compared and adjustments are to be made hourly. Even the proportional distribution of the lump sum retro payment is based on hours worked (not years of service). The City nevertheless maintains that it should not be required to pay the CO job class a $5.24 adjustment for each hour that they work. Essentially, the City asserts that it understood and intended at all times during the process that the compensation adjustment the parties contemplated making (and agreed to make) to the CO job class was an increase in its annual salary to match that of the Mechanical Technician, a job class that was paid 90% of the salary paid to a First Class Fire Fighter. There is no doubt that all of the following assertions are true and were established in evidence:

• all of the job classes in the Association’s bargaining unit earn an annual salary;

• the vast majority of those annual salaries are expressed as a percentage of the salary earned by a First Class Fire Fighter;

• the CO job class is an exception to the above and the annual salary grid applicable to the CO is set out in the collective agreement without any reference to the First Class Firefighter salary;

• some of the job classes in the bargaining unit work 24-hour shifts; others work 12-hour shifts; and others work 8-hour shifts or 10.75 hour shifts;

• the employees in any given job class do not necessarily work the same number of hours week to week or per pay period;

• as between job classes, employees do not work the same number of hours per week or per pay period, nor the same number of hours annually;

• job classes may be paid the same annual salary (i.e. the same percentage of a First Class Firefighter’s salary) despite working a different number of hours on average per week, or a different number of hours annually;

• regardless of the hours he or she worked in any pay period, an employee is nevertheless paid the same amount for each pay period, which is calculated by payroll having regard to the average weekly hours of work specified in the collective agreement for that employee’s job class, and the requirement under the collective agreement to ensure that the employee’s entire annual salary is paid to him/her in the calendar year;

• for the purpose of calculating regular pay, payroll employs an hourly wage rate (“the Payroll Rate”), but it is not set out in the collective agreement;

• the Payroll Rate for each of the CO and the Mechanical Technician is different from the hourly rates in Appendix 2 to the Plan (“the Pay Equity Rates");

• the Pay Equity Rates were calculated by the City’s consultant, who prepared Appendix 2;

• the collective agreement specifies that the Mechanical Technician works on average 40 hours per week or 2080 hours per year, and the CO on average 42 hours per week or 2184 per year;

• a CO or Mechanical Technician who works hours in excess of the annual total for the job class is entitled to overtime pay, and the hourly rate used to calculate that overtime pay is the annual salary divided by the normal annual total hours (“the Hourly Rate”) ;

• the Pay Equity Rates are equivalent to the Hourly Rate used for determining overtime pay, and are the result of dividing the highest available annual salary for each job class by the normal total annual hours worked by an employee in that job class;

• paying the CO an adjustment of $5.24 for each hour worked would result in an annual salary that is approximately 94.5% that of a First Class Fire Fighter;

• the Mechanical Technician’s annual salary is 90% that of a First Class Fire Fighter;

• the parties have always negotiated their collective agreements in terms of annual salary and annual salary increases;

• there is collective bargaining history of the Association seeking to have the CO salary pegged (at either 90% or 100%) to that of a First Class Fire Fighter;

• the discussions around the retroactive component of the pay equity plan were premised on a ceiling of 90% of the First Class Firefighter salary (equivalent to the Mechanical Technician’s annual salary) for the CO;

• all of the City members on the JPEC assumed throughout that the parties were negotiating an equalization of annual salary as between the CO and the Mechanical Technician;

• all of the City’s costing was done on that basis, including the cost estimates presented to BOC and Council;

• the City’s global costing figures were shared with its consultant, but the assumptions on which they were based was not;

• although the parties had been working with Appendix 2 for some months before concluding their negotiations, the information on it was assembled and presented in the format of the template used by the City’s consultant and there was never any discussion at the JPEC meetings of what the $5.24 adjustment indicated on that document meant or referred to;

• No discussion occurred at the JPEC as to whether an annual salary adjustment or an hourly salary adjustment to the CO job class would be made;

• No member of the JPEC for the City asked their consultant or the Association’s members or their consultant what the $5.24 meant or what significance it had for the calculation of actual paid out adjustments;

• The consultants prepared the Plan after the JPEC members agreed on the comparisons and on Appendix 2;

• None of the City’s members on the JPEC, nor Ms McAlea Major, had read the Plan before Council directed that it be implemented; and

• Initially some at least of the Association’s representatives on the JPEC appeared to think the parties had also agreed to equalize the annual salaries of the CO and the Mechanical Technician without regard to hours of work.

35. On two occasions (February 27, 2009 and April 3, 2009), Marianne Love, the City’s consultant, sent an e-mail to Patty Malone, the City’s liaison on the JPEC briefing her on the pay equity process. The first e-mail was sent before the Plan language was drafted, and the second was sent before anything was submitted to the BOC and Council, and it comprised a new briefing note, plus a copy of the one previously sent. This document was introduced into evidence after Ms Malone had testified, and we were subsequently advised that her evidence, if called in reply, would be that she did not recall showing either briefing note to any other City member of the JPEC. We were not advised as to whether her testimony would be that she had read the documents herself, but it is hard to imagine that she did. For anyone who thought the parties were negotiating (or had agreed upon) the equalization of annual salaries as between the CO and Mechanical Technician, the February 27, 2009 Briefing Note (sent to her twice) would clearly have raised a red flags:

[From the February 27, 2009 Briefing Note—emphasis added]

The pay equity analysis shows that there is a $5.24/hour adjustment for the Communication Operator given that the job to job comparator is the Mechanical Technician. Cross comparators for the other female job classes were found in the outside CUPE bargaining unit resulting in no additional pay equity adjustments. The Communication Operator position came into existence January 1, 1991.

The Mechanical Technician position did not exist from 1991 through to 1996 (in part) and therefore, we are required to look for another male comparator for pay equity purposes or negotiate a resolve. There are a number of options for consideration in respect to this retroactive period, which are as follows:

36. The Briefing Note clearly conveys the view that the comparison the JPEC settled on will lead to the CO being paid an additional $5.24 per hour. Ms Malone testified that her understanding was that a $5.24 per hour adjustment would lead to an equalization of the annual salary for the CO and Mechanical Technician, and that neither she, nor anyone else on the JPEC or responsible for taking the matter to the BOC or Council, did the mathematical calculation that would have shown them this was not the case. This is somewhat surprising, given the testimony of Julie Kovacs, the City’s Manager of Payroll Development and Systems at the time. She received a copy of the Plan (and appendices) on May 20, 2009, and almost immediately realized that it provided for an hourly adjustment, and that the implications of the different hours worked by the two job classes would result in the CO’s annual salary exceeding that of the Mechanical Technician.

37. The City did not argue that the Plan’s requirements are ambiguous, rather it argued that it should be allowed to escape the consequences of those requirements. It relies principally on the doctrine of “mutual mistake”. The upshot of the various authorities filed by the City on this point is that the term “mutual mistake” is used to describe the situation where parties enter into a contract at cross-purposes about some fundamental term of the contract. The archetypal example used to describe “mutual mistake” is the following: A agrees to sell a Ford Cortina to B, but B thinks he is contracting to buy A’s Ford Zephyr. Where it is found to be applicable, the contract may be voided, or enforced in accordance with what either one of the parties thought was the bargain, having regard to what a reasonable third party would infer from their words or conduct.

38. Sperry Vickers Division Sperry Inc. Canada, [1983] OLRB Rep. July 1208 at ¶¶ 25-29 is a decision by the Ontario Labour Relations Board dealing with the question of whether there was a collective agreement in effect between the parties. It contains an extensive discussion of mutual mistake and its potential application in the collective bargaining context. A similar discussion occurs in Northwest Drywall and Building Supplies Ltd., (October 22, 1990 B.C. Industrial Relations Council). The decisions cite with approval a number of other decisions of labour tribunals and arbitrators in which doubt was expressed as to whether the doctrine, which was developed by courts of equitable jurisdiction, has any place at all in the labour relations regime where adjudicators’ jurisdiction derives from statute, such that the range of remedies contemplated for mutual mistake reside exclusively in different adjudicative bodies (voiding a collective agreement in the hands of a labour tribunal and determining what the collective agreement means in the hands of an arbitrator). The labour relations impact of the possibility of the ex post facto voiding of otherwise valid collective agreements is a frequently mentioned concern also, as is the desire not to create an incentive for a party to attempt to renege on a deal. It is simply too easy for a party to say “I did not understand”, and the mere potential for some benefit to arise from that position increases the likelihood of litigation and creates uncertainty. The cases do not offer much exploration of what constitutes a “fundamental term” of a contract warranting the application of the equitable relief afforded in cases of “mutual mistake”.

39. The City has not referred us to any case where a labour relations board or arbitration panel applied the doctrine of mutual mistake in determining whether a contract existed or what its terms were. There are two cases where a contract was found void ab initio or was rectified due to mistake, but the mistake in each of those cases (regardless of how the arbitrator characterized it) was clearly in the nature of a “common mistake”, that is one shared by both parties to the contract. Consequently, it is difficult to see what application Zeller’s Inc. and U.F.C.W., Loc. 1518 (Re) (2001), 2001 CanLII 62108 (BC LA), 95 L.A.C. (4th) 21 (Thompson) and A.G. Simpson Automotive Systems and C.A.W. Canada, Loc. 222 (Wilson) (Re) (2006), 2006 CanLII 37583 (ON LA), 156 L.A.C. (4th) 400 (Barrett) have to the facts before us.

40. Counsel for the Association has provided us with a number of authorities standing for the proposition that parties are bound to the written agreements they have entered into, and cannot escape their consequences by asserting that they did not understand them in circumstances where they did not read the documents or seek advice about their meaning. Many of these cases arise in a commercial context, and while we agree completely with the proposition for which they are cited, we prefer the articulation of that proposition and its rationale as it has been set out in decisions rendered in the labour relations context. They all relate to a “fundamental term” of a written agreement, and they all involve one party’s alleged misunderstanding as to what it meant. There is no mention or discussion of “mutual mistake”.

41. The Ontario Labour Relations Board jurisprudence is clear on the consequences where parties conclude a written agreement, as set out and applied in Jovalco Group Corp., [2013] O.L.R.D. No. 1018:

42. The following propositions are well-established in the Board’s case law:

a) Absent fraud or other exceptional circumstances, parties are bound to the written agreements they make;

b) A contracting party’s misapprehension as to the consequences of entering into an agreement does not make the agreement unenforceable against that party unless the misapprehension is the result of a misrepresentation by the other party;

c) Absent some ambiguity in the language of an agreement, parol or extrinsic evidence as to the parties’ intentions is not admissible for the purposes of the construction of that document.

13. Jovalco asserts that it did not understand the implications of what is was signing because the document was in English. If that is true, then Jovalco should have taken steps to have it translated in the several days that elapsed between the document being forwarded to it on October 25, 2012 and signing and returning it to the Iron Workers on October 31, 2012. Jovalco’s failure, for whatever reason, to take the steps necessary to comprehend the legal implications of what it was signing is no basis for finding it is not bound by its agreement. The Iron Workers have referred to a number of cases where the Board has made observations or findings to the same effect, including one o the most-frequently cited, Midtown Meats Cold Storage Ltd. (2002 CanLII 31687 (ON LRB)):

14. The Board is not prepared to permit the union to resile from its agreement that there were no further issues in the application for certification, and that it could be dismissed. The union has not provided reasons which are sufficiently compelling for the Board to depart from its consistent practice of not permitting parties to resile from their settlements. Without in any way challenging the bona fides of the union representative’s explanation, the union is essentially arguing that Ms. Wesley did not appreciate or intend that her agreement would compromise the union’s ability to complain about the employer’s alleged misconduct and seek relief pursuant to section 11. The Board is regularly faced with parties arguing that they did not appreciate the full ramifications of their actions. We often hear that employers did not understand the implications of signing a collective agreement, or the labour relations consequences of buying a unionized business. With respect, the circumstances of his case are no different. The Board’s response has consistently been that parties are presumed to know the labour relations repercussions of the decisions they make, and in particular, of the agreements they reach. To permit a party to resile from an agreement in these circumstances is to create uncertainty around settlements and undermine the significant labour relations value of encouraging parties to enter into agreements, in the almost certain knowledge that they will be enforced by the Board.

15. While Midtown Meats speaks of holding parties to their “settlements”, its principles are more broadly applicable to holding parties to any written agreement or contract they enter into.

16. It is perhaps worth noting that what was at stake in the Jovalco case was whether a construction industry employer had agreed to take three tradesmen referred by the union hiring hall for one small project and pay them the rates guaranteed in the provincial collective agreement, or whether it had agreed to be bound by the provincial collective agreement (and all renewals of it) in respect of all its projects in Ontario and to hire only union members and pay them the collective agreement rates. The document that the principal of Jovalco signed clearly had the latter effect. A similar fact situation dealt with by the Board in Bona Building & Management Co. Ltd. (2004 CanLII 13194 (ON LRB)) resulted in the same conclusion.

17. The approach articulated above mirrors a number of observations that are reproduced in the Sperry Vickers decision, and with which that panel of the Board appeared to have agreed when it decided not to apply the equitable doctrine of mutual mistake to the facts before it. We find the lengthy quote at ¶27 from Puretex Knitting Co. Ltd. (Re) (1975) 1975 CanLII 2156 (ON LA), 8 L.A.C. (2d) 371 (Dunn) particularly apt:

The parties entered into a written agreement, duly ratified it, and indeed implemented it in all but one of its provisions. Is the agreement then to be treated as void, or voidable, because it is made manifest that, at its inception, one party held one opinion as to the legal ramifications of a single, if important, clause at odds with the opinion of the other party? For this board to so hold would set a most dangerous precedent to the process of collective bargaining. Clause by clause settlement of issues is the process of negotiation. To allow one party to say, ‘It was not our intention’, and thus avoid a written contract, or a settled term of the contract, is to invite chaos in the labour relations field. A party is entitled to rely on the objective meaning of the wording settled, and should not be concerned with the subjective interpretations that the other party may wish to make.

Nothing this board heard leads it to believe that either company or union had anything less than full knowledge of the factual matters forming the basis of their negotiation. The fact that certain workers had been raised five cents on October 1, 1974, by governmental intervention was known to both. Both company and union signed their agreement with full knowledge of all factual information necessary for prior deliberations. Neither of them can now impeach that agreement by saying its wording does not represent their agreement because that wording meant different things to each of the parties, ab initio. It may well be that the legal meaning of the words they adopted have a meaning quite different to that which either party may have intended to give them. In order to preserve integrity to a contract that parties have taken care to reduce to writing, we must look to its words to establish intent, and not to what the parties, post contu-actu, may wish to say was their intent, albeit with honesty and sincerity.

44. We do not think the doctrine of mutual mistake is appropriate to apply in the labour relations context, for the reasons set out in the cases discussed above. We prefer the approach and the rationale set out in Midtown Meats and Puretex.

45. Even if we thought it appropriate to consider the application of the doctrine of mutual mistake in the context of the consideration of a pay equity plan or collective agreement, we would not view the mistake in this case as pertaining to so fundamental a term of the contract as to require equitable intervention in any event. The Plan contains many provisions, most of them inserted in compliance with section 13 of the Act. Earlier we reproduced the table of contents of the Plan to provide some illustration of the scope of matters covered in it. Simply put, the Plan is not analogous to the archetypal case of the simple contract for the sale of a particular good (a Ford Cortina or Ford Zephyr, as the case may be). The parties’ dispute about how the CO’s compensation is to be adjusted is a significant matter for both of them to be sure, but we do not see that it is any more important or fundamental or of lesser financial significance than, for example, the provisions of that Plan that identify female job classes for which no adjustment is required.

46. The Association urged us to find that the City contravened the duty to bargain in good faith by failing to inform itself of the facts during negotiation or exercising due diligence with respect to the documentation produced and by failing to execute the Plan that the BOC and Council ratified. We think what happened in the course of the negotiations falls far short of bad faith bargaining. Had the City informed itself properly at the time (as the Association says it did not), the Plan might well have been drafted differently and less favourably for the CO job class. As counsel for the City noted, there is some Tribunal authority for the proposition that pay equity may be achieved by equalizing the annual salaries of male and female job classes, despite the fact that they may work a different number of hours, so it was not inevitable that the Plan would have provided for an hourly adjustment. The bulk of the adjustments under the Plan were paid, with only the amounts in dispute as a consequence of the parties’ issue about what they had agreed to being held back. This is not a case where an employer has repudiated an entire agreement. The Association’s bad faith bargaining complaint is dismissed.

47. There are additional retroactive adjustments owing to the incumbents of the CO job class from the date the Mechanical Technician job class was created in 1996 until June 30, 2009. Those adjustments are the equivalent of the difference between the Hourly Rate for the Mechanical Technician and the CO from time to time, multiplied by the hours worked by the CO. These amounts are owing under the Plan we have found the parties concluded and that is binding on them. That Plan did not provide for interest, and it is not appropriate in our view for us to order interest on this amount. The City is directed to calculate and pay these amounts within 60 days of the date of this decision.

48. From June 30, 2009 to the present, the CO incumbents should have been paid the Hourly Rate for the Mechanical Technician for all hours worked (with the exception of any CO not at the top step of her salary grid and who would receive the difference between the two Hourly Rates as her adjustment). The unpaid adjustments that have accrued to date do attract interest, and it should be calculated in accordance with the formula set out in Hallowell House. The City is directed to calculate and pay these amounts within 60 days of the date of this decision.

49. From this date forward, for each hour that they work, the CO incumbents should be paid a pay equity adjustment that is the difference between their Hourly Rate and the Hourly Rate for the Mechanical Technician. The City is directed to adjust the individual COs pay in accordance with this determination forthwith.

“Mary Anne McKellar”

Mary Anne McKellar, Chair

“P. LeMay”

P. LeMay, Member

“Pauline Seville”

Pauline Seville, Member