Court File and Parties

COURT FILE NO.: CV-11-018 DATE: 20181212 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: HELGA LOUISE BRILLON Plaintiff/Responding Party – and – GENERAL DYNAMICS LAND SYSTEMS - CANADA Defendant/Moving Party

COUNSEL: D. Morin, for the Plaintiff/Responding Party G. Avraam, for the Defendant/Moving Party

HEARD: July 6 and October 19, 2018

DECISION ON MOTION

WILCOX, J

Introduction

[1] This is a motion by the defendant seeking dismissal of the plaintiff’s claim.

[2] The plaintiff, Helga Louise Brillon (Brillon), was at all times material to this matter an employee of the defendant at its London, Ontario plant. Brillon commenced employment as an apprentice with General Motors Diesel Division at the London plant in 1988. In 1999 General Motors Diesel Division was renamed GM Defence. In 2003 General Dynamics purchased GM Defence and named this division of its operations General Dynamics Land Systems – Canada. Brillon has been continuously employed at this same location throughout. However, she has been on long term disability benefits since about 2006.

[3] By two statements of claim issued in 2011, Brillon sued Sun Life Assurance Company of Canada (Sun Life) and General Dynamics Land Systems – Canada (General Dynamics), respectively, for damages.

[4] Brillon alleged that as an employee of General Dynamics she was insured under a policy of group insurance provided by Sun Life pursuant to a contract with General Dynamics. The policy provided for, among other things, long term disability benefits to eligible employees of General Dynamics. She became disabled in 2006 and went on long term disability benefits. General Dynamics deliberately attempted to reduce or eliminate her entitlement to these benefits, including attempting to break or eliminate her seniority under the collective agreement it had with its employees.

[5] Both defendants delivered statements of defence. By order of O’Neil, J. dated November 10, 2011, the two actions were consolidated into this one.

[6] General Dynamics denied most of the plaintiff’s factual allegations and that she was entitled to the relief claimed. Notably, it pleaded that this court lacks jurisdiction over the subject matter of the action against it, alleging that that jurisdiction is vested solely in an arbitrator appointed under the collective agreement, and sought dismissal of the action.

[7] General Dynamics then brought this motion to have the statement of claim against it dismissed under the Rules 20 and 21 of the Rules of Civil Procedure, and section 48 of the Labour Relations Act.

[8] Rule 20 provides for motions for summary judgment. Rule 21.01(3)(a) provides that the defendant may move to have the action stayed or dismissed on the ground that the court has no jurisdiction over the subject matter of the action. Counsel for General Dynamics clarified that the primary issue for this motion was the court’s jurisdiction. The request for summary judgment would only be for consideration if the court found that it had jurisdiction over the matter.

[9] At the outset of the hearing of the motion, counsel for General Dynamics stated that Sun Life had advised both him and the plaintiff that Sun Life was taking no position on this motion.

Re Delay

[10] General Dynamics addressed the issue of its delay in bringing this motion. Rule 21.02 says that a motion under Rule 21.01 shall be made promptly and that a failure to do so may be taken into account by the court in awarding costs.

[11] There has been substantial delay after the exchange of pleadings in 2011 to the bringing of this motion, even to the date of the motion, July 29, 2016, let alone to the dates of its hearing in July and October 2018.

[12] The plaintiff in its factum submitted that General Dynamics had attorned to the jurisdiction of this court when it delivered its statement of defence on the merits. Any reservation of rights it might have made regarding jurisdiction was erased by the rest of the statement of defence and by its participation in the litigation over the subsequent years. To entertain General Dynamics’ challenge of this court’s jurisdiction at this point in time would amount to an abuse of the court’s process, according to this argument.

[13] The plaintiff based its position on an analogy to Rules 17.06(1) and the decision in [M.J. Jones Inc. v. Kingsway General Insurance Co.](2004 CarswellOnt 3244). Rule 17.06(1) states:

A party who has been served with an originating process outside Ontario may move, before delivering a defence, notice of intent to defend or notice of appearance,

(a) for an order setting aside the service and any order that authorized the service; or

(b) for an order staying the proceeding. R.R.O. 1990, Reg. 194, r. 17.06 (1) .

[14] In M.J. Jones, the Ontario Court of Appeal stated:

[19] Even though Emery proceeded under s. 106 , as a foreign defendant it may be taken to have attorned to Ontario's jurisdiction if it engages on the merits of the litigation. By engaging on the merits, such a defendant is seen to have consented to or submitted to Ontario's jurisdiction. In that case, such a defendant will be precluded from disputing jurisdiction simpliciter .

[20] A foreign defendant is also precluded from contemporaneously disputing jurisdiction simpliciter and defending on the merits. Otherwise, litigants would incur unnecessary litigation costs in a claim which, as it may turn out, the court did not have jurisdiction to determine in the first place.

[21] Further, if foreign defendants were permitted to defend contemporaneously on the merits and to dispute jurisdiction, then, in addition to the possibility of unnecessary expense, a defendant could retreat if it appeared that the success of their defence was in jeopardy.

[22] Accordingly, it is well-accepted law that a foreign defendant that engages on the merits of the action will be taken to have "attorned" to the domestic court's jurisdiction. ...

[15] However, the Supreme Court of Canada in the case of [Momentous.ca v. Can-Am Association of Professional Baseball Ltd.]([2012] 1 S.C.R.) distinguished between motions under Rule 17.06 and Rule 21.01(3)(a). Rule 21.01(3)(a) reads as follows:

(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,

Jurisdiction

(a) the court has no jurisdiction over the subject matter of the action;

[16] The court in Momentous said:

[4] The Ontario Rules of Civil Procedure provide two rules under which a party may challenge whether an Ontario court can or should hear an action.

[5] Rule 17.06 permits a party who has been served with an originating process outside Ontario to move for an order setting aside the service or staying the proceeding on the grounds that service is not authorized by the Rules or that Ontario is not a convenient forum for the hearing of the proceeding. This rule requires that the motion be brought before the party delivers a defence, notice of intent to defend or notice of appearance.

[7] Rule 21.01(3)(a) permits a defendant to seek a stay or dismissal of the action on the basis that the court has “no jurisdiction over the subject matter of the action”. Thus, when another forum ― an arbitration panel, a tribunal or another court ― has the exclusive jurisdiction to deal with the claim, the Ontario Superior Court of Justice will not take jurisdiction, based upon agreement or statute.

[8] ... Although the motion must be brought promptly, we agree with Laskin J.A. that there is nothing in Rule 21.01(3)(a) that requires it to be brought before delivery of a statement of defence. Within the framework provided by the Ontario Rules of Civil Procedure , a statement of defence that specifically pleads a foreign forum selection clause does not amount to consent that Ontario assume jurisdiction so as to preclude consideration on the merits of whether to enforce the clause.

[17] At issue in the present case is whether the court or labour arbitrator has jurisdiction over the subject matter under the Labour Relations Act s. 48(1). Where there is a law such as s. 48(1) which deals with the court’s jurisdiction, I would be surprised if, as the plaintiff’s factum seems to suggest, a law may be circumvented or ignored because a party conducts itself contrary to it. I do not agree with the argument that the defendant is, in the face of s. 48(1), able to attorn to this court’s jurisdiction based on its conduct in this litigation. Whether the case should proceed in this court is an issue to be determined on other grounds. The delay in bringing this motion is a matter to be dealt with through costs, according to Rule 21.02, which states:

21.02 A motion under rule 21.01 shall be made promptly and a failure to do so may be taken into account by the court in awarding costs. R.R.O. 1990, Reg. 194, r. 21.02 .

[18] Indeed, in submissions, plaintiff’s counsel agreed that delay in and of itself in bringing this motion does not vest jurisdiction in the court given the wording of the Labour Relations Act. He agreed that, if motions challenging jurisdiction are not brought promptly, the remedy is in costs.

[19] Consequently, I find that the delay in bringing this motion does not vest jurisdiction in the court given the wording of the Labour Relations Act, s. 48(1).

Re Jurisdiction

[20] There was a collective agreement between General Dynamics and the union representing its employees, including the plaintiff. Section 48(1) of the Labour Relations Act reads:

48 (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.

[21] Correspondingly, paragraph 40 of the collective agreement stated:

All differences between the parties arising from the interpretation, application, administration or alleged violation of this Agreement, including any questions as to whether a matter is arbitrable, shall be arbitrable. No other differences shall be arbitrable.

[22] The Supreme Court of Canada dealt with section 45(1) (now s. 48(1)) of the Ontario Labour Relations Act in Weber v. Ontario Hydro. The issue was when is the court’s jurisdiction over civil actions ousted by that section. The headnote reads in part:

The exclusive jurisdiction model is the one that should be adopted. Under this approach, if the difference between the parties arises from the collective agreement, the claimant must proceed by arbitration and the courts have no power to entertain an action in respect of that dispute. The question in each case is whether the dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement.

[23] In Weber, the court explained:

51 On this approach, (the exclusive jurisdiction model) the task of the judge or arbitrator determining the appropriate forum for the proceedings centres on whether the dispute or difference between the parties arises out of the collective agreement. Two elements must be considered: the dispute and the ambit of the collective agreement.

52 In considering the dispute, the decision-maker must attempt to define its "essential character", to use the phrase of La Forest J.A. in Energy & Chemical Workers Union, Local 691 v. Irving Oil Ltd. (1983), 148 D.L.R. (3d) 398 (N.B.C.A.). The fact that the parties are employer and employee may not be determinative. Similarly, the place of the conduct giving rise to the dispute may not be conclusive; matters arising from the collective agreement may occur off the workplace and conversely, not everything that happens on the workplace may arise from the collective agreement: … In the majority of cases the nature of the dispute will be clear; either it had to do with the collective agreement or it did not. Some cases, however, may be less than obvious. The question in each case is whether the dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement.

53 Because the nature of the dispute and the ambit of the collective agreement will vary from case to case, it is impossible to categorize the classes of case that will fall within the exclusive jurisdiction of the arbitrator. …

54 This approach does not preclude all actions in the courts between employer and employee. Only disputes which expressly or inferentially arise out of the collective agreement are foreclosed to the courts: …

[24] In Morris v. The Manufacturers Life Assurance Company and City of Toronto Pardu J., after quoting from Cromwell J.A. in Halifax Regional School Board v. Nova Scotia Union of Public Employees, Local 2 on point, held that “the decision as to whether the matter is arbitrable should be left at first instance to the arbitrator.”

[25] The defence submitted that essential character of the plaintiff’s dispute with General Dynamics relates to the latter’s alleged bad faith conduct towards the plaintiff and its interference with her seniority which would consequently affect her pension and benefits. It is not, he submitted, about the plaintiff’s entitlement to long term disability benefits, which would not be arbitrable. Consequently, he said, the court lacked the jurisdiction to determine whether the matter should be before the court, as that issue is in the exclusive jurisdiction of labour arbitrator under s. 48(1) of the Labour Relations Act.

[26] The plaintiff’s position was that this court has jurisdiction over the case. Plaintiff’s counsel provided a long and comprehensive argument that the collective agreement and its supplemental agreements implicitly and explicitly support this position. He submitted that the case is not about employment issues which would be arbitrable, but is about General Dynamics’ wrongful interference with the administration, adjudication and provision of long term disability benefits, which is not arbitrable. He added that the company’s attempts at affecting the plaintiff’s seniority were relevant to the provision of those benefits, not to an employment issue.

Analysis

[27] The statement of claim against General Dynamics claims damages for breach of contract, breach of the human rights code, wrongful breakage of seniority in employment, intentional interference in a long term disability claim and bad faith conduct. The allegations include that General Dynamics intentionally engaged in a course of conduct in an improper attempt to “break her seniority” and eliminate the plaintiff from its work force. This would cost her ongoing employment opportunities and her ongoing entitlements including under the collective agreement. It would also reduce General Dynamics financial exposure to her.

[28] On their face, these appear to be labour relations issues between an employer and employee of the sort that could fall under the provisions of the collective agreement. Certainly, the collective agreement has provisions dealing with seniority. Furthermore, the requirement of good faith conduct in dealing with an employee under the collective agreement has been identified in [Blue Door Shelters and S.E.I.U., Local 1, Re, 2013 CarswellOnt 16627, Para. 4](2013 CarswellOnt 16627). In argument, however, plaintiff’s counsel framed the case more narrowly, as wrongful interference with the administration, adjudication and provision of long term disability benefits, not as an issue to do with employment.

[29] The defence described it in broader terms, as summarized above, which would involve employment law.

[30] Weber directs that an attempt be made to define the essential character of the dispute, adding that the nature of the dispute, that is, whether or not it has to do with the collective agreement, will be clear. Unfortunately, I do not find this to be a clear case. There are arguments that its essential character can be defined broadly, in which case it is arbitrable, or narrowly, in which case it would not be arbitrable. The resolution of this argument must be left to a labour arbitrator, as required by the Labour Relations Act, s. 48(1). To try to resolve that issue here would be to trespass on the jurisdiction of the labour arbitrator under s. 48(1).

[31] In the result, I would allow the motion in part. The action will be stayed so that the matter may be referred to a labour arbitrator to determine the issue of jurisdiction. Consequently, it is not necessary to deal with the alternative request for summary judgment. That part of the motion is dismissed.

Costs

[32] In the event that the parties are unable to agree on the costs of this motion, the plaintiff shall serve and file its costs submissions by January 15, 2019. The defendant, General Dynamics, shall and file its response by January 31, 2019.

J. A. S. Wilcox Released: December 12, 2018