Traditional standard of review reaffirmed

Labour arbitrators have received a significant endorsement from the courts for their adjudication of collective agreements.

In a series of five decisions heard by the Court of Appeal for Ontario, the court held that an arbitrator’s interpretation of statutes or legislation will only be reviewed by a court if it is patently unreasonable – even if the interpretation is not entirely accurate.

“There has been was some uncertainty, when an arbitrator was interpreting legislation, as to whether the standard of review would be correctness as a matter of general law and the arbitrator had to be correct, or whether the ordinary standard of patent unreasonableness would be applied and was the appropriate standard of review,” explains Paul Cavalluzzo, of Cavulluzzo Hayes Shilton McIntyre & Cornish LLP.

“That’s why this is important, because it clarifies that when an arbitrator is interpreting a collective agreement in the context or backdrop of legislation, the standard of review will be whether the ultimate decision is patently unreasonable, so that even though an arbitrator may be mistaken with respect to their interpretation of the statute, ultimately if the final decision is reasonable, then the court will not intervene,” says Cavalluzzo,
“The importance of that is it assures the parties that the courts will accord significant deference to arbitrators because of their experience and expertise in interpreting collective agreements - even against the backdrop of a statutory regime.”

The cases included LaPointe-Fisher Nursing Home v. United Food & Commercial Workers International Union, Local 175/633 - the lead appeal in which Cavalluzzo successfully represented the union - along with four others that had gone to the Divisional Court to challenge arbitrators’ interpretation of whether the employers were required to cover the cost of the 2004 Ontario Health Premium (OHP) as stipulated in their respective collective agreements.

Each collective agreement was worded differently, some describing the OHP as a “tax,” others as a “premium” or “cost,” and it was up to the arbitrator to determine whether the employer was required to pay the OHP fee for the bargaining unit based on the collective agreement’s wording.

None of the cases conclusively determines whether the employer is obligated to pay the premium; rather, each was decided based on the collective agreement.
When the OPH was introduced, there was a flurry of more than 40 arbitrations by parties requesting an interpretation of the new health tax; the province called it a premium following election promises not to raise taxes, although it was introduced under provincial tax legislation.

In writing the appeal court’s decision to dismiss the appeal in LaPointe-Fisher, Justice James MacPherson acknowledges: “The central issues in all five appeals are: (1) what is the standard of review of the arbitral awards; and (2) applying the proper standard of review, was the Divisional Court correct to uphold the arbitral awards?”

The appellants in each case had asked the appeal court to overturn the decisions and apply a standard of “correctness” to each arbitrator’s interpretation of the tax legislation that facilitates the OHP.
MacPherson notes, “In Ontario, it is firmly established that the standard of review with respect to the decisions of labour arbitrators interpreting collective agreements is patent unreasonableness,” as re-affirmed in Lakeport Beverages v. Teamsters Local Union 938 in 2005.

“As a general rule, I accept the proposition that curial deference need not be shown to an administrative tribunal in its interpretation of a general public statute other than its constituting legislation, although I would leave open the possibility that, in cases where the external statute is linked to the tribunal’s mandate and is frequently encountered by it, a measure of deference may be appropriate,” writes MacPherson.

“However, this does not mean that 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. If that were the case, it would substantially expand the scope of reviewability of administrative decisions, and unjustifiably so . . . .

“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 unreasonableness. Of course, 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.”

MacPherson points out the arbitrator in LaPointe-Fisher considered the legislative regime - or intent of the OHP - but only in the context of interpreting the collective agreement.
“For these reasons, I conclude that the Divisional Court did not err by applying the patent unreasonableness standard of review to the arbitrator’s award.”

Brian D. Mulroney, partner and regional labour group coordinate at Borden Ladner Gervais LLP, says while the courts have demonstrated consistency in upholding patent unreasonableness as the standard of review for labour arbitrators, it doesn’t resolve problems with the standard as raised by the Supreme Court of Canada in the Alberta case Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92.

“If you look at SCC cases going back six to 10 years, there has been an ongoing dialogue amongst the justices of the Supreme Court over the issue of the standard of review,” says Mulroney.

He notes two issues that dissenting justices at the SCC have raised: “The first is as a practical matter, if we have three standards of review - correctness, reasonableness, and patent unreasonableness - how do you distinguish between a decision that is unreasonable and a decision that is patently unreasonable? Can you really do that as an intellectual matter?” asks Mulroney.

“The second issue raised by the defence was, in any event, does it make sense in a system of jurisprudence that we will allow quasi judicial decisions to stand even though they’re unreasonable but not patently unreasonable?”

Referring to Lakeport, which recently upheld the standard of patent unreasonableness in Ontario, Mulroney says: “The Ontario Court of Appeal arguably has failed to engage the jurisprudential problems that have been raised by the Supreme Court of Canada; they gave a very narrow answer that if you wanted to open it, might generate a fair amount of debate.”

Yet he adds, “But it is a consistent argument.”

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