International Brotherhood of Electrical Workers, Local 1007 Applicant - v. -, 2016 ABQB 574

Court of Queen’s Bench of Alberta Citation: International Brotherhood of Electrical Workers, Local 1007 v Epcor Utilities Inc, 2016 ABQB 574 Date: 20161012 Docket: 1503 14593 Registry: Edmonton Between: International Brotherhood of Electrical Workers, Local 1007 Applicant - and - Epcor Utilities Inc Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.S. Little _______________________________________________________ I.

Introduction [ 1 ] IBEW challenges the decision ( 2015 CarswellAlta 1647 ) of a three person grievance arbitration panel that a long term disability plan which provides for benefits only until an employee reaches pensionable age is discriminatory based on age but that it is saved under s. 7(2) of the Alberta Human Rights Act , RSA 2000, c. A-25.5 (the Act ) which allows such discrimination if it is part of a bona fide group or employee insurance plan. II. Facts [ 2 ] Only a brief review of the facts is necessary.

a) Under a letter agreement ancillary to a collective agreement, one of the benefits to which employees are entitled is a long term disability (LTD) plan.

b) That plan is provided by a third party insurer.

c) The terms of that plan include that long term disability payments being made stop when an employee reaches pensionable age under the terms of the company pension plan.

d) That is what happened to Mr. McGowan who was a 36 year employee who had been receiving long term disability payments for about a year.

e) When he became pensionable in accordance with his age and years of service, his LTD benefits stopped.

f) He then resigned so that he could collect his pension.

g) He filed a grievance on the basis that the provisions of the LTD plan discriminate against him on the basis of his age contrary tosection 7(1) of the Act.

h) The grievance arbitration panel held that the LTD plan was discriminatory based on age but that it was saved by s. 7(2) of the Act,the applicable part of which reads: a. “Subsection (1) as it relates to age… does not affect the operation of any bona fide retirement or pension plan or the terms orconditions of any bona fide group or employee insurance plan.” [3] I will refer to subsection (2) also as a saving provision and to a bona fide group or employee insurance plan as an exemptplan. [4] Having found age discrimination, the panel interpreted two Supreme Court of Canada cases called Potash (New Brunswick(Human Rights Commission) v Potash Corporation of Saskatchewan Inc. 2008 SCC 45 , [2008] S.C.J.

No. 46) and Zurich (Zurich Insurance Co. v Ontario (Human Rights Commission) (SCC), [1992 2 S.C.R. 321) to which I will refer inmore detail since that

interpretation is the nub of the issue. But it is worth repeating the relevant portion of the panel’s decision: That leaves a remaining issue as to whether the Employer’s plan is saved from a finding of age discrimination by section 7(2) of the Act. The panel has reviewed the Zurich and Potash cases, both decided by the Supreme Court of Canada. The Zurich case does impose ahigher burden upon an employer which goes beyond what the Employer has met in this case.

However, the Potash case was decidedsubsequent to the Zurich case and dealt with a less burdensome legislative requirement (which was effectively the same as the Albertaexemption in Section 7(2)). Potash stands for the principle that where a legislative provision requires that the plan be “bona fide”, theEmployer is required to establish the bona fides of the overall plan, and not each of its component parts.

The obligation to establish bonafides is met when the evidence is such that the plan is not a sham but a “legitimate plan, adopted in good faith and not for the purpose ofdefeating protected rights (Potash at para. 41). Having heard the evidence of the Employer with respect to the plan, the panel is satisfiedthat the Employer’s long term benefits plan is bona fide and thus a term and condition that may otherwise be viewed as discriminatory onthe basis of age is protected by section 7(2) of the Act. (para 86) III.

Standard of Review [5] It is common ground between the parties that the correctness standard of review applies to the panel’s

interpretation of theterm bona fide as used in s. 7(2) of the Act as a result of it being a question of statutory

interpretation of fundamental significance, andsecondarily that it is the decision of a grievance panel as opposed to a tribunal interpreting its own statute. [6] Epcor adds that reasonableness then applies with respect to the panel’s application of the facts to the definition of bona fide. [7] IBEW argues that the panel did not have sufficient evidence to make a determination as to whether the LTD plan was bonafide because it relied on the determination of bona fide under pension plans as opposed to insurance policies which engage a morestringent test of the evidence.

If I determine that the more stringent Zurich test applies to bona fide, then by its own admission in theearlier quote of its reasons, the panel determined that that burden was not met. IV. Analysis [8] Counsel for IBEW urges me to distinguish between the Zurich and the Potash cases by citing Potash for the proposition thatwhile the test for an exempt pension plan is merely bona fide, the test for an insurance policy under Zurich is that it must be both bonafide and reasonable. [9] That is in incorrect distinction.

What the Zurich case decided was what the phrase “reasonable and bona fide” meant in anOntario saving provision, while what the Potash case decided was what bona fide alone meant in a saving provision virtually identicalto that in the Alberta legislation. [10] In Zurich, the Supreme Court of Canada held that for a saving provision requiring that a plan be “reasonable and bona fide”,the Court had to evaluate the plan under a two part test: In my opinion, a discriminatory practice is “reasonable” within the meaning of s. 21 of the Code is (

a) it is based on a sound andaccepted insurance practice; and (

b) there is no practical alternative. Under (a), a practice is sound if it is one which it is desirable toadopt for the purpose of achieving the legitimate business objective of charging premiums that are commensurate with risk. Under (b),the availability of a practical alternative is a question of fact to be determined having regard to all the facts of the case.

In order to meet the test of “bona fides”, the practice must be one that was adopted honestly, in the interests of sound and acceptedbusiness practice and not for the purpose of defeating the rights protected under the Code. (para 342-43) [11] In Potash, the majority determined the definition of bona fides without the “reasonable” modifier. It booked to the definitionin Black’s Law Dictionary (para 34).

It found the explanation from Zurich “helpful”. (para 35) [12] But ultimately in Potash, the Supreme Court of Canada rejected the proposition that the reasonableness component fromZurich applies to a determination of the words “bona fide” do not impact the “reasonableness” analysis from Zurich and held that “for apension plan to be found to be ‘bona fide’ within the meaning of s. 3(6(a), it must be a legitimate plan, adopted in good faith and not forthe purpose of defeating protected rights.” (para 41) The business practice component need not be examined.

[ 13 ] The applicable test is not determined by what instrument is being examined, ie. a pension plan or an insurance policy, but by what the saving provision states. In this case subsection 7(2) of the Act states that the insurance plan must be bona fide . As Justice Abella wrote in Potash in distinguishing between the saving provision in Zurich and that in Potash : “Since s. 3(6)(

a) does not use the word “reasonable”, it need not be imported.” (para 31) Neither does s. 7(2) of the Alberta Act use the word “reasonable”, and I will not import it. The applicable test is that from Potash . [ 14 ] The arbitration panel here applied the Potash test to find that the plan in question was not a sham but a legitimate plan, adopted in good faith and not for the purpose of defeating protected rights. [ 15 ] The evidence before the panel respecting the bona fides of the plan included the testimony of Ms. Kristenson.

Since 2009 she had been the senior manager of pensions and benefits and before that worked in other human resource positions. She described the LTD policy as being insured through and administered by Sun Life. It covers a period of eighteen months which starts after the employer’s self-funded six month short term disability plan. Sun Life has provided that insurance since 1996, and the particular provision in question has been in place since 2006. There has been in place since 2009 a Joint Benefits Advisory Committee in which IBEW participates.

On that evidence, I am satisfied that the panel correctly applied the evidence to the test set out by the SCC in Potash to determine that the policy was bona fide. [ 16 ] In any event, IBEW does not challenge this evidence. What it argues is that the panel ought to have called for further evidence respecting the reasonableness of the LTD plan, an argument that I reject as having no application to a determination of the bona fides of the plan. V. Conclusion [ 17 ] Accordingly I dismiss IBEW’s application, with costs. [ 18 ] Thank you to both counsel for their concise briefs and submissions.

Heard on the 6 th day of October, 2016. Dated at the City of Edmonton, Alberta this 11 th day of October, 2016. J.S. Little J.C.Q.B.A. Appearances: D. Scott for the Applicant C. Neuman, QC for the Respondent