Pennecon Maintenance Services Limited Applicant And: Fish, Food & Allied Workers (FFAW/UNIFOR ) Respondent, 2021 NLSC 141

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Pennecon Maintenance Services Limited v. Fish, Food & Allied Workers , 2021 NLSC 141 Date : October 29, 2021 Docket : 202001G5780 Between: Pennecon Maintenance Services Limited Applicant And: Fish, Food & Allied Workers (FFAW/UNIFOR ) Respondent Before: Justice Frances J. Knickle On Judicial Review From: A Decision of a consensual arbitral tribunal, David G.L. Buffett, Q.C., Arbitrator, dated the 2 nd day of October, 2020. Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: June 28, 2021 Appearances: Stephanie Sheppard Appearing on behalf of the Applicant

Kyle Rees Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Canada (Minister of Citizenship and Immigration) v. Vavilov , 2019 SCC 65 ; Sattva Capital Corp . v. Creston Moly Corp ., 2014 SCC 53 REASONS FOR JUDGMENT Knickle, J. : INTRODUCTION [ 1 ] Pennecon Maintenance Services Limited (“Pennecon”) applies for judicial review of a decision by the Arbitrator regarding the

interpretation of a collective agreement with the union, Fish Food and Allied Workers (“FFAW”). FFAW is the trade union representing the relevant employees of Pennecon. [ 2 ] One of the terms of the collective agreement was a requirement for Pennecon to pay certain employees an hourly bonus. During the course of the collective agreement, Pennecon discontinued these payments. FFAW filed a grievance of this decision. Whether the grievance had merit turned on the

interpretation of the collective agreement between the two parties. A hearing was held before an Arbitrator. The Arbitrator declined to interpret the collective agreement as proposed by Pennecon, but settled on an

interpretation favourable to FFAW. Pennecon has now sought judicial review of that decision as unreasonable. BACKGROUND CIRCUMSTANCES [ 3 ] Vale Newfoundland and Labrador Limited (“Vale”) operates the Long Harbour Processing Plant in Long Harbour, Newfoundland and Labrador. Pennecon was contracted to provide maintenance and repair support with regard to equipment used on site.

The collective agreement between Pennecon and its employees working on site included an obligation for certain Pennecon employees to “provide training and knowledge transfer” to Vale’s employees, the Process Plant Technicians, also working on site. [ 4 ] The collective agreement between Pennecon and FFAW commenced January 1, 2014 and continues to December 31, 2021. The collective agreement was amended, and there was general consensus that the agreement that was in place at the time the dispute arose, was the agreement as amended in February 2017. [ 5 ]

Article 2.01 of the collective agreement explicitly recognized the obligation of the Pennecon employees to mentor the Vale employees. Not all Pennecon employees were expected to provide mentoring; only the class of employees known as the Maintenance Support Technicians. In recognition of this training, these employees were entitled to an hourly bonus in addition to their regular hourly wages. This bonus was referred to as the “mentoring uplift” and is set out in

Schedule “A” of the collective agreement as the

section that established the “wage rates”. The mentoring uplift is described as follows: Mentoring Uplift Maintenance Support Technicians have a responsibility to mentor, coach and train Vale Processing Plant Operators in maintenance activities, as well as each other, to create a multi-skilled non-jurisdictional learning environment. In recognition of this expectation, the Company will pay a mentoring uplift of four dollars fifty five cents ($4.55) per hour for each regularly scheduled hour worked.

The Mentoring Uplift will not be paid to Maintenance Repair Technicians. [ 6 ] In the spring of 2019, Vale advised Pennecon that it no longer required or had an expectation that Pennecon employees would train the Vale employees and stopped paying Pennecon to cover this mentoring.

Given this change, Pennecon advised FFAW that it would no longer pay the uplift as it no longer had the expectation that Pennecon employees provide “training, mentoring, or coaching” to the Vale employees. [ 7 ] FFAW filed a grievance, through its member Jordan Doody, regarding Pennecon’s discontinuance of the payments, asserting that this discontinuance violated the terms of the collective agreement. [ 8 ] The main issue was the proper meaning to be given to the mentoring uplift clause.

Pennecon was of the view that it was always the intention of the parties that the uplift was to be paid for the training, coaching, and mentoring of the Vale employees by the Pennecon employees. The uplift was never intended to compensate the kind of “everyday” mentoring that one might expect as between employees. This meant that now that Pennecon no longer had the expectation that the training of the Vale employees would occur, Vale

was no longer obligated to pay the uplift to the Pennecon employees. [ 9 ] FFAW’s position was that the expectation by Pennecon was that the training, mentoring and coaching that would occur under the mentoring clause was not confined to training Vale employees, but extended to Pennecon employees as well. According to the evidence at the hearing, there was never a formal plan implemented to facilitate this mentoring. However, there was evidence that informal mentoring occurred as between both Vale employees and Pennecon employees, and Pennecon employees as between themselves.

While FFAW recognized that no formal mentoring program was implemented, and did not dispute that Pennecon no longer had the expectation that Vale employees would be trained, this did not entitle Pennecon to discontinue the uplift. As per the wording of the mentoring uplift clause, there was still the expectation that Pennecon employees would train other Pennecon employees, that is, “each other”, and did continue to so do.

For that reason payment of the uplift needed to continue, as per the terms of the collective agreement. [ 10 ] At the hearing before the Arbitrator, both parties submitted that to properly interpret the collective agreement, the Arbitrator needed to consider the surrounding circumstances; that is, circumstances outside the four corners of the collective agreement and the appropriate legal principles governing contracts, particularly in the labour relations context.

Both parties called witnesses to present evidence as to how the clause establishing the “uplift” for the Pennecon employees came about as well as the extent to which the mentoring uplift clause had been implemented by the Pennecon employees. [ 11 ] There was agreement between the witnesses as to some of the surrounding circumstances. For example, the witnesses who testified on behalf of the Union, as well as the witness who testified on behalf of Pennecon, agreed that the mentoring uplift was established to replace a former retention bonus that was no longer to be paid.

The evidence was that it was difficult to attract and retain workers so that this extra money, both the previous retention bonus, and then the mentoring uplift, was partly to assist in both attracting and retaining such employees.

There was also general agreement that the “uplift” was intended to compensate the Pennecon employees given that by training the Vale employees, the Pennecon employees would be working themselves out of a job. [ 12 ] However, the disagreement on the facts was whether the uplift was only meant to cover the obligation of Pennecon employees to mentor Vale employees; notwithstanding the wording of the clause included “as well as each other”.

When asked to explain that part of the clause, the witness testifying on behalf of Pennecon, Lorne Bennett, testified that the words “each other” could be explained as a reference to the understanding that employees who were “scaffolders” might mentor each other. The decision of the Arbitrator [ 13 ] The Arbitrator provided a written decision.

He reviewed not only the circumstances surrounding the collective agreement, as presented through the documentation and viva voce testimony, he also reviewed the collective agreement in detail and the various legal principles as submitted by the parties as relevant to the proper

interpretation of the collective agreement. [ 14 ] The Arbitrator accepted that there was an expectation that the designated Pennecon employees (the Maintenance Support Technicians) train, coach and mentor particular Vale employees. He also accepted that as a result of Vale advising Pennecon that there was no longer an expectation for this training to occur, there was no longer an expectation by Pennecon that its employees would so train Vale employees. However, he did not accept that this meant that Pennecon was no longer obliged to pay the uplift.

This is because the clause in question referred to not only Vale employees, but “each other”. [ 15 ] The Arbitrator found that the wording of the clause, when considered with the other terms of the collective agreement, could not reasonably be construed to refer solely to mentoring Vale employees. The proposed

interpretation could not be reconciled with the wording of the clause, or the other terms of the collective agreement. The wording of the clause referred to not only Vale employees, but to “each other”. The Arbitrator found that these words had meaning. The Arbitrator stated, at page 36 of his decision: … The Collective Agreement wording in

Schedule A in the mentoring uplift provision makes reference not only to the mentoring, coaching and training of Vale Processing Plant Technicians but also “each other”. These words have meaning and are presumed to have purpose and significance. I have not heard any evidence to the effect that there no longer exists an expectation on the part of the Employer that the mentoring, coaching and training of each other no longer exists. Nor have I heard any evidence that there has been any communication concerning this expectation.

The stated goal is the creation of a multi skilled, non jurisdictional learning environment. The mentoring, coaching and training of each other is in keeping with the achievement of that goal. [ 16 ] The Arbitrator found that given the wording of the clause, the uplift was meant to compensate the designated Pennecon employees for not only mentoring Vale employees, but “each other”. The Arbitrator did not accept the testimony of Lorne Bennett that the reference to “each other” was a reference to scaffolders potentially being required to mentor other scaffolders.

The Arbitrator stated: These words, “each other”, were only addressed briefly at the hearing. Counsel for the Union in cross-examination pointed out that they were in the Collective Agreement but not the subject of any communication to the employees and they were not included in AM#2 or JD#2. Mr. Bennett said in response simply that these words were put in because of scaffolders without elaborating any further.

My reaction to that is that the words scaffolders or scaffolding are not used in the agreement provision and there are no words to suggest the expectation and the obligation is confined in any such way. [ 17 ] The Arbitrator observed that the terminology used in the collective agreement was specific.

This specificity of other parts of the collective agreement was not reconcilable with interpreting the words “each other” to mean scaffolders. [ 18 ] As the expectation that mentoring would continue for the duration of the collective agreement, and there was evidence through the testimony of Jordan Doody that Pennecon employees had been mentoring each other, Pennecon was not entitled to discontinue paying the uplift, without first giving notice to the Pennecon employees that they did not expect such mentoring to occur. The Arbitrator stated:

I therefore find that until such time as the Employer communicates to the Union and the employees that it no longer has the expectationthat the Maintenance Support Technicians will mentor, coach and train each other that it has the continuing obligation to pay thementoring uplift… . [19] In other words, while the Arbitrator found that Pennecon was obligated to continue paying the uplift, Pennecon would beentitled to discontinue payment, once it gave notice that it no longer had that expectation that the employees mentor each other. [20] It is from this decision that Pennecon now seeks an order in the nature of certiorari.

THE LAW The standard of review [21] In a judicial review of an administrative or tribunal decision, there is a presumption that the standard of review is that ofreasonableness; unless there is a “clear indication by legislative intent or by the rule of law” to derogate from that standard (see Canada(Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at paragraph 10). Both parties submitted that the standard of reviewin these circumstances is that of reasonableness and that there is no “ legislative intent” or “rule of law” that requires derogation fromthat standard. I agree.

The principles applicable to the assessment of reasonableness of a decision [22] The majority in Vavilov explained that the review of a decision on the standard of reasonableness is not a question of what thisCourt would have done if tasked with making the decision, but whether “the decision made by the administrative decision maker –including the rationale for the decision and the outcome to which it led - was reasonable” (Vavilov at paragraph 83).

Both the process ofthe decision maker or the process in the making of the decision, as well as the justification for the decision, are subject to thereasonableness assessment. [23] The reasonable decision is characterized by three essential qualities: justification, transparency and intelligibility (Vavilov atparagraph 99). The majority for the Court in Vavilov stated the review of the decision is not a “line by line treasure hunt” for error(paragraphs 102-104), but the review court must be satisfied there are no “fatal flaws” in the “overarching logic”.

The Court continued: … it must be satisfied that “there is [a] line of analysis within the given reasons that could reasonably lead the tribunal from the evidencebefore it to the conclusion at which it arrived”: Ryan , at para. 55; Southam, at para. 56. Reasons that “simply repeat statutory language,summarize arguments made, and then state a peremptory conclusion” will rarely assist a reviewing court in understanding the rationaleunderlying a decision and “are no substitute for statements of fact, analysis, inference and judgment”: R. A. Macdonald and D.

Lametti,“Reasons for Decision in Administrative Law” (1990), 3 C.J.A.L.P. 123, at p. 139; see also Mora Gonzalez v. Canada (Minister ofCitizenship and Immigration), 2014 FC 750, 27 Imm. L.R. (4th) 151(F.C.), at paras. 57-59. [24] The reasonable decision is comprised of reasoning that is “internally coherent” and “justified in light of the legal and factualconstraints” (Vavilov at paragraph 102).

In terms of the legal and factual constraints, Vavilov states at paragraph 106: It is unnecessary to catalogue all of the legal or factual considerations that could constrain an administrative decision maker in aparticular case. However, in the sections that follow, we discuss a number of elements that will generally be relevant in evaluatingwhether a given decision is reasonable, namely the governing statutory scheme; other relevant statutory or common law; the principles ofstatutory

interpretation; the evidence before the decision maker and facts of which the decision maker may take notice; the submissionsof the parties; the past practices and decisions of the administrative body; and the potential impact of the decision on the individual towhom it applies. These elements are not a checklist for conducting reasonableness review, and they may vary in significance dependingon the context.

They are offered merely to highlight some elements of the surrounding context that can cause a reviewing court to loseconfidence in the outcome reached. [25] At paragraph 104, the court stated that to uphold the decision, the reviewing court “must ultimately be satisfied that thedecision maker’s reasoning ‘adds up’ ”. The principles of contract

interpretation [26] The legal principles or “constraints” relevant to the Arbitrator’s decision that he was asked to make in these circumstances arethose principles governing the

interpretation of contracts. The circumstances here involve the

interpretation of the collective agreementbetween the parties. [27] The modern approach to the

interpretation of contracts was explained by the Supreme Court of Canada in Sattva Capital Corp.v. Creston Moly Corp., 2014 SCC 53. The goal is to “ascertain the intention of the parties” (Sattva at paragraph 55). This is a “fact-specific endeavor” that requires an examination of not only the terms of the written contract, but also the circumstances surrounding thecreation of the contract. However, the surrounding circumstances can never “overwhelm” the words of the agreement.

As stated inSattva at paragraph 57: 57 While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed tooverwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence isto deepen a decision-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract.The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, atpp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviatefrom the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. BC Tel Mobility CellularInc. (1997), (BC CA), 101 B.C.A.C. 62 (B.C. C.A.)).

[ 28 ] The Supreme Court of Canada cautioned that evidence of surrounding circumstances should “consist only of objective evidence of the background facts at the time of the execution of the contract” ( Sattva at paragraph 58).

It is evidence of those facts “known or reasonably ought to have been known to both parties at or before the date” of the contract ( Sattva at paragraph 60). [ 29 ] The Court explained that evidence of surrounding circumstances is not evidence that is used to “change” or “overrule the meaning” of the written words of a contract, but is an “interpretive aid” for “determining the meaning” of those written words ( Sattva at paragraph 60). [ 30 ] The assessment of the reasonableness of the Arbitrator’s decision includes whether the decision was “justified” in light of the above legal constraints.

ANALYSIS [ 31 ] Applying the principles in Vavilov to the circumstances, there is no basis to set aside the decision of the Arbitrator. The decision was reasonable and there is no “fatal flaw” in the line of reasoning of the Arbitrator that requires intervention by this Court. The decision is transparent and intelligible as to how the decision was made, and also explains its justification for the outcome. The Arbitrator was also thorough. He canvassed not only the evidence presented, but terms of the collective agreement, and the applicable legal principles.

For example, in terms of understanding the legal constraints of interpreting the agreement, the Arbitrator applied the very principles (and appropriately so, in my view) espoused by the parties. The Arbitrator stated: The matter before me turns on the wording of that Collective Agreement having regards to the rules of Collective Agreement

interpretation and an application of Sattva. It is clear from Sattva, that it is not he case that one can look at the circumstances surrounding the making of the Collective Agreement only if there is an ambiguity. Instead one is required to have regard to the surrounding circumstances to better appreciate and understand what the parties meant and intended by the words that they used. [ 32 ] Further, the decision he made took into account the circumstances of the parties.

This was a labour dispute, between the Employer and the Union, and it is clear that he recognized that the parties would continue to have a relationship whatever his decision. His approach and result had practicality in view that was in keeping with the terms of the collective agreement and legal principles. This recognition is evident from his decision that while Pennecon would be obliged to continue the mentoring uplift payment, they were not without a course of action.

The Arbitrator was clear that if Pennecon decided that they no longer had the expectation that Pennecon employees mentor, coach and train other Pennecon employees, as per the mentoring uplift clause, they could give the proper notice of this, and would then be entitled to cease the payments. While not necessary for the determination of this judicial review, it is my understanding that that is what in fact has occurred. This aspect of the Arbitrator’s decision evidences that he took a practical approach to the dispute and the

interpretation of the collective agreement in light of the relationship and history between the parties. This he was also required to do. [ 33 ] His sensitivity to the labour context was evident throughout his decision. For example, the Arbitrator addressed the assertion that Lorne Bennett, who testified on behalf of Pennecon, might be seen as conceding that Pennecon had no authority to unilaterally cease the payments because he did not so assert in his communications with the Union, or during his testimony.

The Arbitrator stated at pages 29 to 30 of his decision: It would, in my view, not be in the best interest of labour relations and counter productive if something like this could be held over Mr. Bennett’s head and be the subject of suggestion that the Employer was somehow conceding that it could not act unilaterally. I do not believe that was the case and find that it was not the case.

For the foregoing reasons I attach no significance to the fact that he did not make the assertion that unilateral action could be taken. [ 34 ] The Applicant complains that the Arbitrator’s decision was unreasonable because he “failed” to consider Lorne Bennett’s testimony that the reference to “each other” in the uplift clause was intended to cover scaffolders and not the other Pennecon employees. I disagree. [ 35 ] The Arbitrator is clear in his decision that he considered Lorne Bennett’s testimony. He simply did not accept this aspect of Lorne Bennett’s evidence.

This, as the decision maker, he was entitled to do and his justification for so doing is not only intelligible, it is understandable in the circumstances. Not only did the clause not make reference to “scaffolders”, but nowhere in the collective agreement was such language used. He could see no reasonable way to “justify” interpreting the broad language of the phrase “as well as each other” to be a specific reference to scaffolders.

Specific language was used elsewhere in the collective agreement to identify other Pennecon employees; for example the explicit distinguishing between the Maintenance Support Technicians who were to receive the uplift, and the Maintenance Repair Technicians, who were not entitled to the uplift.

Given the precision of the collective agreement in identifying the various classes of employees, the Arbitrator reasonably found that if it had been intended that the words “each other” was to apply to scaffolders, the clause would have identified scaffolders. [ 36 ] This equally applies to the assertion that the uplift was intended to compensate for mentoring only Vale employees. The Applicant submits the Arbitrator’s decision was unreasonable because he ignored the fact that the intention of the parties was that the uplift was to compensate solely for the mentoring of the Vale employees.

I disagree. [ 37 ] It was not an agreed fact between the parties that this was their intention. To the contrary, this was precisely the dispute. The intention of the parties regarding the scope of the uplift was what the Arbitrator had to decide. As stated by the Arbitrator, the uplift clause referred not only to mentoring Vale employees, but “as well as each other”, and these words must “have meaning”. To interpret the clause to mean that the expectation was to mentor solely Vale employees leaves the words “each other” without any meaning.

As stated in Sattva , referred to earlier in this decision, while the surrounding circumstances are important, they cannot “overwhelm” the words of the contract, or rewrite the contract.

[ 38 ] For this reason, I see no “fatal flaw” in the Arbitrator’s finding that given the words as written in the impugned contract, it could mean neither that the expectation was Pennecon employees mentor, coach and train solely Vale employees; nor that the reference to “as well as each other” was a reference to “scaffolders”.

Neither of these meanings accord with the language of the collective agreement. [ 39 ] Pennecon complains that if the intention was that Pennecon employees be paid the uplift for also mentoring “each other”, it “defies logic” why Pennecon would communicate to the Union that the uplift was being cancelled, and not refer to the fact that the relevant clause also referred to mentoring “each other”.

It may be that Pennecon wanted to confine the uplift clause to solely the mentoring of Vale employees, especially given that they were no longer paid by Vale, but the Arbitrator could not find that this was the intention of the parties, without being satisfied that this was also what FFAW understood the clause to mean at the time the contract was formed, as per Sattva .

While I agree with the Applicant that there was not a surfeit of evidence as to what the reference to “each other” meant; what was clear was that FFAW did not agree that the scope of the clause, or the intention of the parties, was solely to mentor Vale employees. [ 40 ] The Arbitrator accepted this and so had to find a meaning that truly reflected the intention of the parties with regard to the uplift clause.

The path he chose was based on the wording of the clause in light of the overall terms of the agreement, and the principles in Sattva . [ 41 ] It can hardly be said that the Arbitrator’s decision was unreasonable because he chose to interpret the clause to mean what it said. [ 42 ] For the above reasons, I find that the decision was reasonable and see no basis to interfere. Indeed, given the conflict as to the scope and purpose of the mentoring uplift, relying on the words of the collective agreement to interpret the clause to mean what it stated, was the sound course.

CONCLUSION [ 43 ] There is no basis to set aside the decision of the Arbitrator, and the application for judicial review is dismissed. The Respondent shall have their costs on the usual party and party basis. _____________________________ Frances J. Knickle Justice