Docket: CACV2048 Communications, Energy & Paperworkers Union of Canada, Local 721-G Appellant (Applicant) - v. -, 2012 SKCA 19

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2012 SKCA 19 Date: 20120228 Between: Docket: CACV2048 Communications, Energy & Paperworkers Union of Canada, Local 721-G Appellant (Applicant) - and - Mercury Graphics Respondent (Respondent) Coram: Vancise, Smith and Ottenbreit JJ.A. Counsel: Gary L. Bainbridge for the Appellant Dwayne W. Chomyn for the Respondent

Appeal: From: 2011 SKQB 41 Heard: December 15, 2011 Disposition: Appeal dismissed Written Reasons: February 28, 2012 By: The Honourable Mr. Justice Vancise In Concurrence: The Honourable Madam Justice Smith The Honourable Mr. Justice Ottenbreit Vancise J.A. I. Introduction [ 1 ] This is an appeal from the decision of Mr. Justice Foley who, on judicial review, confirmed a decision of an arbitrator appointed pursuant to the terms of the three collective bargaining agreements at issue in this matter.

The parties agreed that the arbitrator had jurisdiction to embark upon the inquiry to determine whether the employees under all three collective bargaining agreements were entitled to severance pay.

The employer Mercury Graphics, however, took the position that the arbitrator had no jurisdiction beyond that set out in s. 25 of The Trade Union Act [1] to rule on jurisdiction. [ 2 ] The issue on this appeal is narrow--do the severance provisions in the three collective bargaining agreements that are the subject matter of the grievance and arbitration procedure survive the termination of the collective bargaining agreements? The parties all agree that the lawful strike and subsequent lockout terminated all three collective bargaining agreements.

After failing to reach an agreement, subsequent to the strike and lockout, Graphic made an offer to reemploy all the employees on terms that were substantially less favourable than those provided for in the collective bargaining agreements.

That offer was rejected, Graphic closed the plant permanently and terminated the employment of all 85 permanent employees. [ 3 ] Each collective bargaining agreement contained a provision for the payment of severance in the following terms: In the event of severance due to consolidation or technological change, severed employees shall receive severance pay of not less than two (2) week’s (sic) pay at their regular rate of pay for each completed year of service with the employer. [ 4 ] The Communications, Energy & Paperworkers Union of Canada, Local 721-G (“the Union”) claims the employees are entitled to severance pay by reason that the right to severance vested prior to the termination of the respective collective bargaining agreements. [ 5 ] Graphic argues that the severance pay entitlement is not a vested right but a contingent right that was not exercised prior to the expiration of the collective bargaining agreements and, as a result, it has no obligation to pay severance pay to the employees affected. [ 6 ] A detailed description of the chronology after negotiations broke down is set out in detail in paras. 29-35 of the arbitrator’s decision. [ 7 ] For the reasons that follow, we agree with the decision of the reviewing judge and dismiss the appeal with costs in this Court on the appropriate column.

II. Decision of Arbitrator [ 8 ] The arbitrator found that the collective bargaining agreements were terminated by a lawful strike/lockout and, although based on length of service, the severance pay provisions were a contingent and not a vested right. [ 9 ] In his opinion, for there to be a vested right, it was necessary that there be a crystallizing event, i.e. severance in accordance with the terms of the collective bargaining agreement during the currency of the collective bargaining agreement. [ 10 ] None of the employees returned to work after the termination of the collective bargaining agreements.

In the arbitrator’s opinion, in the absence of clear language to the contrary in the collective bargaining agreement that the right to severance survived the collective bargaining agreement, severance pay was not payable if an employee was terminated after the expiration of the collective bargaining agreement.

He contrasted the entitlement to severance pay with accrued wages or holiday pay which would vest and be payable to the employee after the termination of the collective bargaining agreement. [ 11 ] The arbitrator found that he had no jurisdiction to order the payment of severance pay under the collective bargaining agreement or under the common law and, as a result, dismissed the grievance. III.

The Decision of the Court of Queen’s Bench [ 12 ] The Union applied by way of judicial review to set aside the decision of the arbitrator contending that the arbitrator erred in law in the following terms: The Arbitrator exceeded his jurisdiction, made an unreasonable decision, or committed an otherwise reviewable error of law, as follows: (

a) The Arbitrator was incorrect in law ruling that he was without jurisdiction to apply the severance provisions of the collective agreements to the grievances before him; (

b) The Arbitrator was incorrect in law in ruling that he was without jurisdiction to award severance at common law in the absence of a collective agreement being in effect; and (

c) Such further and other grounds as counsel may advise. [ 13 ] Mr. Justice Foley found the applicable standard of review was reasonableness by reason that the issue before the arbitrator was not a true question of jurisdiction as contemplated by Dunsmuir v. New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190. In his opinion, the issue was not a discrete or preliminary issue which was jurisdictional but rather the

interpretation of the collective bargaining agreement to be viewed on the standard of reasonableness. [ 14 ] Mr.

Justice Foley found that the decision of the arbitrator that the severance pay provision in the collective bargaining agreements was not vested and did not survive the collective bargaining agreements and, as a result, was not a right amenable to the grievance process or to be enforced after the collective bargaining agreements came to an end was within the range of reasonable outcomes and dismissed the application. [ 15 ] He also found that the arbitrator was correct in finding that he could not enforce whatever common law rights, if any, the employees enjoyed after the termination or severance and termination of the collective bargaining agreement.

IV. Analysis A. Standard of Review [ 16 ] The Union argues that the judge on judicial review erred in finding that the appropriate standard of review was reasonableness based on his finding that the issue was not a discrete or preliminary issue and, as such, a true question of jurisdiction. In so doing, he relied on a decision of this Court Prairie North Regional Health Authority v. Kutzner , 2010 SKCA 132 , 325 D.L.R. (4th) 401. The Union contends that on a proper reading of Prairie North and Dunsmuir , the reviewing judge was in error.

In its submission, the arbitrator had assumed jurisdiction to determine whether severance payment entitlements survive the collective bargaining agreements and that he had to be correct in finding that he did not have jurisdiction.

[17] The standard of review applicable to the review of the lower court’s decision by this Court is one of correctness. In Dr. Q v.College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226, Chief Justice McLachlin stated: 43 The Court of Appeal stated that "[t]he standard that we must apply in assessing the judgment of Madam Justice Koenigsberg iswhether in her re-weighing of the evidence she was clearly wrong" (para. 25). This is not the appropriate test at the secondary appellatelevel.

The role of the Court of Appeal was to determine whether the reviewing judge had chosen and applied the correct standard ofreview, and in the event she had not, to assess the administrative body's decision in light of the correct standard of review,reasonableness. At this stage in the analysis, the Court of Appeal is dealing with appellate review of a subordinate court, not judicialreview of an administrative decision. As such, the normal rules of appellate review of lower courts as articulated in Housen [v.Nikolaisen, 2002 SCC 33 [2002] 2 S.C.R. 235] apply.

The question of the right standard to select and apply is one of law and,therefore, must be answered correctly by a reviewing judge. The Court of Appeal erred by affording deference where none was due. Thus, no deference is owed to the decision of the reviewing court. [18] In my opinion, in the context of this application, it does not matter whether the standard of review is correctness or reasonableness. For the reasons that follow, I find the decisions of both the arbitrator and reviewing judge were correct. B.

Severance Pay [19] The Union contends that severance pay is a right that accrues over the course of an employee’s employment, is based on seniorityand is, as a result, vested with the result that it is a right enforceable after the expiration of a collective bargaining agreement. It alsoargues that because it is vested, there is no requirement for a triggering event to crystallize the right to severance pay.

That is, severancepay is an ongoing right payable at the rate provided in the collective bargaining agreement when the employee is terminated or severedand is payable during the currency of or after the expiry or termination of the collective bargaining agreement. [20] Graphic, on the other hand, argues that the entitlement to severance pay is not vested and the obligation to pay only occurs whenthere is severance (a crystallizing or triggering event) which occurs during the currency of the collective bargaining agreement.

If theseverance or termination occurs after the termination of the collective bargaining agreement (the situation here), it is a claim that has notvested and, as such, is not payable or arbitrable. [21] The collective bargaining agreement is the source of the arbitrator’s jurisdiction.

In the absence of express language continuing thecollective bargaining agreement in force after its expiration, a vacuum exists with respect to certain matters such as hours of work,holiday pay, entitlement to overtime for statutory holidays, etc. which are all rights and obligations under collective bargainingagreements that are rendered a nullity unless otherwise provided for in the collective bargaining agreement. [22] In Dayco (Canada) Ltd. v. CAW-Canada, (SCC), [1993] 2 S.C.R. 230, Mr. Justice La Forest stated, at pp. 270-71: … A collective agreement is rather like a contract for a fixed term.

At the end of the term, the contract or agreement is said to "expire"by mutual agreement. But the contract is not thereby rendered a nullity. It ceases to have prospective application, but the rights that haveaccrued under it continue to subsist. This termination or expiration can be contrasted with the contractual notion of rescission, wherebythe contract is rendered null and void, and the parties have no obligations thereunder: see Anson's Law of Contract (26th ed. 1984), at pp.428-39; Atiyah, An Introduction to the Law of Contract (4th ed. 1989), at pp. 411-32.

Thus it should not be seen as a novel concept thatgrievances can arise after the expiration of a collective agreement that relate to rights accruing under that agreement. It seems to me thatit would take very clear words to demonstrate that the parties intended to rescind their agreement by agreeing to enter into a succeedingagreement.

Rather, the presumed intention is only that the prospective relationship between the parties is to be governed by the newagreement, and that the old agreement ceases to have any relevance to that ongoing relationship. [emphasis added] [23] Dayco involved a claim for benefits for retired workers and, as the court noted at pp. 274-75, the relevant issue in determiningwhether the arbitrator had jurisdiction was not when the rights were breached but rather whether the collective bargaining agreement wasin force at the time the rights accrued.

The Union contends that because the rights accrued during the course of the various collectivebargaining agreements, such rights endure beyond the termination of the collective bargaining agreements and are enforceable. [24] The expiry of the collective bargaining agreements do not preclude the arbitrability of a grievance alleging the breach of a term of aright that has vested. In that case, the right or benefit forms the requisite basis for the grievance. [25] All three collective bargaining agreements are silent on the issue of survivability.

The issue therefore remains--does the severanceright or benefit survive the termination or the expiration of the collective bargaining agreements? It is useful to compare the right to

other rights which do survive such as entitlement to be paid for hours worked and holiday pay earned prior to the termination of theagreement. Those rights under the collective bargaining agreement have been earned and can be the proper subject of a grievance afterthe termination of the collective bargaining agreement because the wages or holiday pay are payable even if an employee resigns or isterminated for cause. However, severance pay is not payable to an employee who resigns or is terminated for cause.

To receiveseverance pay, there is an additional element required--the severance or termination by the employer of the employee’s employmentduring the currency of the collective bargaining agreement, in other words, a crystallizing or triggering event. [26] In support of this argument, Graphic relies on Dayco where the court was unanimous on this issue and stated: … While an employee continues to be a part of the bargaining unit, he or she is of necessity subject to the vicissitudes of the collectivebargaining process.

However, on retirement a worker withdraws from that relationship, and at that point his or her accrued employmentrights crystallize into some form of "vested" retirement right. …[2] [27] In Dayco, the employee’s retirement rights had accrued or vested upon the employee’s retirement--the crystallizing event--prior tothe termination of the collective bargaining agreement and, as such, were enforceable and were properly the subject of the grievanceprocess. [28] Graphic points out that there are a number of rights such as disability benefits and pension benefits which may or may not vestwhich are specifically protected by statute.

For example, s. 47 of The Trade Union Act protects disability rights during a labour disputeand there is similar legislation to protect pension rights during labour disputes. Importantly, there is no such statutory protection for aright of severance. [29] In my opinion, there is a real distinction between pay for services rendered or earned and severance. In the former, the right orentitlement is complete and not contingent on any other event to be able to be enforced.

Severance, on the other hand, is an entitlementthat is due or payable only in the event of severance--severance which takes place during the currency of the collective bargainingagreement--which is the condition of entitlement. [30] This point is well illustrated in Westfair Foods Ltd. v.

United Food and Commercial Workers Union, Local 1400, 2004 SKCA 119,244 D.L.R. (4th) 726 where there was a claim for holiday pay for a holiday that occurred during a lawful strike, that is, after the expiryof the collective bargaining agreement and where no provision for such payment had been included in the back to work protocol. There,the Court found that there was no right to be paid for a holiday that occurred after the termination of the collective bargainingagreement. See also: Bradburn v.

Wentworth Arms Hotel Limited, (SCC), [1979] 1 S.C.R. 846. [31] The Union relied on a number of cases to demonstrate that severance pay was an accrued right. In my opinion, all of these cases--Re Atco Lumber Ltd. and I.W.A. Canada, Local 1-405 (2004), (BC LA), 130 L.A.C. (4th) 76; Re TelegramPublishing Co.

Ltd. and Marc Zwelling & Gottlob Essig (1972), (ON SC), 1 L.A.C. (2d) 1; Re Western National DrugServices, Division of National Drug and Chemical Company of Canada Ltd. and Retail, Wholesale and Department Store Union, Local580 (1978), (BC LA), 20 L.A.C. (2d) 202--are distinguishable on the facts or were decided prior to Dayco which isthe controlling authority. [32] This ground of appeal is therefore dismissed. C. Jurisdiction to Apply the Common Law to Severance [33] The Union contends that even if we find the severance right was not vested, the Court can consider the common law right ofseverance.

It argues that the individual contracts of employment are not terminated by the termination of a collective bargainingagreement but merely suspended and that the individual contracts of employment are therefore in force and that the arbitrator hasjurisdiction to enforce them. The Union relies on Weber v.

Ontario Hydro, (SCC), [1995] 2 S.C.R. 929 and theexclusive jurisdiction model articulated by McLachlin J. as follows: 50 The final alternative is to accept that if the difference between the parties arises from the collective agreement, the claimant mustproceed by arbitration and the courts have no power to entertain an action in respect of that dispute. There is no overlapping jurisdiction. [34] The Union therefore argues that, based on the exclusive jurisdiction model, the arbitrator can apply common law principles toprovide a remedy for severance.

The problem with this argument is that the right the employees seek to assert does not arise out of theinterpretation, application or violation of the collective bargaining agreement from which the arbitrator derives his authority. The Unionargues that the common law right to compensation on termination was applied in Alberta and A.U.P.E. (Davey), Re (1993), 1993

16770 (AB GAA), 36 L.A.C. (4th) 375 where an employee with ten years’ service was terminated under the terms of the collectivebargaining agreement. There, the arbitrator applied the common law to a termination made within the confines of the collectivebargaining agreement. That is the opposite of the situation here. In this case, the dispute involves a right, if one exists, which does notinvolve the

interpretation, application or violation of the collective bargaining agreement. It does not exist under the collectivebargaining agreement. In Weber, the issue was whether the facts which gave rise to a grievance and had been settled could still belitigated at common law by the courts. McLachlin J. soundly rejected that right by rejecting the concurrent model. [35] Similarly, the Union relied on Reliable Printing Ltd. v. G.C.I.U., Local 255-C, Re (1994), (AB GAA), 39L.A.C. (4th) 212 in which severance pay was grieved when the employer’s operations were permanently closed.

The case isdistinguishable by reason that the collective bargaining agreement made a provision for a termination being in accordance with theprovincial Employment Standards Code. The panel fashioned a remedy having regard to an

interpretation of the Employment StandardsCode which provided that it did not affect a provision in an agreement where a right at common law or custom imposes a greaterobligation on the employer and found that the Code represented a floor rather than a ceiling with respect to an employee’s entitlement. [36] Once again, the entitlement arose out of the

interpretation of the collective bargaining agreement and the result and

interpretation ofthe statute incorporated by reference in the collective bargaining agreement. That is not the situation here--quite the reverse. [37] The common law right asserted is outside the collective bargaining agreement and the jurisdiction of the arbitrator who has noindependent power. His power is conferred by the collective bargaining agreement and s. 25 of The Trade Union Act.

He had nojurisdiction to embark on any inquiry other than to determine the arbitrability of the grievance which is expressly conferred on him by s.25 of The Trade Union Act and is exactly what he did. [38] Here, the collective bargaining agreements were terminated prior to the severance of the employees and the essential character ofthe dispute does not arise out of the

interpretation of the collective bargaining agreement. [39] The Union also relies on Isidore Garon Itée v. Tremblay, 2006 SCC 2, [2006] 1 S.C.R. 27 and, in particular, the following: 27 The precedence given to the collective scheme is sometimes taken to mean that freedom of contract is abrogated once a collectiveagreement is concluded: Paquet, at p. 212. However, it is clear that the employment relationship arises only when the employee acceptsthe employer's offer to hire him or her.

There is therefore no source in either Canadian case law or legislation for the theory thatindividual contracts are completely abolished in the context of the collective scheme. The individual contract does not cease to exist, butis simply suspended. When a union's certification is revoked, the individual contract becomes effective again and once again becomesthe only tool for managing the employment relationship. If it no longer existed, the employee would have to be rehired, which is not thecase. When the collective scheme ends, this does not terminate the employment relationship.

During the term of the collective agreement,however, the individual contract of employment cannot be relied on as a source of rights. [40] The parties agree that the individual contracts of employment are suspended during the currency of a collective bargaining schemeafter the termination of a collective bargaining agreement. Where they

part company is whether the collective scheme has come to anend. The termination of the collective bargaining agreement does not mean that the certification order, the obligations to bargain withthe Union as the exclusive bargaining agent, etc. come to an end. The collective scheme is still operative. [41] Indeed, the Supreme Court of Canada in CAIMAW v. Paccar of Canada Ltd., (SCC), [1989] 2 S.C.R. 983 explicitlyrecognized the ongoing duty to bargain. The court stated: … The operative factor, it seems to me, is the ongoing duty on the parties to bargain collectively and in good faith.

So long as thatobligation remains, then the tripartite relationship of union, employer and employee brought about by the Code displaces common lawconcepts. The termination of the collective agreement has no effect on the obligation of the parties to bargain in good faith imposed by s.6. The union retains its certification as the representative of the employees whether a collective agreement is in force or not.

The schemeof the Labour Code, requiring the union and the employer to bargain collectively as the expiry of a collective agreement approaches (ss.62 and 63) does not leave any room for the operation of common law principles. …[3] [42] In the present case, the collective bargaining scheme remains in place even though the collective bargaining agreements have beenterminated by the strike and lockout and therefore the individual contracts of employment are not revived.

Thus, for all these reasons,the arbitrator did not have jurisdiction to enforce the common law rights arising out of the termination of the employees. What right, ifany, exists may be decided elsewhere. [43] The appeal is therefore dismissed with costs to the respondent Graphic on the appropriate column.

DATED at the City of Regina, in the Province of Saskatchewan, this 28th day of February, A.D. 2012. “Smith J.A.” for Vancise J.A. I concur “Smith J.A.” Smith J.A. I concur “Ottenbreit J.A.” Ottenbreit J.A.