Docket: CACV 2184 The Sherwood Co-operative Association Limited. Appellant - v. -, 2013 SKCA 119

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 119 Date: 2013-11-08 Between: Docket: CACV 2184 The Sherwood Co-operative Association Limited. Appellant - and - Retail, Wholesale and Department Store Union, Local 539 and Wayne Bryski Respondents Coram: Cameron, Herauf and Whitmore JJ.A. Counsel: Larry B. Leblanc Q.C. for the appellant Larry W. Kowalchuk for the respondent

Appeal: From: 2011 SKQB 354 Heard: October 17, 2013 Disposition: Appeal allowed Written Reasons: November 8, 2013 By: The Honourable Mr Justice Cameron In Concurrence: The Honourable Mr. Justice Herauf The Honourable Mr. Justice Whitmore CAMERON J.A. I. Introduction [ 1 ] This is an appeal by The Sherwood Co-operative Association Limited from an order made by Madam Justice Dawson.

She dismissed an application by the Co-operative to quash a decision of a Board of Arbitration finding that the Co-operative had breached the terms of a collective bargaining agreement between it and the Retail, Wholesale and Department Store Union, Local 539. [ 2 ] The Board of Arbitration had been convened to determine a grievance by Wayne Bryski, a meat cutter employed by the Co- operative and paid by the hour. The grievance related to the method used by the Co-operative in calculating his hours of work for the work-week of Monday September 1 st to Friday September 6 th of 2008.

Monday was a statutory holiday—it was Labour Day—but Mr. Bryski worked that day, and did so for 8 hours. He also worked for 8 hours on each of Tuesday and Wednesday, and then worked for 6 hours on Thursday. He did not work on Friday, having worked the Monday, so he ended up having worked a total of 30 hours that week. [ 3 ] In the circumstances, the Co-operative credited him with 46 hours of work, rather than 30. It did so on the premise he was entitled under the collective agreement to be credited with an additional 16 hours of work for having worked the Monday.

This was in keeping with past practice over the life of several collective agreements, including the agreement then in force. Even so, Mr. Bryski, a 19 year employee, thought he was being short-changed, and the Union took up his cause. It contended he should have been credited with 54 hours of work on the premise he had worked 30 hours and was entitled to be credited with an additional 16 hours for having worked on the Monday, plus an additional 8 hours in order, it seems, to bring his work-week up to the level of the basic work-week of 38 hours.

This led to the grievance. [ 4 ] The Board of Arbitration allowed the grievance. Based on its

interpretation of the relevant provisions of the collective agreement, the Board decided that the Co-operative was bound to credit Mr. Bryski with 54 hours of work in accordance with the method of calculation advanced by the Union. The Board also decided, based on its understanding of the doctrine of estoppel, that the Union was not precluded, by reason of its having acquiesced over the years in the method of calculation employed by the Co-operative, from taking the position that this method did not accord with the provisions of the collective agreement.

The Union was not precluded from doing so, in the opinion of the Board, because the estoppel that had arisen out of past practice came to an end upon the Union having notified the Co-operative, through the filing of the grievance, that the Union no longer approved of this method of calculation. [ 5 ] On her review of the decision of the Board, Justice Dawson held that its

interpretation of the collective bargaining agreement was reasonable and that its application of the doctrine of estoppel was correct. [ 6 ] The Co-operative then brought this appeal, contending she had erred in both respects. II. The Provisions of the Collective Bargaining Agreement [ 7 ] The relevant provisions are found in

Article 12 of the collective agreement. Those of particular relevance are underlined.

ARTICLE 12—STATUTORY HOLIDAYS 1. The following days shall be considered holidays for which there shall be no deduction in pay : New Year’s Day Good Friday Victoria Day Canada Day Saskatchewan Day Labour Day Thanksgiving Day Remembrance Day Christmas Day Boxing Day and any other days proclaimed as holidays by Federal, Provincial or Civic authorities. 2. Should any employee be required to perform work on any of the above mentioned holidays, he/she shall receive in addition to his/her holiday pay, two (2) times the regular rate of all hours worked . 3.

Should any holiday fall on a Sunday, the following Monday shall be observed as a paid holiday if so proclaimed by Federal, Provincial or Civic Government. 4. When a holiday or holidays as set out in Clause 1 of this

Article falls in any week, the work week shall be reduced by eight (8) hours , or the number of hours proclaimed to be observed in respect of such a week, and no employee shall suffer a reduction in take-home pay ….Hours worked in excess of the reduced hours of work in any such week shall be paid for in accordance with the overtime provisions set out in

Article

Article 8, it might be noted, provides for a basic work-week of 38 hours. III. The Application of these Provisions Over Time. [ 8 ] The Board found as a fact that the provisions of

Article 12 appeared in identical form in previous collective agreements negotiated between the parties, dating back to 1995. It also found that over the years the Co-operative had consistently applied these provisions to the same effect as it did in calculating Mr. Bryski’s hours of work. In addition, the Board observed that “The Union acknowledges that prior to the within grievance, the past practice of the parties has been to follow the Employer’s

interpretation of applying

Article 12.2 and 12.4 with respect to employees who work on the Statutory holiday”. [1] [ 9 ] So the longstanding practice of the parties was to treat Articles 12.2 and 12.4 of the collective agreement as calling for the method of calculation employed by the Co-operative in calculating Mr. Bryski’s hours of work. According to this method, if employees worked on a statutory holiday their work-week was shortened from the basic 38 hours to 30 hours, as required by

Article 12.4, and the employees were credited with having worked: • the number of hours they actually worked during the work-week (30 hours in Mr. Bryski’s case), as contemplated by

Article 12.2, plus • twice the number of hours they worked on the holiday (8 x 2, or 16 hours in Bryski’s case), as further contemplated by

Article 12.2. [ 10 ] According to the Board’s further findings of fact, the Union conceded that it had not previously challenged the past practice (or method of calculation used over time), and offered no explanation for why it had not done so. IV. The Appeal . [ 11 ] As noted at the outset, the Co-operative appealed from the decision of Justice Dawson on the two-fold ground she erred, first, in finding that the Board’s

interpretation of the relevant provisions of the collective agreement was reasonable and, second, in deciding that the Board’s application of the doctrine of estoppel was correct. [ 12 ] The estoppel issue is essentially a threshold issue inasmuch as it is concerned with whether the Union was precluded in the circumstances of the case from pursuing the grievance on the footing the customary method of calculation used by the Co-operative violated the collective agreement.

That being so, we shall address this issue first The Issue of Estoppel [ 13 ] Justice Dawson opted to review the Board’s disposition of this issue on the standard of ‘correctness’, rather than ‘reasonableness’, in keeping, she thought, with Dunsmuir v. New Brunswick, 2008 SCC 9 , [2008] 1 S.C.R. 190. With the benefit of hindsight, it is clear she should not have done so, for the Supreme Court has since held

otherwise: Nor-Man Regional Health Authority Inc . v. Manitoba Association of Health Care Professionals , 2011 SCC 59 , [2011] 3 S.C.R. 616.

Thus, the Board’s disposition of this issue should have been, and must now be, reviewed on the standard of reasonableness rather than correctness. [ 14 ] As explained in Dunsmuir , the reasonableness standard of review is a deferential standard that imports a high degree of respect for the decision under review—respect borne of a number of considerations, including the relative expertise of the decision-maker, the intended finality of the decision, and the potential existence of more than one rational solution.

Hence it is necessary, when applying this standard of review, to apply it on the understanding the decision-maker enjoys ‘a margin of appreciation’ within the range of acceptable and rational outcomes.

It is also necessary to apply it on the further understanding that the inquiry into the reasonableness of the decision is mostly concerned with the existence of justification, transparency, and intelligibility in the decision-making process, but is also concerned with the outcome and whether it is defensible in light of the facts and the law. [ 15 ] Having thus reviewed the Board’s decision, we have come to the conclusion its decision in relation to the issue of estoppel does not withstand scrutiny on the reasonableness standard. [ 16 ] Our reasons for coming to this conclusion are founded in significant part on the recent decision of the Supreme Court of Canada in the Manitoba case of Nor-Man Regional Health Authority Inc . v.

Manitoba Association of Health Care Professionals , supra . In fairness to the Board, Nor-Man was not available to it, for the decision in that case came down after the Board had rendered its decision. Had it been otherwise, there is good reason to suppose the Board would have approached the issue of estoppel differently and may have come to a different conclusion. [ 17 ] In any event, Nor-Man is virtually on all fours with the present case and serves to shed a good light on the adaptation and use of the principle of estoppel in the context of arbitrating grievances arising out of a collective agreement.

There the dispute centred on whether a 20 year employee of the Nor-Man Regional Health Authority, whose work history included casual service, was entitled to a ‘bonus’ week of vacation pursuant to the collective agreement between the Regional Health Authority and the union representing its employees. Based on the Regional Health Authority’s past practice of excluding casual service in calculating vacation benefits, it decided that the employee was not entitled to a bonus week of vacation. The arbitrator held that this practice violated the terms of the collective agreement.

Nevertheless, he dismissed the grievance in light of the union’s longstanding acquiescence in this practice. In the opinion of the arbitrator, the union’s acquiescence raised an estoppel for the duration of the collective agreement and thus barred the union, over the life of the agreement, from contending that the practice was in breach of the collective agreement. [ 18 ] The arbitrator’s decision was upheld on judicial review in the Court of Queen’s Bench, set aside in the Court of Appeal, and restored in the Supreme Court. In restoring it, the Supreme Court, speaking through Mr.

Justice Fish, assessed the role of estoppel in grievance arbitration. He noted that it is within the remedial authority of arbitrators to adapt and apply the principles of estoppel in this context, bearing in mind a number of contextual considerations peculiar to this field of dispute resolution. He said this: [5] Labour arbitrators are not legally bound to apply equitable and common law principles—including estoppel—in the same manner as courts of law.

Theirs is a different mission, informed by the particular context of labour relations. [6] To assist them in the pursuit of that mission, arbitrators are given a broad mandate in adapting the legal principles they find relevant to the grievances of which they are seized.

They must, of course, exercise that mandate reasonably, in a manner that is consistent with the objectives and purposes of the statutory scheme, the principles of labour relations, the nature of the collective bargaining process, and the factual matrix of the grievance. [emphasis added] [ 19 ] In elaborating upon this, Justice Fish observed that the role of arbitrators is distinctive in the sense their mandate extends to fostering peace in industrial relations.

He then went on to address the peculiar nature of collective agreements and how this features in grievance arbitration, including the need to have regard for the ongoing relationship between employers and employees: [48] Collective agreements govern the ongoing relationship between employers and their employees, as represented by their unions. When disputes arise—and they inevitably will—the collective agreement is expected to survive, at least until the next round of negotiations.

The peaceful continuation of the relationship depends on a system of grievance arbitration that is sensitive to the immediate and long-term interests of both the employees and the employer. [ 20 ] With that, he drew attention, in para. 50 of his reasons for judgment, to something of ‘particular relevance here’, namely the following observations of Paul C. Weiler, the then Chairman of the British Columbia Labour Relations Board, explaining the place of estoppel in the context of grievance arbitration: ... a collective bargaining relationship is quite a different animal.

The union and the employer deal with each other for years and years through successive agreements and renewals. They must deal with a wide variety of problems arising on a day-to-day basis across the entire spectrum of employment conditions in the workplace, and often under quite general and ambiguous contract language. By and large, it is the employer which takes the initiative in making operational decisions within the framework of the collective agreement. If the union leadership does not like certain management actions, then it will object to them and will carry a grievance forward about the

matter. The other side of that coin is that if management does take action, and the union officials are fully aware of it, and no objection isforthcoming, then the only reasonable inference the employer can draw is that its position is acceptable. Suppose the employer commitsitself on that assumption. But the union later on takes a second look and feels that it might have a good argument under the collectiveagreement, and the union now asks the arbitrator to enforce its strict legal rights for events that have already occurred.

It is apparent onits face that it would be inequitable and unfair to permit such a sudden reversal to the detriment of the other side.

In the words of theBoard in [Corporation of the District of Burnaby and Canadian Union of Public Employees, Local 23, [1978] 2 C.L.R.B.R. 99, at p.103], "It is hard to imagine a better recipe for eroding the atmosphere of trust and co-operation which is required for good labourmanagement relations, ultimately breeding industrial unrest in the relationship -- all contrary to the objectives of the Labour Code"....[emphasis added]. (Re Corporation of the City of Penticton and Canadian Union of Public Employees, Local 608 (1978), (BC LA), 18L.A.C. (2d) 307 (B.C.L.R.B.), at p. 320) [21] With this background of principle in mind, we turn to the Board’s disposition of the estoppel issue. [22] Having made its findings of fact—which are not said to be unreasonable—the Board turned its attention to the nature of estoppel in the arbitral context by reference to Beatrice Foods Inc. v.

R.W.D.S.U., Local 440 (1994), (ON LA), 44 L.A.C. (4th)59.

The arbitrator there said this of the matter: In my view, the principle of estoppel is available to avoid the inequitable application or administration of a collective agreement, andmay be applied where: 1. there is a representation by words or conduct that a particular legal regime will be maintained, and 2. where the other party relies upon that representation and, expecting the status quo to continue, foregoes the opportunity to negotiateappropriate contract language. [23] The Board appears to have embraced this conception of estoppel, and no one suggested on appeal that it could not reasonably havedone so.

Hence, it is not the Board’s identification of the principle of estoppel, or its findings of fact, that is in issue here, but rather itsapplication of this principle to the facts as found. [24] In applying this principle to the facts of the case, the Board again had regard for the decision in Beatrice Foods, as well for twoother arbitral decisions referred to therein, namely CN/CP Telecommunications v. Canadian Telecommunications Union (1981), (ON LA), 4 L.A. C. (3d) 205 and Kemptville District Hospital v. Ontario Nurses Association (1988), (ON LA), 1 L.A.C. (4th) 360.

Each of these cases attracted the application of estoppel in situations not unlike the situation in the presentcase. That being so, and given the Board’s extensive references to Beatrice Foods, it might be well, before turning to the reasons for itsdecision in detail, to provide a brief outline of the situation in that case. [25] That case arose out of a grievance by the union regarding the employer’s calculation of overtime premiums in relation to work-weeks featuring a statutory holiday.

The calculation, made by the company during the term of its collective agreement with the union,was consistent with the provisions of the agreement but contrary to longstanding past practice under previous collective agreements tothe same effect.

In consequence the union took the position that the employer was estopped from deviating from past practice on thegrounds, first, that the employer had given no indication during the negotiations leading up to the agreement that it might do so; second,that the union had relied upon this state of affairs in entering into the agreement; and, third, that the union had thus acted to its detrimentin the sense of having foregone the opportunity to negotiate a change to the agreement to secure the practice. [26] The arbitrator agreed with the position taken by the union, applied the principle of estoppel, and allowed the grievance.

He heldthat both elements of estoppel were present, much as they were in each of two previous arbitral decisions in which the principle ofestoppel was similarly applied in similar circumstances, namely in CN/CP Telecommunications and Kemptville District Hospital. [27] While the Board appears to have been fully alive to these cases, and to their similarity to the case at hand, it nevertheless declinedto apply the principle of estoppel.

It declined to do so on the bases expressed in the following passage taken from the reasons for itsdecision: [27] Following the reasoning in CN/CP, the Union in the case at hand had an affirmative duty to alert or notify the Employer of itsintention to no longer follow the Employer’s

interpretation of

Article 12.2 and 12.4 and calculation of total paid hours of work (when anemployee works the Statutory holiday). The Board finds in this case that the Union provided such notice through the filing of thegrievance under consideration (see Brown and Beatty, supra, paragraph 2:2213). In comparing the facts of this case to those in BeatriceFoods, Kemptville and CN/CP it is apparent to the Board that the necessary element of detrimental reliance on the part of the Employeris missing in order for an estoppel to come into play against the Union now asserting its contractual rights. The Union has not “held out”

to the Employer that it would continue to support the

interpretation of the collective agreement and calculation of total paid hours of work as it had done in the past. Rather, it has grieved the issue thereby giving notice to the Employer of its intentions to assert its contractual rights. [ 28 ] With the greatest of respect, these lines of reasoning are seriously flawed and do not stand up to review on the reasonableness standard. Nor, in our respectful judgment, does the outcome.

The flaws are several. [ 29 ] First, the Board’s reasoning does not accord with the reasoning in CN/CP Telecommunications (as the Board apparently thought it did), or for that matter the reasoning in Beatrice Foods and Kemptville District Hospital. This is not to suggest the Board was bound by these decisions in the precedential sense, but only to say that the Board seems to have misread them.

None of them may be read to suggest that an estoppel arising out of long standing past practice in relation to something as significant to a collective agreement as compensation may be brought to an end, midway through the life of an existing collective agreement, by the simple expedient of filing a grievance challenging the correctness of the practice. [ 30 ] Second, the Board reasoned that the grievance amounted to notice to the Co-operative that the Union no longer approved the past method of calculation, and that this notice served to bring an end to the estoppel rooted in this past practice.

With respect, the Board did not seem to appreciate the ramifications of this line of reasoning, the effect of which was to bring the estoppel to an end retrospectively, rather than prospectively, in the sense the events giving rise to the grievance pre-dated the grievance and, therefore, the notice.

This line of reasoning, for which the Board cited no authority, runs counter to the basic proposition of fairness and equity formulated years earlier by Paul Weiler in Re Corporation of the City of Penticton and Canadian Union of Public Employees, Local 608 , supra , which proposition was cited with approval in CN/CP Telecommunications and endorsed by the Supreme Court in Nor-Man. [ 31 ] Third, the Board lost sight of the related but different and more comprehensive notion, acted upon in each of Beatrice Foods , Kemptville District Hospital, and CN/CP Telecommunications, that in the absence of the extraordinary an estoppel arising out of longstanding past practice relating to something as significant to a collective agreement as compensation is customarily treated as having arisen at the point the parties entered into the agreement and as continuing to operate for the duration of the agreement.

This notion was also acted upon in Nor-Man, as it was in Viterra Inc. v.

Grain Services Union (ILWU-Canada) , 2013 SKCA 93 . [ 32 ] Fourth—and here we have the benefit of hindsight—neither the reasoning of the Board, nor the outcome of the grievance, reflect a proper appreciation of the need, identified in Nor-Man, for the Board to have exercised its mandate reasonably, “in a manner that is consistent with…the principles of labour relations, the nature of the collective bargaining process, and the factual matrix of the grievance”. [ 33 ] For some reason the Board failed to grasp the point—or let it slip away—that the collective agreement in force at the time the grievance was initiated had been entered into upon a common understanding of the import of Articles 12.2 and 12.4, or at least upon an understanding by the Co-operative of their import based on longstanding practicing in which the Union had acquiesced.

The notion that it was open to the Union in the circumstances of this case to resile from that practice, midway through the term of the agreement, by filing a grievance contesting the correctness of the practice, is not a tenable notion. It is both inherently inequitable and potentially destructive—destructive, that is, of the ongoing relationship of the parties over the term of the agreement.

As noted in Nor-Man (citing with approval the observations of Paul Weiler in Re Corporation of the City of Penticton and Canadian Union of Public Employees, Local 608 ) , this amounts to a recipe for eroding the atmosphere of trust and co-operation which is required for good labour-management relations, ultimately breeding industrial unrest in the relationship. [ 34 ] In sum, we are of the opinion the Board’s reasoning is flawed to the point of being unreasonable, and that the outcome of its disposition of the grievance is likewise unreasonable.

We regard the outcome as unreasonable, given what we have had to say of the Board’s application of the principle of estoppel to the facts as found by the Board. Accordingly, we have decided that the decision of the Board must be set aside. [ 35 ] That being so, it is unnecessary for to us to consider whether the Board’s

interpretation of Articles 12.2 and 12.4 is reasonable. We do think it worth noting, however, that we found it difficult to understand the Board’s reasons, and difficult to understand why it framed the issue as it did. It framed the issue in these terms: “Does a reasonable

interpretation of

Article 12 of the Collective Agreement support the Union’s Grievance?” [ 36 ] Posing the question in this way risks misunderstanding and tends to tilt the response in the direction of the position taken by the Union. The task of the Board was not to determine if the

interpretation advanced by the Union was reasonable, but rather to determine the meaning of the provisions in issue in keeping with the established principles of

interpretation. This is not to say the Board’s

interpretation is necessarily unreasonable. We want to be clear about this. We have not found it necessary to review the reasonableness of its decision in this respect, so we express no opinion on the matter. The only point we wish to make is this. Should this issue again arise, it would be well for the matter to be considered afresh, with an open mind and, perhaps, a greater degree of clarity. [ 37 ] In conclusion, the appeal is allowed and the decisions of each of Justice Dawson and the Board are set aside. There will be judgment accordingly, with costs to the appellant to be taxed in the usual way.

Dated at Regina, Saskatchewan, this 8th day of November, 2013. “Cameron J.A.” __________ Cameron J.A. I concur: “Herauf J.A.” _____________ Herauf J.A. “Whitmore J.A.” ______ Whitmore J.A.