United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd., [1993] 2 S.C.R. 316
United Brotherhood of Carpenters
and Joiners of America, Local 579 Appellant
v.
Bradco Construction Limited Respondent
Indexed as: United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd.
File No.: 22023.
1992: October 16; 1993: May 19.
Present: L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.
on appeal from the court of appeal for newfoundland
Labour relations ‑‑ Collective agreement ‑‑ Interpretation ‑‑ Extrinsic evidence ‑‑ Collective agreement applicable "when the Employer shall perform any work of the type covered" by the agreement ‑‑ Affiliated company hiring non‑unionized carpenters ‑‑ Arbitrator finding that such "double‑breasting" violated collective agreement ‑‑ Whether arbitrator's interpretation of collective agreement patently unreasonable ‑‑ Whether arbitrator's use of extrinsic evidence patently unreasonable.
Judicial review ‑‑ Standard of review ‑‑ Labour relations arbitrator.
The appellant union represents employees of the respondent Bradco, which is affiliated with and carries on business on the same premises as N.D. Dobbin Ltd., a non‑unionized company. The two companies use common facilities and are, for all practical purposes, owned by the same persons and are managed and directed by the same persons. While a collective agreement between Bradco and the union was in effect, Dobbin won the contract to construct a university building. To assist in carrying out this contract, it hired carpenters who were not affiliated with the union. The union claimed that this amounted to a breach of the collective agreement it had with Bradco because Dobbin was an affiliated company of Bradco. Article 3.01 of the agreement provides that "when the Employer shall perform any work of the type covered by this Agreement . . . this Agreement shall be applicable to all such work". The arbitrator found in the union's favour. He noted that the existence of the two companies permitted Bradco to engage in the practice of "double‑breasting", whereby the non‑unionized arm, Dobbin, could bid on contracts and carry out work using the facilities, management personnel and equipment of the unionized arm, Bradco, but could hire non‑union personnel. The practice of double-breasting had led to a prolonged strike in 1986, which was settled in accordance with a report (the "Harris report") which formed the basis of the collective agreement now in force. Both sides had made significant concessions: the union agreed to wage concessions, while the companies agreed to stop engaging in "double‑breasting". The arbitrator found that Article 3 was incorporated into the agreement in an effort to guarantee the companies' compliance with the "double‑breasting" concession. Since the language of the article was not clear and unambiguous, he found that he was entitled to look at extrinsic evidence, specifically the Harris report. In his view this case presented a clear example of double‑breasting of the sort which the report was intended to terminate. The arbitrator's decision was upheld by the Supreme Court of Newfoundland, Trial Division, but reversed by the Court of Appeal, which found that both the arbitrator's determination that the meaning of the phrase "perform any work" was unclear and his resolution of the ambiguity were patently unreasonable.
Held: The appeal should be allowed.
Per L'Heureux‑Dubé, Sopinka, Gonthier and McLachlin JJ.: Arbitration in this matter was a statutory requirement under s. 88 of the Newfoundland Labour Relations Act, 1977, which provides that disputes arising out of the interpretation or application of a collective agreement "shall be submitted for final settlement to arbitration". In determining the appropriate standard of judicial review the court must interpret the legislative provision in question in light of the nature of the particular tribunal and the type of questions which are entrusted to it, having due regard for the policy enunciated by this Court that, in the case of specialized tribunals, decisions upon matters entrusted to them by reason of their expertise should be accorded deference.
Statutory provisions governing judicial review range from "true" privative clauses which clearly and specifically purport to oust all judicial review of decisions rendered by the tribunal to clauses which provide for a full right of appeal on any question of law or fact and which allow the reviewing court to substitute its opinion for that of the tribunal. Where the relevant provision is a true privative clause, judicial review is limited to errors of jurisdiction resulting from an error in interpreting a legislative provision limiting the tribunal's powers or a patently unreasonable error on a question of law otherwise within the tribunal's jurisdiction. Although their preclusive effect may be less obvious than that of the true privative clause, other forms of clauses purporting to restrict review may also have privative effect. Wording such as "final and conclusive" may be found to restrict review to matters of jurisdiction if the court concludes that the legislator clearly intended that the decision should be immune from review in the absence of an error as to jurisdiction.
Section 88(2) falls somewhere between a full privative clause and a clause providing for full review by way of appeal. The word "final" will not always imply an intended restriction on judicial review: whether or not it should be interpreted in any particular case as conveying an intention to preclude or restrain judicial review requires an analysis of the provision in light of the purpose, nature and expertise of the tribunal in question. The goal of mandatory arbitration is to arrive at an efficient and cost‑effective manner of resolving disputes which will enable the parties to continue in their ongoing working relationship to the greatest extent possible. As an unlimited scope of judicial review of an arbitrator's decision would thwart the achievement of this goal, the words "final settlement" must be taken to indicate the legislature's intention that the courts exercise some restraint in this area.
Along with the rationale for its existence, the expertise of the tribunal is of the utmost importance in determining the intention of the legislator with respect to the degree of deference to be shown to a tribunal's decision in the absence of a full privative clause. Judicial deference to the decision of the arbitrator is warranted here, even though s. 88(2) was not intended to restrict judicial review to jurisdictional matters. While judicial deference to a finding of law made by an arbitrator will not usually be warranted, the questions the arbitrator had to resolve here involved the interpretation of the collective agreement and its application to a particular factual situation, matters which constitute the core area of an arbitrator's expertise. Combined with the purpose and wording of s. 88, the arbitrator's relative expertise mandates that the court defer to the decision of the arbitrator in this case unless his decision is found to be patently unreasonable.
The arbitrator's admission of extrinsic evidence, in the form of the Harris report, was proper. Under s. 84(1) of The Labour Relations Act, 1977 the arbitrator may receive and accept such evidence as he deems advisable whether or not it would be admissible in a court of law. An arbitrator's decision in this regard is not reviewable unless it is shown to be patently unreasonable. The arbitrator's finding that Article 3.01 of the collective agreement was ambiguous cannot be said to be patently unreasonable and he was justified in resorting to the extrinsic evidence to discern the intentions of the parties in order to resolve that ambiguity. The arbitrator, upon referring to the extrinsic evidence, concluded that the intention of the parties was that Article 3.01 should deal with the situation of double‑breasting. Given that the words of the provision were capable of rationally supporting an interpretation reflective of this intention, it was not patently unreasonable for the arbitrator to conclude that it accomplished its purpose and that the relationships which it described included the relationship between Bradco and Dobbin.
Per Cory J.: Sopinka J.'s reasons were substantially agreed with. A reservation was expressed regarding the approach that should be taken by courts reviewing decisions of arbitrators acting in the field of labour relations, but the reasoning of the majority in Dayco was followed.
Cases Cited
By Sopinka J.
Referred to: Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; Bradburn v. Wentworth Arms Hotel Ltd., [1979] 1 S.C.R. 846; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Zurich Insurance Co. v. Ontario (Human Rights Commission), [1992] 2 S.C.R. 321; Canada (Attorney General) v. Public Service Alliance of Canada, [1991] 1 S.C.R. 614; Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941; Crevier v. Attorney General of Quebec, [1981] 2 S.C.R. 220; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Bell Canada v. Canada (Canadian Radio‑television and Telecommunications Commission, [1989] 1 S.C.R. 1722; Dayco (Canada) Ltd. v. CAW‑Canada, [1993] 2 S.C.R. 000; Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554; Douglas Aircraft Co. of Canada v. McConnell, [1980] 1 S.C.R. 245; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Volvo Canada Ltd. v. U.A.W., Local 720, [1980] 1 S.C.R. 178; Alberta Union of Provincial Employees, Branch 63 v. Board of Governors of Olds College, [1982] 1 S.C.R. 923; Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644; Leggatt v. Brown (1899), 30 O.R. 225; Re Milk & Bread Drivers, Local 647, and Silverwood Dairies Ltd. (1969), 20 L.A.C. 406; Re Int'l Ass'n of Machinists, Local 1740, and John Bertram & Sons Co. (1967), 18 L.A.C. 362; Re Noranda Metal Industries Ltd., Fergus Division and I.B.E.W., Local 2345 (1983), 44 O.R. (2d) 529.
By Cory J.
Followed: Dayco (Canada) Ltd. v. CAW‑Canada, [1993] 2 S.C.R. 000; referred to: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Heustis v. New Brunswick Electric Power Commission, [1979] 2 S.C.R. 768.
Statutes and Regulations Cited
Labour Relations Act, 1977, S.N. 1977, c. 64, ss. 18, 84(1), 88(1), (2).
APPEAL from a judgment of the Newfoundland Court of Appeal (1990), 81 Nfld. & P.E.I.R. 181, 255 A.P.R. 181, reversing a decision of the Supreme Court, Trial Division (1988), 75 Nfld. & P.E.I.R. 308, 234 A.P.R. 308, upholding an arbitrator's decision in the appellant union's favour. Appeal allowed.
V. Randell J. Earle, for the appellant.
Thomas R. Kendell, for the respondent.
//Sopinka J.//
The judgment of L'Heureux-Dubé, Sopinka Gonthier and McLachlin JJ. was delivered by
Sopinka J. -- The main issue in this appeal is whether the interpretation given by a labour relations arbitrator to certain provisions of a collective agreement between the appellant and respondent, and his use of extrinsic evidence to arrive at that interpretation, were patently unreasonable.
The Facts
The appellant Union, the United Brotherhood of Carpenters and Joiners of America, Local 579, represents employees of the respondent Bradco Construction Limited ("Bradco"), a company which is affiliated with, and carries on business on the same premises as, N.D. Dobbin Limited ("Dobbin"), a non-unionized company. The parties' Agreed Statement of Facts states that "[Bradco and Dobbin] are operating from the same premises using common facilities such as office space, mail box, bonding support and some staff. From time to time they employ persons who have been in the employ of the other". Further, the two companies are "for all practical purposes, owned by the same persons and are managed and directed by the same persons".
The respondent Bradco is a member of the Newfoundland Construction Labour Relations Association (the "Association"), which is the bargaining agent for unionized employers within the commercial and industrial sector of the construction industry in the province of Newfoundland, and as such is bound by a collective agreement with the Union entered into by the Association effective October 1, 1986 to April 30, 1988. Article 3.01 of this agreement, under the heading "Preservation of Work", provides:
3.01Effective the date of signing of this Agreement and expiring April 29, 1988, the parties agree that if and when the Employer shall perform any work of the type covered by this Agreement at the site of a construction project, under its own name or under the name of another, as a corporation, company, partnership or any other business entity, including a joint venture, wherein the Employer (including its officers, directors, owners, partners or stockholders) exercises either directly or indirectly (such as through family members) any significant degree of ownership, management or control, the terms and conditions of this Agreement shall be applicable to all such work.
Sometime after the coming into effect of this collective agreement, Dobbin submitted an independent bid for, and won, the contract to build the Fine Arts Building at the Corner Brook campus of the University of Newfoundland. To assist it in fulfilling this contract, Dobbin hired carpenters who were not affiliated with the Union. The Union claimed that this amounted to a breach of the collective agreement it had with Bradco because Dobbin was an affiliated company of Bradco.
The arbitrator found in favour of the Union. This decision was upheld by the Supreme Court of Newfoundland, Trial Division (1988), 75 Nfld. & P.E.I.R. 308, 234 A.P.R. 308, but reversed by the Court of Appeal (1990), 81 Nfld. & P.E.I.R. 181, 255 A.P.R. 181.
Relevant Statutory Provisions
The Labour Relations Act, 1977, S.N. 1977, c. 64
84. (1) An arbitration board appointed pursuant to a collective agreement or in accordance with this Act
(a)may determine its own procedure, but shall give full opportunity to the parties to the proceeding to present evidence and make submissions to it;
(b)has in relation to any proceeding before it, power to
(i)summon and enforce the attendance of witnesses and compel them to give oral or written evidence on oath and to produce such documents and things as the arbitration board deems requisite to the full investigation and consideration of any matter that is within its jurisdiction and before it in the proceeding;
(ii)administer oaths and affirmations;
(iii)receive and accept such evidence and information on oath, affidavit or otherwise as the arbitration board deems desirable, whether admissible in a court of law or not; and
...
(c)has power to determine any questions as to whether a matter referred to the arbitration board is arbitrable.
...
88. (1) Subject to subsection (12), this section applies only to the construction industry.
(2) Where an employer or employers' organization has entered into a collective agreement, then, notwithstanding anything to the contrary in this Act or in the collective agreement, any dispute or difference between the parties to the collective agreement, including persons bound by the collective agreement, relating to or involving
(a)the interpretation, meaning, application or administration of the collective agreement or any provision of the collective agreement;
(b)a violation or an allegation of a violation of the collective agreement;
(c)working conditions; or
(d)a question whether a matter is arbitrable;
shall be submitted for final settlement to arbitration in accordance with this section in substitution for any arbitration or arbitration procedure provided for in the collective agreement.
Relevant Provisions of the Collective Agreement
Article 1 -- Purpose
1.01 The purpose of this Agreement is to establish the contractual working conditions between the parties hereto;to establish wages, working conditions and certain benefits for the employees herein represented and to provide for the settlement of dispute without a stoppage of work between the parties hereto.
Article 2 -- Recognition
2.04The terms and conditions of this Agreement are binding upon the employer, its officers and members; and upon any party, person, association or company doing subcontract work that falls within the jurisdictional claims of the carpenters.
An arbitrator shall have the right to award liquidated damages in the event of a proven violation of the above.
Article 3 -- Preservation of Work
3.01Effective the date of signing of this Agreement and expiring April 29, 1988, the parties agree that if and when the Employer shall perform any work of the type covered by this Agreement at the site of a construction project, under its own name or under the name of another, as a corporation, company, partnership or any other business entity, including a joint venture, wherein the Employer (including its officers, directors, owners, partners or stockholders) exercises either directly or indirectly (such as through family members) any significant degree of ownership, management or control, the terms and conditions of this Agreement shall be applicable to all such work.
3.02The Employer shall operate a strictly union shop and shall not employ non-union tradesmen either in their own right or through any affiliated, subsidiary or related company.
3.03 All alleged violations of this Article shall be considered a dispute under this Agreement and shall be processed in accordance with the grievance and arbitration provisions of this Agreement. As a remedy for violations of this Article, any arbitrator or arbitration board appointed under this Agreement shall be empowered at the Unions' request to require the Employer to (1) pay to affected employees covered by this Agreement, the equivalent of wages lost by such employees as a result of the violations, and (2) pay into the affected joint trust funds established under this Agreement any delinquent contributions to such funds which have resulted from the violations, including such interest as may be prescribed by the arbitrator or arbitration board. Provision of this remedy herein shall not make it the exclusive remedy to the Union for violations of this Article; nor does it make the same as other remedies unavailable to the Union for violations of other Articles of this Agreement.
3.04All work bid prior to September 12, 1986 shall not be affected by this Article and shall be completed on terms and conditions in existence prior to the date of signing, except that work bid by non-union businesses within the scope of Article 1.01 prior to September 12, 1986 shall be performed in accordance with the terms and conditions of this Agreement subsequent to the 12th day of May, 1987.
3.05This Article shall not be affected or revised by any bridging provision of this Agreement.
Lower Court Judgments
Arbitrator (Dr. Arthur M. Sullivan, Dec. 3, 1987)
Tracing the history of the relationship between the Union and Bradco, the arbitrator found that it was a "long and troubled" one. The existence of the two companies permitted Bradco to engage in the practice of "double-breasting", whereby the non-unionized arm (Dobbin) could bid on contracts and carry out work using the facilities, management personnel and equipment of the unionized arm (Bradco) but could hire non-union personnel. This situation eventually led to a prolonged strike in 1986.
The arbitrator found that the 1986 strike was settled in accordance with a report prepared by Dr. Leslie Harris, which formed the basis of the collective agreement now in force. Both sides made significant concessions. The Union agreed to wage concessions, while the companies agreed to stop engaging in "double-breasting". The arbitrator found that Article 3 was incorporated into the agreement in an effort to guarantee the companies' compliance with the "double-breasting" concession.
While the respondent Bradco conceded that Bradco and Dobbin were related in the sense that they share principals, shareholders, equipment and facilities, Bradco argued that it did not perform any of the work on the Fine Arts Building contract and thus had not violated Article 3.01. In Bradco's view, "Employer" in Article 3.01 should read "Bradco" and "the Union" should read "the United Brotherhood of Carpenters and Joiners of America, Local 579". The contract was bid upon and awarded to Dobbin, and work was carried out solely by Dobbin. The only circumstance under which Article 3.01 would "kick in" would be if Bradco had bid on the contract and had the work performed by Dobbin or another related company. Bradco further argued that the wording of Article 3.01 was clear and that, in the absence of any ambiguity, it was not open to the arbitrator to consider extrinsic evidence.
The arbitrator found that the words "perform any work", as used in Article 3.01, were not clear and unambiguous. Further, he rejected Bradco's suggested interpretation of when Article 3.01 would "kick in" as leading to an absurdity or at least to an inconsistency with the rest of the collective agreement. If the clause could only be invoked when Bradco bid on a contract and assigned it to Dobbin, effectively it never would be, for there was no need for Bradco to bid on a contract when Dobbin had the same capabilities as Bradco, including access to the same facilities and management.
Given his finding that the language of Article 3.01 was not clear and unambiguous, the arbitrator found he was entitled to look at extrinsic evidence in an effort to arrive at the most probable interpretation. He found that the most relevant extrinsic evidence was the report of Dr. Harris, upon which the agreement was based. According to the report the signatory companies agreed "to place all double-breasting activities in abeyance for the terms of the Collective Agreements and, in respect of all work commenced or bid after the conclusion of the Agreement, to run a strict union shop operation ...". In his opinion, this case presented "a clear example of double-breasting of the sort which the Harris Report was intended to terminate". He accordingly found in favour of the Union.
Supreme Court of Newfoundland, Trial Division (1988), 75 Nfld. & P.E.I.R. 308
Hickman C.J. also rejected Bradco's argument that Article 3.01 of the agreement should not come into play because Bradco did not itself "perform any work" of the sort covered by the agreement. In his view, this interpretation "would indeed lead to an absurdity and would be totally inconsistent with the clear intent of the Collective Agreement and, in particular, Clause 3 thereof" (p. 312).
In Hickman C.J.'s view, the ratio decidendi of the arbitrator in deciding to look at extrinsic evidence as an aid to interpretation was correct and not an error in law. The proper approach to be taken by an arbitrator in interpreting a collective agreement is to look at the language in dispute. If he reasonably concludes that the words used are not clear, then he may consider extrinsic evidence to ascertain the intention of the contracting parties. Further, Hickman C.J. found that the extrinsic evidence supported the arbitrator's interpretation of the agreement, stating as follows, at p. 313:
It is clear from the Collective Agreement, as a whole, that section 3.01 embraced all nonunion companies which were owned or controlled by unionized companies who, by virtue of their membership in the Association, were parties to the Collective Agreement. This is the only reasonable interpretation one can reach bearing in mind the Harris report which was accepted by the Association and the Union and formed the basis for the Collective Agreement which was designed to eliminate double-breasting by unionized companies whose shareholders and directors also controlled a nonunionized Company. Section 3.02 adds validity to that conclusion. Such provision in the Collective Agreement is enforceable as it embraces only associated nonunion companies.
Hickman C.J. also rejected the implied submission of Bradco that Dobbin was in the same position as a non-union company which is totally independent of members of the Association, stating that Dobbin was a non-unionized company under the control and management of a unionized company.
The trial judge then quoted Lamer J. (as he then was) in Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476, with respect to judicial deference to arbitrators and administrative tribunals, and concluded that the decision of the arbitrator was reasonable and should not be disturbed.
Supreme Court of Newfoundland, Court of Appeal (1990), 81 Nfld. & P.E.I.R. 181
The judgment of the court was written by Goodridge C.J.N. (Gushue and Mahoney JJ.A. concurring). Citing this Court's decisions in Bradburn v. Wentworth Arms Hotel Ltd., [1979] 1 S.C.R. 846, and CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983, the Court of Appeal noted that the findings of an arbitration board, if covered by a privative clause and acting within its jurisdiction, will only be disturbed if they are "patently unreasonable". Although he stated that there may be some question whether the decision of an arbitrator appointed pursuant to s. 88 of the Newfoundland Labour Relations Act, 1977 was protected by a privative clause, Goodridge C.J.N found this issue to be of no consequence in this matter as the arbitrator's decision failed even the most stringent test.
In this case, the Court of Appeal found, at p. 186, that the test of unreasonableness was to be applied twice:
First of all it is applied to determine whether or not the finding that the agreement is ambiguous is patently unreasonable. Secondly, if such finding is not found to be patently unreasonable, the test is applied to determine whether or not the resolution of the ambiguity is patently unreasonable.
The Court of Appeal found that the arbitrator's determination that the meaning of the phrase "perform any work" was unclear was patently unreasonable as the term "work" was defined elaborately in the agreement, and the term "perform" had a clear meaning to which no latent ambiguity attached. The Court of Appeal also felt that the strict interpretation of Article 3.01 proposed by Bradco was not absurd because it went at least part-way towards avoiding double-breasting: "[i]t prevents Bradco from escaping its obligations under the agreement by subcontracting the work to the Dobbin company or by having the work done on its behalf by the Dobbin company" (pp. 186-87).
Even if the finding of an ambiguity had not been itself patently unreasonable, in the opinion of the Court of Appeal, the arbitrator's resolution of the ambiguity "ignores or misapplies the basic rules of interpretation" (p. 187) and thus was patently unreasonable. Stating that the function of the court is to ascertain what the parties meant by the words they have used, to declare the meaning of what is written and not what was intended to have been written, the Court of Appeal held that the language of Article 3.01 could not support the interpretation of the arbitrator, stating as follows, at p. 188:
If the name of the Dobbin company is substituted in the article it would read as follows:
". . . if and when (Bradco) shall perform any work of the type covered by this agreement at the site of a construction contract under its own name or under the name of (N.D. Dobbin Limited), the terms and conditions of this agreement shall be applicable to all such work."
It is clear from that article that the actor must always be Bradco whether acting in its own name or in the name of another. In this case it is clear from the award that the actor is not Bradco but the Dobbin company for it was that company which successfully tendered on the Fine Arts Building and performed the work done in respect thereof.
The Court of Appeal thus concluded that the arbitrator's resolution of the dispute was unreasonable and went on to consider other points which it stated were not mentioned by Dr. Sullivan. With respect to the appellant's argument that the presence of Article 2.04 dealing with subcontractors made Article 3.01 redundant if it was interpreted as the respondent suggests, the court agreed that there was a presumption against redundancy but that Article 3.01 sought to bind Bradco and companies through which it performs work while Article 2.04 sought to bind subcontractors. The Court of Appeal also rejected the submissions of the appellant that Article 3.02 was in conflict with the respondent's position and that Article 3.04 making the collective agreement applicable to non-union businesses after May 12, 1987 supported the position that Article 3.01 was ambiguous. This latter submission was rejected on the basis that Dobbin was not a business within the scope of Article 1.01, as it was not a signatory to the agreement.
Issues
The issues raised by this appeal are the appropriate standard of review to be applied to the arbitrator's decision given the absence of a full privative clause, the degree to which labour relations arbitrators or boards may admit and rely on extrinsic evidence to interpret a collective agreement, and lastly, whether the arbitrator erred in a reviewable manner either in finding ambiguity in Article 3 of the collective agreement or in concluding that the agreement had been breached by Bradco in the circumstances. I will address each of these issues in turn.
1. The Appropriate Standard of Review
The Court of Appeal characterized the aspects of the arbitrator's decision under review in this case as errors of law within jurisdiction. Before commencing its analysis, the Court of Appeal raised a preliminary question as to whether the decision of the arbitrator in this case was covered by a privative clause, suggesting that if it was not, the court could apply a correctness standard of review to the arbitrator's decision.
Arbitration in this matter was a statutory requirement under the provisions of s. 88 of the Newfoundland Labour Relations Act, 1977, which section applies only to the construction industry, and the question posed by the Court of Appeal was whether the reference in s. 88(2) to submitting a dispute for "final settlement" to arbitration meant that the arbitrator's decision could be reviewed only for jurisdictional error. The general privative clause in The Labour Relations Act, 1977 is found in s. 18, and refers to a decision of the Labour Relations Board as being final and conclusive and not open to review, but does not refer to the decision of an arbitrator appointed under the Act. The Court of Appeal left its own question unanswered as it determined that the decision of the arbitrator failed even the most stringent test (i.e. the patently unreasonable test) and thus was reviewable.
The question posed by the Court of Appeal seems to suggest that in the absence of a full privative clause, no judicial deference is accorded the decision of an administrative tribunal. The issue is not so straightforward. The standard of review to be applied to a decision of an administrative tribunal is governed by the legislative provisions which govern judicial review, the wording of the particular statute conferring jurisdiction on the administrative body, and the common law relating to judicial review of administrative action including the common law policy of judicial deference. The remedy of certiorari at common law and statutory provisions which provide for judicial review permit review of administrative decisions for errors of law on the face of the record. Legislative provisions conferring jurisdiction upon a tribunal often purport either to broaden the scope of judicial review by providing for a statutory right of appeal or to narrow it by invoking words of preclusive effect. Determining the appropriate standard of review, therefore, is largely a question of interpreting these legislative provisions in the context of the policy with respect to judicial deference.
The legislative provisions in question must be interpreted in light of the nature of the particular tribunal and the type of questions which are entrusted to it. On this basis, the court must determine what the legislator intended should be the standard of review applied to the particular decision at issue, having due regard for the policy enunciated by this Court that, in the case of specialized tribunals, decisions upon matters entrusted to them by reason of their expertise should be accorded deference. The statutory provisions to be interpreted in this manner range from "true" privative clauses which clearly and specifically purport to oust all judicial review of decisions rendered by the tribunal (such as that in U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048) to clauses which provide for a full right of appeal on any question of law or fact and which allow the reviewing court to substitute its opinion for that of the tribunal (as in Zurich Insurance Co. v. Ontario (Human Rights Commission), [1992] 2 S.C.R. 321).
Where the relevant legislative provision is a true privative clause, judicial review is limited to errors of jurisdiction resulting from an error in interpreting a legislative provision limiting the tribunal's powers or a patently unreasonable error on a question of law otherwise within the tribunal's jurisdiction. The tests for identifying such errors are set out in Bibeault and affirmed in Canada (Attorney General) v. Public Service Alliance of Canada, [1991] 1 S.C.R. 614 ("PSAC No. 1"), and most recently in Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941 ("PSAC No. 2"). In the presence of a full privative clause, judicial review exists not by reason of the wording of the statute (which is, of course, fully preclusive) but because as a matter of constitutional law judicial review cannot be ousted completely: see Crevier v. Attorney General of Quebec, [1981] 2 S.C.R. 220.
Although their preclusive effect may be less obvious than that of the true privative clause, other forms of clauses purporting to restrict review may also have privative effect. Wording such as "final and conclusive" and the like may be found to restrict review to matters of jurisdiction if the court concludes that, taking into account the factors referred to above, the legislator clearly intended that the decision should be immune from review in the absence of an error as to jurisdiction. Such was the case in National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, in which this Court found privative effect in a clause which provided that the tribunal's decision, with certain limited exceptions, was "final and conclusive". See also the comments of Gonthier J. in Bell Canada v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 1 S.C.R. 1722, at p. 1744.
Section 88(2) falls somewhere between a full privative clause and a clause providing for full review by way of appeal. While it does not provide that the decision of the arbitrator is protected from review on any ground of law or fact, it similarly does not provide specifically for appeal or review on these grounds. It simply provides that the arbitrator's decision will amount to final settlement of the dispute. The question is what the legislature intended by the use of this phrase, and specifically whether the phrase mandates the deference of the court to the particular decision made by the arbitrator in this case.
The first point to be made is that the word "final" will not always imply an intended restriction on judicial review. Most statutes which confer rights of appeal from the judgment at trial of a court do so in terms of a final judgment of that court. In that context, the word "final" refers to the fact that the issue as between the parties has been settled and no further steps need be taken for the decision to qualify as a determination of the rights of the parties. In other words, the ruling is not an interim one. The appellate court is not, however, precluded from reviewing this final judgment for errors of law. Whether or not the word "final" should be interpreted in any particular case as conveying an intention to preclude or restrain judicial review requires an analysis of the provision in light of the purpose, nature and expertise of the tribunal to the decision of which it refers. These factors are similar to those referred to in Bibeault, supra, and their application is characterized as the functional approach. It was applied more recently by this Court in Dayco (Canada) Ltd. v. CAW-Canada, [1993] 2 S.C.R. 000.
The provision in the Newfoundland Labour Relations Act, 1977 mandating the referral to an arbitrator of grievances arising out of a collective agreement empowers the arbitrator to decide disputes relating to the collective agreement. The goal of mandatory arbitration is to arrive at an efficient and cost-effective manner of resolving disputes which will enable the parties to continue in their ongoing working relationship to the greatest extent possible. As an unlimited scope of judicial review of an arbitrator's decision would thwart the achievement of this goal, the words "final settlement" must be taken to indicate the legislature's intention that the courts exercise some restraint in this area.
Along with the rationale for its existence, the expertise of the tribunal is of the utmost importance in determining the intention of the legislator with respect to the degree of deference to be shown to a tribunal's decision in the absence of a full privative clause. Even where the tribunal's enabling statute provides explicitly for appellate review, as was the case in Bell Canada, supra, it has been stressed that deference should be shown by the appellate tribunal to the opinions of the specialized lower tribunal on matters squarely within its jurisdiction.
On the other side of the coin, a lack of relative expertise on the part of the tribunal vis-à-vis the particular issue before it as compared with the reviewing court is a ground for a refusal of deference. This point was made by this Court in Zurich, supra, at p. 338, with respect to findings of law made by human rights tribunals (albeit in the context of an extremely broad review clause):
In spite of the ability to overturn decisions of the Board on findings of fact, this Court has indicated that some curial deference will apply even to cases without privative clauses to reflect the principle of the specialization of duties (see Bell Canada v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 1 S.C.R. 1722, at p. 1746, Etobicoke, supra, at p. 211). While curial deference will apply to findings of fact, which the Board of Inquiry may have been in a better position to determine, such deference will not apply to findings of law in which the Board has no particular expertise.
A similar conclusion has been reached with respect to deference to human rights tribunals on questions of law by a majority of this Court in Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554, as set out in the reasons of La Forest J., adopted by Lamer C.J.
With respect to decisions made by a labour arbitrator which are outside his core area of expertise, the words of Laskin C.J. in Bradburn v. Wentworth Arms Hotel Ltd., supra, are apposite. Although he dissented on the appropriate standard of review and was the most generous of the judges with respect to curial deference, the former Chief Justice nonetheless regarded the construction of a statute as being an exception to the normal position of deference to an arbitrator. He stated as follows, at pp. 848-49:
To me the threshold question is the scope of review of the decision of the arbitration board to which was referred the employers' claim for damages for an allegedly unlawful strike. Although review of the arbitration board's decision for error of law on the face of the record is open in the absence of a privative statutory provision, the concept of error of law is a very elusive one where it turns on the interpretation of words of a collective agreement which are involved in the arbitration. That is why courts generally, and certainly this Court, have taken the position that if the arbitration board has given the relevant words of the collective agreement an interpretation which those words could reasonably bear, they will not interfere with the arbitration board's determination.
There are two limitations on the policy of non-interference. The first is where a question of jurisdiction is involved, and the second is where a statute falls to be construed by the board of arbitration.... [Emphasis added.]
As these words indicate, the rationale for deferring to an arbitrator's interpretation of a collective agreement does not necessarily apply to afford deference to a finding of law made by the arbitrator, when this involves interpretation of a statute or a rule of the common law. Generally, these are not matters within the expertise of the arbitrator, and in the absence of legislative intention that deference should be paid to findings of law made by an arbitrator, such findings would be reviewable on a standard of correctness. In this regard, a distinction can be drawn between arbitrators, appointed on an ad hoc basis to decide a particular dispute arising under a collective agreement, and labour relations boards responsible for overseeing the ongoing interpretation of legislation and development of labour relations policy and precedent within a given labour jurisdiction. To the latter, and other similar specialized tribunals responsible for the regulation of a specific industrial or technological sphere, a greater degree of deference is due their interpretation of the law notwithstanding the absence of a privative clause.
In a number of past decisions, this Court has indicated that judicial deference should be accorded to the decisions of arbitrators interpreting a collective agreement even in the absence of a privative clause. For example, in Douglas Aircraft Co. of Canada v. McConnell, [1980] 1 S.C.R. 245, Estey J. commented, at p. 275, with the rest of the Court concurring on this point, that:
the law of review has evolved, even in the absence of a privative clause, to a point of recognition of the purpose of contractually-rooted statutory arbitration: namely, the speedy, inexpensive and certain settlement of differences without interruption of the work of the parties. The scope of review only mirrors this purpose if it concerns itself only with matters of law which assume jurisdictional proportions.
Although this passage might be taken to suggest that an arbitrator's decision on any question of law may be immune from review, I am of the view that it refers to questions of law in interpreting the collective agreement and not the interpretation of a statute or a rule of common law. I am uncertain as to what is meant by "jurisdictional proportions" in this context as there is no privative clause requiring that the jurisdictional limits of the tribunal be ascertained in order to determine whether a particular decision is immune from review. I assume, however, that Estey J. was merely following the language of Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227 ("CUPE"), and like cases of the time which did involve privative clauses, and that what he is referring to is the policy of deference with respect to matters relating to the interpretation of collective agreements which is the stuff of the "differences" to which he refers.
A similarly deferential approach based on the purpose of arbitration was taken in Volvo Canada Ltd. v. U.A.W., Local 720, [1980] 1 S.C.R. 178, at p. 214. In that case, a majority of this Court applied the patently unreasonable test to the decision of an arbitrator appointed pursuant to a collective agreement, even though this was consensual rather than statutory arbitration and there was no privative clause per se. Noting that neither of the parties to the agreement had any choice but to have a grievance arbitrated, Pigeon J. stressed, at p. 214, that:
[o]n the other hand, the arbitration is not meant to be an additional step before the matter goes before the courts, the decision is meant to be final. It is therefore imperative that decisions on the construction of a collective agreement not be approached by asking how the Court would decide the point but by asking whether it is a "patently unreasonable" interpretation of the agreement.
The operation of this interpretive approach which takes account of the nature and purpose of the tribunal and its expertise was also demonstrated in the context of a labour relations board in Alberta Union of Provincial Employees, Branch 63 v. Board of Governors of Olds College, [1982] 1 S.C.R. 923. In that case, although the privative clause was weak, making explicit provision for review, and certiorari was expressly allowed under the legislation, Laskin C.J. held that the clause was nonetheless sufficiently explicit for the courts to show reserve, and to restrain review solely to patently unreasonable errors. Laskin C.J. concluded, at p. 931, as follows:
Here the Public Service Employee Relations Board is operating in its home territory, so to speak. It was concerned with the interpretation and application of provisions confided by its constituent Act to its exclusive administration, with its decision stated to have final and conclusive effect. In such circumstances, the proper approach by a reviewing court is not the blunt substitution of judicial opinion for the views of the Board but rather that expressed by Dickson J. in [CUPE], where he formulated the issue of scope of review as follows:
... was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?
Taking into account the relevant factors of statutory wording, expertise and the purpose of the tribunal, I am of the opinion that the legislator did not intend by s. 88(2) to restrict judicial review of the decisions of the arbitrator except as to jurisdictional matters. Judicial deference to the decision of the arbitrator is nonetheless warranted here. In this case, the decision of the arbitrator is questioned on two bases: first, his conclusion that the collective agreement, and Article 3.01 specifically, was unclear and ambiguous, and second, his conclusion that, properly interpreted, Article 3.01 applied to the contract bid by Dobbin. The questions to be resolved in coming to these conclusions involved the interpretation of the collective agreement and its application to a particular factual situation -- matters which constitute the core area of an arbitrator's expertise. Combined with the purpose and wording of s. 88, which confers upon the arbitrator exclusive jurisdiction to come to a final settlement of disputes arising out of the interpretation or application of the collective agreement, the arbitrator's relative expertise mandates that the court defer to the decision of the arbitrator in this case unless his decision is found to be patently unreasonable. The issue as to whether there are some decisions of an arbitrator on other questions of law not restricted to the interpretation of the collective agreement which are also immune from review may be left for another day.
The Standard Adopted in the Court of Appeal
The Court of Appeal defined the patently unreasonable test in the following manner, at pp. 185-86:
In an ordinary appeal on a question of law, the decision of a trial judge may be heard by a number of judges at different appeal levels. During the progress of a matter through appellate courts, there may be decisions rendered which either dissent from or conflict with the ultimate decision; there may be on the other hand either unanimity or a marked absence of disagreement with the ultimate decision. In the first case the decision of the trial judge, if overruled, may be said to be reasonable though wrong. In the second case, the decision of the trial judge, if overruled, may be said to be patently unreasonable.
One test that might be used therefore is an assessment of how the award, if it had been appealable, might have fared during the appeal process. Is it a decision that would have been overruled during that process but not without dissent and conflict or is it a decision that would have been overruled with a marked degree of condemnation by all or a large majority of those sitting on appeal?
This characterization of the test seems to suggest that the decision of the arbitrator is patently unreasonable if the judges of the Court of Appeal are unanimously or even mostly of a view that his decision was wrong. This looks to be very similar to a correctness standard, and is distinguishable from full appellate review only on the basis of the number of judges who need disagree with the arbitrator's decision. This is clearly not the standard of review which has been enunciated by this Court over the past decade and is not in keeping with the rationale behind curial deference.
Once it has been determined that curial deference to a particular decision of a tribunal is appropriate, the tribunal has the right to be wrong, regardless of how many reviewing judges disagree with its decision. A patently unreasonable error is more easily defined by what it is not than by what it is. This Court has said that a finding or decision of a tribunal is not patently unreasonable if there is any evidence capable of supporting the decision even though the reviewing court may not have reached the same conclusion (Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644, at pp. 687-88), or, in the context of a collective agreement, so long as the words of that agreement have not been given an interpretation which those words cannot reasonably bear (Bradburn, supra, per Laskin C.J., at p. 849). What these statements mean, in my view, is that the court will defer even if the interpretation given by the tribunal to the collective agreement is not the "right" interpretation in the court's view nor even the "best" of two possible interpretations, so long as it is an interpretation reasonably attributable to the words of the agreement. Or, as stated by Dickson J. in CUPE, at p. 237:
... was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?
See also PSAC No. 2 (reasons of Cory J.).
Before applying the patently unreasonable test, as defined above, to the arbitrator's interpretation of the collective agreement, it is necessary to address the issue of the admission of extrinsic evidence, in the form of the Harris report, in this case.
2. The Admission of Extrinsic Evidence
The general rule prohibiting the use of extrinsic evidence to interpret collective agreements originates from the parol evidence rule in contract law. The rule developed from the desire to have finality and certainty in contractual obligations. It is generally presumed that when parties reduce an agreement to writing they will have included all the necessary terms and circumstances and that the intention of the parties is that the written contract is to be the embodiment of all the terms. Furthermore, the rule is designed to prevent the use of fabricated or unreliable extrinsic negotiations to attack formal written contracts.
One of the exceptions to the parol evidence rule has always been that where there is ambiguity in the written contract itself, extrinsic evidence may be admitted to clarify the meaning of the ambiguous term. (See Leggatt v. Brown (1899), 30 O.R. 225 (Div. Ct.).) However, determining when one falls within the scope of this exception is far from easy, as even what can be said to constitute a patent ambiguity is unclear. Some authorities have held that there must be more than the arguability of different constructions of the agreement (Re Milk & Bread Drivers, Local 647, and Silverwood Dairies Ltd. (1969), 20 L.A.C. 406), while others suggest that the appropriate test is a lack of clear preponderance of meaning stemming from the words and structure of the agreement (Re Int'l Ass'n of Machinists, Local 1740, and John Bertram & Sons Co. (1967), 18 L.A.C. 362). An ambiguity is to be distinguished from an inaccuracy, a novel result or a mere difficulty in construction. There is also the issue of whether an ambiguity need be a patent one to warrant the introduction of extrinsic evidence or whether a latent ambiguity involving the uncertain application of otherwise clear words to the facts of the case is sufficient. If a latent ambiguity is taken to be sufficient, the further question arises as to whether extrinsic evidence may be introduced for the purpose of determining the existence of the ambiguity. The difficulties faced by courts of law in resolving these issues are magnified in the case of arbitrators charged with the interpretation and application of a collective agreement, as these individuals are often not only untrained in the law themselves but are required to adjudicate upon arguments made by lay persons.
In this case, Dr. Sullivan, the arbitrator, admitted without objection the Harris report, which was a report of a conciliator who settled a strike involving the employers who were parties to this collective agreement and the union. The mediator's report was the basis for the settlement of the strike and was accepted by the parties to the agreement. It contained a strong recommendation against double-breasting.
In oral argument, the respondent clarified that it does not contest the admission of the Harris report nor the decision of the arbitrator to accept it. Counsel for the respondent further conceded that the arbitrator could conclude from the report that Article 3 was designed to preclude the practice of double-breasting. It was the use made of the report with which the respondent took issue. Submitting that the arbitrator's finding of ambiguity in Article 3 was patently unreasonable, the respondent argued that the parties expressed their intention clearly in the collective agreement and the arbitrator was obliged to give effect to this interpretation even if it conflicted with the extrinsic evidence. In view of the fact that the respondent's concessions relate to an issue of law involving a provision that is common to many labour relations statutes, I would not wish to decide this matter without considering whether the respondent's concessions on the above points were proper ones to make. I, therefore, propose to examine these concessions.
Section 84(1) of The Labour Relations Act, 1977 provides that the arbitrator may receive and accept such evidence as he deems advisable whether or not it would be admissible in a court of law. By s. 84(1), the legislator has specifically indicated that the arbitrator need not concern himself with the common law rules governing the admission of extrinsic evidence, including the debate as to whether an ambiguity need be patent or latent or even exists at all. In dealing with a similar provision in the Ontario Labour Relations Act, the Ontario Court of Appeal stated in Re Noranda Metal Industries Ltd., Fergus Division and I.B.E.W., Local 2345 (1983), 44 O.R. (2d) 529, that the provision was designed "to permit an arbitrator to rely on relevant evidence even where such evidence is not admissible in a court of law" (p. 538). While provisions such as these do not oust judicial review completely, they enable the arbitrator to relax the rules of evidence. This reflects the fact that arbitrators are often not trained in the law and are permitted to apply the rules in the same way as would be done by reasonable persons in the conduct of their business. Section 84(1) evinces a legislative intent to leave these matters to the decision of the arbitrator. Accordingly, an arbitrator's decision in this regard is not reviewable unless it is shown to be patently unreasonable. While failure to give effect to a rule of privilege or an exclusionary rule of evidence which embodies an important aspect of public policy might, without more, attract review, the use of extrinsic evidence to interpret a collective agreement is very much in the core area of an arbitrator's function. In this regard, the Court is not apt to intervene provided the approach adopted by the arbitrator with respect to the use to be made of the evidence assists in determining the true intention of the parties.
The arbitrator in this case was of the opinion that he was entitled to rely on the Harris report if the terms of the agreement were not clear and unambiguous. In my view, this was not an unreasonable approach. He was not required to attempt to apply the rules of evidence as to what constitutes ambiguity, but merely to reasonably conclude that the collective agreement was unclear. In this regard, the following statement by Gonthier J. in the National Corn Growers case is instructive, at p. 1371:
The first comment I wish to make is that I share the appellants' view that in circumstances where the domestic legislation is unclear it is reasonable to examine any underlying international agreement. In interpreting legislation which has been enacted with a view towards implementing international obligations, as is the case here, it is reasonable for a tribunal to examine the domestic law in the context of the relevant agreement to clarify any uncertainty. Indeed where the text of the domestic law lends itself to it, one should also strive to expound an interpretation which is consonant with the relevant international obligations.
That passage was referring to the interpretation of statutory provisions which implemented an international agreement, but I see no reason why it should not be equally applicable to the interpretation of an agreement such as a collective agreement.
Gonthier J. went on to observe in National Corn Growers that such extrinsic evidence could be referred to before determining that there existed ambiguity on the face of the agreement for the purpose of determining if there was latent ambiguity. It is unnecessary for me to determine the applicability of that principle in this case because here the arbitrator first found that the terms of Article 3.01 were not clear and unambiguous and then resorted to the extrinsic evidence to arrive at his interpretation. The respondent's concession that the report was properly admitted was a proper one, and the arbitrator's reliance on it is unassailable unless his conclusion that the terms of Article 3.01 were not clear and unambiguous was patently unreasonable.
3. Reasonableness of the Arbitrator's Decision
Ambiguity
The disputed provision makes the terms and conditions of the collective agreement applicable "when the Employer shall perform any work ... under its own name or under the name of another...". Obviously the employer corporation as a corporate entity cannot "perform the work" itself; a corporation can only act through others, i.e. employees and others who do work for the corporation. The paragraph goes on to define the type of entity which would have a sufficient connection to the employer so as to be considered its alter ego for the purposes of the provision.
On the appellant's view of the provision the form of the contractual arrangement under which the work is performed would be immaterial as the determining factor is whether the employer as the controlling mind of Bradco is also the controlling mind of whatever entity is performing the work in question. This interpretation derives some support from the terms of the surrounding clauses in the agreement, in particular Article 3.04, which contemplates that after a certain date, the terms and conditions of the collective agreement will apply to non-union employers "within the scope of Article 1.01" who have bid on jobs prior to the date of the negotiation of the collective agreement. Article 1.01 only refers to the "parties" to the agreement, none of whom are non-union employers. It appears to be the intention of the parties that work bid by union employers prior to the negotiating of the present collective agreement would be covered by the terms of the collective agreement which was in place at the time of bidding. What then was the purpose of a provision that attempted to bind non-union companies which were not parties to the collective agreement? It must have been intended that this was to be done on the basis of Article 3.01. It follows that the parties contemplated that a non-union company which successfully bid on the job was subject to Article 3.01 if the requisite relationship existed between it and a union company which was party to the agreement. This interpretation would tend to negate the interpretation put forward by the respondent.
The interpretation contended for by the respondent and accepted by the Court of Appeal would restrict the words "perform any work" to a situation in which the employer Bradco had bid for and been awarded the contract and then either subcontracted the work to Dobbin or assigned the contract to Dobbin. This provision could not apply to a situation in which Dobbin was the successful bidder. The Court of Appeal considered that both the arbitrator's finding that "perform any work" was ambiguous and his conclusion that Article 3.01 would never "kick in" if given the respondent's interpretation were accepted were patently unreasonable findings. While the arbitrator's discussion of "perform any work" was not completely clear, it seems to me that his concern with whether "work" includes bidding on contracts meant that he was trying to determine whether the provision could in fact apply when Dobbin bid the contract on its own. Further, the Court of Appeal seems to have overlooked the fact that the arbitrator found that the interpretation put forward by the respondent would lead to an inconsistency with the rest of the agreement. Article 3.04, in particular, suggests that an interpretation other than that advocated by the respondent is at least plausible. Whether or not one agrees that the respondent's interpretation would, as the arbitrator suggested, lead to an absurdity, it cannot be said to be the only possible interpretation of the provision. It is not clear on the face of the agreement which of the two interpretations is correct. The arbitrator's finding of ambiguity can not therefore be said to be patently unreasonable and he was justified in resorting to the extrinsic evidence to discern the intentions of the parties in order to resolve that ambiguity.
Conclusions of the Arbitrator
The Court of Appeal held that, even if the arbitrator was entitled to rely on extrinsic evidence as an aid to interpreting the agreement, his conclusion as to the meaning of the provision was patently unreasonable. The Court of Appeal stated, at p. 188:
Assuming that extrinsic evidence could be used for such a broad purpose, one must nevertheless return to the basic rule of interpretation. As expressed by Halsbury, the function of the court is to ascertain what the parties meant by the words they have used, to declare the meaning of what is written and not what was intended to have been written.
The Court of Appeal held that the arbitrator had substituted his interpretation of what the parties intended which he had derived from the extrinsic evidence for the words of the agreement. Goodridge C.J.N. then stated that the language of the agreement was not capable of the interpretation given it by the arbitrator as it could not apply to a company that did not sign the agreement or to a situation where a company other than Bradco bid and employed workers on a particular project. In my view, the arbitrator's interpretation does not seek to bind Dobbin, as a corporate entity, to an agreement to which it is not a party, but rather binds the employer (being the controlling mind of Bradco) to prevent non-union companies under its control from bidding on or performing work within the jurisdiction of the collective agreement without applying the terms of the agreement to that work.
The respondent submitted in oral argument that the process used by the arbitrator to arrive at his decision as well as his decision itself was patently unreasonable. In that regard, the respondent points to the final paragraph of the arbitrator's reasons, which reads as follows:
In the present case however we have a clear example of double-breasting of the sort which the Harris Report was intended to terminate. There is no doubt that the Company has violated the spirit of that agreement. In my judgement it has, as well, broken the specific letter of Article 3.01 of the Collective Agreement and the Company is therefore in violation of that Agreement and therefore the grievance should be upheld.
The respondent argues that the arbitrator's reference to the Harris report as being an agreement violated by Bradco demonstrates that the arbitrator simply substituted the intention of the parties which he found contained in the Harris report for the clear words of the agreement, and, further, that the arbitrator never referred back to the words of Article 3.01 to illustrate how the Harris report had cleared up the ambiguity which he had found. In my view, the respondent is taking greater issue with the way in which the arbitrator expressed himself rather than the procedure which he followed or the actual result at which he arrived.
The Harris report established that the employers and the union settled the strike on the basis, inter alia, that double-breasting would be discontinued. Double-breasting was previously dealt with by this Court in Lester, supra, in which the practice was described in the dissenting judgment of Wilson J. as follows, at p. 652:
One company, which continues to carry on business subject to a union contract, creates a new parallel company which is non-union. In this way the owners of the companies can bid on both union and non-union jobs and utilize the skill and expertise of the key members of their staff on both.
The arrangement between Bradco and Dobbin is the type of arrangement that constitutes double-breasting. The arbitrator found that Article 3.01 was ambiguous in that it was capable of more than one interpretation, and upon referring to extrinsic evidence concluded that the intention of the parties was that Article 3.01 should deal with the situation of double-breasting. Given that the words of Article 3.01 were capable of rationally supporting an interpretation reflective of this intention, it was not patently unreasonable for the arbitrator to conclude that it accomplished its purpose and that the relationships which it described included the relationship between Bradco and Dobbin.
Disposition
I would therefore allow the appeal, set aside the judgment of the Court of Appeal and restore the judgment of Hickman C.J. and the award of the arbitrator. The appellant is entitled to costs both here and in the Court of Appeal.
//Cory J.//
The following are the reasons delivered by
Cory J. -- I am in substantial agreement with the excellent reasons of Mr. Justice Sopinka. I would have differed only on the approach that should be taken by courts reviewing decisions of arbitrators acting in the field of labour relations.
In Dayco (Canada) Ltd. v. CAW - Canada, [1993] 2 S.C.R. 000, I attempted to put forward the position that the courts should not be too quick to attack the jurisdiction of administrative tribunals either on the basis of the wording of the privative clause or for any other reason. This was the view expressed by Dickson J., as he then was, in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227. In that case the result turned in part on the wording of the privative clause. Dickson J. stated at p. 233:
The question of what is and is not jurisdictional is often very difficult to determine. The courts, in my view, should not be alert to brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so.
My concern in Dayco, supra, and in this case, was that the language used in the reasons for judgment could be seen as advocating a change in the approach adopted by Dickson J. It seemed to me that to take a contrary approach would only encourage litigation in situations where judicial restraint should be the rule. For the same reasons restraint should be exercised when courts are reviewing the decisions of labour arbitrators dealing with and interpreting collective bargaining agreements. Dickson J. made this point in Heustis v. New Brunswick Electric Power Commission, [1979] 2 S.C.R. 768, at p. 781:
There is a very good policy reason for judicial restraint in fettering adjudicators in the exercise of remedial powers. The whole purpose in establishing a system of grievance adjudication under the Act is to secure prompt, final, and binding settlement of disputes arising out of interpretation or application of the collective agreement, or disciplinary action taken by the employer, all to the end that industrial peace may be maintained.
However, in Dayco, supra, my position, at least with regard to the interpretation which should be given to privative clauses, was in the minority and I will now loyally follow the reasoning of the majority. I therefore concur with the reasons of Sopinka J.
Appeal allowed with costs.
Solicitors for the appellant: O'Dea, Strong, Earle, St. John's, Newfoundland.
Solicitors for the respondent: Mercer, Orsborn, Benson, Myles, St. John's, Newfoundland.