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HomeMy WebLinkAboutUnion 92-05-21· N THE MATTER OF AN ARBITRATION BETWEEN: ONTARIO COUNCIL OF REGENTS FOR THE COLLEGES OF APPLIED ARTS AND TECHNOLOGY IN THE FORM OF CENTENNIAl, COLLEGE (hereinafter called the "College") ONTARIO PUBLIC SERVICE EMPLOYEES UNION (FOR ACADEMIC EMPLOYEES) (hereinafter called the "Union") BOARD OF ARBITRATION: Richard H. McLaren Sherril Murray, Union Nominee R.J. Gallivan, College Nominee COUNSEL FOR THE COLLEGE Christopher Riggs COUNSEL FOR THE UNION Craig Flood HEARINGS IN RELATION TO THIS MATTER WERE HELD AT TORONTO, ONTARIO, ON ~ANUARY 29 AND APRIL 22, 1992. AWARD Mr. Norman Rosenitsch is a Professor at Centennial College who began his employment on July 16, 1967. He made enquiries about his entitlement to a Sick Leave Credit - Buyout based on the Letter of Understanding as set out in the collective agreement. The appropriate College officials had no information to armwer these inquiries. Finally, he made a formal application to his supervisor to participate in the Buyout Programme (Exhibit 4). He was advised by the supervisor that no information was available, and Mr. Rosenitsch then proceeded to file this complaint (Exhibit 5). Ms. Elizabeth Dorey, Manager of Payroll, Employee Records and Benefits "P.E.R.B.", sent a memo to Mr. Rosenitsch, dated May 8, 1991. This memo contained information relating to the Letter of Understanding, including a prescribed application form for the Sick Leave Credit - Buyout Programme (Exhibit 6A & B). Mr. Rosenitsch completed the application form. On June 27, 1991, the Joint Task Force on Sick Leave determined that he was eligible for a cash buyout. He was paid $22,016.25 on July 18, 1991 (Exhibit 8). On April 3, 1991 Mr. P, osenitsch had followed up his complaint with a formal grievance. (Exhibit 1) It reads as follows: I am grieving that the Letter of Understanding on page 100 of the collective agreement (Sept. 1, 1989 to Aug. 31, 1991) has been violated. (Exhibit 1) -2- The outstanding issue relating to the grievance is the Grievor's entitlement to interest. The Grievor claims an interest entitlement from April 1, 1991 to July 18, 1991, the date that he received payment. He also makes a claims for interest from July 19, 1991 to the date of this award, being interest on the interest. The parties agreed that the Board was to remain seized of the method of calculating interest. The College asserts a different, interpretation of the Letter of Understancling. It also asserts that the activity of the Joint Task Force amounts to an estoppel. It called evidence from Maureen Callahan who is employed at Seneca College where she is currently Dean of Communication Arts. She was one of the Management members of the Joint Task Force. Ms. Cailahan testified that the Task Force was not given a specific date, as part of their mandate, as to when payments were to be made to eligible candidates for the Buyout Programme. The Task Force was not prepared to issue any monies mt. il the various payment options were fully investigated. Part of this investigation involved the requisition of tas advice so the recipients of the monies would be fully aware of the tax implications associated with Buyout options. Finally, the Union representative of the Task Force Mr. Montgomery, suggested that the whole question of buyouts not be raised until after the end of the academic year, that being April 30, 1991. The Task Force, in carrying out its mandate, did not contemplate the accrual of interest, or payment of interest on the funds payable to eligible candidates of the programme. It was argued on behalf of the Union that. interest is capable of -3- being awarded as an arbitrable remedy in appropriate circumstances. In support of that proposition reference was made to: Re Beckett Elevator Co. Ltd., 11 L.A.C. (3d) 289 (1983); Re Ontario Hydro, 11 L.A.C. (3d) 308 (1983) and an unreported decision between these parties and another Grievor and another grievance of a Board of Arbitration chaired by Gall Brent and dated February 20, 1984. It was argued that the Letter of Understanding and the Joint Task Force document pursuant to the Letter of Understanding (Exl~bit 9) meant that the Colleges had the funds available for the Buyout Programme. It was asserted that this amounted to a trust, as it satisfied the three conditions for the establishment of a trust. There being a trust, then a trustee is required to act In a prudent, fashion and invest the flmds. In this case the funds rould be deposited in an interest bearing account, so that the interest is ultimately accrued to the benefit of the beneficiaries. The beneficiaries would be employees of the College who would have their Sick Leave credits bought out. In support of these propositions reference was made to: Re Norman Estate [1951] O.R. 752 (C.A.); Re Wiard v Gable [1860] C.K. 458; Re Honseberger v Kratz, [1885] O.K. 521 (Ch. D.); Re Saskatchewan Land and Homestead Co. v Moore, O.W.N. 684 (Kelly, 1915); Re Hogg v. The Toronto General Trusts Corporation [1933] S.C.R. 1 (S.C.C.); Re Bell Estate [1977] 6 (S. Ct.) and Re McOuarrie et al v. Jacobs et al [1987] 26 E.T.R. (B.C.S.Ct.) In support of its position it was argued on behalf of the College that there was no violation of the Letter of Understanding, and any right to claim interest presupposes a violation. It was further argued that there was no jurisdiction in the Board of Arbitration to award interest. Alternatively, if the awarding of interest can be implied from the collective agreement, it is subject to the application of discretion. In the circumstances of this case, the discretion ought to be exercised to deny the awarding of interest. Finally, it was asserted that there was an estoppel that operated against the Union to prevent the awarding of interest in this case. In support of these propositions reference was made to the following decisions: Re Alexandra Marine and General Hospital & Ontario Nurses Association, in an unreported decision by Arbitrator Hunter dated .December 21, 1983; Re Alexandra Marine and General Hospital & Ontario Nurses Association, in an unreported decision by Arbitrator Hunter dated May 17, 1984; Re Polymer Cord Ltd. 10 L.A.C. 31 (Laskin, ].958); Re Canada Packers Ltd., 11 L.A.C. (2d) 370 (Weatherill, 1976); Re Dominion Stores Ltd., 15 L.A.C. (3d) 47 (Yeoman, 1984); Re Fanshawe College of Applied Arts and Technology & Ontario Public Service Employees Union, in an unreported decision by Arbitrator Brandt dated December 14, 1988; Re Regional Municipality of Hamilton-Wentworth, 6 L.A.C. (3d) 147 (O'Shea, 1982); Re Keeprite Inc., 8 L.A.C. (3d) 35 (McLaren, 1982); Re Lambton College & Ontario Public Service Employees Union, in an unreported decision by Arbitrator Brown dated December 13, 1986; Re Newport Sportswear Ltd., 30 L.A.C. (2d) 149 (O'Shea, 1981); Re Ontario Hydro, 11 L.A.C. (3d) 308 (McCamus, 1983) and Re Sheridan College & Ontario Public Service Employees Union in an unreported decision by Arbitrator Palmer dated August 19, 185. In a previous decision between these parties, involving the same Grievor as in this matter, a majority decision by Arbitrator Brent issued on February 20, 1984, supra, stated at page 8 that: "It was recognized in the Mohawk College case, (1982), 5. L.A.C. (3d) 237 (Brunner, 1982) and in the other cases dealing with interest that the award of interest is not automatic and there will be factors to persuade a Board of Arbitration not to make such an award. We, therefore, find that we have the power to award interest under the authority of the collective agreement and the Colleges' Collective BargaIning Act which directs us to make a binding decision". -5- It has become the prevailing view that within the College's collective bargaining relationship, an award of interest may be granted in the appropriate circumstances. However, there is in implying such a right a discretion not to award the interest. This Board adopt~ the reasoning exhibited by Arbitrator Brent and those of the other Community College decisions which have awarded interest. In so doing, this Board recognizes that the decision of the present Chairman in l~e Keeprite Inc., supra is distinguishable and ought not to be applied in these circumstances. There are three methods of examining the discretion to be applied in determining whether interest ought to be awarded. In the decision of Arbitrator Hunter involving Alexandra Marine and General Hospital and Ontario Nurses' Association, an nreported decision dated May 17, 1984, it was stated at page 4 that the language of the collective agreement ~mder consideration in that matter, as well as the sequence of negotiations, lead to the conclusion that interest ought not to be awarded. This is au example of a determination that prevented the awardin~ of interest because such an award would be inconsistent with respect to the understanding between the parties. In that case, the language employed by the parties, in combination with the conduct of the parties, indicated that the payment of interest was not contemplated. Consequently, the discretion not to award interest was justified. Further examples of this kind of limitation on the discretion to award interest may be found in the decision of Re Newport Sportswear Ltd, supra, at page 155 and a further decision by the same Arbitrator in Re Regional Municipality of Hamilton-Wentworth, supra, at page 152. In applying this limitation on the discretion to award interest it was submitted on behalf of the College that the -6- Letter of Understanding is silent with respect to the awarding of interest. However, in other parts of the collective agreement such as Article 19, dealing with the pre-paid leave plan, there is extensive reference to the accumulation of interest in Article 19.01; 19.03 (d); 19.04 (a), (b), and (f); 19.05 (c), (e) and (f). A second area of applying discretion in the awarding of interest is associated with the pNnciples of making a party whole as a result of a breach of a collective agreement. ~lds is the most common circumstance where interest is awarded, usually because the employer is holding money which rightfully belongs to the employee. This situation also arises where the Employer has improperly withdrawn money from the employee. In these circumstances, in order to make the grieving party whole, discretion is exercised to permit the wardhug of interest, particularly in circur~stances where the grievance requested the awarding of interest as part of the remedy. There are numerous examples of this principle found in cases such as Alexandra Marine and General Hospital, supra, and Sheridan College and the Ontario Public Service Employees Union, supra, a decision by Arbitrator Palmer where at pages 22 and 23 it stated that: "... here the GrieVor was without salary for a considerable period of time. During this period she was either deprived of the use of savings which had to be used for living expenses or had to borrow money upon which she would have had to pay interest; the chance of gifts, it would seem, are rare in this life. Thus, the actions of the College have caused her expenses beyond the amount of the salary withheld. A mere payment of her salary, therefore, does not "make her whole". To provide interest, then, is not to punish the College (although it is hard to see how this would be the case when they have deferred the payment of these monies and either had the use of them or been in a position where they did not have to borrow it); rather the action is one of a compensatory nature". -7- A similar principle underpinning these decisions with respect to the awarding of interest for monies withheld by the Employer, can be found in a decision by Arbitrator Brandt in Fanshawe College of Applied Arts and Technology, supra, and a decision in Lambton College, supra, by Arbitrator Brown at page 15. It is submitted by Counsel for the Employer that the facts of this situation did not reveal that the College is holding monies of the employees. Therefore, in order to make the parties whole and render a compensatory award, it is unnecessary to award interest. Consequently, it is proper to exercise discretion and not to award interest in thc circ~tances. The third area of discretion in the awarding of interest arises in the circumstances where the conduct of the parties may effect the implied right to interest, as :~termined by the Arbitration Board. An example of this approach may be found in an unreported decision by Arbitrator Hunter between the Alexandra Marine and General Hospital and Ontario Nurses' Association in an award dated May 17, 1984, at page 4 wherein it was stated that: "Not only does the reference to "the then current per diem rate of pay" imply that the parties were not contemplating interest, but the sequence of negotiations leads to the same conclusion. The negotiations make it clear to us that O.N.A. was agreeing to "freeze" the sick leave credits standing to each employee's account followed by pay out at a considerably later date. Indeed, the final pay out date was moved back by one year (to March 31, 1984) with O.N.A.'s conculTence." It was submitted that the conduct of the Task Force and particularly the Union representatives on the Task Force, meant that this was a situation where the implied right of interest did not exist. Mr. Montgomery, who was one of the Union representatives, had raised -8- the issue of interest in discussions with other members of the task force as is indicated in the testimony of Ms. Callahan, and did not want anything related to the buyout being raised by members of the bargaining unit until after the end of the school year, which occurred on April 30, 1991. The College representatives agreed to that approach and it was submitted that the conduct of the parties ought to act as a restraint on this Board of Arbitration in exercising its discretion to award interest. Thc appointment of Arbitrator Brcnt in the collective agreement as a chair, has an impact on the discretion to determine if there is an implied right to receive interest. This impact arises out of Arbitrator Brent's decision in the Centennial College case where she concludes that a Board of Arbitration has the authority to award interest under the collective '~eement, although such an award is not automatic. In this case one ought to go back to the initial documentation to resolve the dispute. On the one hand the College asserts that there is no commitment to make a payment to the individuals on April 1, 1991. On the other hand, the Union asserts that the documents indicate that a trust was created. As a result of a trust being established, there is a duty upon the College as trustee to ensure that the funds were invested prudently until payment was made. In not acting this way there was a breach of trustee duty, which ought to result in the awarding of interest. The Letter of Understanding states that the arrangements of the sick leave credits buyout are as follows: (a) effective April 1, 1991, the Colleges will make available the sum of five million dollars to commence a voluntary programme to buyout sick leave credits of employees hired before April 1, 1991. Neither this language, nor any other part of the Letter of Understanding, make any reference to the payment of interest on and after the date of April 1, 1991. Furthermore, it makes no provision that the money or any part thereof is to be in the hands of an individual employee as -9- of any particular date, least of all April 1, 1991. The language does say that some money will be made available to commence the programme. The submission of the Union on that language is that a purpose trust is created and the test of the three certainties is applicable. There is also a contractual obligation to make the sum available and the amount is clear. However, the beneficiaries, other than generally to be employees hired before April 1, 1991, are not identified. Indeed, one of the duties of the Task Force was to develop a mechanism which would allow for the identification of applicants who were eligible for payout. Exhibit 13 indicates that there were many more applicants than there were funds to pay them. There is a lack of certainty as to who the beneficiaries are. While there is use of imperative language, there is little to suggest that the monies be segregated and held for the benefit of whoever may be defined as being the appropriate recipient of the monies. Therefore, the ~oard of Arbitration finds that there is insufficient certainty to establish that there was a trust. Based on trust law, the Board is prepared to accept that there would have been an obligation upon the College as trustee, to act in a prudent fashion and invest the funds being held for the benefit of the particular individuals. However, in this case a trust has not been established due to lack of certainty with respect to potential beneficiaries. Even if the Board of Arbitration were not to take this particular interpretation of the Letter of Understanding, and one moves on to examine the process set up to select the individuals to be entitled to the buyout, there is a discretion to limit the implied obligation to award interest. This is based upon the conduct of the parties, as well as 'the language which the parties have used. The testimony of Ms. Callahan is that Mr. Montgomery, one of the Union Representatives on the Task Force, had made the request that the whole question of -10- buyouts not be raised before the end of the academic year, which did not occur until April 30, 1991. As a result of discussion amongst members of the Task Force, it was concluded that there was no entitlement to interest because of the way in which the language of the Letter of Understanding was constructed. There was also no time-table for the payments. In a communique to all employees of the College system, the Task Force indicated the selection procedure that it was going to use to pay out funds, and furthermore, indicated that the employees who were to receive those payouts would be notified in June of 1991 and that the payments would be made in July of 1991. Thus, this joint document prepared by 2 Management Representatives and 2 Union Representatives (Exhibit 9) was the operational document by which the Letter of Understanding was going to be implemented under the terms of the collective agreement. What occurred in this case was exactly what was set out in ~xhibit 9. The Grievor was info~med that he was eligible to receive the buyout and' was in fact paid in July of 1991. Therefore, this Board of Arbitration finds that there is no violation of the Letter of Understanding nor of the Task Force document with respect to payments to the Grievor. In the absence of such a violation then there is no breach of the collective agreement which requires the party to be made whole and therefore give rise to some implicit right to the receipt of interest. Furthermore, even if there were such a breach, there is a discretionary limitation on the remedy applicable to that breach because of the conduct of the parties, and the Task Force process which was utilized to implement the Letter of Understanding In any event the Board of Arbitration has interpreted the Letter of Understanding as not requiring that there be any payment to any individl__m__!s by April 1, 1991 or any other particular date within 1991. The Letter of Understanding does not give rise to an implied right of interest due to the monies being improperly held back beyond the -11- due date for payment. For all of the foregoing reasons it is concluded that there will be no award of interest to the Grievor in this matter. It is ordered that the grievance be dismissed. DATED AT LONDON, ONTARIO THIS 21st DAY OF MAY, 1992. Richard H. McLaren Chairman I ~_¢~Ya~/dissent Siqned "Sherril Murray" Sherril Murray, Union Nominee K.-J'.-Gall_yah, College Nominee 2571W D ir 8 S l:i N