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Hamilton v. ICI Canada Inc. (Ontario Superior Court of Justice)

Hamilton v. ICI Canada Inc. (Ontario Superior Court of Justice)

Clara Hamilton , Plaintiff (Responding party) and ICI Canada Inc., Operating as ICI Autocolor, Defendant, (Moving party)

Court: Ontario Superior Court of Justice

Judge: Mesbur J.

Heard: October 2, 2001

Judgment: October 5, 2001

Year: 2001

Docket: C39454/97

Counsel: Douglas Best, Tamara Farber, for Defendant/Moving Party

David Share, for Plaintiff/Responding Party


Subject:

Labour and Employment

Civil Practice and Procedure

Labour law.

Judges and courts.

Cases considered by Mesbur J.:

I.W.A. -- Canada, Local 2693 v. Longlac Wood Industries Inc., 2000 CarswellOnt 2417, 24 C.C.P.B. 72, 21 C.C.L.I. (3d) 90, (sub nom. International Woodworkers of America, Local 2693 v. Longlac Wood Industries Inc.) [2000] O.J. No. 2607 (Ont. C.A.) -- referred to

London Life Insurance Co. v. Dubreuil Brothers Employees Assn. (2000), 24 C.C.P.B. 85, 49 O.R. (3d) 766, (sub nom. London Life Insurance Co. v. I.W.A. Canada, Local 2693) 190 D.L.R. (4th) 428, 134 O.A.C. 382, 2001 C.L.L.C. 220-003 (Ont. C.A.) -- followed

Sun Life Assurance Co. of Canada v. CAW-Canada, 2000 CarswellOnt 2418, 24 C.C.P.B. 172, (sub nom. Sun Life Assurance Co. of Canada v. National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada)) 135 O.A.C. 115, (sub nom. Sun Life Assurance Co. of Canada v. National Automobile, Aerospace, Transportation and General Workers Union of Canada) [2000] O.J. No. 2608 (Ont. C.A.) -- referred to

Sun Life Assurance Co. of Canada v. CAW-Canada (2001), (sub nom. Sun Life Assurance Co. of Canada v. National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada)) 267 N.R. 393 (note), (sub nom. Sun Life Assurance Co. of Canada v. National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada)) 147 O.A.C. 200 (note) (S.C.C.) -- referred to

Weber v. Ontario Hydro, 95 C.L.L.C. 210-027, 12 C.C.E.L. (2d) 1, 24 C.C.L.T. (2d) 217, 30 Admin. L.R. (2d) 1, 24 O.R. (3d) 358 (note), 125 D.L.R. (4th) 583, 183 N.R. 241, 30 C.R.R. (2d) 1, 82 O.A.C. 321, [1995] 2 S.C.R. 929, [1995] L.V.I. 2687-1 (S.C.C.) -- considered

Statutes considered:

Ont.Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A

s. 48(1) -- referred to

s. 74 -- considered

Rules considered:

Ont.Rules of Civil Procedure, R.R.O. 1990, Reg. 194

R. 21.01(3)(a) -- referred to

Mesbur J.:

Nature of the motion

1 Clara Hamilton worked for ICI Autocolor for many years in one of their plants. The plant was unionized, and she was a member of the union, subject to the collective agreement with her employer. In 1992 she was injured in a non-workplace accident. She received some long-term disability (LTD) benefits under the company plan. In 1993, the plant where she worked closed, and she received a severance package. In 1995 she was advised she was no longer eligible for LTD benefits. She initially sued sunlife, whom she thought was the insurer under the plan. When she learned that Sunlife, whom she thought was the insurer under the plan, she then sued ICI for a declaration that she was entitled to a continuation of her disability benefits, or damages in lieu of continuing benefits. At issue on this motion is whether this court has jurisdiction to entertain this claim, or whether the claim arises under the collective agreement, and constitutes a "difference between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable", and is thus subject to final and binding settlement by arbitration.1

Background facts:

2 This motion first came before the court in December of 1999. The defendant was moving under Rule 21.01(3)(a) to dismiss the action on the basis of the court's having no jurisdiction to entertain the claim. At that time, pursuant to Minutes of Settlement, the motion was stayed so that the plaintiff could apply to the Ontario Labour Relations Board (O.L.R.B.) under s. 74 of the Labour Relations Act, 1995. Section 74 of the Act imposes a duty on trade unions to fairly represent the interest of employees. The Minutes also contemplated that in the application, the OLRB would determine whether or not either of United Steel Workers of America (the union) or Local 13328 (Ms. Hamilton's local) had the legal capacity to be bound by s. 74 of the Labour Relations Act, 1995. Ms. Hamilton's lawyer had been told that the union took the position since her plant had been closed, her local no longer existed, the collective agreement had expired, and the union no longer had any provisions to deal with Ms. Hamilton's grievance about the termination of her LTD benefits. The parties entered into the Minutes of Settlement in order to obtain a determination of whether the OLRB could deal with the grievance.

3 The Minutes of Settlement have two paragraphs that are significant on this motion. They read as follows:

2. In the course of the Application, if the Ontario Labour Relations Board finds that either of the Local or the Union has the legal capacity to be bound by section 74 of the Labour Relations Act, 1995, then the within action shall be dismissed in its entirety, regardless of any remedial order made or refused to be made by the Ontario Labour Relations Board under section 74 in that Application, and in such case, the Plaintiff shall obtain an order dismissing the within action on consent of the parties.

3. In the course of the Application, if the Ontario Labour Relations Board finds that neither the Local nor the Union have the legal capacity to be bound by section 74 of the Labour Relations Act, 1995, then the parties can return the within motion on 10 days notice, and the parties, by their respective solicitors, may agree to procedures regarding the filing of materials and the issues to be determined on the motion.

4 Ms. Hamilton made her application to the OLRB. She named both the union and the local as the responding parties. She claimed they had violated section 74 of the Labour Relations Act, in that they had failed to represent her with respect to her entitlement to LTD benefits with her employer. The union and the local responded to the application. They denied any violation of section 74, but raised two "preliminary objections" to the application. The first was that the application was untimely. The second was that the application lacked particulars. They requested that the Board rule on the preliminary objections before dealing with the merits of the application. The Board did. On March 1, 2001, the Board released its decision. It declined to inquire into the complaint because of Ms. Hamilton's excessive delay. It made no specific finding as to whether the union or the local had the legal capacity to be bound by s. 74 of the Act. The union and the local, in their responding materials did not address the issue of whether they had the legal capacity to be bound by s. 74 or not; they simply sought a determination of the preliminary issues first. They were successful, and that was the end of the matter before the Board.

5 The defendant takes the position that the Board's decision is impliedly a finding that the union or the local had legal capacity to be bound by s. 74 of the Act, and thus, by the terms of the Minutes, the action must be dismissed. Even if the Minutes are not engaged, the defendant says the action should nevertheless be dismissed, as the court has no jurisdiction to entertain the claim. The plaintiff says first the Board never addressed the issue of s. 74 of the Act, and thus there is no "finding" to support a dismissal of the claim, and second, this case falls within what have been called "category three" types of benefit entitlement claims, and are not arbitrable. Thus, she says, her claim is properly before the courts.

The effect of the Board's decisionn on the Minutes of Settlement

6 The Minutes of Settlement are very precise about what will trigger a dismissal of the action. They require the OLRB to "find" that either of the Local or the Union "has the legal capacity to be bound by section 74 of the Labour Relations Act, 1995". There is no express finding to this effect. I agree with the plaintiff's position that all the Board did was deal with the respondents' preliminary objections, and did not address the issue of legal capacity at all. Since the Board only ruled on the preliminary issues, I cannot find its decision to be "a decision made under S 74 of the Act". There is no basis upon which the terms of paragraph 2 of the Minutes have been met.

7 In order to dismiss the claim on the basis of the Minutes, the terms of paragraph 2 of the Minutes must be strictly complied with. They have not. I decline to dismiss the action on that basis. That leads me, however, to a discussion of whether, as a matter of law, this court has jurisdiction to entertain this action.

8 The Board, in its decision, commented that Ms. Hamilton is a "person in search of a forum... in which it can be determined whether she was properly denied disability benefits". The Board was of the view that the law was clear; namely, that the issue of denial of disability benefits belong in the courts. The Board stated that even if there had not been excessive delay, it "would not have ordered the trade union to take to arbitration a matter over which an arbitrator does not have jurisdiction." The defendant suggests that first, these comments are obiter, and second, the conclusion is incorrect, given the particular nature of the LTD benefits referred to in the collective agreement, and the fact the Board's decision makes reference to the provisions of the collective agreement dealing with medical benefits, rather than the provision dealing with LTD benefits.

9 In a series of recent cases,2 the Ontario Court of Appeal has dealt with the arbitrability of certain types of disability benefits, or benefit entitlement claims. The Minutes, of course, were signed prior to these decisions being released. It is common ground that if a claim is arbitrable under a collective agreement, the court has no jurisdiction to hear the claim. Similarly, if a claim is not arbitrable under a collective agreement, this constitutes a circumstance in which the court will take jurisdiction, since to fail to do so would leave the complainant without a remedy. The four categories of claim that have emerged were originally identified in Brown and Beatty, Canadian Labour Arbitration, 3rd ed. (1988). They are:

1. where the collective agreement does not set out the benefit sought to be enforced, the claim is not arbitrable.

2. Where the collective agreement stipulates that the employer is obliged to provide certain medical or sick-pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable;

3. Where the collective agreement only obliges the employer to pay the premiums associated with an insurance plan, the claim is not arbitrable; and

4. Where the insurance policy is incorporated into the collective agreement, the claim is arbitrable.

10 Article 3 of the collective agreement deals with the provision of LTD benefits. Article 3.01(a) reads in part as follows:

3.01(a) The Company guarantees to apply to the employees covered by this agreement the following employee benefit plans, that is the Pension Plan, the Life Insurance Plan, the Disability Wages for Payroll Employees Plan, the Long Term Disability Insurance Plan and the Service Awards Plan (hereinafter referred to as the Group of Plans) in conformity with the general application of such Groups of Plans throughout ICI Canada Inc.

11 Subsection (b) of Article 3.01 is also relevant. It reads:

3.01(b) It is expressly understood and agreed that a grievance alleging a violation of the Company's obligations with respect to the Employee Benefit Plans under this Article 3 may, in the event of failure to reach prior satisfactory settlement thereon, be considered a grievance for the purpose of Article 11 -- Grievance Procedure and Article 12 -- Arbitration, and such grievance shall be subject to the same procedure and time limits as any other grievance processed under such Articles.

12 Article 11 of the collective agreement sets out the grievance procedure to be followed. Article 12.01 provides that "any grievance involving the interpretation, application or alleged violation of any article of this agreement including whether a matter is arbitrable may, in the event of failure to reach agreement theron, be referred by either party to arbitration by an arbitration board...". Article 12.02 goes on to provide that "the decision of the majority of the arbitration board...on the matter at issue shall be final and binding on both parties...".

13 The first question to address is which category the LTD insurance provision falls under. The answer to this question will also require an analysis of who is the insurer under the plan.

14 There is no question that Article 3.01 is not a "category one" provision. The defendant takes the position that Article 3.01 of the collective agreement clearly falls within either "category two" or "category four". If it is either of these categories, the claim would be arbitrable, and thus outside the jurisdiction of the court. The plaintiff, however, takes the position that Article 3.01 falls within "category three", and is thus inarbitrable. If this is the case, the court would be able to take jurisdiction.

15 First, does Article 3.01 incorporate the plan, or make specific reference to it? In my view, it does not. Article 3.01 refers to the "Long Term Disability Insurance Plan". The actual plan in question is named "Long Term Disability Plan for Employees of ICI Canada Inc." For the plan itself to be incorporated, or to be specifically referred to, it must be named accurately. It is not. Thus, the provision cannot be a "category four" provision.

16 Category two provisions require that the employer is "obliged to provide certain medical or sick-pay benefits". What is the employer's obligation under this collective agreement? It is to "guarantee" to "apply" the plan to the employees. Nowhere are the medical or sick-pay benefits described. The employer is not guaranteeing that it will pay the benefits, simply that it will ensure the plans are "applied" to its employees. I interpret this somewhat vague and confusing wording to mean nothing more than the employer promises to provide the coverage; i.e. make sure the premiums are paid. When I consider the wording of Article 3.01, it seems to do no more than "oblige the employer to pay the premiums associated with an insurance plan." Thus, it is a "category three" provision, and inarbitrable.

17 The defendant suggested that since no insurance company is obliged to provide the benefits under the plan, and the plan is essentially self-funded, the conflict is still between Ms. Hamilton and her employer, and thus should be within the exclusive jurisdiction of the collective agreement. This position requires an examination of the LTD plan itself, and the Administrative Services contract with Sun Life.

18 Under the LTD plan, ICI Canada Inc. is designated as an employer under the LTD Plan. (Appendix A). ICI Canada Inc. is a party to the collective agreement. By Section XIV of the LTD plan, certain provisions are made concerning funding of the plan. First, by article 14.01, the Company (ICI Canada Inc.) is obliged to establish a Trust Fund. By article 14.02, the company is required to appoint a trustee to oversee the plan's fund, and it is obliged to contribute to the trust fund. All disability benefits are to be paid directly from the trust fund.

19 The Company appears, by virtue of the Administrative Services Contract, to have created an entity called "The Trustees of the C-I-L L.T.D. Trust". These trustees have entered into an administrative services contract with Sun Life of Canada Benefit Management Limited (Sunbenco) to provide administrative, claims and actuarial services with regard to the LTD plan. In the agreement, the trustees appoint Sunbenco as the Plan Administrator. The agreement goes on to provide that Sunbenco is not liable for paying benefits under the plan. Paragraph 6 of the agreement provides in part:

Sunbenco is not and shall not be considered an insurer or underwriter of the Plan the Trustees shall retain the final responsibility and liability for the payment of benefits made under the Plan and for all expenses incurred in the administration of the Plan...

20 The Administrative Services Contract indicates that the Trustees of the C-I-L L.T.D. Trust have liability for paying benefits under the Plan. It is the Trustees who in effect insure, or underwrite of the plan. The Trust, or the trustees however, are not parties to the collective agreement. While the trust may be in some fashion related to the employer, there is nothing in the collective agreement to suggest the Trustees are either part of the employer, related to it, or in any way bound by the collective agreement. It is the Trust, or trustees, and not the employer, that has the obligation to pay the benefits under the LTD plan.

21 Of equal importance is paragraph 3 of the Administrative Services Contract. It reads as follows:

Subject to paragraph 5, Sunbenco will have the right to determine the amount of Plan benefits, if any, payable to an employee and the Trustees agree to accept and follow such determination. Sunbenco agrees to make such determination on the basis of the Plan Document.

Thus, the employer has no jurisdiction over the actual determination of the entitlement to benefits under the plan. That discretion rests solely with Sunbenco, the Plan administrator. Effectively, it is Sunbenco that adjudicates claims. They, of course, are not parties to the collective agreement. The question Ms. Hamilton wishes determined is whether her LTD benefits were properly denied. The employer has no power to make that decision.

22 The Supreme Court of Canada in Weber3 set out the concept of an arbitrator's exclusive jurisdiction encompassing disputes arising out of the collective agreement. However, not every dispute between employer and employee comes under that jurisdiction. As McLachlin, J. put it:

The question in each case is whether dispute, in its essential character, arises from the interpretation, application, administration or violation of the collective agreement.

The dispute here, in its essential character does not arise from the interpretation, application, administration or violation of the collective agreement. The comments of Goudge, J.A. in London Life Insurance Co. v. Dubreuil Brothers Employees Assn.4 are equally applicable in this case. This case is not a dispute "between those bound by the collective agreement, but between an employee and the insurer, a stranger to that agreement. It is not a dispute arising out of the interpretation, application, administration or violation of the collective agreement, which has admittedly been fully complied with. It is instead a dispute about entitlement to benefits under the insurance policy. The facts which give thisdispute its essential character were not intended by the parties to be governed by the collective agreement and do not engage the rights and obligation of the parties found expressly or by inference in that agreement."

23 I therefore conclude that this court has jurisdiction to deal with Ms. Hamilton's claim.

Disposition:

24 In the result, the defendant's motion is dismissed. On consent, the plaintiff's motion to amend her pleadings is granted. The parties agree that costs should follow the event, and should be fixed in the amount of $750. The plaintiff is therefore entitled to her costs of the motion, fixed at $750.


1 Labour Relations Act, 1995 S. O. 1995, Chap. 1, Shc. A; November 10, 1995, section 48(1)

2 London Life Insurance Co. v. Dubreuil Brothers Employees Assn. (2000), 49 O.R. (3d) 766 (Ont. C.A.); Sun Life Assurance Co. of Canada v. CAW -- Canada, [2000] O.J. No. 2608 (Ont. C.A.), leave to appeal dismissed [Sun Life Assurance Co. of Canada v. CAW -- Canada (2001), 267 N.R. 393 (note) (S.C.C.)]; and I.W.A. -- Canada, Local 2693 v. Longlac Wood Industries Inc., [2000] O.J. No. 2607 (Ont. C.A.)

3 Weber v. Ontario Hydro, [1995] 2 S.C.R. 929 (S.C.C.)

4 Note 2, above.