Dayco (Canada) Ltd. v. CAW-Canada, [1993] 2 S.C.R. 230 (1993)

Supreme Court of Canada

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Dayco (Canada) Ltd. v. CAW-Canada, [1993] 2 S.C.R. 230 (1993)

Dayco (Canada) Ltd. v. CAW-Canada,

[1993] 2 S.C.R. 230

Dayco (Canada) Ltd. Appellant v.

National Automobile, Aerospace and Agricultural

Implement Workers Union of Canada (CAW-Canada)

(formerly International Union, United Automobile,

Aerospace and Agricultural Implement Workers of

America (UAW)) and Howard D. Brown, Arbitrator Respondents

Indexed as: Dayco (Canada) Ltd. v. CAW-Canada

File No.: 22180.

1992: May 7; 1993: May 6.

Present: Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.

on appeal from the court of appeal for ontario

Labour relations -- Grievance arbitration -- Company ending retired workers' benefits derived from expired collective agreement -- Union initiating grievance -- Whether or not grievance arbitrable -- Whether or not arbitrator correctly assumed jurisdiction.

Judicial review -- Labour Relations Board -- Grievance arbitration -- Company ending retired workers' benefits derived from expired collective agreement -- Union initiating grievance -- Whether or not grievance arbitrable -- Whether or not arbitrator correctly assumed jurisdiction -- Whether or not privative clause applicable -- Labour Relations Act, R.S.O. 1980, c. 228, s. 44.

Appellant shut down its Hamilton plant in 1983 and permanently closed it in 1985. The company provided certain group insurance benefits to its employees under former collective agreements, the last one of which was signed on April 27, 1983 and expired on April 21, 1985. Prior to the final closing, the company and the union negotiated a shutdown agreement, under which the group insurance benefits for active employees would be discontinued six months after the plant closed. The agreement did not mention the retirees' benefits. The collective agreement was formally terminated on May 29, 1985. The pension plan was wound up and an annuity was bought to satisfy the company's outstanding pension obligations.

The company advised all retirees that their benefits would be terminated when the benefits for active employees were to cease under the shutdown agreement. The union lodged a grievance on behalf of the retired workers, demanding reinstatement of the benefits. The company refused to acknowledge this grievance and objected to the arbitrator's jurisdiction. In its opinion, there was no collective agreement in place when the grievance was lodged and it had no obligations to the retired workers on any basis but the collective agreement.

At the arbitration hearing the company renewed its objection to the grievance, and argued that the arbitrator had no jurisdiction because the collective agreement had ended. The arbitrator heard submissions on this point only, and then adjourned the hearing. In a written award, he rejected the company's arguments on jurisdiction, found that the matter before him was arbitrable, and ordered the arbitration to proceed on the merits at a later date. The company applied for judicial review of the arbitrator's decision, and the Divisional Court set aside the award. An appeal to the Court of Appeal was allowed, thus reinstating the arbitrator's award. This appeal raises two issues. The first is the scope of judicial review of the arbitrator's decision. The remaining issue is the correctness of the arbitrator's finding that a promise to pay benefits to retired employees can survive the expiration of the collective agreement in which the promise is made.

The union sought to cross-appeal that portion of the Court of Appeal's order directing that the arbitration proceed before a different arbitrator. That order was made at the request of the company, in the belief that the arbitrator had in effect pre-judged the merits of the case in the course of determining his jurisdiction.

Held: The appeal and cross-appeal should be dismissed.

Per La Forest, Sopinka, Gonthier, McLachlin and Iacobucci JJ.: At this Court, the appellant only challenged the conclusion of the arbitrator on the general proposition that a promise in a collective agreement can survive the expiry of the collective agreement in which the promise is made. In answering the question the arbitrator was not acting within his jurisdiction in a strict sense. Rather he was deciding upon jurisdiction and as such was required to be correct.

Courts should, as a matter of policy, defer to the expertise of the arbitrator in questions relating to the interpretation of collective agreements. An arbitrator has jurisdiction stricto sensu to interpret the provisions of a collective agreement in the course of determining the arbitrability -- i.e., the arbitrator's jurisdiction -- of matters under that agreement. But here the viability and subsistence of the collective agreement is challenged. The collective agreement is the foundation of the arbitrator's jurisdiction, and in determining that it exists or subsists, the arbitrator must be correct. If the issue is arbitrable, then the arbitrator has jurisdiction, at least in the limited sense of being empowered to decid...

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