McLeod v. Egan, [1975] 1 SCR 517

Supreme Court of Canada

McLeod v. Egan, [1975] 1 S.C.R. 517

Date: 1974-05-27

William McLeod and George McPherson (Plaintiffs) Appellants;

and

Rory F. Egan and Galt Metal Industries Limited (Defendants) Respondents.

1974: May 2, 3; 1974: May 27.

Present: Laskin C.J. and Martland, Judson, Spence, Pigeon, Dickson and Beetz JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Labour relations—Arbitration—Overtime in excess of statutory maximum—Specific consent or agreement required—The Employment Standards Act, 1965 (Ont.), c. 35, s. 11(2).

Arbitration—Review by courts—Interpretation of statute—Reasonableness test not applicable.

A collective agreement provided for a standard working week of 40 hours, 8 hours daily, Monday to Friday and for overtime rates. An employee, to whom the agreement and The Employment Standards Act, 1968 (Ont.), c. 35, now R.S.O. 1970, c. 147 applied, was disciplined by the respondent Company for refusing to work in excess of 48 hours in a week. The grievance proceeded to arbitration where the arbitrator construed a stipulation in the collective agreement that the Company could require overtime beyond the basic 40 hours per week as constituting “the consent or agreement of the employee or his agent” required by s. 11(2) of the Act. Morand J. quashed the award but the Court of Appeal was of the opinion that the construction by the arbitrator of the agreement in the light of s. 11(2) of the Act was one which it would reasonably bear and therefore could not be impeached.

Held: The appeal should be allowed.

Per Laskin C.J. and Spence and Beetz JJ.: Where an arbitrator is required, in deciding a dispute, to construe a document subscribed by the parties who chose the arbitrator the Courts will not readily interfere with the award of the arbitrator and, where the document lends itself to two different constructions,

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neither of which is unreasonable, will defer to the choice of the arbitrator. However should an arbitrator find it necessary to construe a statute then it lies with the Court to determine what meaning the statute should bear and there can be no policy of deference to the adjudication of the arbitrator.

Per Martland, Judson, Spence, Pigeon, Dickson and Beetz JJ.: The Act provides that the consent or agreement of the employee or his agent is necessary before an employee can be required to perform work beyond the statutory legal limits of eight hours per day and forty‑eight hours per week. Such consent or agreement must relate specifically to the performance of work beyond these limits. To construe anything in the agreement as satisfying the requirements of s. 11 (2) of the Act was an error of law on the face of the award.

[Re Ford Motor Co. of Canada Ltd. and International Union, United Automobile Workers of America, [1972] 1 O.R. 36 disapproved].

APPEAL from a judgment of the Court of Appeal for Ontario[1] allowing an appeal from Morand J. granting an order in lieu of certiorari to quash an arbitration award of the respondent Rory F. Egan. Appeal allowed with costs to the respondents.

Ian G. Scott, Q.C., and Chris G. Paliare, for the appellants.

Bruce Stewart, for the respondents.

The judgment of the Chief Justice was concurred in by Spence and Beetz JJ.

THE CHIEF JUSTICE—I agree with my brother Martland in his disposition of this appeal, but I wish to add for myself why I cannot accept the approach taken by the Ontario Court of Appeal, namely that there was an issue of construction and the construction adopted by the arbitrator was one which the language which he had to construe would reasonably bear. Although the issue before the arbitrator arose by virtue of a grievance under a collective agreement, it became necessary for him to go outside the collective agreement and to construe and apply

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a statute which was not a projection of the collective bargaining relations of the parties but a general public enactment of the superior provincial Legislature. On such a matter, there can be no policy of curial deference to the adjudication of an arbitrator, chosen by the parties or in accordance with their prescriptions, who interprets a document which is in language to which they have subscribed as a domestic charter to govern their relationship.

In so far as Re Ford Motor Co. of Canada Ltd. and International Union, United Automobile Workers of America[2] would apply the same test to the construction of a statute called for in a grievance arbitration as to the construction of the collective agreement itself under which the grievance arises, I would hold it to be wrong. No doubt, a statute like a collective agreement or any other document may present difficulties of construction, may be ambiguous and may lend itself to two different constructions neither of which may be thought to be unreasonable. If that be the case, it nonetheless lies with the Court, and ultimately with this Court, to determine what meaning the statute should bear. That is not to say that an arbitrator, in the course of his duty, should refrain from construing a statute which is involved in the issues that have been brought before him. In my opinion, he must construe, but at the risk of having his construction set aside by a Court as being wrong.

I would allow the appeal and make the same award as to costs as proposed by my brother Martland.

The judgment of Martland J. was concurred in by Judson, Spence, Pigeon, Dickson and Beetz JJ.

MARTLAND J.—This appeal is concerned with an application by the appellants, on their own behalf and on behalf of all other members of The United Steelworkers of America, Local 2894 (hereinafter referred to as “the Union”)

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for an order, in lieu of a writ of certiorari, to quash an award made by the respondent, Rory F. Egan, who had acted as arbitrator, appointed pursuant to the provisions of a collective agreement, dated October 14, 1969, between the Union and the respondent, Gait Metal Industries Limited (hereinafter referred to as “the Company”). The application was granted by Morand J. The Court of Appeal allowed an appeal by the Company. The Union appeals from this judgment with leave of the Court of Appeal.

The collective agreement, in art. 4.01, provided that the standard working week should consist of 40 hours, 8 hours daily, Monday to Friday inclusive, with provision for the rates payable for overtime.

Section 7(1) of The Employment Standards Act (hereinafter referred to as “the Act”), 1968 (Ont.), c. 35 (now s. 12(1), R.S.O. 1970, c. 147), provides:

Subject to subsection 2, the working hours of an employee shall not exceed eight in the day and forty-eight in the week.

Subsection 2 is not relevant to the issues in this appeal.

An employee of the Company, to whom the provisions of the Act applied and who had already worked 48 hours in a particular week, was disciplined by the Company by reason of his refusal to work overtime in excess of 48 hours in that week. Pursuant to the provisions of the collective agreement, a grievance was filed in which it was alleged that the employee could not lawfully be required to work in excess of 48 hours per week. The grievance proceeded to arbitration before the respondent arbitrator.

Section 9 (now s. 16) of the Act allows the Director of Employment Standards to issue a permit authorizing hours of work in excess of those prescribed by s. 7. Such a permit had been obtained by the Company in respect of the overtime period which the employee had been asked to work.

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Section 11 (now s. 18) of the Act provides that:

11. (1) No employer may require or permit work, and no employee may work or agree to work, any hours that exceed the maximum hours determined under this Act.

(2) The issuance of a permit under section 9 does not require an employee to work any hours in excess of those prescribed by section 7 without the consent or agreement of the employee or his agent.

The arbitrator determined that the consent or agreement of the employee or his agent required by s. 11(2) of the Act was found in art. 2.01 of the collective agreement.

Article 2.01 provides:

2.01 The management and operation of the Company’s plant, the efficiency, direction, supervision and control of all operations and all working forces including the right to discipline, hire, suspend and discharge employees for cause and to make and enforce reasonable rules to promote safety, efficiency, order, discipline and protection of the Company’s materials, tools and machinery and to promote or demote employees or transfer employees temporarily or permanently to new duties or to decide as to the relative skill, ability and efficiency of employees in the performance of their duties, or to relieve employees from duty because of lack of work or for other legitimate reasons, or to schedule its operations or to extend, limit, curtail or reschedule its operations when in its sole discretion it may deem it advisable to do so shall remain vested solely in the Company, subject to the provisions of Article 9 hereof and to the right of an employee to lodge a grievance under the provisions of Article 10 in the manner and to the extent therein provided.

Dealing with the effect of s. 11(2) of the Act, the arbitrator said:

The effect of the words “without the consent or agreement of the employee or his agent” is, in the present case, to leave the question as to whether overtime is voluntary or compulsory for determination under the terms of the collective agreement between the Company and the employees’ bargaining

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agent. That being so, the finding made earlier herein that the collective agreement provides that overtime is compulsory remains unaffected by the provisions of The Employment Standards Act and governs the situation before me.

He had, earlier in his reasons, said, in relation to art. 2.01 of the collective agreement:

In the absence of language limiting the broad powers vested in the Company in Article 2, it is beyond dispute that, under the provisions of the Collective Agreement, overtime is compulsory.

His conclusion was:

Since overtime is compulsory under the terms of the collective agreement, I find that the conduct of the grievor in the circumstances described above was such as to render him liable to discipline.

These passages from the award make it clear that the arbitrator did not find in the agreement anything which could be construed as a specific consent to overtime beyond the normal statutory limit of 48 hours per week by any employee. What he relied on was an agreement that the Company could require overtime work beyond the total of 40 hours per week stipulated in the collective agreement.

The arbitrator’s award was quashed by Morand J. His opinion was that, while overtime work could normally be demanded as a management right, that right had been limited by The Employment Standards Act which prescribes a maximum total work week of 48 hours. Beyond that, it is the right of the employee to decide whether to consent. Article 2.01 of the collective agreement did not contain any such consent, and by reading it into that article the arbitrator had varied the agreement, which he could not do.

He is here referring to the provision contained in art. 10.08 of the collective agreement defining the arbitrator’s authority:

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The arbitrator shall hold a fair hearing on the grievance in the general location of Galt, Ontario. His authority shall be limited to interpreting and applying the express language of this Agreement without altering, varying, adding to it or making a decision inconsistent with its terms.

The Court of Appeal was of the opinion that the arbitrator had construed the collective agreement, particularly art. 2.01, in the light of s. 11(2) of the Act, that the construction he had placed upon it was one which it would reasonably bear, and, accordingly, could not be impeached. The appeal was allowed, and the judgment of Morand J. was set aside.

The basic provision of the Act is that which places a maximum limit upon the working hours of an employee of eight in the day and forty-eight in the week. Any provision of an agreement which purported to give to an employer an unqualified right to require working hours in excess of those limits would be illegal, and the provisions of art. 2.01 of the collective agreement, which provided that certain management rights should remain vested in the Company, could not, in so far as they preserved the Company’s right to require overtime work by its employees, enable the Company to require overtime work in excess of those limits.

To go beyond the limits provided in s. 7 of the Act more than this is required. It is first necessary for an employer to obtain a permit from the Director of Employment Standards permitting work in excess of the prescribed limits, as provided in s. 9. But, coupled with this provision, which provides for exceptions to the prescribed maximum limits, is the express requirement of s. 11(2) that such a permit is not effective to require an employee to work the extra hours provided for in the permit unless he, or his agent, has consented or agreed thereto.

In my opinion such consent or agreement must relate specifically to the performance of work by the employee beyond the normal statu-

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tory legal limits. There is no such consent or agreement to be found in art. 2.01 of the collective agreement. On the contrary, the stipulation in art. 2.01 is that the rights enumerated “shall remain vested solely in the Company”. By the operation of the statute, the right to require overtime beyond 48 hours per week from any individual employee had been taken away from the employer and became subject to the rights of the employee under s. 11(2). There is nothing in the agreement that can possibly be construed as having met the requirements of that subsection and, therefore, it is unnecessary to determine whether this particular consent can be given by a collective agreement.

In my opinion there was an error of law on the face of the award in respect of the legal requirements of s. 11(2) of the Act.

I would allow the appeal, set aside the order of the Court of Appeal and restore the order of Morand J. The appellants are entitled to the costs of their application to the Supreme Court of Ontario and in the Court of Appeal. In accordance with the condition imposed by the Court of Appeal in the order granting leave to appeal to this Court, the respondents are entitled to their costs of the application for leave to appeal and of the appeal to this Court.

Appeal allowed.

Solicitors for the appellants: Cameron, Brewin & Scott, Toronto.

Solicitors for the respondents: Hicks, Morley, Hamilton, Stewart & Storie, Toronto.