



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Bennett 
          v. British Columbia,







2007 
          BCCA 5



Date: 20070102





Dockets: CA033624, CA033628

Brought under the
Class Proceedings Act
, 
    R.S.B.C. 1996, c. 50

Between:

Frederick 
    Bennett

Respondent

(
Plaintiff
)

And

Her 
    Majesty the Queen in Right of the

Province 
    of British Columbia

Appellant

(
Defendant
)








Before:


The 
          Honourable Madam Justice Newbury




The 
          Honourable Madam Justice Levine




The 
          Honourable Mr. Justice Chiasson








J.G. 
          Morley

D.C. 
          Prowse

T. Callan


Counsel for the Appellant




P. 
          Waldmann

M. 
          Zigler

A. Peeling


Counsel for the Respondent




Place 
          and Date of Hearing:


Vancouver
,
British Columbia




October 19 & 20, 2006




Place 
          and Date of Judgment:


Vancouver
,
British Columbia




January 2, 2007










Written 
          Reasons by
:




The 
          Honourable Madam Justice Newbury




Concurred 
          in by:




The 
          Honourable Madam Justice Levine




Concurring 
          Reasons by:




The 
          Honourable Mr. Justice Chiasson



Reasons 
    for Judgment of the Honourable Madam Justice Newbury:

Introduction

[1]

The respondent Mr. Bennett seeks to bring a class action on behalf 
    of some 27,000 persons who, until their respective retirement dates, were 
    employed either by the Province of British Columbia or by Crown corporations 
    or other Crown-related bodies.  As such, they historically received certain 
    benefits, namely premium-free MSP and extended health plan coverage, which 
    the Province paid from the Consolidated Revenue Fund between 1978 and 2001, 
    and thereafter from a separate fund.  They contend that these benefits formed 
    part of the consideration for their employment and therefore constitute contractual 
    rights that vested and became legally enforceable upon their retirement.

[2]

At least from 2000, the Province began discussions with its unions 
    to change the arrangements with respect to retirees benefits.  Responsibility 
    for the management and administration of government pensions was eventually 
    transferred to a board of trustees established pursuant to an agreement between 
    the Province, the British Columbia Government and Service Employees Union 
    (the BCGEU), the Union of Psychiatric Nurses, and the Professional Employees 
    Association.  According to the Province, one of its objectives was to ensure 
    that all the post-retirement group benefits would be funded out of the employer 
    contributions to [a fund called the Inflation Adjustment Account].  A statutory 
    provision was enacted making the agreement binding on all retired employees.  
    Mr. Bennett and other retired members of the Public Service Pension Plan 
    (whom I shall refer to collectively as the Retirees) were notified that 
    their MSP and extended health plan benefits would no longer be paid in full.  
    They took the view that this constituted breach of contract and breach of 
    fiduciary duty on the part of the Province.  Mr. Bennett commenced his action 
    in August of 2004 and sought to have it certified under the
Class Proceedings 
    Act
, R.S.B.C. 1996, c. 50.

[3]

The Province defended on many grounds, including the assertion that 
    the benefits in question were never the subject of the Retirees terms of 
    employment, but were   extended by the Province without consideration, and 
    without any intention to create a contractual relationship.  As such, they 
    could be diminished or eliminated at the will of the Legislature.  In the 
    alternative, the Province contended that even if the MSP and extended health 
    benefits had been contractual, any claim the Retirees may have had was compromised 
    by the BCGEU when the Province agreed to increase its contributions to certain 
    employee benefits by 0.25%.  In the words of the amended statement of defence:

Post-retirement 
    group benefits, provided on a defined benefit basis, were never part of the 
    compensation of employees of the Province.  Before unionization, the Province 
    provided for these benefits in a statutory scheme separate from that governing 
    compensation.  After collective bargaining, the Province refused to have such 
    benefits in its collective agreements.  By statute,
all
terms and conditions 
    of employment of bargaining unit employees of the Province must be in collective 
    agreements.

In 
    any event, the 2000 Joint Trust Agreement made clear the basis on which the 
    Province was providing post-retirement group benefits from that point on.  
    The Province and other employers were obliged to provide a specific level 
    of funding for post-retirement group benefits and inflation protection, while 
    the Board, with representation from employee groups and the BCGREA, managed 
    the funding in the interests of all the members.  External factors have driven 
    the costs of these benefits up, resulting in reforms, not by the Province, 
    but by the Board.

Further, any claim was compromised by the BCGEU in October 
    2003 when the Province agreed to increase the employers contributions to 
    inflation security and post-retirement group benefits by 0.25% of salary.

The Province moved for the dismissal of the 
    action, or for a stay, pursuant to Supreme Court Rules 14 and 19. Mr. Bennett 
    applied to have the action certified as a class action, and counsel agreed 
    that both motions could be heard at the same time.

[4]

In support of its motions, the Province objected that the Supreme Court 
    lacked jurisdiction to hear the case.  It said Mr. Bennetts claim lay instead 
    within the exclusive jurisdiction of a labour arbitrator appointed under one 
    of the collective agreements to which most of the Retirees were bound until 
    their respective retirement dates.  About 75% of the Retirees had been members, 
    for example, of the BCGEU.  Its collective agreement specified that all differences 
    respecting the interpretation, application, operation, or any alleged violation 
    of a provision of the collective agreement would be resolved through the grievance 
    procedure by an arbitrator or arbitration board.  This principle is of course 
    codified by s. 84(2) and (3) of the
Labour Relations Code
, R.S.B.C. 
    1996, c. 244 as follows:

(2)  
    Every collective agreement must contain a provision for final and conclusive 
    settlement without stoppage of work, by arbitration or another method agreed 
    to by the parties, of
all disputes between the persons bound by the agreement 
    respecting its interpretation, application, operation or alleged violation, 
    including a question as to whether a matter is arbitrable
.

(3)  
    If a collective agreement does not contain a provision referred to in subsections (1) 
    and (2), the collective agreement is deemed to contain those of the following 
    provisions it does not contain:

(a) the 
    employer must not dismiss or discipline an employee bound by this agreement 
    except for just and reasonable cause;

(b) if 
    a difference arises between the parties relating to the dismissal or discipline 
    of an employee, or to the interpretation, application, operation or alleged 
    violation of this agreement, including a question as to whether a matter is 
    arbitrable, either of the parties, without stoppage of work, may, after exhausting 
    any grievance procedure established by this agreement, notify the other party 
    in writing of its desire to submit the difference to arbitration, and the 
    parties must agree on a single arbitrator, the arbitrator must hear and determine 
    the difference and issue a decision, which is final and binding on the parties 
    and any person affected by it.  [Emphasis added.]

[5]

The Chambers judge below declined to grant the Provinces motions. 
     He ruled that the Court had jurisdiction to hear the action and that certification 
    of the class as proposed by the plaintiff pursuant to the
Class Proceedings 
    Act
was the preferable way to determine the issues raised by the pleadings.  
    For reasons indexed as 2005 BCSC 1673, he granted Mr. Bennetts application 
    for certification and made the required orders defining the class, defining 
    the common issues, and appointing Mr. Bennett as the representative plaintiff.

[6]

The Province appeals from this order on the grounds that the Chambers 
    judge erred in ruling that the court, rather than one or more labour arbitrators, 
    had jurisdiction over the matters in issue for unionized employees, and erred 
    in permitting those Retirees who were not employed directly by Her Majesty 
    to be included in the class.  Although the Province concedes that those Retirees 
    who were not unionized (the excluded employees) could pursue a civil action 
    for breach of obligations allegedly accrued in consideration for work, counsel 
    suggested that their rights could be most efficiently determined once the 
    evidence of the understanding in relation to unionized employees [is] determined 
    through labour arbitration.

[7]

As will be seen below, I am of the view that the Chambers judge did 
    not err on the central question of jurisdiction.  I do agree, however, that 
    those Retirees who were not employed directly by the Province were not properly 
    included in that part of the action that is framed in contract and must be 
    excluded from the plaintiff class for purposes of that aspect of the proceeding.

Legislative 
    Framework

[8]

Unfortunately, a rather complex and indeed confusing series of statutes, 
    regulations and rules must be reviewed to elucidate the issues of jurisdiction 
    and procedure raised by this appeal.

[9]

As the plaintiff notes in his factum, the Province first began fully 
    subsidizing the Medical Services Plan premiums of retired members of the Public 
    Service Pension Plan in 1978.  At that time, s. 4(2) of the
Public Services 
    Medical Plan Act
, S.B.C. 1955, c. 63 stated that notwithstanding the 
    provisions of the
Civil Service Superannuation Act
, S.B.C. 1935 
    c. 77, there would be deducted from the superannuation allowance payable to 
    a pensioner (a person receiving a superannuation allowance under the
Civil 
    Service Superannuation Act
) the monthly premium prescribed by regulation. 
     Reg. 361/78 prescribed that the monthly premium for purposes of s. 4(2) 
    was nil, with the apparent result that pensioners who were subject to the 
    Act effectively paid no premiums.

[10]

Beginning in 1981, retired government employees also received premium-free 
    extended health benefits (EHBs) under a regulation passed pursuant to the
Public Service Benefit Plans Act
, S.B.C. 1976, c. 46.  Section 
    2(1) thereof permitted the Provincial Secretary to make a contract or contracts 
    with an insurer or insurers causing any or all employees to whom this Act 
    applies to be insured.  By s. 3(b), the Lieutenant-Governor in Council was 
    empowered to determine and establish the rate or rates and method or methods 
    of contribution toward payment of premium to be made by persons insured under 
    the Act, and by s. 5, monies required to be paid by the Minister of Finance 
    or on behalf of the Crown as employer under the Act were to be paid from 
    monies appropriated for that purpose by the Legislature or, if no appropriation 
    is available for that purpose or if the appropriation is not sufficient, from 
    the Consolidated Revenue Fund.  Reg. 34/81, promulgated January 26, 1981 
    and headed Pensioners Extended Health Care Plan, extended a particular group 
    plan contract to confer benefits on every person who receives on or after 
    April 1, 1981, an allowance under the
Pension (Public Service) Act
and who elects to receive those benefits.  Section 3 of the regulation stated 
    that persons to whom the contract applied would not be required to make any 
    contribution towards payment of premium under that contract.  The Province 
    does not dispute that retired employees were included in this description.

[11]

According to Mr. Cook, the chairman of the Public Service Pension Board 
    of Trustees, the MSP and extended health benefits (which I shall refer to 
    collectively as the Benefits) made available to retirees were dealt with 
    separately from the terms of the Public Service Pension Plan.  Until 1960, 
    the Plan was generally regulated by the various iterations of the
Civil 
    Service Superannuation Act
, later called the
Public Service 
    Superannuation Act
(beginning with S.B.C. 1973, c. 13), and then the
Pension (Public Service) Act
(beginning with R.S.B.C. 1979, 
    c. 318).  The latter statute was amended
inter alia
by the
Pension 
    Statutes Amendment Act
, S.B.C. 1994, c. 54, which established a Public 
    Service Pension Advisory Board.  That body was required
inter

alia
to report annually to the Treasury Board on the operation of the Plan and 
    Fund.  Section 61(2) of the amended statute authorized the Lieutenant-Governor 
    in Council to make regulations for various matters, including:

(d.)       prescribing the manner of making application 
    for and the granting of superannuation allowances and supplemental benefits 
    allowances;

(e.)       prescribing forms to be used for purposes 
    of this Act or the regulations;



(g.)       providing for the transfer and administration 
    under this Act of the accounts and money transferred under this Act from the 
    superannuation fund under the former Act to the fund under this Act;



(m.)
prescribing group benefit entitlements which 
    may be provided for pensioners, including extended health plans and dental 
    plans
;

(n.)       
    prescribing terms and conditions under which the group benefit entitlements 
    referred to in paragraph (m) may be provided and funded from employer contributions 
    under section 4.2(e)(iii), (f)(iii), (g)(iii).and (h)(iii) . [Emphasis added.]

Reg. 136/95 confirmed the identity of the MSP and EHB 
    Plan contracts provided for pensioners pursuant to s. 61.

[12]

As Mr. Bennett notes in his factum, pension and health benefits were 
    consolidated in 1995 when Reg. 34/81 was repealed and replaced by a new Pensioner 
    Group Benefit Funding Regulation (141/95) enacted pursuant to the
Public 
    Service Benefit Plan Act
.  Section 2(1) of the regulation confirmed 
    that a member (a term that included any person receiving a superannuation 
    allowance under the
Pension (Public Service) Act
) was required 
    to make a nil contribution to the payment of premiums for MSP plan and EHB 
    coverage.  Thus in the plaintiffs submission, entitlement to the Benefits 
    was again tied to membership in the Public Service Pension Plan.

[13]

Yet another legislative change occurred in 1999 when the
Public 
    Sector Pension Plans Act
, S.B.C. 1999, c. 44 was enacted in succession 
    to the
Pension (Public Service) Act
.  The new statute established 
    the British Columbia Pension Corporation consisting of a pension management 
    board, the purpose of which was to provide plan administration services for 
    various governmental pension plans, including the Public Service Pension Plan.  
    Schedule C to the
Public Sector Pension Plans Act
continued 
    the Plan and its membership and confirmed at s. 2(4) that any vested rights 
    held by Plan members under the previous statute continued to apply, in the 
    same manner and to the same extent, under the Public Service Pension Plan. 
     Similarly, s. 9(1) continued the Public Service Pension Fund under the new 
    Schedule and s. 9(4) specified that benefits payable thereunder and under 
    the Pension Plan Rules must be paid from the pension fund and, for this purpose, 
    the pension fund must be considered one and indivisible.  Section 18(4)(f) 
    of the Schedule required that the Pension Plan provide for post-retirement 
    group benefits.  Under Reg. 114/2000, the Fund was divided into three accounts 
     the basic account, the inflation adjustment account, and the supplemental 
    benefits account.  Sections 93 and 94 of the Regulation contemplated the funding 
    of EHB and MSP premiums by the employer or by the monthly premium deducted 
    from the members pension, or both, in accordance with regulations made under 
    the
Public Service Benefit Plan Act
.

[14]

It bears emphasizing before concluding this section that the Benefits 
    were provided to the Provinces former union and non-union employees alike.  
    From the early 1970s, when collective bargaining was introduced into the public 
    service, the Benefits were kept separate and apart from the bargaining process.  
    As stated by Mr. Straszak, the Assistant Deputy Minister for the Employee 
    Relations Division of the British Columbia Public Service Agency,  no collective 
    agreement to which the Crown has been a party since the introduction of collective 
    bargaining in 1974 has promised extended health benefits or medical services 
    plan subsidies to employees after they retire.  Neither has any Terms and 
    Conditions of Employment document for excluded employees.  Since 1974, this 
    separation has been reflected in s. 13 of the
Public Service Labour 
    Relations Act
, S.B.C. 1973, c. 144, and successor provisions.  Section 
    13 provided that:

Every collective agreement
shall include all matters affecting wages or 
    salary, hours of work, and other working conditions, except

(a.)       
    the principle of merit and its application in the appointment and promotion 
    of employees, subject to section 34 of the
Public Service Act
;

(b.)
all matters included under the
Public Service Superannuation Act
;

(c.)       
    the organization, establishment, and administration of the departments and 
    branches of the Government except the effect of reductions in establishment 
    of employees which shall be negotiated by the parties;

(d.)       
    the application of the system of classification of positions or job evaluation 
    under the
Public Service Act
and regulations; and

(e.)       
    the procedures and methods of training or retraining employees, other than 
    those affected by section 18, and other than training programmes administered 
    within a branch or department that apply to one occupational group only.  
    [Emphasis added.]

Essentially the same provision remains in 
    force today as s. 12 of the
Public Service Relations Act
, R.S.B.C. 
    1996, c. 388.  (See
infra
, at para. 42.)

Legislative 
    Changes, 2002  2003

[15]

I have already mentioned that in late 2000, the government and three 
    of its unions signed a Joint Trust Agreement which contemplated material 
    changes in the pension arrangements applicable to retired persons.  A recital 
    to the Agreement stated that as a result of discussions initiated by the President 
    of the BCGEU, the parties wished to provide
inter alia
for the joint 
    management of the Public Service Pension Plan and Fund.  Under the Agreement, 
    a board entitled the Public Service Pension Board of Trustees was constituted, 
    consisting of 14 trustees, one of whom was required to be a retired employee 
    appointed by the B.C. Government Retired Employees Association.  The board 
    was to be given all the powers necessary to enable it to administer the Pension 
    Plan and manage the Pension Fund, subject only to the limitations set out 
    in [the] Agreement, the Pension Plan Rules, the [
Public Sector Pension 
    Plans Act
], the [
Pension Benefits Standards Act
R.S.B.C. 
    1996, c. 352] and all other applicable laws.  Further, the board was to be 
    authorized to:

make plan rules, applicable generally or to a specified person or class 
    of persons, prescribing the Pension Plan Rules.  Without limitation, the Board 
    may group or classify Employers and Plan Members in any way it considers necessary 
    or desirable for the purposes of the Pension Plan, including the provision 
    or payment of pension benefits under the Pension Plan.  The Board may also 
    provide in the Pension Plan Rules for different benefits and different levels 
    of benefits for different groups or classes of Plan Members so as to take 
    into account any variable affecting the administration or funding of the Pension 
    Plan.

Section 15.7 of the Agreement required the 
    board to:

(a)        change the Employer contribution rates currently 
    provided in subsections 6(1)(a), (b) and (c) of the Statutory Pension Plan 
    Rules from 7.75%, 9.25% and 1.25%, respectively, to 4.25%, 5.75% and 2.25%, 
    respectively.

(b)        
    provide that the Employer portion of the cost of all of the post retirement 
    group benefits currently provided in Part 12 of the Statutory Pension Plan 
    Rules shall be paid in the same manner that the Employer portion of the cost 
    of the dental plan benefits is currently paid under Section 92 of the Statutory 
    Pension Plan Rules

According to Mr. Cooks affidavit, the effect of the 
    Agreement was that the Benefits would be paid for from the supplemental benefits 
    account effective April 1, 2001.  (References elsewhere in the evidence to 
    the inflation adjustment account may or may not be correct.)

[16]

In October 2002, additional amendments to Reg. 141/95 had the effect 
    of repealing the obligation of the Province to pay 100% of all MSP premiums 
    for Retirees.  A sliding schedule of part payments, based on years of service 
    of retired employees, was introduced by Reg. 276/2002.  The following year, 
    amendments were made to the
Public Sector Pension Plans Act
to remove the requirement that the Province include the Benefits in the Pension 
    Plan, although such payments were still permitted under s. 18 of Schedule 
    C to that statute.

[17]

Effective January 1, 2004, the board enacted new Public Service Pension 
    Plan Post-Retirement Group Benefit Rules pursuant to part 2.1 of Schedule 
    C.  The preamble to the Rules describes in laymans terms the statutory changes:

Effective 
    January 1, 2004, the
Pension Statutes Amendment Act
, 2003 amended Schedule 
    C to the
Public Sector Pension Plans Act
to add a new Part 2.1  Post 
    Retirement Group Benefits.  The new part confirms
the authority of the 
    Public Service Pension Board of Trustees to administer group benefits for 
    retired plan members
.  Section 18.3 of Part 2.1 provides that the board 
    may determine the type of group benefits, who will be eligible to receive 
    benefits and the terms and conditions of coverage.  In addition, section 18.3 
    authorizes the board
to collect contributions for group benefit premiums 
    and to determine contributions required from, and subsidy levels provided 
    to, retired plan members
.

Effective 
    January 1, 2004,
references to pensioner in the
Public Service Benefit 
    Plan Act
were removed pursuant to the
Pension Statutes Amendment Act
, 
    2003, and the Pensioner Group Benefit Funding Regulation was repealed
.

Beginning 
    January 1, 2004, the Public Service Pension Plan Post Retirement Group Benefit 
    Rules, made under the authority of Part 2.1 of Schedule C of the
Public 
    Sector Pension Plans Act
and Article 11 of the Public Service Pension 
    Plan Joint Trust Agreement, constitute the rules for the provision of group 
    benefits to retired members of the Public Service Pension Plan.

Post-retirement group benefits are contingent benefits 
    and are subject to the availability of funding.  Coverage for these benefits 
    can be increased, decreased or eliminated at the discretion of the Public 
    Service Pension Board of Trustees
.  [Emphasis added.]

Sections 5 and 6 confirmed the changes begun 
    in 2002, namely the reduction of the percentages of MSP and extended health 
    plan premiums to be paid on behalf of Retirees, depending on their years of 
    pensionable service.  Section 18(4)(f) of Schedule C was deleted (by the
Pension 
    Statutes Amendment Act
, S.B.C. 2003, c. 62, s. 20).  Section 18(7) 
    of the amended schedule had already been enacted, purporting to bind the Retirees 
    to the Joint Trust Agreement:

Despite subsection (2), the unionized employees, the non-unionized 
    employees and the retirees not represented by the partners may benefit from 
    and be made subject to the agreement and the partners have the power to enter 
    into the agreement on behalf of those persons and, if entered into,
the 
    agreement is binding on those persons
.  [Emphasis added.]

The 
    previous Pensioner Group Benefit Funding Regulation (141/95) was repealed 
    by Reg. 484/2003.

The Plaintiffs Allegations

[18]

Between approximately 1978 and 2002, then, the Province paid the entire 
    monthly premiums necessary to fund the Benefits on behalf of the members of 
    the Public Service Pension Plan.  Mr. Bennett alleges that he and the other 
    Retirees were induced to take or continue employment with the Province at 
    a much lower pay than was available in the free market, and forego overtime 
    in exchange for the security and permanency of position, including the assurance 
    of the Benefits post-retirement.  At para. 24 of his amended statement of 
    claim, he states:

The promise of Retiree Benefits was communicated widely and openly from 
    early in its inception.  The communications included the standard letters 
    written to all employees just prior to retirement, information sheets, pamphlets 
    and benefit booklets distributed to employees, all of which stated that the 
    Retiree Benefits would be paid for by the government, and that the coverage 
    would be premium-free or nil.  The communications unequivocally promised 
    the Plaintiff and Retired Members that the payment of EHB and MSP premiums 
    by the Defendant was part of their retirement package.

[19]

As an example, Mr. Bennett notes that in the 1980s the Province distributed 
    to its employees a booklet entitled Public Service Superannuation Plan which 
    stated that it had been prepared with great care to provide [the recipients] 
    with the essential details of the Public Service Superannuation Plan in a 
    format that is clear and meaningful.  Under the heading Health Care Benefits, 
    the booklet advised employees that:

You 
    will probably wish to retain your health care coverage under the Medical Services 
    Plan of British Columbia.  An application form must be completed.
The 
    government will pay the monthly premium for you and your dependants after 
    retirement
.

You may also apply for continued, government paid, Extended Health Care 
    Plan coverage after retirement.  If you do not apply for coverage at the time 
    of retirement, the Extended Health Care Plan is not available to you at a 
    later date unless you can supply proof of continuous coverage from another 
    extended health care plan.  Pensioners who cease to reside in
British Columbia, and thereby become ineligible for 
    coverage, may later apply for coverage under the Extended Health Care Plan 
    provided they apply within one month of their return to residence in British 
    Columbia.  [Emphasis added.]

Another booklet published by the Superannuation Commission 
    and headed Your Retirement Income advised that the Public Service Pension 
    Plan provides 100% subsidized coverage for both B.C. Medical Plan and Extended 
    Health Plan.  Mr. Bennett deposes that similar representations were made 
    at retirement seminars he attended in the mid-1990s, and by a staff person 
    with whom he met individually to confirm the details of what retirement income 
    he could expect if he retired.

[20]

Shortly before he retired in 1996, Mr. Bennett received further correspondence 
    and an application form for superannuation allowance for completion.  Section 
    4 thereof instructed:

GROUP APPLICATION FOR MEDICAL PLAN COVERAGE

This 
    form is to be completed and returned to the Superannuation Commission if you 
    will be residing in British Columbia following retirement and elect group 
    medical plan coverage.
The government will pay the monthly premium for 
    you and your dependents after retirement
.  A new identity card will be 
    sent to you from the medical plan within approximately three months after 
    the effective date of your pension.  In the interim you may continue to use 
    your previous plan number.

Your 
    coverage under this plan will begin the first of the month following the month 
    in which your pension is effective.  For example, if you retire in February, 
    your pension will be effective March 1 and your medical plan coverage will 
    be effective from April 1.  If you do not defer the payment of your pension 
    there should be no interruption in your coverage.

If 
    you do not wish to have this group medical plan coverage, please inform the 
    Superannuation Commission.

EXTENDED HEALTH CARE PLAN COVERAGE

Complete, 
    sign and return the Extended Health Care Plan card if you will be residing 
    in British Columbia following retirement and elect coverage as described in 
    the enclosed brochure.
The Government will pay the monthly premium for 
    you and your dependents after retirement
.  Dental coverage is not available.

Your 
    coverage under this plan will begin the first of the month following the month 
    in which your pension is effective.  For example, if you retire in February, 
    your pension will be effective March 1 and your extended health care plan 
    coverage will be effective from April 1.  If you do not defer the payment 
    of your pension there should be no interruption in your coverage.

If 
    you do not wish to have this Extended Health Care Plan coverage, please inform 
    the Superannuation Commission.  Coverage will not be available to you at a 
    later date unless you can show that you have had continuous coverage under 
    an extended health care plan.

Pensioners who cease to reside in
British Columbia, and thereby become ineligible for 
    coverage, may later apply for coverage under the Extended Health Care Plan 
    provided they apply within one month of their return to residence in British 
    Columbia.  [Emphasis added.]

Mr. Bennett says that he was not told at any time that 
    his employers promise to pay the Benefits was subject to the discretion 
    of the Legislature or contingent on the internal organizational structure 
    arranged by the Defendant to fund the benefits.

[21]

In addition to his claim for breach of contract, Mr. Bennett alleges 
    that the Province was in a position of trust and confidence in relation to 
    the Retirees and therefore owed a fiduciary duty to them, which duty was breached 
    by the introduction of the new arrangements and the alleged underfunding 
    of the account from which the Benefits are now paid in part. The pleading 
    continues:

The 
    Retired Members are no longer active employees in a position to negotiate 
    benefits with the Defendant.  They are in a position of particular vulnerability 
    in relation to the Defendants control over the provision of their benefits
.  They are also particularly vulnerable as 
    a result of their advanced age and susceptibility to health problems, and 
    their limited capacity to assume increased financial burdens as a result of 
    their retired status.

The Defendant owed the Plaintiff and Retired Members a fiduciary duty 
    with respect to their benefits.  The Retired Members relied on their reasonable 
    expectation that the Defendant would act in their best interest.  The Defendants 
    unilateral reduction of the Retiree Benefits as discussed below, was and is 
    contrary to their best interests and is a breach of the Defendants fiduciary 
    obligation to the Retired Members.  [Emphasis added.]

[22]

In summary, the plaintiff sought,
inter alia
, a declaration 
    that the Retirees are entitled to receive the Benefits without alteration 
    or amendment during their lifetimes; an order that the Province sufficiently 
    fund any accounts out of which the [Benefits] are to be paid; damages for 
    the amounts of monthly premiums which the Retirees have been obliged to pay; 
    damages for breach of contract and/or breach of fiduciary duty in an amount 
    to be determined; punitive damages; and an order certifying the action as 
    a class proceeding and appointing Mr. Bennett as the representative plaintiff 
    for the class.

The Chambers Judges Decision

[23]

The Chambers judge below, Mr. Justice Melvin, dealt with the question 
    of jurisdiction at paras. 16 - 32 of his reasons.  He began, correctly, with 
    the decision of the Supreme Court of Canada in
Weber v. Ontario Hydro
[1995] 2 S.C.R. 929, about which more will be said below, and the judgment 
    of this court in
Fasslane Delivery Services Ltd. v. Purolator Courier 
    Ltd.
(2004) 30 B.C.L.R. (4th) 95, 2004 BCCA 300.  Both of these were 
    relied on by the Province for the proposition that since the case at bar arises 
    out of the employment relationship, it must be referred to arbitration.  The 
    Chambers judge disagreed with this proposition.  The crux of his reasoning 
    was as follows:

In 
    this respect, I disagree.  It is to be noted initially that none of the 
    collective agreements in existence dealt with retiree benefits, Medical Service 
    Plan or Extended Health Plan.  Secondly, it is to be noted that the retirees 
    are not members of or parties to the collective agreement.  Stopping 
    there, it is clear that the collective agreement is silent.  Consequently, 
    as the silence of the collective agreement is acknowledged by all parties, 
    the question arises as to how can it be interpreted or applied, or how can 
    there be an alleged violation of the provision which is not contained in the 
    agreement?

More importantly, however, in my view, the provincial 
    legislation in force from time to time makes it abundantly clear that under 
    no circumstances could the subject be contained in a collective agreement.  
    In that respect, I refer to the
Public Service Labour Relations Act
, 
    R.S.B.C. 1996, c. 388, s. 12(b):

12        
    Every collective agreement must include all matters affecting wages or salary, 
    hours of work and other working conditions, except the following: ...

(b)        
    all matters included under the Public Service Pension Plan, continued under 
    the
Public Sector Pension Plans Act
, and the pension plan rules made 
    under that plan; ...

In 
    that respect, it is interesting to consider the position taken in written 
    argument by the defendant; that is, the British Columbia Government Employees' 
    Union attempted to introduce post-retirement group benefits into the collective 
    agreement on two occasions, and the Province refused each time, at the risk 
    of strike.  As a result, it is submitted that retiree benefits have never 
    been included in any collective agreement and instead were covered by statutory 
    benefits.  In my view, the position taken by the defendant in these circumstances 
    is somewhat inconsistent with the submission that the matter should be dealt 
    with as if it involved interpretation, application or alleged violation of 
    a collective agreement.

I am satisfied under the circumstances the court has 
    jurisdiction and there is no exclusive jurisdiction in an arbitrator.  [At 
    paras. 25-8.]

[24]

The Chambers judge went on to consider the Provinces argument that
if
jurisdiction was concurrent, arbitration was the preferable means 
    of resolving the claim because of
, inter alia
, the specialized expertise 
    of arbitrators, the public policy in favour of deciding issues of unionized 
    employees contractual entitlements through grievance rather than civil litigation, 
    and judicial economy.  (Para. 29.)  Melvin J. noted, however, that those Retirees 
    who were excluded employees would not be entitled to participate in the grievance 
    process.  The same was true of certain executives of the three governmental 
    unions in question who were members of the Pension Plan.  He reasoned that 
    the pursuit of a grievance would involve the unions grieving the Retirees 
    dispute with the employer, so that  the retired employee (who is not a member 
    of a collective agreement) would have to ask the union to grieve the union, 
    as the union is the employer of this limited group of individuals.  This peculiarity 
    is not determinative of the issue but it points out some of the difficulties 
    in the position taken by the defendant.  (Para. 32.)

[25]

Melvin J. next turned to the Provinces argument that the proposed 
    class of plaintiffs included a number of Retirees who had never been employed 
    directly by the Province, the sole defendant in this action.  Some of the 
    Retirees had been employed by Crown corporations or other Crown agents, while 
    others were employed by related entities, some of which are no longer associated 
    in any way with the government.  The Province contended that those Retirees 
    could have no cause of action in contract against Her Majesty and that their 
    respective former employers (of which there are 51) should have been named 
    as defendants.  The Chambers judge rejected this argument as well, reasoning 
    that:

That 
    position, in my view, ignores the creation of the relation and the funding 
    of the plans.  With reference to each of the 27,000 prospective class 
    members, they are all parties to and beneficiaries under a pension plan which 
    was under the direction and control from time to time of the defendant.  
    During their employment period, they contributed to the pension plan.
Although they may not have been direct employees of the defendant, they 
    were either direct or indirect contributors through deduction of their cheques 
    and payment by their employers to the plan under the direction and control 
    of the defendant
.

The plaintiff's action is not in relation to benefits 
    which flow from employers,
but is in relation to benefits that flow from 
    the pension plan and retirement
.  All of these 27,000 persons participate 
    in the plan; all rely on the same contractual basis of pamphlets, letters, 
    brochures and memoranda as evidence of the existence of this benefit (health 
    care).  Under those circumstances, in my view, the relationship between 
    the employee and the employer, and the nature of the employer
vis-à-vis
the defendant, is immaterial.
The nexus between the retirees and 
    the defendant is their participation in the plan
under the direction and 
    control of the defendant.  [At paras. 34-5; emphasis added.]

[26]

Melvin J. went on to review the requirements of s. 4(1)(a)-(e) of the
Class Proceedings Act
and concluded that they were met by the 
    proposed action, which he noted was similar to those certified in
Kranjcec 
    v. Ontario
(2004) 69 O.R. (3d) 231 (Ont. S.C.J.), and
Ormrod 
    v. Etobicoke (Hydro-Electric Commission)
(2001) 53 O.R. (3d) 285 (Ont. 
    S.C.J.).  He defined the composition of the class as:

(a)        persons who are Residents of British Columbia 
    and are members of the British Columbia Public Sector Pension Plan (the Pension 
    Plan) who retired on or before November 30, 2002 (the Retirees), and who 
    were entitled to receive premium-free Medical Services Plan Benefits and Extended 
    Health Care Benefits (the Retiree  Benefits) at their respective dates of 
    retirement;

(b)        the surviving spouses and dependents of the 
    Retirees who are Residents of British Columbia and who were entitled to receive 
    premium-free Retiree Benefits as of November 30, 2002; and

(c)        
    the beneficiaries and/or estates of persons in paragraphs (a) and (b) above 
    who died prior to any settlement or judgment in this action.

and 
    defined the common issues thus:

a.         Did the Defendant breach its contractual promise and fiduciary 
    duty to provide and fund Retiree Benefits to the Class Members as alleged 
    in the Amended Statement of Claim?

b.         If the Defendant did breach its contractual promise and fiduciary 
    duty to the Class Members, what relief should be granted to the Class Members?

c.         
    Should punitive damages be awarded and if so, in what amount?

[27]

Presumably, the Chambers judge did not mean to suggest that the existence 
    of a contractual promise or fiduciary duty could be assumed.  Perhaps, 
    then, it would have been better to have phrased questions (a) and (b) as follows:

a.         Was the Defendant under a contractual obligation 
    or a fiduciary duty to provide and fund Retiree Benefits to the Class Members 
    as alleged in the Amended Statement of Claim, and if so, did the Defendant 
    breach such obligation or duty?

b.         
    If the Defendant did breach a contractual obligation or fiduciary duty to 
    the Class Members, what relief should be granted to the Class Members?

However, counsel before us proceeded on the assumption, 
    as shall I, that at any trial of this action or in any arbitration of a grievance 
    by the plaintiff, the central issue will be whether the Province was under 
    a contractual obligation or a fiduciary duty to continue to fund the Benefits, 
    or whether they were subject solely to the will of the Legislature and did 
    not form part of the plaintiffs contract of employment or ground any fiduciary 
    duty.

ANALYSIS

[28]

The Province submits that the Chambers judge erred in three respects 
    on the question of jurisdiction.  First, it is said that he held that [the] 
    silence of the collective agreement on the subject of retiree benefits means 
    the dispute between the parties is non-arbitrable.  With respect, I do not 
    read the Chambers judges reasons on this point (quoted above at para. 23) 
    as doing more than raising the question of how the collective agreement could 
    be interpreted or applied, or how can there be an alleged violation of the 
    provision which is not contained in the agreement?  I am not sure the Province 
    provided a satisfactory answer to that question in this case.  More important, 
    the Chambers judge said, was s. 12(b) of the
Public Service Labour Relations 
    Act
, which in his view  made it abundantly clear that the subject 
    of retiree benefits
could not
be dealt with in a collective agreement.  
    The Province contends that the Chambers judge here misinterpreted s. 12(b) 
    and that it does not prohibit including post-retirement benefits in a collective 
    agreement.  Indeed, the Province says, s. 12(b) has no application 
    to the Benefits, which are health benefits rather than pension benefits and 
    are not matters included under the Public Service Pension Plan.

[29]

Third, the Province challenges the Chambers judges holding that, 
    to quote from its factum, the dispute could not be arbitrated because the 
    Plaintiff is no longer in the bargaining unit.  The Province responds that 
    the relevant time to determine whether a post-retirement benefit is a vested 
    right under an employment contract is at the time of retirement, at which 
    time the plaintiff was in the bargaining unit.  This is correct, but it does 
    not detract from the fact that, as the Chambers judge noted in passing at 
    his para. 25, the [R]etirees are not members of or parties to the collective 
    agreement.  Being no longer members of the union or subject to the collective 
    agreement, they may well expect difficulties in enforcing any vested rights 
    through a grievance procedure, as I will discuss below.

[30]

Like the Chambers judge, however, I will begin my analysis of the question 
    of jurisdiction by referring to
Weber
,
supra
, where the 
    Supreme Court of Canada adopted the exclusive jurisdiction model of disputes 
    arising out of collective agreements.  At para. 52 of the Courts reasons, 
    McLachlin J. (now C.J.C.) laid out the proper approach as follows:

In considering the dispute, the decision-maker must attempt 
    to define its "essential character", to use the phrase of La Forest 
    J.A. in
Energy & Chemical Workers Union, Local 691 v. Irving Oil Ltd.
(1983), 148 D.L.R. (3d) 398 (N.B.C.A.).  The fact that the parties 
    are employer and employee may not be determinative.  Similarly, 
    the place of the conduct giving rise to the dispute may not be conclusive; 
    matters arising from the collective agreement may occur off the workplace 
    and conversely, not everything that happens on the workplace may arise from 
    the collective agreement:
Energy & Chemical Workers Union
,
supra
,
per
La Forest J.A.  Sometimes the time when the claim originated 
    may be important, as in
Wainwright v. Vancouver Shipyards Co
. (1987), 
    38 D.L.R. (4th) 760 (B.C.C.A.), where it was held that the court had jurisdiction 
    over contracts pre-dating the collective agreement.  See also
Johnston 
    v. Dresser Industries Canada Ltd
. (1990), 75 O.R. (2d) 609 (C.A.).  In 
    the majority of cases the nature of the dispute will be clear; either it had 
    to do with the collective agreement or it did not.  Some cases, 
    however, may be less than obvious.  The question in each case is
whether the dispute, in its essential character, arises from the interpretation, 
    application, administration or violation of the collective agreement
.

and 
    further:

This approach does
not preclude all actions in the 
    courts between employer and employee.  Only disputes which expressly 
    or inferentially arise out of the collective agreement are foreclosed to the 
    courts
:  .  Additionally, the courts possess residual jurisdiction based 
    on their special powers, as discussed by Estey J. in
St. Anne Nackawic
,
supra
.  [At para. 54; emphasis added.]

This reasoning has been applied by courts in this province 
    on many occasions:  see, e.g.,
Fasslane 
    Delivery Services Ltd. v. Purolator Courier Ltd
.,
supra
;
Haight-Smith v. Neden
(2002)
98 B.C.L.R. 
    (3d) 260
, 2002 BCCA 132;
Elkview 
    Coal Corp. v. U.S.W.A., Local 9346
(2001)
92 B.C.L.R. 
    (3d) 62,
2001 BCCA 488;
Haynes v. B.C.T.F.,

2005 BCSC 627
; 
    and
Ancheta v. Joe
(2003) 11 B.C.L.R. (4th) 348, 2003 BCSC 93.

[31]

Further elaboration of the 
Weber
principle was provided 
    by Bastarache J. for the Court in
Regina

Police Assn Inc. 
    v. Regina (City) Board of Police Commissioners
[2000] 1 S.C.R. 360, 
    2000 S.C.C. 14:

To determine whether a dispute arises out of the collective 
    agreement, we must therefore consider
two elements: the nature of the dispute 
    and the ambit of the collective agreement
.  In considering the 
    nature of the dispute, the goal is to determine its essential character.  This 
    determination must proceed on the basis of the facts surrounding the dispute 
    between the parties, and not on the basis of how the legal issues may be framed:  see
Weber
,
supra
, at para. 43.  Simply, the decision-maker
must determine whether, having examined the factual context of the dispute, 
    its essential character concerns a subject matter that is covered by the collective 
    agreement
.  Upon determining the essential character of the 
    dispute,
the decision-maker must examine the provisions of the collective 
    agreement to determine whether it contemplates such factual situations.  It 
    is clear that the collective agreement need not provide for the subject matter 
    of the dispute explicitly
.  If the essential character of the 
    dispute arises either explicitly, or implicitly, from the interpretation, 
    application, administration or violation of the collective agreement, the 
    dispute is within the sole jurisdiction of an arbitrator to decide:  see, 
    e.g.,
Weber
, at para. 54;
New Brunswick v. O'Leary
[[1995] 2 
    S.C.R. 967] at para. 6.  [At para. 25; emphasis added.]

[32]

More recently, in
Bisaillon v. Concordia University
[2006] 
    1 S.C.R. 666, 2006 SCC 19, the Court again considered the
Weber
approach. LeBel J. for the majority suggested that an arbitrators jurisdiction 
    depends on two factors.  The first has to do with the subject or the nature 
    of the dispute; this is the subject-matter aspect of the arbitrators jurisdiction. 
     The identification of the essential character of the dispute requires not 
    only determining its legal nature, but also taking into account the facts 
    surrounding the dispute between the parties.  Thus one must ascertain whether 
    the factual context so identified falls within the ambit of the collective 
    agreement  in other words, whether the collective agreement implicitly 
    or explicitly applies to the facts in dispute.  (Para. 32.)  The second part 
    of the
Weber
analysis was said to relate to the persons who 
    are parties to the dispute  the personal aspect of the arbitrators jurisdiction.  
    (At para. 29, quoting from Robert P. Gagnon,
Le Droit du Travail du Quebec
(5th ed., 2003) at 506.)

[33]

On the subject-matter jurisdiction of grievance arbitrators, LeBel 
    J. noted  courts had adopted a liberal position, giving such arbitrators 
    broad exclusive jurisdiction over issues relating to conditions of employment, 
    provided that those conditions can be shown to have an express or implicit 
    connection to the collective agreement.  (At para. 33.)  In
J.M. Asbestos 
    Inc. v. Lemieux
, [1986] Q.J. No. 613 (Q.L.), for example, the Quebec 
    Court of Appeal had held that an arbitration board appointed under a collective 
    agreement had the jurisdiction to hear a dispute between a unionized employee 
    and his employer regarding the interpretation of pension plan provisions, 
    even though the plan was in effect long before the collective agreement was 
    signed.  (
Bisaillon
, para. 35.)  LeBel J. continued:

Another approach, one even more favourable to finding 
    that a grievance arbitrator has jurisdiction, appears to be being developed 
    in decisions of the Quebec Court of Appeal. For example, in
Hydro-Québec 
    v. Corbeil
, (2005), 47 C.C.P.B. 200, [2005] Q.J. No. 8143 (QL), 2005 QCCA 
    610, the Court of Appeal
held that an arbitrator had jurisdiction without 
    relying on the existence in the collective agreement of any reference to the 
    pension plan. In that case, the Court found the pension plan to form part 
    of the employees' remuneration and conditions of employment and, on that basis, 
    to be an integral part of the collective agreement
. (See also
Association 
    provinciale des retraités d'Hydro-Québec v. Hydro-Québec
, [2005] R.J.Q. 
    927, [2005] Q.J. No. 1644 (QL), 2005 QCCA 304.) Since practically all collective 
    agreements address employee remuneration, grievance arbitrators would, under 
    this approach, almost automatically have jurisdiction in such cases. Similarly, 
    M. Savard and A. Violette have expressed the view that the inclusion in a 
    collective agreement of very general clauses, such as the classic clause recognizing 
    the employer's management rights, could confer jurisdiction over issues regarding 
    the application and implementation of benefits plans, including pension plans.
A grievance arbitrator would thus have jurisdiction over such issues even 
    in the absence of an express reference to the pension plan in the collective 
    agreement
("Les affaires Weber, O'Leary, et Canadien Pacifique Ltée: 
    que reste-t-il pour les cours de justice?",
in
Développements 
    récents en droit du travail
(1997) 49, at pp. 72-73). In the case at bar, 
    however, there is no need to rule on the validity of this approach, since, 
    as I will explain, the collective agreements in question make express reference 
    to the Pension Plan
.  [At para. 38; emphasis added.]

[34]

With respect to the 
in personam
 jurisdiction of grievance 
    arbitrators, the majority endorsed the finding of the Quebec Court of Appeal 
    in
Bisaillon
that the arbitrator responsible for hearing grievances 
    arising out of the collective agreement in that case had no jurisdiction 
    to hear claims of persons to whom the agreement does not apply.  LeBel J. 
    expressly agreed at para. 39 with the suggestion of authors R. Blouin and 
    F. Morin (
Droit de l'arbitrage de grief
(5e éd., 2000) that a grievance 
    will be possible 
only to the extent that the disagreement involves parties 
    with a connection to the agreement in question
, that is, the employer 
    and the certified union or the employees to whom the collective agreement 
    applies.  (My emphasis.)  Where this condition is not met, courts of law 
    retain jurisdiction over the dispute, as the Court had acknowledged in
Weber
at para. 57.  In McLachlin J.s words, What must be avoided  is a real 
    deprivation of ultimate remedy.

[35]

In
Bisaillon
itself, the petitioner was a unionized employee 
    of Concordia

University who sought 
    to institute a class action against his employer in order to contest a number 
    of decisions made with respect to the administration and use of the employees 
    pension fund.  The University was party to nine collective agreements each 
    of which contained a commitment on its part to offer membership in the pension 
    plan to the employees covered by the agreement in accordance with the conditions 
    of the plan.  Thus LeBel J. observed:

In these provisions, Concordia made a commitment to the 
    unions to offer the Pension Plan to the employees covered by the agreements 
    in accordance with the conditions of the plan. The unions thus obtained certain 
    assurances with respect to the maintenance of the plan and the eligibility 
    of the employees they represented. In effect, the parties decided to incorporate 
    the conditions for applying the Pension Plan into the collective agreement. 
    In this context, the employer was not in the position of a third person, such 
    as an insurer providing insurance benefits proposed by the parties to the 
    collective agreement. On the contrary,
Concordia appeared to retain effective 
    control over the administration of the Pension Plan while committing itself, 
    at least implicitly, to respect and fulfil various rights and obligations 
    provided for in the plan or arising out of the legislation applicable to it
. 
    In so doing, it also recognized the
in personam
and subject-matter 
    jurisdiction of the grievance arbitrator.  [At para. 54; emphasis added.]

Applying the dual approach he had explained earlier in 
    his reasons, LeBel J. concluded that the pension plan had become a condition 
    of employment in which the employees had given up their right to act on an 
    individual basis, independently of the union representing them and that since 
    the disagreement had arisen out of the collective agreement, it should have 
    been pursued through the grievance process.  (Para. 57.)  If Mr. Bisaillons 
    allegations were correct, the grievance arbitrator would have the necessary 
    jurisdiction to declare the employers impugned decisions to be null and 
    to provide an appropriate remedy.  Accordingly, it was not necessary to exercise 
    the Courts exceptional residual jurisdiction.  (Para. 55.)

[36]

Bastarache J., dissenting along with McLachlin, C.J.C. and Binnie J. 
    in
Bisaillon
, took a more restrictive view of the exclusive 
    jurisdiction of labour arbitrators.  He emphasized that the mere fact that 
    a dispute arises out of an employees conditions of employment is insufficient 
    to trigger the exclusive jurisdiction of the labour arbitrator (at para. 
    73), and that where a collective agreement contemplates a benefit that is 
    external to that agreement, scrutinizing the policy itself, whose contours 
    have been determined elsewhere and which implicates broader interests and 
    individuals beyond the collective agreement, is another matter entirely.  
    Thus the minority would have ruled that arbitral jurisdiction did not extend 
    to matters affecting the substance of the pension plan in question.  (Para. 
    86.)

[37]

Both parties to this appeal sought to rely on
Bisaillon
, 
    the Province for its liberal approach to arbitral jurisdiction and the majoritys 
    suggestion that the grievance arbitrator might have jurisdiction over issues 
    such as pension plans even in the absence of an express reference thereto 
    in the collective agreement.  Counsel for the plaintiff on the other hand 
    emphasized that the Court stopped short of deciding that point, that it endorsed 
    the social dimension of class actions (at para. 16 of
Bisaillon
), 
    and stated  at para. 63 that modern civil procedure would not leave non-unionized 
    employees without effective recourse.  Most important, in Mr. Ziglers submission, 
    was the dual approach to jurisdiction taken by the majority.  Applying it 
    to this case, neither the subject-matter aspect nor the personal arbitral 
    jurisdiction is met in the case at bar: the factual context of the dispute 
    clearly falls outside the ambit of any collective agreement, and the Retirees 
    are no longer parties with a connection to the agreement in question.  (
Bisaillon
, 
    at para. 39.)

[38]

Both counsel also drew support from an earlier decision of the Supreme 
    Court of Canada,
Dayco (
Canada) Ltd. v. CAW-Canada
[1993] 2 S.C.R. 230.  In that case, the employer had 
    provided for certain group insurance benefits to its employees under a series 
    of collective agreements, the last of which expired in April 1985.  In that 
    year, the company closed its doors permanently after negotiating a shut-down 
    agreement with active employees under which group insurance benefits would 
    be discontinued six months after closing.  The agreement was silent about 
    retirees benefits.  It was formally terminated in May 1985 and the company 
    purchased an annuity to satisfy the outstanding pension obligations to
active
employees.  The union launched a grievance on behalf of the retired employees 
    and the company objected to the arbitrators jurisdiction on the theory that 
    at the time the grievance was lodged, there was no collective agreement in 
    place and it had no obligations to the retired workers on any basis other 
    than the collective agreement.  The arbitrator found that he had jurisdiction, 
    a ruling ultimately affirmed by the Supreme Court of Canada.

[39]

Much of the Courts reasons were taken up with the question of the 
    appropriate standard of review of the arbitrators determination of jurisdiction.  
    The Court,
per
La Forest J., decided that the arbitrator was required 
    to be correct.  At 269, La Forest J. then turned to the question of the 
    survivability of the group insurance benefits of retired workers, concluding 
    that when an employee withdraws from the employment relationship (and
ipso 
    facto
, the collective bargaining process), his or her accrued employment 
    rights crystallize into some form of vested retirement right.  (At 272.)  
    His Lordship rejected the employers contention that any breach of the collective 
    agreement that occurs after its expiration is not arbitrable. Instead, he 
    endorsed the respondents submission that the time of breach is irrelevant, 
    so long as the right being breached accrued during the currency of the collective 
    agreement.  (At 274.)

[40]

After reviewing both American and Canadian law, the Court also concluded 
    that in both systems, retirement benefits are in the nature of accrued rights, 
    that those benefits may (depending on the terms of the agreement) vest; 
    and that such vested rights can be enforced by union grievance on behalf of 
    retirees.  (At 282.)  With respect to the enforcement of
retired
workers 
    rights, however, the law in Canada was not completely clear.  I quote La Forest 
    J. at some length because of the significance of his comments for the parties 
    in the case at bar:


In
Canada, it is unclear whether either of 
    these routes is open to retired workers, who may be completely reliant upon 
    their former bargaining agent to bring a grievance on their behalf when an 
    employer unilaterally revokes vested benefits.  And the grievance 
    route may be foreclosed, as the union may be unwilling to grieve the issue 
    on behalf of the retirees.  This may arise because of an inevitable 
    conflict of interest facing the union
.  If 
    it were successful in grieving under an old collective agreement on behalf 
    of retired workers, the employer would face increased overall labour costs, 
    perhaps leading to harder bargaining over current employees' compensation.  The 
    union may well be reluctant to carry forward a grievance on behalf of retirees, 
    as success on that front might well be contrary to the interests of current 
    members of the bargaining unit.

In 
    these circumstances,
Canadian retirees may well find themselves in possession 
    of a right without a remedy
.  The grievance procedure may be 
    foreclosed, as described above.  Retirees may not be entitled to 
    bring a claim against the union for unfair representation, as such rights 
    in Ontario appear to be limited to current members of the bargaining unit: 
    see s. 68 of the Act.  Finally, Ontario's
Rights of Labour Act
, 
    R.S.O. 1980, c. 456, s. 3(3), and like provisions in other jurisdictions, 
    may foreclose the possibility of a court action by the retirees; see Adams,
Canadian Labour Law
(2nd ed., 1993), at ss. 7.40-7.90.
This 
    problem does not arise in this case, as the union here did pursue a grievance 
    on behalf of the retired workers.  But in another case it seems 
    to me that such a remedial vacuum, arising because the retirees are not party 
    to the arbitration procedures guaranteed by the Act, may possibly be justification 
    for allowing a court action to proceed
; see
St.-Anne Nackawic Pulp 
    & Paper Co. v. Canadian Paper Workers Union, Local 219
(1982), 142 
    D.L.R. (3d) 678 (N.B.C.A.), at pp. 686 and 691; and see [1986] 1 S.C.R. 704, 
    at pp. 713 and 721.  Indeed,
counsel for the company submitted that a court 
    action was not only possible, but that the courts were the only forum available 
    to these retirees
.  But this submission was made in passing, 
    and was not developed in argument.  As such I do not propose to 
    go into the issue, except to say that it would appear to be irrelevant in 
    this case.
Assuming a court action is available, I know of no 
    reason or authority that would preclude arbitration as an alternative forum 
    for the retirees
.

There 
    may, as well, be other means by which retirees could surmount the remedial 
    roadblocks that appear to face them.  The term "employee" 
    in the Act may well encompass retired workers in some contexts, thereby allowing 
    retirees to take advantage of the Act's fair representation provisions. Finally, 
    there is a possibility that the relationship between retired members of a 
    bargaining unit and the bargaining agent for that unit is fiduciary in nature.
If 
    a union failed to consider the interests of retirees during collective bargaining, 
    or refused to process a grievance on behalf of those retirees, such conduct 
    might form the basis of a claim for breach of fiduciary duty
.

To summarize, I am of the view that retirement rights 
    can, if contemplated by the terms of a collective agreement, survive the expiration 
    of that agreement. Moreover, although it is not strictly necessary to decide 
    the point in this appeal, I would also find that these surviving rights vest 
    at the time of retirement, and would survive subsequent collective bargaining 
    that purported to divest such rights.  As such, I have concluded 
    that the arbitrator's general propositions in this respect were correctly 
    stated, and the arbitrator had jurisdiction to hear the union's grievance.  Of 
    course, I make no comment on whether the terms of the agreement between the 
    company and the union do in fact create such a vested right.  That 
    is a question for the arbitrator to decide when the arbitration hearing proceeds 
    on the merits.  [At 303-5; emphasis added.]

[41]

The Province submits that taken together,
Weber
,
Dayco
and
Bisaillon
supply a complete answer (in the affirmative), 
    to the question of whether the case at bar is arbitrable.  First,
Dayco
shows that post-retirement rights vest at the time of retirement and may 
    form the subject of a grievance under a collective agreement, even where the 
    plaintiff or grievor is retired and therefore no longer a party to the collective 
    agreement or represented by the bargaining agent.  The question left open 
    by the Court in
Dayco
, namely whether courts of law may acquire 
    jurisdiction where the grievance procedure is foreclosed, was in the Provinces 
    submission answered by the Court in
Weber
, where the exclusive 
    jurisdiction model was adopted for all cases in which the essential character 
    of the dispute arises from the interpretation, application, administration 
    or violation of the collective agreement.  Further, the Supreme Court in
Bisaillon
left open, but seemed to anticipate at para. 38, that even in the absence 
    of an express reference to a pension plan in the collective agreement, a labour 
    arbitrator might have jurisdiction, particularly where it forms part of employees 
    remuneration or conditions of employment.

[42]

The case at bar, however, has certain features that distinguish it 
    from both
Dayco
and
Bisaillon
.  Most noticeably, 
    the Benefits have never been mentioned in, or the subject of, any collective 
    agreement between the Province and its unions.  Indeed, as has been seen, 
    retired government employees became entitled to the Benefits some years before 
    the provincial government ever took part in collective bargaining, and the 
    Benefits were made available on retirement to all employees, not only those 
    who were  unionized. It is difficult to say, then, that the essential character 
    of the dispute concerns a subject-matter that is covered, implicitly or 
    explicitly, by the collective agreement.  (
Regina Police
,
supra.
) 
     Shortly after collective bargaining was introduced, the provision that is 
    now found at s. 12 of the
Public Service Labour Relations Act
was enacted.  I set out s. 12 for convenience:

Every 
    collective agreement must include all matters affecting wages or salary, hours 
    of work and other working conditions, except the following:

(a)        the principle of merit and its application 
    in the appointment and promotion of employees, subject to section 4 (2) 
    of the
Public Service Act;

(b)        all matters included under the Public Service 
    Pension Plan, continued under the
Public 
    Sector Pension Plans Act,
and the pension plan rules made under 
    that plan;

(c)        the organization, establishment and administration 
    of the ministries and branches of the government, except the effect of reductions 
    in establishment of employees, which must be negotiated by the parties;

(d)        the application of the system of classification 
    of positions or job evaluation under the
Public Service Act
and regulations;

(e)        
    the procedures and methods of training or retraining all employees not affected 
    by section 15, other than training programs administered with a branch 
    or ministry that apply to one occupational group only.

I would not have thought that an ordinary reading of 
    this provision would lead to the conclusion that the matters referred to in 
    paras. (a) - (e) are prohibited from being included in collective agreements.  
    On its face, this section simply seems to require that all matters affecting 
    wages or salary, hours of work and working conditions must be included in 
    collective agreements, with certain exceptions.  Thus the Province contends 
    that if a matter is not found within one of the exceptions, it must either 
    be in a collective agreement or not affect working conditions (i.e., not 
    be a contractual entitlement.  On the other hand, the items described in 
    paras. (a) and (c) are arguably matters that the Province would wish to insulate 
    from the bargaining process as matters of fundamental political authority. 
     If this is correct, presumably the same is true of para. (b).

[43]

Counsel referred us to no case-law that would assist on the proper 
    construction of the provision, but I note two cases in which this court seems 
    to have regarded s. 12 or its predecessors as exclusionary.  In
Government 
    Employee Relations Bureau v. BCGEU
(1984) 58 B.C.L.R. 1, the Court
per
Taggart J.A. quoted what was then s. 13(d) and (e) of the
Public Service Labour Relations Act
and observed:

There is no question that by excepting those matters from collective agreements 
    the Legislature has
limited the ambit of collective bargaining
.  In 
    doing so it has legislated with respect to one of the fundamental principles 
    of labour relations
viz
the scope of collective bargaining and of the 
    collective agreement that flows from it.  [At 5; emphasis added.]

Similarly, in
BCGEU v. British Columbia (Government 
    Personnel Services Division)
(1987) 12 B.C.L.R. (2d) 97, Hutcheon 
    J.A. for the Court observed with respect to an argument made on behalf of 
    the government concerning a permissive power given by s. 73(2) of the
Forest 
    Act
, R.S.B.C. c. 1979, c. 140, that:

I do not think the analogy is apt.  No doubt the legislature could
exclude 
    s. 73(2) from the collective bargaining process as it has done with a number 
    of other subjects by s. 13
of the
Public Service Labour Relations Act
.  
    Thus, for example, the principle of merit and its application in the appointment 
    and promoting of employees is excluded (s. 13(a)).  That exclusion has not 
    been made in this case.  [At 102; emphasis added.]

See also
Vancouver Hospital & Health Sciences 
    Centre v. British Columbia Nurses Union
(2005) 45 B.C.L.R. (4th) 
    235, 2005 BCCA 343, at para. 43.

[44]

Even if one assumes that s. 12 is prohibitive or exclusionary, the 
    Province notes that para. (b) does not refer to post-retirement benefits generally, 
    but to the Public Service Pension Plan.  Mr. Morley emphasizes that it was 
    not until April of 2001 that the Benefits were provided under the Plan.  As 
    has been seen, they were paid under the authority of the
Public Service 
    Benefits Plan Act
from 1978 (in the case of MSP premiums) or 1981 
    (in the case of EHB benefits), until 2001.  In response, the plaintiff relies 
    on the fact that the
Public Service Pension Plans Act

was
amended to contemplate the Benefits as part of the Pension Plan, that historically 
    they were at least tied to membership in the Plan, and that the various 
    letters, booklets and brochures provided by the Province (through the Superannuation 
    Commission) to retiring employees over the years, seemed to represent the 
    Benefits as part and parcel of the Plan.

[45]

It is not for this court to make findings concerning the allegedly 
    contractual terms of employment between the Province and Mr. Bennett and the 
    plaintiffs he represents nor whether the Benefits were matters included 
    under the Pension Plan.  The important point for our purposes is that
in 
    fact
, none of the collective agreements entered into by the Province with 
    its unions dealt with post-retirement benefits.  They were always the subject 
    of statute or regulation. Indeed, the Province notes that in 1977 and 1979, 
    the BCGEU attempted to obtain the Provinces agreement to the inclusion of 
    certain post-retirement benefits in the collective agreements then being negotiated, 
    but the Province refused to do so.

[46]

Not surprisingly, the Province argues that the silence of a collective 
    agreement on a given matter does not preclude that matter being arbitrable, 
    citing not only
Bisaillon
, but
Loyalist College of Applied 
    Arts and Technology (Board of Governors) v. Ontario Public Service Employees 
    Union
(2003) 63 O.R. (3d) 641 (Ont. C.A.), at para. 37;
Claxton 
    v. BML Multi Trades Group
(2003) 27 C.C.E.L. (3d) 161 (Ont. C.A.), 
    a decision of Abella J.A., as she then was; and
Fasslane Delivery
,
supra
.  I have no doubt that this argument is correct, but it does 
    not follow that every matter arising between an employee and an employer is 
    arbitrable, the labour arbitrator having (the Province emphasizes) the jurisdiction 
    not only to resolve employment disputes but to also decide whether any given 
    dispute lies within his or her  jurisdiction.
Weber
,
Fasslane
and
Claxton
make it clear that the question is whether the dispute 
    in its essential character arises from the collective agreement.  As Ryan 
    J.A. noted in
Mainland Sawmills Ltd. v. I.W.A. Canada, Local 1-3567 
    Society
(2005) 36 B.C.L.R. (4th) 310, 2005 BCCA 89, a bare allegation 
    that a collective agreement is in place will not suffice to remove a dispute 
    from the courts jurisdiction.  (Para. 24.)  Even when an arbitrator does 
    determine that he or she has jurisdiction over a particular grievance,
Dayco
confirms that that determination must be correct.

[47]

In my respectful view, it simply cannot be said that the essential 
    character of the dispute in this case arises from the interpretation, application, 
    administration or violation of a collective agreement.  At least until 2001, 
    the Benefits were never the subject of collective bargaining.  They were made 
    available to union and non-union employees alike even before collective bargaining 
    became the norm in the Provinces civil service.  The Retirees claim to the 
    Benefits is a matter lying outside the ambit of any collective agreement to 
    which the Province is party  although not, perhaps, outside the employment 
    relationships it had with the Retirees. Consistent with this, the determination 
    of Mr. Bennetts claim will involve arguments as to contract formation, Crown 
    obligation, and statutory interpretation, which are not in my respectful opinion 
    matters that necessarily engage or require the expertise of labour arbitrators.

[48]

My conclusion in this regard is reinforced by a consideration of the 
    second aspect of the analysis referred to in
Bisaillon
 the 
    personal aspect of the arbitrators jurisdiction.  Although it is true in 
    theory that a retired person can seek to force his or her former union to 
    represent him or her in advancing a claim, and that there may be recourse 
    against a union that fails to carry out its duty
vis-à-vis
a retired 
    member (as to which see
Cominco Pensioners Union v. Cominco Ltd
., 
    June 13, 1979, B.C.L.R.B. No. 49/79 at 15), it stretches credulity to imagine 
    that in this case the unions would not find themselves in  a serious conflict 
    of interest.  This is especially true of the BCGEU, which the Province says 
    has purported to compromise the Retirees claims  although no explanation 
    was proffered as to how the union could do so on Mr. Bennetts behalf when 
    it no longer represents him or other Retirees.  Like the Manitoba Court of 
    Appeal in
Bohemier v. Centra Gas Manitoba
(1999) 170 D.L.R. 
    (4th) 310, then, I conclude that  retired employees, being non-parties to 
    the [collective] agreement, have a right to an independent cause of action 
    in court for an alleged violation of their  rights.  (Para. 33.)  The Court 
    was discussing pension rights, but the same is true of the health benefits 
    which are the subject of this case.

[49]

Even if I regarded labour arbitration as an avenue of
concurrent
jurisdiction, I would agree with the Chambers judge that a class action is 
    clearly preferable in this case, given the desirability of dealing with the 
    claims of both unionized and non-unionized former employees of the Province.  
    This augments the usual considerations regarding judicial economy and access 
    to justice which make the case eminently suitable for a class action: see
Ormrod v. Etobicoke
,
supra
, at para. 35.

Plaintiffs 
    Not Employed by the Province

[50]

Setting aside the question of jurisdiction, the Province also contends 
    that the Chambers judge erred in allowing persons who were not employed directly 
    by the defendant Her Majesty the Queen to be included in the plaintiff class.  
    (I will refer to these potential plaintiffs as the Other Retirees).  They 
    make up about one-third of the plaintiff class and were employed by a large 
    number of disparate entities including Coast Capital Savings, the Oak Bay 
    Lodge Society, St. Paul
s Hospital and the British Columbia Excluded Employees Association. 
     Considering for the moment the claim only in
contract
 and Mr. Zigler 
    was clear that this was the primary theory of the claim  it is plain and 
    obvious to me that a contractual claim by the Other Retirees against the Province 
    is bound to fail.  On this point, Mr. Prowse referred us to
Washer v. 
    British Columbia Toll Highways and Bridges Authority
(1965) 53 D.L.R. 
    (2d) 620 (B.C.C.A.), which was an action brought for wrongful dismissal by 
    a former employee of the Toll Authority, a Crown corporation.  By the terms 
    of its constating statute, the Authority was also an agent of the Crown.  
    Nonetheless, the Court rejected the contention that the plaintiff himself 
    was therefore a servant of the Crown who held office only during the Crowns 
    pleasure.  Bull J.A. reasoned as follows:

It was urged that as the appellant was a Crown servant or agent, its employees 
    must of necessity have that status inasmuch as their functions and duties 
    must be in pursuance of the purposes of the appellant which "exercises" 
    its powers "only as agent for Her Majesty" and is such an agent 
    "for all purposes": s. 4 of the Statute above. To follow this proposition 
    to its logical conclusion would mean that the respondent was not the employee 
    of the appellant at all, but the employee of the Crown engaged by its agent 
    the appellant. This, of course, is not the case, it being clear beyond doubt 
    that by virtue of s. 12 of the Statute the
appellant employs and has 
    its own servants as it deems necessary to carry out its purposes, albeit such 
    purposes are for the Crown
.

It was also submitted that as the appellant is a Crown 
    agency carrying out governmental functions it is consequently entitled to 
    Crown immunities, prerogatives and privileges. These, it is said, would include 
    the inherent right of the Crown to terminate the employment of its servants 
    at pleasure, without notice or cause. No authority was cited to us to support 
    this proposition. There is no question that as a Crown agency, the appellant 
    would have certain immunities, prerogatives and privileges inherent in the 
    Crown. An example would be immunity from suit, except that that immunity has 
    been specifically removed by s. 8 of the Statute. But in my respectful 
    opinion the position of the respondent and the Crown must be dealt with not 
    on the basis of an assumed delegation of royal prerogatives, but on the proper 
    construction of the Statute, and the Regulations passed thereunder, as a whole 
    as to whether or not it was intended that he and the other employees of the 
    appellant were engaged as and were to be servants of the Crown.  [At 627-8; 
    emphasis added.]

In the result, the Court held that the plaintiff had 
    been only a servant of a Crown corporation which was an agency of the Crown 
    such that the Crowns right of dismissal at pleasure was not inherent in his 
    engagement by the Toll Authority.
Washer
was relied on and 
    approved by the Supreme Court of Canada in
Northern Pipeline Agency 
    v. Perehinec
[1983] 2 S.C.R. 513 at 536.

[51]

Plaintiffs counsel did not bring to our attention any authority that 
    would suggest that under the
Class Proceedings Act
, it is not 
    necessary for each member of the plaintiff class to have a
lis
, or 
    cause of action, against the defendant. On the contrary, s. 4(1)(a) requires 
    that the pleadings disclose a cause of action, and the criterion of Supreme 
    Court Rule 19(24)(a) is routinely applied in this context.  Mr. Waldmann suggested 
    in oral argument that in return for the alleged promises to provide the 
    Benefits, the Province benefited indirectly from the services provided by 
    the Other Retirees to their respective employers; but while I accept that 
    A may validly contract with B to provide a benefit to C, it was not 
    suggested anywhere in the pleadings or in argument that the Other Retirees 
    were in fact engaged by their respective employers on behalf of the a third 
    party, the Province.  The lesson of
Washer
is that those employers 
    had their own workforces, and were not acting as agents of the Crown in hiring 
    and remunerating the Retirees.  Thus I disagree with Melvin J.s comment that 
    the plaintiffs action is not in relation to benefits which flow from employers, 
    but  benefits that flow from the pension plan and retirement.  (Para. 35.) 
     This runs contrary to what I see as, and what counsel presented as, the central 
    theory of this part of the case  a contract of employment, the consideration 
    for which was each Retirees services until retirement.  That contract had 
    to be one between employer and employee.

[52]

As regards the claim for breach of fiduciary duty, I note para. 32 
    of the amended statement of claim:

Further, or in the alternative, the Defendant breached its fiduciary duty 
    owed to the Retired Members.  The Defendant was and is in a position of trust 
    and confidence in relation to the Retired Members.  The Plaintiff and Retired 
    Members understood that certain benefits had been promised to them and they 
    reasonably expected the Defendant to act in their best interests with respect 
    to the promised benefits.

I find it difficult to discern a breach of duty other 
    than a possible breach of contractual promise here, and no allegation of negligent 
    mis-statement was made.  However, since a court at this stage must be slow 
    to drive the plaintiff from the judgment seat, I consider that the Other 
    Retirees should be permitted, with the remaining plaintiffs, to refine and 
    pursue a claim in the law of fiduciary obligation against the Province as 
    the party which over the years administered and funded the Pension Plan and 
    paid for the Benefits.  I make no prediction as to whether such claim, or 
    any other claim advanced by Mr. Bennett, is likely to succeed.

Disposition

[53]

For these reasons, I would allow the appeal only to the extent of excluding 
    from the plaintiff class, in respect of the claim in
contract
, those 
    Retirees who were not employed by Her Majesty the Queen in Right of the Province. 
     This would have the consequence of creating a sub-class of plaintiffs, consisting 
    only of those Retirees who were employed by the Province, who may pursue the 
    contract claim.  The claim for breach of fiduciary duty may of course be pursued 
    on behalf of the entire class of Retirees.  In all other respects, I would 
    dismiss the appeal, with thanks to counsel for their able submissions.

The Honourable
Madam Justice Newbury

I Agree:

The Honourable
Madam Justice Levine

Reasons for Judgment of the Honourable Mr. Justice Chiasson:

Introduction

[54]

I have had the opportunity to read the very comprehensive and helpful 
    Reasons of Madam Justice Newbury.  I agree with her conclusions, but do so 
    following a slightly different route.

[55]

The respondent claims certain post-retirement benefits and damages 
    based on breach of contract and breach of fiduciary duty.

[56]

A core premise of the appellants case is stated in its statement of 
    defence: [b]y statute,
all
terms and conditions of employment of bargaining 
    unit employees of the [appellant] must be in collective agreements (emphasis 
    in original).  This contention is repeated in the appellants reply factum: 
    . . . as a matter of general labour law,
all
contractual rights accruing 
    to a unionized employee at work must be found in a collective agreement . 
    . ." (emphasis in original).

[57]

Building on this core premise, the appellant notes that the respondent 
    was a unionized employee of the appellant and was covered by collective agreements 
    containing a statutorily mandated arbitration commitment.  As noted by Newbury 
    J.A., the relevant commitment to arbitrate derives from ss. 84(2) and (3) 
    of the
Labour Relations Code
, R.S.B.C. 1996, c. 244, which applies 
    to the appellant and its unionized employees pursuant to s. 23 of the
Public 
    Service Labour Relations Act
, R.S.B.C. 1996, c. 388 (
PSLRA
).

[58]

The appellant denies that the respondent has the contractual or fiduciary 
    rights he claims, but states that whether contractual or based on an alleged 
    fiduciary relationship, the rights, if any, derive from the respondents position 
    as an employee and proceedings concerning them must be arbitrated, not litigated.

[59]

For the reasons that follow, I disagree with the appellants core premise 
    that all of the respondents contractual rights must be contained in a collective 
    agreement.

[60]

In its factum, the appellant put its proposition as follows:

In 
    [
Isidore Garon ltée v. Syndicat du bois ouvré de la région de Québec inc.,
[2006] 1 S.C.R. 27, 2006 SCC 2], released shortly after the chambers judges 
    decision, the Supreme Court of Canada made this clear, summing up two fundamental 
    principles of Canadian collective bargaining law [at paras. 9, 25 and 26] 
    as follows:

For 
    half a century, the interplay between the rights arising out of an individual 
    employment relationship and the rights arising out of collective labour relations 
    has been marked by two trends in the case law, which appear to have met head 
    on in this appeal.  According to the first line of cases,
the general 
    law and individual negotiation have no place in matters relating to conditions 
    of employment in the collective labour relations context (3.1
).  
    In the second line of cases,
the minimum employment standards set out 
    in various employment‑related statutes, the substantive rights and freedoms 
    provided for in human rights legislation and the principles of the Canadian 
    Charter of Rights and Freedoms have been incorporated into collective agreements (3.2)
.  
    To determine which of the rules from the case law  exclusion or inclusion  
    will guide the decision in the instant case, the basis for those rules must 
    be explained []

The 
    first principle can be restated as holding that all conditions of employment 
    for unionized employees must arise out of collective bargaining.

[] 
    Underlying the first line of cases is the desire to give precedence to collective 
    bargaining for all conditions of employment.  If the right claimed can 
    be characterized as a condition of employment, it cannot be negotiated individually 
    by the employer and the employee.  The union alone performs this task, 
    and it must do so for the employees collectively.

As 
    the Court remarks, a condition of employment is any provision that has a 
    real connection with the contract of employment.

In 
    other words, it is a basic principle of labour law that collective agreements 
    are
comprehensive
expressions of the contractual rights and obligations 
    of unionized employers and employees with respect to each other. A corollary 
    of this principle is that
if
a benefit of some kind is not provided 
    for, either expressly or impliedly, in the collective agreement, then it is
not
a contractual right. Employers, unions and employees all rely on 
    this principle.

(Emphasis in original.)

[61]

There also is some support for the appellants position in the Supreme 
    Court of Canadas decision in
Bisaillon v. Concordia University
, 
    [2006] 1 S.C.R. 666, 2006 SCC 19:

Our 
    system of collective representation proscribes the individual negotiation 
    of conditions of employment.  A screen is erected between the employer and 
    the employee in the bargaining unit  (at para. 25)

. . .

The system of collective representation thus takes certain individual 
    rights away from employees. In particular, employees are denied the possibility 
    of negotiating their conditions of employment directly with their employer 
    ... (at para. 26)

[62]

I do not read these decisions as foreclosing parties, unions and employers, 
    from agreeing to have matters concerning the employment relationship dealt 
    with outside a collective agreement and certainly not as foreclosing a legislature 
    from legislating this result.

[63]

In this conclusion, I am supported by the comments of McLachlin J., 
    now C.J.C., in
Weber v. Ontario Hydro
, [1995] 2 S.C.R. 929.  
    In discussing the commitment to arbitrate differences, she stated in para. 
    45:  [t]he word differences denotes the dispute between the parties, not 
    the legal actions which one may be entitled to bring against the other.  
    She added in para. 49: . . . one must look not to the legal characterization 
    of the wrong, but to the facts giving rise to the dispute.  The question 
    is whether, . . . the difference between the parties arises from the collective 
    agreement. . . (para. 50).  That is, there may be differences that arise 
    in an employment relationship that do not arise from a collective agreement.

[64]

It is clear from the written and oral submissions of the parties that 
    the claims advanced by the respondent based in contract and fiduciary relationship 
    are alleged to derive from his employment relationship with the appellant.  
    The question is whether these claims can arise only out of a collective agreement.

[65]

Section 12 of the
PSLRA
requires that all matters affecting 
    working conditions must be included in a collective agreement, except
inter 
    alia
(b) all matters included under the Public Service Pension Plan, 
    continued under the
Public Sector Pension Plans Act
, [S.B.C. 1999, 
    c. 44] and the pension plan rules made under that plan.

[66]

Although the matter remains an open question, I agree with Madam Justice 
    Newbury that the plain reading of this legislation suggests that the matters 
    covered by the subsections of s. 12 are not prohibited from inclusion in a 
    collective agreement.  I agree with her observations concerning the relationship 
    between the benefits claimed by the respondent and s. 12(b), and with her 
    statement: [i]t is not for this court to make findings concerning the allegedly 
    contractual terms of employment between the Province and Mr. Bennett and the 
    plaintiffs he represents nor whether the Benefits were matters included 
    under the Pension Plan.

[67]

By definition, the matters included in s. 12(b) are matters affecting 
    . . . working conditions because as such they are excepted from the requirement 
    that matters affecting working conditions must be included in a collective 
    agreement.  This exclusion is not incompatible with either the respondents 
    assertion that the matters addressed in s. 12(b) are the subject of a contract 
    separate from the collective agreement or the appellants contention that 
    they are not.

[68]

What is clear and is common-ground is that the benefits pursued by 
    the respondent are not dealt with in the collective agreement.

[69]

While, as a general proposition, matters concerning working conditions 
    in a unionized setting are found within the four corners of collective agreements, 
    the law does not preclude parties from agreeing to exceptions or prevent a 
    legislature from legislating exceptions.

[70]

The appellants core proposition that all matters concerning the respondents 
    working conditions must be in a collective agreement is not sustainable on 
    the facts of this case.

[71]

The parties agree that the rights asserted by the respondent are not 
    found in a collective agreement.  The respondent is entitled to bring an action 
    to establish that he otherwise has a contractual right or a right derived 
    from a fiduciary relationship to the benefits he claims.  The appellant asserts 
    and is entitled to seek to establish that the respondent has no such rights 
    and that the benefits were provided at the legislative discretion of the appellant.  
    In the words of McLachlin C.J.C., ". . . the difference between the parties 
    [does not arise] from the collective agreement . . ."

[72]

I also would dispose of this appeal on the basis proposed by Madam 
    Justice Newbury.

The Honourable
Mr. Justice Chiasson




