AWARD

 

                        A hearing in this matter was held in Ottawa, Ontario on October 6 and November 4, 2004. At the outset of the hearing, the parties were agreed that the Arbitrator had been properly appointed pursuant to the collective agreement, and that I had jurisdiction to hear and determine the two matters in issue between them.

                        Grievances 2003-873 and 2003-874 are both policy grievances filed pursuant to Article 11.06 of the collective agreement. They both relate to the implementation of the Memorandum of Settlement of June 10, 2003, which is the template for the current collective agreement. Both of them are dated November 24, 2003. Grievance 2003-873 concerns the entitlement of members of the bargaining unit who became entitled to early retirement on or after April 1, 2001, but took the commuted value of their pension rather than a periodic pension, to retroactive salary payments arising from the Memorandum of Settlement and the collective agreement. Grievance 2003-874 concerns the entitlement of employees whose employment with NAV CANADA terminated between July 4, 2003, the date of ratification of the Memorandum of Settlement of June 10, 2003, and September 9, 2003, the official signing date of the new collective agreement, to the same retroactive salary payments.

                        While the negotiations which led to the current collective agreement were lengthy and complex, the history of the major events, for present purposes, can be simply stated. After a protracted mediation, the mediator, S. Bruce Outhouse, Q.C., issued his “Report and Recommendations” on May 23, 2003. He made recommendations for settlement over a range of issues in dispute, and recommended, among other things, a four-year collective agreement with annual increases, effective April 1, in each of 2001 through 2004. His recommendation on the subject of retroactivity, which is central to these grievances, was as follows:

Retroactive payments should be made only to current employees, as of the date of signing of the new collective agreement, and former employees who have retired or died since April 1st, 2001. No retroactive payments should be made to former employees who have resigned or who have been terminated between April 1, 2001, and the signing of the new collective agreement.

 

                        After the mediator’s report was issued, the parties entered into further negotiations, and ultimately rendered the recommendations set out therein into a Memorandum of Settlement. That document, which is dated June 10, 2003, makes certain changes to the mediator’s recommendations, but not in respect of his recommendation concerning retroactivity. The operative parts of the Memorandum of Settlement for the purposes of this award are as follows:

The Union and the Employer agree to resolve all outstanding bargaining issues by entering into a collective agreement (the “Collective Agreement”), the terms and conditions of which shall include: 1. the items previously agreed to by the parties; 2. the recommendations of Mediator Outhouse in his report dated May 23, 2003, and his clarifications thereto, except where modified as follows:

 

. . . . . .

 

The parties agree that the Outhouse recommendations be accurately reflected in contract language prior to contract execution.

 

                        On July 4, 2003, the Union notified the Employer that the Union membership had ratified the Memorandum of Settlement, and “that the provisions contained in that agreement can therefore be executed effective immediately”.

                        During July, the parties exchanged correspondence relating to the preparation of a formal collective agreement for execution; it appears that a final version in English was available by July 25, and the French translation was prepared thereafter. By the end of the month, however, the parties were at odds about whether the provisions of the Memorandum of Settlement should be implemented forthwith, or whether they should await the signing of the formal collective agreement. This was resolved by a Memorandum of Understanding dated July 30, 2003, which specified that the implementation of the new rates of pay prior to the signing of the formal collective agreement would not be raised by the Union as determinative of whether or not the collective agreement has been executed.

                        Finally, on September 9, 2003, the formal collective agreement was executed.  Clause 42.02 of the formal document specifies that:

42.02 Unless otherwise expressly stipulated, this

Agreement shall become effective on the date it is

signed and shall remain in effect until March 31,

2001.

 

                        The formal collective agreement, as signed, does not include any language on retroactivity for salary increases. The parties are agreed, however, that the language of the mediator’s report is the language which governs this issue. It is also a matter of agreement between the parties that the language comes entirely from Mediator Outhouse, the parties having proposed different approaches to the question of retroactivity in their respective submissions to the mediator. Moreover, while the parties did request clarification of some issues of effective dates from the mediator after receipt of his report, there has never been an attempt to ask Mr. Outhouse what he meant by the language which he chose to use to limit retroactivity. In the result, therefore, the language must be interpreted as it appears on its face, in accordance with the usual rules of contractual interpretation, the parties having adopted the mediator’s report by entering into the Memorandum of Settlement.

                        Obviously, there are always a number of questions about the operative dates for various provisions of the new collective agreement. That is not in issue before me, however, since the operative dates for the salary increases are all specified, and it is only the entitlement to retroactive pay that is in issue. Fundamentally, the Union takes the position that “the date of signing of the new collective agreement” is July 4, 2003, the date on which the new collective agreement was ratified by notice from the Union to the Employer. The Employer takes the position that the appropriate date is the official signing date of September 9, 2003, when the parties signed the formal collective agreement document. From that dispute, and from a related dispute about the meaning of the words “former employees who have retired”, the present grievances arise for determination.

                        As did the parties in argument, I propose to deal first with the question of the date of signing of the collective agreement for purposes of retroactivity. The parties referred me to a number of arbitral authorities for various principles and propositions. I do not propose to deal extensively with these authorities, since each of them is dependent upon the specific language being interpreted. Perhaps the most thorough review of the general legal principles operating on this question is found in Re Cape Breton Healthcare Complex and CAW-Canada, Locals 4600 and 4603 (Holiday Entitlement) (1999), 83 L.A.C. (4th) 289 (Outhouse), a decision of Mr. Outhouse in his capacity as a grievance arbitrator. In this award, Mr. Outhouse clearly emphasizes the importance of the particular language chosen to express the bargain between the parties in light, in that case, of the statutory requirements for a collective agreement in the Province of Nova Scotia, which are different from those applicable in the present case.

                        In my view, however, there is really no need to rely on general principles and arbitral authority to decide this matter. The parties chose, in entering into the Memorandum of Settlement of June 10, 2003, to adopt Mr. Outhouse’s language on retroactivity. That language specifies as the operative date “the date of signing of the new collective agreement”.

                        In their Memorandum of Settlement, however, the parties refer specifically to the requirement that the recommendations be accurately reflected in contract language “prior to contract execution”. While this is not exactly the same language as that chosen by Mr. Outhouse to express the appropriate operative date, it clearly indicates that the parties intended that their bargain would not be executed until a formal collective agreement had been created and signed. Indeed, that is the language which they also inserted into that new agreement in clause 42.02 to express the effective date of the new agreement.

                        Finally, when the question of whether the collective agreement was in force following ratification arose between the parties, the Employer agreed to begin implementation of some of the provisions of the agreement, but only after the parties had produced a new Memorandum of Understanding dated July 30, 2003, which specifically refers to ratification of the new collective agreement by the Union on July 4, 2003, and to the signing of “said collective agreement” at some time then still in the future, and which barred the Union from using any implementation prior to signing as an argument about whether or not the collective agreement had been executed. In matters of interpretation of contractual language, parties must be held to the objective test of what reasonable parties in their positions would have intended. In my view, if the parties intended that ratification would constitute the equivalent of “signing” for the purposes of retroactivity, they would have expressly said so to contradict the inference which derives directly from the words which they have used throughout the transactions leading up to the signing on September 9, 2003.

                        In the result, therefore, Grievance 2003-874 must be denied.

                        The other issue relates to the exception to Mr. Outhouse’s language restricting retroactive payments to current employees as of the date of signing, which requires that payments also be made to former employees “who have retired or died since April 1, 2001”. Specifically, the parties disagree as to what the word “retired” means, and whether it applies to persons who, rather than taking a pension benefit paid periodically, choose instead to take the commuted value of the pension to which that person would be entitled. The Employer takes the position that this constitutes something other than retiring for the purposes of the retroactivity language, while the Union disagrees with that interpretation.

                        While any employee with more than 24 months of continuous pension plan membership is entitled to a deferred pension which can be commuted to a lump sum upon resignation, the categories of former employees whom the Union says ought to be considered to have retired, rather than resigned, are those covered by three specific provisions of the pension plan who are entitled to immediate early retirement pensions, which can also be taken as a commuted value pursuant to the portability provisions of the pension plan.

These kinds of pensions are provided by the NAV CANADA Pension Plan (effective November 1, 1996), and specifically Article 5, which deals with retirement benefits in general. Clause 5.2 deals with early retirement benefits, and the early retirement plans here at issue are covered by paragraphs 5.2(f), (g) and (h), which provide for Category F, G and H pensions respectively. These pensions are applicable only to air traffic controllers, and not to other employees of the Employer. Category F pensions are available to air traffic controllers whose retirement is an Involuntary Cessation of Operational Service, and who have completed at least 20 years of Operational Eligibility Service that is also Pensionable Eligibility Service. The capitalized phrases are all defined terms under the pensio