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Arbitrator Without Jurisdiction Over Aggravated and Punitive Damages
January 25, 2007

A college professor was dismissed for sending anti-Semitic letters to a fellow employee but was reinstated at arbitration because of an eight-year delay between the letters and his dismissal. His union subsequently claimed aggravated and punitive damages, alleging intentional infliction of mental dismiss, defamation and discrimination based on his union activity. The arbitration board held that it did not have jurisdiction to award aggravated and punitive damages in the absence of an enabling collective agreement clause. On judicial review, the Ontario Divisional Court concluded that the board’s decision was incorrect because the collective agreement inferentially included all aspects of the dismissal grievance, including claims for these kinds of damages.

On appeal, the Ontario Court of Appeal ruled that the lower court erred in applying the correctness standard rather than the standard of patent unreasonableness on judicial review. The Court said that the arbitration board had to determine whether the collective agreement gave it the power to award aggravated and punitive damages. The board gave cogent reasons why that power did not arise expressly or impliedly from the collective agreement and so its decision was not clearly irrational and could not be said to be patently unreasonable. The Supreme Court of Canada recently denied leave to appeal from the Court of Appeal decision.

This decision will assist employers in defending claims at arbitration for aggravated or punitive damages when the collective agreement does not confer the arbitrator with the required jurisdiction.

Ontario Public Service Employees Union v. Seneca College of Applied Arts & Technology, [2006] O.J. No. 1756 (CA), app’l for leave to appeal denied [2006] S.C.C.A. No. 281