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Labour Law - Unions - Civil liability of unions - Duties - Representation of members - Duty of fair representation - Scope of duty

Thursday, September 08, 2016 @ 8:00 PM  

Appeal by the defendants, the Union and the trustees of the Union’s long-term disability (LTD) fund, from an order certifying a class action by the plaintiffs, Watt and Hensman. The plaintiffs were members of the defendant Union and recipients of benefits under employee-funded LTD plans established by the Union for the benefit of its members. The Union made amendments to the LTD plans and trusts to address funding deficits that resulted in a reduction of benefits paid to disabled members, such as the plaintiffs. The plaintiffs commenced a proposed class action that sought general, aggravated and punitive damages for negligence and breach of contract and/or fiduciary duty. The Union took the position that it was not a commercial provider of benefits and that its members were aware the LTD plans were employee-funded. The Union disputed the factual or legal existence of a contract with its members to pay or provide LTD benefits. The chambers judge found that the pleadings disclosed reasonable causes of action and that the criteria for certification were met. The defendants appealed.

HELD: Appeal allowed in part. The Supreme Court had jurisdiction over the plaintiffs’ claims, which did not involve a breach of duty of fair representation and arose from agreements alleged to stand apart from the collective agreement. The chambers judge did not err in ruling that the plaintiffs’ cause of action for breach of contract was not bound to fail despite considerable challenges regarding the existence and scope of the contracts, the plaintiffs’ knowledge of the terms, the provision of consideration, and the Union’s capacity to enter into an agreement of the type alleged. The plaintiffs failed to demonstrate a viable cause of action for breach of fiduciary duty by the Union to its disabled members. Nothing in the relevant brochures or communications could support an undertaking by the Union to forsake its duty to advance the best interests of all members in favour of the best interests of disabled members. It could not be said that the Union’s establishment of the LTD plans and trusts gave rise to liability as it having effectively become a trustee. The proposed claim against the trustees based on a fiduciary duty or duty of care to ensure the LTD trusts were fully funded was bound to fail, as the trustees did not exercise control of that nature over the Union. To the extent a wider assertion of negligence was intended regarding business practices, it was not bound to fail.