U.E.S., Local 298 v. Bibeault

U.E.S., Local 298 v. Bibeault
Collection
Supreme Court Judgments
Date
1988-12-22
Report
[1988] 2 SCR 1048
Case number
18609
Judges
Beetz, Jean; McIntyre, William Rogers; Chouinard, Julien; Lamer, Antonio; Le Dain, Gerald Eric; La Forest, Gérard V.
On appeal from
Quebec
Subjects
Administrative law
Labour law
Notes
SCC Case Information: 18609
Decision Content
u.e.s., local 298 v. bibeault, [1988] 2 S.C.R. 1048
Syndicat national des employés
de la Commission scolaire régionale
de l'Outaouais (CSN) Appellant
v.
Union des employés de service, local 298 (FTQ) Respondent
and
Mr. Réal Bibeault and Labour Court Mis en cause
and
Labour Court judges Jean-Paul Geoffroy,
René Beaudry, Denis Aubé, Marc Brière,
Jean Girouard, Bernard Prud'Homme,
Claude St-Arnaud, Louis Morin, Robert Auclair,
Robert Burns and Bernard Lesage Mis en cause
and
Commission scolaire régionale de
l'Outaouais, Entreprise Netco Inc.,
Services Ménagers Roy Limitée, MBD
Conciergeries Limitée Mis en cause
indexed as: u.e.s., local 298 v. bibeault
File No.: 18609.
1986: October 29, 30; 1988: December 22.
Present: Beetz, Estey*, McIntyre, Chouinard*, Lamer, Le Dain* and La Forest JJ.
on appeal from the court of appeal for quebec
Labour law -- Certification -- Transfer of rights and obligations ‑‑ Janitorial services contract terminated by school board and awarded to new subcontractor -- Labour commissioner erred in finding an operation by another of the undertaking and recorded transfer of rights and obligations between subcontractors -- Excess of jurisdiction -- Conditions in which s. 45 of Labour Code applies: continuity of undertaking and requirement of legal relation between successive employers -- Definition of undertaking -- Labour Code, R.S.Q., c. C-27, ss. 45, 46.
Judicial review -- Labour Court and labour commissioner ‑‑ Jurisdiction -- Error as to legislation interpretation of which not within jurisdiction of labour commissioner -- Labour commissioner and Labour Court erred in finding an operation by another of the undertaking and recorded transfer of rights and obligations covered by s. 45 of Labour Code ‑‑ Jurisdictional error -- Writ of evocation granted -- Labour Code, R.S.Q., c. C‑27, ss. 45, 46.
Administrative law -- Prerequisite -- Difficulty in applying concept of prerequisite -- New approach to questions of jurisdiction.
The question is whether s. 45 of the Labour Code applied to the case of two subcontractors who succeeded each other under two subcontracting contracts given to them by the same principal, without there being any legal relation between the two subcontractors. MBD and Netco handled janitorial services in six C.S.R.O. schools under contracts for janitorial services awarded annually through calls for tenders. At the time appellant was certified to represent the Netco and MBD employees assigned to the cleaning of the schools. Following a strike by MBD and Netco employees, the C.S.R.O. legally terminated the contracts for janitorial services and, after calls for tenders, assigned the janitorial services of the six schools by contract to Services Ménagers. Appellant filed applications with the labour commissioner general citing ss. 45 and 46 of the Labour Code, seeking to have the transfer of the rights and obligations of MBD and Netco to Services Ménagers recorded and so defeat respondent's application for certification in respect of the Services Ménagers employees. The labour commissioner granted appellant's applications. He recorded the transfer of the rights and obligations of MBD and Netco to Services Ménagers and declared that the latter was bound by the certification of MBD and Netco. On the same day he dismissed respondent's application for certification. In a majority judgment, the Labour Court upheld the decisions of the labour commissioner. Respondent then applied to the Superior Court for a writ of evocation against the decisions of the Labour Court and the commissioner. The Superior Court allowed the motion for evocation and the judgment was affirmed by the Court of Appeal. In this Court, appellant's principal argument was that the Superior Court and the Court of Appeal, despite the existence of a privative clause in the Labour Code, erred in justifying their intervention by the theory of questions "preliminary" or "collateral" to the exercise of jurisdiction, and holding that the existence of an alienation or operation by another of an undertaking within the meaning of the civil law is a prerequisite to exercise of the power to issue a record of the transfer of rights and obligations.
Held: The appeal should be dismissed.
The chief problem in a case of judicial review is determining the jurisdiction of the tribunal whose decision is impugned. In the absence of any coherent test for distinguishing what is in fact preliminary, the prerequisite concept does not assist in the inquiry. It diverts the courts from the only question they should ask, "Did the legislator intend such a matter to be within the jurisdiction conferred on the tribunal?" By limiting the concept of the preliminary or collateral question and by introducing the doctrine of a patently unreasonable interpretation, this Court is giving notice of the development of a new approach to determining jurisdictional questions. Henceforth, the formalistic analysis of the preliminary or collateral question must give way to a pragmatic and functional analysis. This analysis, hitherto associated with cases of patently unreasonable error on a matter within the Court's jurisdiction, is just as suited to a case in which an error is alleged in the interpretation of a provision limiting that jurisdiction. In both cases, the first stage of the analysis involves determining the tribunal's jurisdiction. To do this, the Court examines not only the wording of the enactment conferring jurisdiction on the administrative tribunal, but the purpose of the statute creating the tribunal, the reason for its existence, the area of expertise of its members and the nature of the problem before the tribunal.
In deciding whether there was a transfer of rights and obligations under s. 45 of the Labour Code, the labour commissioner and the Labour Court did not perform an act within their jurisdiction stricto sensu. Taken together, the wording of ss. 45 and 46, the legislative context of these sections and the area of expertise of the labour commissioner clearly indicate that the legislator did not intend the commissioner's decision about the existence of an alienation or operation by another of an undertaking to be conclusive. The transfer of rights and obligations occurs as of right on the day of the alienation, operation by another or change in legal structure of the undertaking. The labour commissioner only records the transfer of rights and obligations guaranteed in s. 45. The powers conferred on the commissioner in s. 46 of the Code are thus limited to resolving administrative difficulties that may arise out of an alienation or operation by another of an undertaking. A labour commissioner will undoubtedly, depending on the circumstances, consider the requirements contained in s. 45 before making an order under s. 46. Nevertheless, the question of alienation or operation by another of an undertaking is not within the labour commissioner's jurisdiction stricto sensu. These concepts are civil law concepts that require no special expertise on the part of an administrative tribunal. They are concepts which do not call on the commissioner's expertise. As the interpretation of s. 45 is a question of jurisdictional nature, the commissioner cannot erroneously conclude that an alienation or operation by another of an undertaking exists without exceeding his jurisdiction.
In the Labour Code context, the legislator intended that the bargaining and the resulting collective agreement take place within the following three-part framework: an employer, his undertaking and the association of employees connected with that employer's undertaking. When an undertaking is alienated or operated by another in whole or in part, the essential components of this three-part framework must continue to exist if the certification or collective agreement are to remain relevant. For the purposes of s. 45, the undertaking is the most important component. It consists of a self-sustaining organization of resources through which specific activities can be wholly or partly carried on. This definition of an undertaking is the only one which takes into account the various legal operations required to bring s. 45 into operation and is the only one which proves capable of describing an undertaking in all its aspects. The nature of collective bargaining requires that this undertaking be that of an employer. The employer is the one designated in the certification, the collective agreement or by any proceeding "for the securing of certification or for the making or carrying out of a collective agreement" (s. 45). Alienation or operation by another of this undertaking establishes, by means of a voluntary transfer of a right, a legal relation between successive employers. For a transfer of rights and obligations contemplated by s. 45 to operate, the fundamental components of an undertaking must be found to exist in whole or in part in the operations of a new employer, following the "alienation or operation by another . . . in part of" that undertaking. Continuity of the undertaking is a condition for the application of s. 45 because the relevance of the certification and the agreement depends on the existence of that undertaking, at least in its essential elements. The test of continuity in an undertaking requires identification of the essential elements of the undertaking, which must be found to exist to a sufficient degree in the new employer's operations. Each component must be weighed according to its respective importance.
In the case at bar, s. 45 did not bring about a transfer of rights and obligations from Netco and MBD to Services Ménagers. The three subcontractors are competitors in the janitorial services industry. C.S.R.O. is a client which dealt first with Netco and MBD and then with Services Ménagers. Section 45 does not support the conclusion that rights and obligations have been transferred from one employer to another solely because each of them hires employees engaged in similar activities. Only an alienation or agreement to operate made by Netco or MBD in favour of Services Ménagers of that part of their undertaking concerned with janitorial services in the C.S.R.O. schools would have caused a transfer of rights and obligations to be effected between Netco and MBD on the one hand and Services Ménagers on the other. By rejecting the need for a legal relation between successive employers and adopting a "functional" definition of the undertaking, the labour commissioner is giving s. 45 an interpretation that does not recognize the existence of the three-part context in which the collective bargaining must necessarily take place and which also disregards the basis of that section. Because of their desire to protect the certification and collective agreement despite all the vicissitudes of the undertaking, the labour commissioner and the majority of the Labour Court have taken a position inconsistent with the purpose of the Labour Code: to promote collective bargaining as a better means of guaranteeing industrial peace and to establish equitable relations between employer and employees.
Cases Cited
Approved: Mode Amazone v. Comité conjoint de Montréal de l'Union internationale des ouvriers du vêtement pour dames, [1983] T.T. 227; disapproved: Jack Schwartz Service Station v. Teamsters Local Union 900, [1975] T.T. 125; referred to: Adam v. Daniel Roy Ltée, [1983] 1 S.C.R. 683; Martinique Motor Inn Ltd. v. Union des employés d'hôtel, motel et club, [1973] T.T. 151; Syndicat national des employés de l'aluminium d'Arvida Inc. v. J.R. Théberge Ltée, [1965] R.D.T. 449; Centrale de Chauffage Enr. v. Syndicat des employés des institutions religieuses de Chicoutimi Inc., [1970] T.T. 236; Syndicat national des concierges des commissions scolaires des comtés de Richelieu, Verchères et Yamaska (CSN) v. For-Net Inc., [1971] T.T. 146; Union des employés de service d'édifices, local 298 -- F.T.Q. v. Syndicat des employés de soutien de maisons d'enseignement de la Régionale Le Gardeur (CSN), [1971] T.T. 203; Canadian Kenworth Ltd. v. Syndicat international des travailleurs unis de l'automobile, de l'aéronautique, de l'astronautique et des instruments aratoires d'Amérique, local 1146, [1975] T.T. 168; Syndicat des employés de l'imprimerie de la région de l'amiante (CSN) v. Imprimerie Roy et Laliberté Inc., [1980] T.T. 503; Syndicat des salariés de service d'entretien (C.S.D.) v. Montcalm Carpets Specialists Ltd., [1981] T.T. 273; Entrepôts Schenker Ltée v. Travailleurs canadiens de l'Alimentation et d'autres industries, local P-766, [1981] T.T. 420; Syndicat national des employés de la Commission scolaire régionale de l'Outaouais v. Services Ménagers Bordeaux, [1980] T.T. 233; Syndicat des employés de production du Québec et de l'Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; Canadian Union of Public Employees Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, [1975] 1 S.C.R. 382; Crevier v. Attorney General of Quebec, [1981] 2 S.C.R. 220; Montréal Trust v. Tribunal du travail, [1975] R.D.T. 353; Lecavalier v. Syndicat national des employés de la Ville de Laval Inc. (C.S.N.), [1976] C.S. 856; Syndicat des employés municipaux de la Ville de Hull v. Hull (Ville de), [1985] C.A. 552; Derko Ltée v. Roy, Que. Sup. Ct., No. 200-05-001343-792, June 28, 1979; Fraternité internationale des ouvriers en électricité v. National Cablevision Ltd., [1967] R.D.T. 314; Cité de Lachine v. Union des employés municipaux de la Cité de Lachine, [1974] T.T. 279; National Bank of Canada v. Retail Clerks' International Union, [1984] 1 S.C.R. 269; Parkhill Bedding & Furniture Ltd. v. International Molders & Foundry Workers Union of North America, Local 174 (1961), 26 D.L.R. (2d) 589; Labour Relations Board of Saskatchewan v. John East Iron Works Ltd., [1948] 2 W.W.R. 1055; International Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers of America (Local 239) v. Coca-Cola Ltd., [1978] R.L. 391; Alimentation de la Seigneurie Inc. v. Union des employés de commerce, local 500, D.T.E. 83T-694; Union des employés de commerce, local 500 T.U.A.C. (U.F.C.W.) v. Union des employés de commerce, local 501 T.U.A.C. (U.F.C.W.), D.T.E. 85T-521; Industries du frein total Ltée v. Syndicat international des travailleurs unis de l'automobile, de l'aérospatiale et de l'outillage agricole d'Amérique (T.U.A. - F.T.Q. - C.T.C.), section locale 1900, [1985] T.T. 220; Syndicat des salariés de la Boulangerie Weston (C.S.D.) v. Union des employés de commerce, local 501, T.U.A.C., [1986] T.T. 128; Commission des normes du travail v. Delta Granite Inc., J.E. 85-927; Commission des normes du travail v. Banque nationale du Canada, D.T.E. 88T‑282; Commission des normes du travail v. Frank White Entreprises Inc., [1984] C.P. 232; Commission des normes du travail v. Erdan, [1985] C.P. 353; Barnes Security Service Ltd. v. Association internationale des machinistes et des travailleurs de l'aéroastronautique, local 2235, [1972] T.T. 1; Syndicat des travailleurs forestiers de la division Jacques Cartier (FTPF - CSN) v. H.C. Leduc Ltée, [1977] T.T. 249; Clinique communautaire de Pointe St-Charles v. Syndicat professionnel des diététistes du Québec, [1973] T.T. 338; Gérances West Cliff Ltée v. Union des employés de service, local 298 F.T.Q., [1981] T.T. 432; Hull (Ville de) v. Bibeault, D.T.E. 83T-906; Brasserie Labatt Ltée v. Commissaire général du travail, [1986] R.J.Q. 908; Fondation-Habitation Champlain Inc. v. Tribunal du travail, D.T.E. 86T-500; Syndicat des employés de la Commission régionale de Tilly (CSN) v. Langlois, [1976] T.T. 165; Cégep de Shawinigan v. Syndicat du personnel de soutien du Collège d'enseignement de Shawinigan Enr., [1976] T.T. 209; J. A. Hubert Ltée v. Syndicat des employés de soutien du Collège Ahuntsic, [1977] T.T. 110; Union des chauffeurs de camions, hommes d'entrepôts et autres ouvriers, local 106 v. Alain Lacasse Transport Inc., [1977] T.T. 231; Compagnie du Trust National Ltée v. Burns, [1985] C.S. 1286; Sitri Inc. v. Cartage & Miscellaneous Employee's Union, Local 931 (F.T.Q.), [1977] T.T. 29.
Statutes and Regulations Cited
Act respecting Labour standards, R.S.Q., c. N-1.1 [formerly S.Q. 1979, c. 45], s. 96.
Education Act, R.S.Q., c. I-14.
Labour Code, R.S.Q., c. C-27 [am. 1977, c. 41], ss. 1(b), (k), (l), 17, 21, 22 [am. 1979, c. 32, s. 3], 23 [am. 1978, c. 15, s. 140; am. 1979, c. 45, s. 150], 31, 32, 34, 45, 46, 52, 58, 62.
Authors Cited
Association Henri Capitant. Vocabulaire juridique. Publié sous la direction de Gérard Cornu. Paris: P.U.F., 1987.
Brière, Marc, Robert P. Gagnon et Catherine Saint-Germain. La transmission de l'entreprise en droit du travail. Cowansville, Que.: Yvon Blais, 1982.
Capitant, Henri. Vocabulaire juridique. Paris: P.U.F., 1936.
Corniot, S. Dictionnaire de droit, t. I. Paris: Dalloz, 1966.
De Smith, S. A. Constitutional and Administrative Law, 4th ed. By Harry Street and Rodney Brazier. Harmondsworth, Eng.: Penguin Books, 1981.
De Smith, S. A. Judicial Review of Administrative Action, 4th ed. By J. M. Evans. London: Stevens & Sons, 1980.
De Villargues, Rolland. Dictionnaire du droit civil, commercial et criminel, t. 1, 4e éd. Bruxelles: Meline, Cans et Cie, 1889.
Dictionnaire de droit privé. Comité de rédaction: Paul-A. Crépeau et al. Montréal: Centre de recherche en droit privé et comparé du Québec, 1985.
Dion, Gérard. Dictionnaire canadien des relations du travail, 2e éd. Québec: Presses de l'Université Laval, 1986.
Gagnon, Robert P. Droit du travail. Dans Cours de la formation professionnelle du Barreau du Québec 1986-87, vol. 8. Cowansville, Que.: Yvon Blais, 1987.
Gagnon, Robert P., Louis LeBel et Pierre Verge. Droit du travail. Québec: Presses de l'Université Laval, 1987.
Guillien, Raymond and Jean Vincent. Lexique de termes juridiques, 5e éd. Paris: Dalloz, 1981.
Hébert, Gérard et Gilles Trudeau. Les normes minimales du travail au Canada et au Québec. Cowansville, Que.: Yvon Blais, 1987.
Perraud-Charmantier, A. Petit dictionnaire de droit. Paris: Librairie générale de droit et de jurisprudence, [1948].
Québec. Commission des normes du travail. Loi sur les normes du travail, règlement sur les normes du travail, Loi sur la fête nationale: interprétation et jurisprudence. Québec: Governement du Québec, Commission des normes du travail, 1986.
APPEAL from a judgment of the Quebec Court of Appeal[1], affirming a judgment of the Superior Court, [1982] C.S. 977, authorizing the issuance of a writ of evocation from a decision of the Labour Court, [1982] T.T. 115. Appeal dismissed.
Clément Groleau and Raymond Levasseur, for the appellant.
Gaston Nadeau, for the respondent.
Richard Martel and André Durocher, for the mis en cause Services Ménagers Roy Ltée.
Jean Pomminville, for the mis en cause the Commission scolaire régionale de l'Outaouais.
English version of the judgment of the Court delivered by
1 Beetz J. -- The interpretation and application of ss. 45 and 46 of the Labour Code, R.S.Q., c. C-27, are at issue in this case. These provisions state:
45. The alienation or operation by another in whole or in part of an undertaking otherwise than by judicial sale shall not invalidate any certification granted under this code, any collective agreement or any proceeding for the securing of certification or for the making or carrying out of a collective agreement.
The new employer, notwithstanding the division, amalgamation or changed legal structure of the undertaking, shall be bound by the certification or collective agreement as if he were named therein and shall become ipso facto a party to any proceeding relating thereto, in the place and stead of the former employer.
46. An [sic] labour commissioner may make any order deemed necessary to record the transfer of rights and obligations provided for in section 45 and settle any difficulty arising out of the application thereof.
2 The main question is whether s. 45 applies to the case of two "subcontractors" who succeeded each other under two "subcontracting" contracts awarded to them by the same principal, without there being any legal relation between the two "subcontractors". The question is bound up with the concept of an undertaking, which is at the heart of this provision, as well as with the identification of the undertaking in the case at bar. The issue has been disputed in Quebec for many years.
3 The Court must also decide whether the question is jurisdictional in nature.
I - Proceedings and Facts
4 The respondent (the F.T.Q. Union) asked the Superior Court to issue a writ of evocation against a majority decision of the Labour Court affirming a decision of labour commissioner Réal Bibeault. The writ sought was also directed against the decision of the labour commissioner. At this stage of the proceedings, the allegations of fact made in the motion in evocation are taken as proven. Briefly stated, the facts are as follows:
5 The mis en cause Commission scolaire régionale de l'Outaouais (the C.S.R.O.) has always hired subcontractors to clean six of the schools mentioned in the motion for evocation. (The labour commissioner and the Labour Court also discussed other schools mentioned in related cases, but these other cases were not the subject of dispute in the Superior Court, the Court of Appeal or this Court.)
6 The contracts for janitorial services are awarded for each school annually through calls for tenders and are generally in effect from July 1 to June 30 of the following year.
7 The contracts for janitorial services for the schools in question were awarded in 1979 to the mis en cause MBD Conciergeries Limitée (MBD) and Entreprises Netco Inc. (Netco).
8 At the time, appellant (the C.S.N. Union) held four certificates of certification for the Netco employees working at four of the schools, and two certificates covering the MBD employees working at the other two schools.
9 On December 9, 1979 the Netco and MBD employees began a legal strike.
10 As a consequence of this strike the C.S.R.O. legally terminated the contracts awarded to Netco and MBD and, on January 24, 1980, after calls for tenders, awarded contracts for janitorial services in the six schools to the mis en cause Services Ménagers Roy Limitée (Services Ménagers Roy), which with its employees began to perform the contract.
11 The three mis en cause Services Ménagers Roy, MBD and Netco are three separate corporations operating separate undertakings, and compete to obtain contracts for janitorial services offered by public institutions and commercial undertakings.
12 The mis en cause Services Ménagers Roy is an undertaking specializing in janitorial services, and it does business in various parts of Quebec.
13 No contract or transaction of any kind was entered into between the mis en cause Services Ménagers Roy, MBD and Netco in respect of the janitorial work at the six schools, and it was admitted that no legal relation existed between them.
14 On February 5, 1980 the F.T.Q. Union filed an application for certification covering the employees of Services Ménagers Roy working in the Outaouais area. At that time, the F.T.Q. Union included among its members in good standing nearly all the employees of Services Ménagers Roy working in the Outaouais area.
15 At about the same time, the C.S.N. Union filed applications with the labour commissioner general citing ss. 45 and 46 of the Labour Code, seeking to have the transfer of the rights and obligations of MBD and Netco to Services Ménagers Roy recorded pursuant to those sections and so defeat the application of the F.T.Q. Union for certification.
16 On April 29, 1981, labour commissioner Réal Bibeault granted the C.S.N. Union applications; he recorded the transfer of the rights and obligations of MBD or Netco, as the case might be, to Services Ménagers Roy and declared that Services Ménagers Roy was bound by the certification of MBD or Netco, and by the legal strike, and that it became a party to any resulting proceeding in the place and stead of MBD or Netco, as if it had been named therein.
17 On the same day labour commissioner Réal Bibeault dismissed the F.T.Q. Union's application for certification because of his previous decision. In view of the transfer of the rights and obligations of MBD and Netco to Services Ménagers Roy, a legal strike was in progress at the latter's premises and the application for certification was outside the time limits specified by ss. 22 and 58 of the Labour Code.
18 These decisions were appealed to the Labour Court, and were upheld by a majority of that court: Services Ménagers Roy Ltée v. Syndicat national des employés de la Commission scolaire régionale de l'Outaouais (C.S.N.), [1982] T.T. 115.
19 On March 9, 1982, the F.T.Q. Union filed in the Superior Court the motion for evocation referred to above against the decisions of commissioner Réal Bibeault and the Labour Court.
20 On November 5, 1982, Louis-Philippe Landry J. allowed the motion for evocation: Union des employés de service, local 298 (F.T.Q.) v. Bibeault, [1982] C.S. 977.
21 On January 16, 1984 Beauregard, McCarthy and Malouf JJ.A. of the Quebec Court of Appeal affirmed the Superior Court judgment.
22 Hence the appeal with leave of this Court.
II -The Decisions of the Labour Commissioner, the Labour Court and the Courts Below
23 Before turning to these decisions it will be helpful to review the origins of ss. 45 and 46 of the Labour Code and their interpretation during the period leading up to the Labour Court's decision in the case at bar.
1. The Origins of ss. 45 and 46 and the History of Their Interpretation
24 Chouinard J., speaking for this Court, explained the origins of ss. 45 and 46 of the Labour Code in Adam v. Daniel Roy Ltée, [1983] 1 S.C.R. 683. The sections in question were numbered 36 and 37 at that time. Chouinard J. wrote the following at pp. 688‑89:
Section 36 was adopted in 1961 by 9-10 Eliz. II, c. 73, as s. 10a of the Labour Relations Act, R.S.Q. 1941, c. 162A, which the Labour Code replaced. Its primary purpose was to alter the situation created by the decision of the Court of Appeal in Brown, Syndicat national des travailleurs de la pulpe et du papier de La Tuque Inc. v. Commission des relations ouvrières de la Province de Québec, [1958] Que. Q.B. 1.
The union had been certified to represent the employees of Brown Corporation at the La Tuque mill, and a collective agreement had been concluded for a period of three years. Shortly after signing this agreement, Brown Corporation sold its mill to Canadian International Paper Co.
The union applied to the Labour Relations Board to have its certification amended, substituting for Brown Corporation the name of Canadian International Paper Co., which under the contract of sale had assumed responsibility for the collective agreement.
The Board initially allowed the union's request, but subsequently, at the request of a rival association, it revised its decision and cancelled the union's certification. Although it did not say so, the Board appears to have based its decision on the principle of relativity of contracts contained in art. 1023 C.C.:
1023. Contracts have effect only between the contracting parties; they cannot affect third persons, except in the cases provided in the articles of the fifth section of this chapter.
The certification had lapsed as a result of the sale of the mill.
By a majority of four to three, the Court of Appeal affirmed the judgment of the Superior Court, which quashed the writ of prohibition issued against this decision of the Board.
In Centrale de chauffage Enr. v. Syndicat des employés des institutions religieuses de Chicoutimi Inc. et l'Hôpital de Chicoutimi, [1970] R.D.T. 344, Donat Quimper A.C.J. of the Labour Court explained, at pp. 347-48, the reasons justifying adoption of this article and the intent of the legislator:
[TRANSLATION] In the years that followed adoption of the Labour Relations Act in 1944, it became apparent that certain transfers of ownership and work transfers had the effect of impeding the normal exercise of the right of association. In the case of a sale, unless there was an agreement to the contrary the buyer had no obligation either to the employees or to their association. The certification or collective agreement binding on the former owner ceased to apply.
. . .
Similarly, the practice of certain employers of giving work which was usually done in their own establishments to third parties to do could interfere with an application for certification if the transaction was accompanied by layoffs, and, in some cases, deprive the employees transferred to the service of the subcontractor of the benefits of an existing or future agreement. Here again, the certification or agreement was effective only with regard to the principal employer.
These are the two (2) situations which the legislator sought to remedy by enacting the first paragraph of section 10a. By that provision, he sought to protect the right of representation of the association and to maintain working conditions, whatever the fortunes of the business, apart from a judicial sale. He did this by, first, linking the certification and the collective agreement no longer to the person of the employer but to the business. It followed that henceforth the certification and collective agreement were part of the business. In the case of a sale, the buyer became bound by both the certification and the agreement. He succeeded to the rights and duties of the seller toward his former employees and the association.
The application of these new provisions encountered problems and is still the subject of controversy over twenty years after their adoption.
25 As Robert P. Gagnon, Louis LeBel and Pierre Verge observe in Droit du travail (1987), at p. 332:
[TRANSLATION] The first paragraph of s. 45 contemplates the two types of situation the legislator clearly had in mind in enacting this provision, namely the alienation or operation by another of an undertaking. Alienation or operation by another, whether total or partial, will not invalidate certification, and the rights and obligations pertaining thereto will be transferred to the new employer.
26 The circumstances in which s. 45 applies to these two relatively straightforward types of situations generally do not present any great difficulty.
27 However, the matter appears to become more complicated in situations such as that which arises where the original employer resumes operation of the part of the undertaking he had granted to a third party: Martinique Motor Inn Ltd. v. Union des employés d'hôtel, motel et club, [1973] T.T. 151; it also seems to be complicated in situations like the one at bar in which one contractor loses his contract to another with whom he has no connection.
28 The disputes referred to by Chouinard J. are very well described by Catherine Saint-Germain, "Historique de la situation avant le jugement Commission scolaire régionale de l'Outaouais", in M. Brière, R. P. Gagnon and C. Saint-Germain, La transmission de l'entreprise en droit du travail (1982), at pp. 2 to 11.
29 The evolution of and the contradictions in the decisions of the Labour Court may be divided into two major periods.
30 The first period begins with the adoption in 1961 of the provision that would become s. 45 of the Labour Code, and ends in 1975 with Jack Schwartz Service Station v. Teamsters Local Union 900, [1975] T.T. 125.
31 During this first period the Court rendered judgments such as Syndicat national des employés de l'aluminium d'Arvida Inc. v. J.R. Théberge Ltée, [1965] R.D.T. 449; Centrale de Chauffage Enr. v. Syndicat des employés des institutions religieuses de Chicoutimi Inc., [1970] T.T. 236; Syndicat national des concierges des commissions scolaires des comtés de Richelieu, Verchères et Yamaska (CSN) v. For-Net Inc., [1971] T.T. 146, the facts in which are similar to those in the case at bar; Union des employés de service d'édifices, local 298 -- F.T.Q. v. Syndicat des employés de soutien de maisons d'enseignement de la Régionale Le Gardeur (CSN), [1971] T.T. 203, which also has points of similarity with those in the case at bar; Martinique, supra; Canadian Kenworth Ltd. v. Syndicat international des travailleurs unis de l'automobile, de l'aéronautique, de l'astronautique et des instruments aratoires d'Amérique, local 1146, [1975] T.T. 168.
32 Catherine Saint-Germain summarizes these judgments rendered in the first period as follows, loc. cit., at p. 6:
[TRANSLATION] Thus, these first decisions of the Labour Court laid down two major principles governing the interpretation to be given to s. 45 of the Code:
- an undertaking is defined as functions, activities covered by a certification or a collective agreement; the identity of the employees carrying out these duties, the transfer of the equipment used and so on . . . are not determining factors in the transfer of the undertaking: operation by another of the undertaking thus exists when work covered by a certification is placed in the hands of a third party;
- The new employer must have received a right from the previous employer in as much as operation by another implies a meeting of minds. In order for the certification or agreement to follow the undertaking as provided in s. 45 of the Labour Code, there must be a finding of a consensual transaction between the original and the new employer.
However, these principles were placed in doubt by several later decisions of the Court. Neither the theory of the undertaking as a functional reality nor the legal relation theory received unanimous judicial support.
33 The Labour Court judgments rendered during the second period, which immediately precedes the judgment in the case at bar, are summarized in part by Catherine Saint-Germain, loc. cit., at pp. 6 to 8:
[TRANSLATION] Undoubtedly the greatest disruption of established precedent resulted from the judgment of Chief Judge Geoffroy in Jack Schwartz Service Station v. Teamsters Local 900, [1975] T.T. 125. Briefly, the facts were as follows: the Texaco company leased a service station to various operators in turn. With each lease the new employer hired new employees, but the contracts between Texaco and the tenants were identical; could the certification issued with respect to one of the tenants be transferred pursuant to s. 45 so as to apply to a subsequent operator?
Established precedent had traditionally answered this question in the negative, because of the lack of any direct connection between the various operators. In recording the transfer of the certification under s. 45, Chief Judge Geoffroy rejected the traditional approach and found that there does not have to be any legal relation between successive employers for this section to apply . . .
. . .
For the definition of an undertaking, Chief Judge Geoffroy adopted the principle of the undertaking as a group of functions already developed in Théberge, Centrale de chauffage . . . if the work carried out by various operators is the same, the undertaking is transferred even if new employees are hired by each new operator . . .
. . .
Schwartz upset the established precedents of the Court on s. 45 of the Code, and the Court has remained divided since then. Some judges have accepted Schwartz and others have declined to do so.
In Services Ménagers Bordeaux (1980), 3 Can. L.R.B. 43; [1980] T.T. 233, Judge Burns adopted the thesis put forward in Schwartz . . . [T]he question was whether the certification and the agreement issued in respect of a subcontractor for janitorial services should be transferred when the school board terminated the contract and awarded it to another subcontractor. Adopting Schwartz, Judge Burns answered in the affirmative.
34 Judge Morin, for his part, confirmed the requirement of a relation [between the previous and the new employer] in Syndicat des employés de l'imprimerie de la région de l'amiante (CSN) v. Imprimerie Roy et Laliberté Inc., [1980] T.T. 503, although he added certain nuances to the rule. In his view, there must be a legal relation between the parties for s. 45 to apply, but this relation need not be contractual or direct. At page 507, he wrote:
[TRANSLATION] This relation is not severed by the fact that there is an intermediary. For my part, I agree that there must be a relation, but the relation is not necessarily a nominate contract within the meaning of the Civil Code between the old and the new employers.
35 Judge Morin reiterated this position in the case at bar.
36 Other judges of the Labour Court, like Judge Girouard, continued to impose the traditional requirement of a direct transfer between the old and the new employers. For Judge Girouard, the transfer of an undertaking is:
[TRANSLATION] . . . the finding of an intent (hence the exception of a judicial sale) and an act by which that employer divests himself of an undertaking that had been assumed by him and places it in the hands of, or "passes" it to, the other employer.
See in this regard Syndicat des salariés de service d'entretien (C.S.D.) v. Montcalm Carpets Specialists Ltd., [1981] T.T. 273, and Entrepôts Schenker Ltée v. Travailleurs canadiens de l'Alimentation et d'autres industries, local P‑766, [1981] T.T. 420.
37 Moreover, the judges who continue to hold to the traditional view with respect to the requirement of a legal relation have a concept of the undertaking which differs from that originally developed in Théberge and Centrale de Chauffage, supra, and which paradoxically appears to favour the departure made in Schwartz, supra, regarding the absence of any requirement of a legal relation between the old and new employers. On this point, Catherine Saint-Germain describes a position such as that taken by Judge Girouard as follows, loc. cit., at p. 9:
[TRANSLATION] This concept of the transfer of an undertaking is based on a quite different view of the undertaking from that adopted by Judge Lespérance and Associate Chief Judge Quimper in Théberge and La Centrale de Chauffage (that is, an undertaking viewed simply as a group of functions covered by the certificate of certification). Judge Girouard sees the undertaking as an organic reality, as an entire productive entity containing human, physical and intellectual components, namely employees, equipment, a purpose, work premises and so on . . .
38 Catherine Saint-Germain cites the following passage from the judgment of Judge Girouard in Entrepôts Schenker, supra:
[TRANSLATION] These tasks, duties, positions, or activities should not be isolated from the rest of the undertaking and then used as a basis for concluding that they alone constitute the undertaking: that amounts to a confusion of the organized whole with one or more of its components. It is through this confusion that one arrives at the conclusion, which I consider mistaken, that the effect of the certification is to confer a monopolistic exclusivity over the duties or positions. . . .
39 Catherine Saint-Germain concludes in part as follows regarding the contradictions in decisions of the Labour Court before the judgment rendered in the case at bar, loc. cit., at pp. 9‑10:
[TRANSLATION] We find that the decisions of the Labour Court have produced several interpretations of this provision, none of which has so far been unanimously accepted by the judges; . . . [in the opinion of certain judges] it should only apply to situations in which the undertaking,