Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740

Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740
Collection
Supreme Court Judgments
Date
1990-12-07
Report
[1990] 3 SCR 644
Case number
21239
Judges
Dickson, Robert George Brian; Lamer, Antonio; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley
On appeal from
Newfoundland and Labrador
Subjects
Administrative law
Labour law
Notes
SCC Case Information: 21239
Decision Content
Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644
United Association of Journeymen
and Apprentices of the Plumbing
and Pipefitting Industry, Local 740 Appellant
v.
W.W. Lester (1978) Ltd. and
Planet Development Corporation Ltd. Respondents
and
The Labour Relations Board for
the Province of Newfoundland Respondent
indexed as: lester (w.w.) (1978) ltd. v. united association of journeymen and apprentices of the plumbing and pipefitting industry, local 740
File No.: 21239.
1990: April 26; 1990: December 7.
Present: Dickson C.J.* and Lamer C.J.** and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.
on appeal from the court of appeal for newfoundland
Administrative law ‑‑ Judicial review ‑‑ Jurisdiction ‑‑ Labour Relations Board ‑‑ Board granting successorship declaration where company carrying on business subject to union contract set up parallel company operating without a union ‑‑ Whether the Board had jurisdiction to enquire into whether or not successorship had occurred ‑‑ If so, whether the Board's exercise of its jurisdiction was patently unreasonable ‑‑ The Labour Relations Act, 1877, S.N. 1977, c. 64, s. 18.
Labour relations ‑‑ Unions ‑‑ Successor rights ‑‑ Company carrying on business subject to union contract setting up parallel company operating without a union ‑‑ Whether Labour Relations Board may grant successorship declaration ‑‑ The Labour Relations Act, 1977, S.N. 1977, c. 64, s. 89(1).
The respondent construction companies possessed similar share structures and principals and operated side by side. They shared the same office, secretary, telephone number and office expenses but had separate employees. While they shared a minor amount of equipment by renting the equipment to each other, each owned or leased its own equipment. The finances of the companies were separate. One of the principals prepared bids on construction projects on behalf of either company, depending on whether the job in question was a union or non‑union construction site in accordance with the practice of "double breasting" whereby one company, which continues to carry on business subject to a union contract, sets up a second parallel company which operates without a union.
The appellant union, which represented Lester's employees, attempted to organize the non‑unionized employees of Planet but withdrew its application for certification before the hearing. In its place, the appellant deposed an application alleging unfair labour practices on the part of the companies and sought a declaration of successorship pursuant to s. 89 of The Labour Relations Act, 1977. At the same time, the respondent companies laid a complaint alleging unfair labour practices on the part of the union. The Labour Relations Board granted the successorship declaration and found it unnecessary to make findings on the other applications. The respondent companies then applied, unsuccessfully, to the Trial Division of the Newfoundland Supreme Court for an order of certiorari to quash the Board's order. The Court of Appeal, in a unanimous decision, held the Board's decision to be patently unreasonable and remitted the matter of the unfair labour practices to the Board.
The issues raised in this appeal are: (1) whether the Board had the jurisdiction to enter into the inquiry as to whether or not successorship had occurred; and (2) if so, whether the exercise of its jurisdiction was patently unreasonable.
Held (Dickson C.J. and Wilson, L'Heureux‑Dubé and Cory JJ. dissenting): The appeal should be dismissed.
Per Lamer C.J. and La Forest, Sopinka, Gonthier and McLachlin JJ.: Section 16.1 of The Labour Relations Act, 1977 renders moot the question of whether the Labour Relations Board has the power to determine whether an employer had disposed of his business or a part of his business under s. 89(1) of the Act, except for the determination of this case. It may be assumed for the purpose of this judgment that the Board had the jurisdiction to consider whether or not there was a sale, lease, transfer or other disposition.
Section 18 of the Act limits judicial review of the Board's decisions to error in interpreting the jurisdictional provisions or excess of jurisdiction by reason of a patently unreasonable error in the performance of its function. Curial deference must extend both to the determination of the facts and the interpretation of the law. The Court can interfere only where the evidence, viewed reasonably, is incapable of supporting a tribunal's findings of fact, or where the interpretation placed on the legislation is patently unreasonable.
Section 89(1) establishes the conditions in which the collective agreement between a union and one employer may be imposed between the union and another employer. The aim of the successorship provision is to protect employees from losing union protection when a business is sold or transferred from one company to another. A discernible part of the business ‑‑ a functional economic vehicle ‑‑ must be transferred in order to establish successorship under s. 89(1). It is not enough that a mere transfer of assets occur because a business is not a mere collection of assets. A finding of successorship, therefore, could not be based on common shareholdings and a common business enterprise or on the fact that the same people owned or worked for both companies. Corporate interrelationship, without some evidence of disposition, would not be enough to trigger the successorship provisions. The evidence as to anti‑union animus was weak and, even if demonstrated, would not establish the necessary transfer.
The absence of evidence establishing a disposition under s. 89 rendered the Board's decision patently unreasonable and, therefore, subject to judicial review. The Board's action in construing the successorship provisions as if they were common employer provisions was contrary to precedent.
Per Dickson C.J. and Wilson and Cory JJ. (dissenting): A court will not exercise judicial review unless the tribunal's decision was patently unreasonable. It is unrealistic given increasingly complex and highly specialized regulatory regimes to expect the courts to have the requisite knowledge and skill to adjudicate properly on some of those regimes.
The test of patent unreasonableness is stringent. The administrative tribunal's interpretation of the legislation will only be considered patently unreasonable if it cannot be rationally supported by the relevant legislation and demands intervention by the court upon review. Judicial review is not available simply because there is disagreement over the tribunal's decision on the basis of conflicting interpretations of the relevant legislation. The privative clause in s. 18 indicates further the limited nature of judicial review.
How an asset is transferred depends on the nature of the asset. Here, the expertise of the two principals and their ability to move between the two companies lay at the very heart of the double breasting scheme. The Board interpreted the phrase "otherwise disposes of" in s. 89(1) so as to include this type of transfer. This interpretation, while broader than that given in other jurisdictions, is consonant with the purpose and intent of the overall legislative scheme, especially in light of the absence of a common employer provision. The decision, therefore, was not patently unreasonable and the Court had to defer to that decision.
Per L'Heureux‑Dubé J. (dissenting): Agreed with Wilson J. on the issue of reasonableness for the reasons she expressed, although the Board's decision here was not patently unreasonable.
Cases Cited
By McLachlin J.
Considered: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, [1979] 2 S.C.R. 227; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; referred to: Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904 (1985), 55 Nfld. & P.E.I.R. 117; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; National Bank of Canada v. Retail Clerks' International Union, [1984] 1 S.C.R. 269; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, [1975] 1 S.C.R. 382; Kelly Douglas & Co. and W.H. Malkin Ltd., [1974] 1 CLRBR 77; United Steelworkers of America v. Thorco Manufacturing Ltd. (1965), 65 CLLC {PP} 16,052; Lyric Theater Ltd. v. International Alliance of Theatrical Stage Employees, [1980] 2 Can LRBR 331; Canadian Union of Public Employees v. Metropolitan Parking Inc., [1980] 1 Can LRBR 197; International Longshoremen's Assn. v. Terminus Maritime Inc. (1983), 83 CLLC {PP} 16,029; Gibraltar Development Corporation, BCLRB 12 29/82; Rivard Mechanical; Re Plumbers Union, Local 71, [1981] OLRB Rep.May 550; Frank Browne Acoustics Kamloops (1982) Ltd. v. United Brotherhood of Carpenters and Joiners (1984), 6 CLRBR (NS) 247; United Brotherhood of Carpenters & Joiners of America v. Cana Construction Co. (1984), 9 CLRBR (NS) 175; Doran Construction Ltd., Taggart Construction Ltd. and Taggart General Contractors Ltd.; Re Carpenters Union, Local 93, [1984] OLRB Rep.Aug. 1108; Viandes Seficlo Inc. v. Union des Employés de Commerce (1984), 84 CLLC {PP} 14,047; International Brotherhood of Electrical Workers v. Minas Electric Co. (1976), 77 CLLC {PP} 16,075; Labourers' International Union of North America v. Elmont Construction Ltd., [1974] OLRB Rep.June 342; Re International Association of Machinists v. Professional Personnel Services Ltd. and C.P. Personnel Ltd. (Newfoundland Labour Relations Board, unreported, Sept. 1985); United Brotherhood of Carpenters and Joiners v. N. D. Dobin Ltd. and Bradco Ltd. (Newfoundland Labour Relations Board, unreported without written reasons, March 1985); United Brotherhood of Carpenters and Joiners v. Robco Ltd. and Brookfield Investments Ltd. (Newfoundland Labour Relations Board, unreported, May 1985); Brant Erecting and Hoisting; Re Iron Workers' Union, [1980] OLRB Rep.July 945; Concerned Contractors Action Group v. British Columbia and Yukon Territory Building and Construction Trades Council (1986), 13 CLRBR (NS) 121; Mackie Bros. Sand & Gravel Ltd. (1974), BCLRB No. L107/81; International Association of Bridge, Structural and Ornamental Iron Workers v. Empire Iron Works Ltd. (1986), 86 CLLC {PP} 16,027; Tri Power Construction Ltd. v. United Brotherhood of Carpenters and Joiners of America (1984), 8 CLRBR (NS) 332; Re N & L Construction Ltd. (1987), 64 Nfld. & P.E.I.R. 271.
By Wilson J. (dissenting)
National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, [1979] 2 S.C.R. 227; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; Teamsters Union, Local 938 v. Massicotte, [1982] 1 S.C.R. 710.
By L'Heureux‑Dubé J. (dissenting)
National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324.
Statutes and Regulations Cited
Canada Labour Code, R.S.C. 1970, c. L-1, s. 144 [am. 1972, c. 18, s. 1].
Canada Labour Code, R.S.C., 1985, c. L‑2, ss. 35 , 45 .
Industrial Relations Act, R.S.B.C. 1979, c. 212, s. 37 [am. 1987, c. 24, s. 25].
Labour Relations Act, R.S.M. 1987, c. L‑10, s. 59.
Labour Relations Act, R.S.O. 1980, c. 228, ss. 1(4), 63.
Labour Relations Act, 1977, S.N. 1977, c. 64, ss. 16.1, 17(k), 18(1), 24, 25, 28 and 89.
Labour Relations Code, S.A. 1988, c. L‑1.2, s. 44.
Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25.
Trade Union Act, R.S.S. 1978, c. T‑17, s. 37.
Trade Union Act, S.N.S. 1972, c. 19, ss. 20, 29.
Authors Cited
Adams, George W. Canadian Labour Law. Aurora: Canada Law Book Inc., 1985.
Newfoundland. Construction Industry Advisory Committee. Report of the Construction Industry Advisory Committee. (Gordon G. Easton, Q.C., Chairperson, Gonzo Gillingham) St. John's, Nfld.: 1985.
Weiler, Paul. Reconcilable Differences: New Directions in Canadian Labour Law. Toronto: Carswells, 1980.
APPEAL from a judgment of the Newfoundland Court of Appeal (1988), 70 Nfld. & P.E.I.R. 145, 215 A.P.R. 145, reversing the judgment of the Newfoundland Supreme Court, Trial Division (1987), 67 Nfld. & P.E.I.R. 185, 206 A.P.R. 185, denying the respondents' application for certiorari. Appeal dismissed, Dickson C.J. and Wilson, L'Heureux‑Dubé and Cory JJ. dissenting.
Randell Earle, Q.C., and Stephanie Newell, for the appellant.
Barrie Heywood, for the respondents W.W. Lester (1978) Ltd. and Planet Development Corporation Ltd.
Edward M. Hearn, for the respondent The Labour Relations Board for the Province of Newfoundland.
//Wilson J.//
The reasons of Dickson C.J. and Wilson and Cory JJ. were delivered by
WILSON J. (dissenting) -- I have had the benefit of reading the reasons prepared by my colleague Madame Justice McLachlin and must, for the reason I gave in National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, respectfully dissent from her approach to the judicial review of the Board's decision. There I sought to re-emphasize the importance of the principle of curial deference to the decisions of administrative tribunals which this Court adopted in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, [1979] 2 S.C.R. 227. In my view, the present case is one in which that principle ought to be applied.
The principle of curial deference to decisions of administrative tribunals is grounded not only on sound judicial policy but also on good common sense. It is quite unrealistic in this age of increasingly complex and highly specialized regulatory regimes to expect the courts to have the requisite knowledge and skill to adjudicate properly on some of those regimes. As I noted in National Corn Growers, supra, at p. 1335, if all branches of government are to function effectively and efficiently we must recognize:
(1) that their [the "tribunals'"] decisions are crafted by those with specialized knowledge of the subject matter before them; and (2) that there is value in limiting the extent to which their decisions may be frustrated through an expansive judicial review.
Accordingly, I expressed the view in that case that administrative tribunals must be given the latitude by the courts to fulfil their legislative mandates.
What constitutes the required degree of latitude was addressed by this Court in C.U.P.E., supra, and is reflected in the test to be applied. It is a test which, as Dickson J. (as he then was) noted at p. 237, is founded on the idea of patent unreasonableness. The appropriate question to be asked is:
Did the Board here so misinterpret the provisions of the Act as to embark on an inquiry or answer a question not remitted to it? Put another way, was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review? [Emphasis added.]
As I mentioned in National Corn Growers, there has been a tendency in the post-C.U.P.E. era to return to a less stringent test for judicial review than the one established in C.U.P.E. This backsliding has been largely predicated upon a rather Dicean view of the rule of law and the role that the courts should play in the administration of government. That approach to curial review in the administrative context is, in my opinion, no longer appropriate given the sophisticated role that administrative tribunals play in the modern Canadian state. I think we need to return to C.U.P.E. and the spirit which C.U.P.E. embodies.
Was the Board's Decision Patently Unreasonable?
The only issue that needs to be addressed on this appeal is whether the Newfoundland Labour Relations Board's decision was patently unreasonable. Since my colleague McLachlin J. has set out the relevant statutory provisions, I shall not repeat them here. The key section is s. 89 of the Newfoundland Labour Relations Act, 1977, S.N. 1977, c. 64, as amended. The issue is one of interpretation, more specifically whether the words "Where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of his business or the operations thereof or any part of either of them..." cover the practice of "double breasting".
Section 89 is designed to prevent the loss of union protection by employees whose company's business is sold or transferred to another business concern. This provision, known colloquially as a "successor provision" is found in other labour relations statutes, cf., Alberta, Labour Relations Code, S.A. 1988, c. L-1.2, s. 44; Manitoba, The Labour Relations Act, R.S.M. 1987, c. L10, s. 59; Nova Scotia, Trade Union Act, S.N.S 1972, c. 19, s. 29; Ontario, Labour Relations Act, R.S.O. 1980, c. 228, s. 63; Saskatchewan, The Trade Union Act, R.S.S. 1978, c. T-17, s. 37; and Canada, Canada Labour Code, R.S.C., 1985, c. L-2, s. 45 . The provisions exist to protect collective bargaining agreements from becoming meaningless due to, inter alia, the manipulation of the corporate form by employers. Such manipulation can be accomplished by a variety of means and the appellant submitted that "double breasting" was one of them. It was this situation the Board had to address.
"Double breasting" is apparently a common practice in the construction industry in Newfoundland. One company, which continues to carry on business subject to a union contract, creates a new parallel company which is non-union. In this way the owners of the companies can bid on both union and non-union jobs and utilize the skill and expertise of the key members of their staff on both. If the practice falls outside s. 89 the new company is not bound by the existing collective agreement. The Board found that "double breasting" fell within s. 89.
McLachlin J. characterizes the arrangement between the companies Lester and Planet as one of co-operation, "a sharing of expertise", and not one in which any disposition of work, assets or expertise had taken place under s. 89 of the Act. She finds that, even if the expertise of the principals Brent and Wade Lester was a corporate asset, it was equally the asset of both companies. There was no transfer of it from one to the other. My colleague arrives at this characterization despite the Board's factual finding that skills and assets were shuttled back and forth between the two companies as particular projects required. The Court of Appeal described the process as "mutual back scratching".
With respect, I ask: how do you transfer the skill and expertise of X from Company A to Company B other than by making X available to Company B to work on Company B projects? There is no other way. Mode of transfer must surely depend upon the nature of the subject matter. While Brent and Wade Lester were applying their skill and expertise on the non-union project of Planet, such skill and expertise was not available for the union project of Lester and the mobility of these two principals was at the very heart of the double breasting scheme.
My colleague takes a narrow approach to the interpretation of the phrase "otherwise disposes of". The Board gave the phrase a more liberal interpretation in light of what it perceived to be the purpose of the provision. I do not believe that just because the Board gave the phrase a broader interpretation than that given to it in some other jurisdictions means that its interpretation is patently unreasonable. It is clearly arguable that the Board's interpretation is consonant with the purpose and intent of the overall legislative scheme, i.e., to facilitate and preserve collective bargaining regimes between unions and employers. It is, I believe, significant in this connection that the labour relations statutes in some other jurisdictions referred to by my colleague contain common employer provisions which the Newfoundland statute does not. That being so, it is not at all surprising to me that it has not been found necessary in these other jurisdictions to construe a s. 89 type provision liberally as was done by the Board here. The provision must, however, be construed in the context of this statute and not of any other. In my view, the Board's interpretation of s. 89, in the absence of a common employer provision, cannot be said to be patently unreasonable.
In applying the test of patent unreasonableness it is important to remember that the test is a stringent one. As Lamer J. (as he then was) observed in Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476, at p. 493:
This is a very severe test and signals a strict approach to the question of judicial review. It is nevertheless the test which this Court has applied and continues to apply.
In other words, the test of patent unreasonableness establishes a very high threshold which means that an administrative tribunal's interpretation of the legislation in question will only be considered patently unreasonable if, as Dickson C.J. stated in C.U.P.E. at p. 237, it "cannot be rationally supported by the relevant legislation and demands intervention by the court upon review."
It is a necessary corollary of the C.U.P.E. test that the courts must "adopt a posture of deference to the decisions of the tribunal": see CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983, at p. 1003, per La Forest J. One of the implications of such deference is that judicial review is not available simply because there is disagreement over the tribunal's decision on the basis of conflicting interpretations of the relevant legislation. In this regard, I agree with, and find appropriate, the view expressed by Laskin C.J., in Teamsters Union, Local 938 v. Massicotte, [1982] 1 S.C.R. 710, at p. 724, that
. . . mere doubt as to correctness of a labour board interpretation of its statutory power is no ground for finding jurisdictional error, especially when the labour board is exercising powers confided to it in wide terms to resolve competing contentions.
In applying these principles in the instant case, I am of the view that the stringent test in C.U.P.E. has not been met. While my colleague supports one interpretation of the section, it is by no means the only interpretation the provision can reasonably bear. Indeed, the broad interpretation given to it by the Board has the merit of advancing the clear purpose of the Act. It is, in other words, an interpretation "rationally supported by the relevant legislation" and deserving, in my view, of the deference mandated by C.U.P.E. I am mindful of La Forest J.'s observation in CAIMAW, supra, at p. 1003, that a
. . . tribunal has the right to make errors, even serious ones, provided it does not act in a manner "so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review".
The limited nature of judicial review is supported, in my view, by the presence in the Act of a privative clause, s. 18. The existence of such a clause is, as I observed in National Corn Growers, a clear indication from the legislature that the ordinary courts are not the appropriate forums for review of the decisions of specialized tribunals. It is not appropriate for courts to undertake a meticulous analysis of the tribunal's reasoning as my colleague has done here. To do so sets at naught both the privative clause in the legislation and the judicial restraint advocated in C.U.P.E.
In my view, the application of the principle in C.U.P.E. to the instant case requires this Court to defer to the decision of the Board. The Board's interpretation of s. 89 is not patently unreasonable in the context of the Act and ought to stand. While much of the evidence was equivocal regarding the specifics of the relationship between Lester and Planet, there was certainly evidence upon which the Board could reasonably conclude, as it did, that the skill and expertise of the principals Brent and Wade Lester were transferred back and forth between the two companies in order to enable them to bid on both union and non-union jobs and to carry these jobs to completion.
I would allow the appeal, set aside the judgment of the Newfoundland Court of Appeal and restore the decision of Russell J. I would award the respondents their costs both here and in the court below.
//McLachlin J.//
The judgment of Lamer C.J. and La Forest, Sopinka, Gonthier and McLachlin JJ. was delivered by
MCLACHLIN J. -- This case involves the application of successorship provisions of the Newfoundland Labour Relations Act, 1977, S.N. 1977, c. 64, as amended, to two construction companies possessing similar share ownership and principals and operating side by side. One company was bound by a collective agreement, the other not. The question is whether under the Act the collective agreement is deemed to apply to the second company under the Act.
The Facts
W.W. Lester (1978) Ltd., incorporated in 1978, is primarily engaged in the business of installing plumbing and heating systems, with limited involvement in other areas, such as mechanical work, construction work and real estate. The principals in Lester are Walter Lester, the majority shareholder who controls the voting preferred shares, and his two sons, Brent and Wade, who hold the common shares. Lester's employees are represented by the appellant union "United" which has a collective agreement with Lester.
In 1981, the Lester brothers decided that they wanted more control over their affairs, and wished to avoid the real estate and other construction work which Lester carried out, concentrating solely on mechanical work. Accordingly, the Lesters incorporated a second company, Planet Development Corporation Ltd., in which father and the two sons each hold one third of the shares.
The two companies, along with two other companies owned by the family, work out of the same office and share the same secretary, telephone number and office expenses. Apart from the secretary, the companies have separate employees. While a minor amount of equipment is shared between the two companies by renting the equipment to each other, Planet and Lester each own or lease their own equipment. The finances of the companies are separate but when Planet is required to provide a performance bond, a guarantee may be provided by Brent, Wade and Walter Lester and the associated companies. Wade Lester acts as an estimator for both companies. Brent Lester prepares bids for both companies. In most instances general contractors invite Brent Lester to prepare bids by either Lester or Planet, depending on whether the job in question is a union or non-union construction site.
Planet successfully bid on several projects including Burin Hospital, Fisheries College, School of Nursing and a Fishery Products Plant. These projects were not available to Lester. Conversely, Lester bid on projects that were not available to Planet. For example, Lester obtained a hospital contract (Clarenville) which was not available to Planet as the Clarenville hospital site was a union project.
Prior to the hearing of this matter, the community of Marystown was awaiting the construction of another hospital, the Burin Hospital. Brent Lester was asked to bid the Burin project with Planet and Planet obtained the mechanical subcontract. The Burin project was the catalyst that resulted in the labour hearing in question.
The union began by attempting to organize the employees working at the Burin site and brought an application for certification. It appears that the workers at the Burin site did not favour certification, and the union withdrew the application shortly before the hearing. In its place the union deposed an application alleging unfair labour practices. Its complaint alleged that Lester had violated ss. 24 and 25 of The Labour Relations Act, 1977 by informing union members that the only way they could work at the Burin site would be to drop out of the union. The union also sought a declaration of successorship pursuant to s. 89 of the Act for an order that Planet be bound by the collective agreement in existence between the union and the Newfoundland Construction Labour Relations Association, the accredited bargaining agent of Lester. At the same time, the companies laid a complaint alleging that union harassment of the employees working at the Burin site violated s. 28 of the Act.
All of the applications were heard at the same time. The Board granted the successorship declaration (one board member dissenting) and found it unnecessary to make findings on the other applications.
The companies applied to the Trial Division of the Newfoundland Supreme Court for an order of certiorari to quash the Board order. Before the Trial Division the companies argued that the Board had no jurisdiction to make such a declaration and, in the alternative, if it had jurisdiction that it had exercised its jurisdiction in a manner that was patently unreasonable. Russell J. denied the application. On further appeal the Court of Appeal in a unanimous decision held that the Board's decision was patently unreasonable. The Court remitted the matter of the unfair labour practices to the Board. Leave to appeal to this Court on the successorship issue was granted on June 8, 1989.
The Legislation
The Newfoundland Labour Relations Act, 1977, ss. 16.1(2), 17(k), 18(1) and 89:
16.1 . . .
(2) A trade union, council of trade unions, employer or employer's organization may apply to the Board for a determination of any matter referred to in paragraph (k) of section 17.
17. In relation to any proceeding before it, or to determine any matter referred to it by the Minister, or pursuant to an application made to it, the Board may
. . .
(k)decide for all of the purposes of this Act any question that may arise in a proceeding, or pursuant to an application made to it, or referred to it by the Minister, including, without limiting the generality of the foregoing, any question as to whether
...
(vii)any person or organization is a party to or bound by a collective agreement,
(viii)a collective agreement is in operation...
18. (1) No decision, order, direction, declaration or ruling of the Board shall be questioned or reviewed in any court, and no order shall be made or process entered or proceedings taken in any court, whether by way of injunction, declaratory judgment, certiorari, mandamus, prohibition, quo warranto, or otherwise, to question, review, prohibit or restrain the Board or any of its proceedings.
89. (1) Where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of his business or the operations thereof or any part of either of them, and
(a)the employer or the purchaser, lessee, transferee or person otherwise acquiring the business is a party to or is bound by a collective agreement with a bargaining agent on behalf of any employees affected by the sale, lease, transfer, disposition by other means or contract;
(b)one or more bargaining agents have been certified as bargaining agent for any such employees;
(c)one or more trade unions or a council of trade unions has applied to be certified as bargaining agent for any such employees; or
(d)one or more bargaining agents have given or are entitled to give notice under either section 72 or section 73 with respect to any such employees,
then, unless the Board otherwise directs, the collective agreement, certification, application, notice or entitlement to give notice continues in force and is binding upon the purchaser, lessee, transferee or person otherwise acquiring the business.
(2) Any employer, purchaser, lessee, transferee or any bargaining agent, trade union or council of trade unions or other person referred to in subsection (1) may apply to the Board for the resolution of any question or problem that as a result of such sale, lease, transfer or disposition has arisen or may arise with respect to any collective agreement, certification, application, notice or entitlement to give notice.
(3) Where an application is made under subsection (2), the Board shall, by order, make whatever award, give whatever direction, or take any other action that in its discretion the Board deems appropriate, to resolve any relevant question or problem and in particular, but without limiting the generality of the foregoing, may in that or a subsequent order
(a)modify or rescind to the extent that the Board deems necessary or appropriate any collective agreement;
(b)amend or revoke any certification or amend any application for certification;
(c)modify or restrict the operation of any notice or entitlement to give notice;
(d)determine whether employees affected constitute one or more appropriate bargaining units;
(e)if more than one collective agreement is to continue in force, designate the employees that are to be covered by each agreement;
(f)modify or restrict the operation or effect of any provision of any collective agreement and define the rights with respect thereto of any employees affected by the sale, lease, transfer or disposition by other means;
(g)declare which trade union, trade unions or council of trade unions shall be the bargaining agent or agents for the employees; and
(h)interpret any provision of any collective agreement.
(4) Notwithstanding anything to the contrary in this Act, a purchaser, lessee, transferee or person otherwise acquiring the business shall not be required to bargain with any bargaining agent with respect to employees to whom an application made under subsection (2) relates, until the Board has disposed of that application.
(5) Where an application is made under subsection (2), the Board may make or cause to be made any examination of records or other inquiries, and may hold any hearings and take any representation votes, that it deems necessary and prescribe the nature of evidence to be furnished by the Board.
The Judgments
Newfoundland Labour Relations Board
The majority reviewed the evidence and then referred to one of its earlier decisions in Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904 (1985), 55 Nfld. & P.E.I.R. 117, in which a successorship application was successful in the construction context. The majority then went on to determine whether or not there had been a disposition in this case.
Initially, the Board examined the relationship between the two companies and noted that in making a determination of whether or not there has been a sale, transfer or disposition, boards are not overly concerned with the "technical, legal form of the business disposition", particularly in the construction industry where the only assets required to carry on a business may be the skill and expertise of the principals. The Board summarized the evidence as follows:
It seems clear to us that there is a discernable continuity in the business or a part of it, and that Planet does not represent a new or different operation totally unconnected with the old. Lester came into being in 1978 and Planet came into being in 1981. The nature of the work carried on by both is the same. For example, Lester built the hospital at Clarenville and Planet built an identical hospital in Burin. The tools of the trade are the same, the skills of the workers are the same, the types of projects on which they bid are the same, the planning, engineering, technical and estimating skills are the same. The one significant difference is that one project is bid using union labour rates, while another is bid using non-union labour rates. The only conclusion we can come to is that the controlling forces (the Lesters) wish to be able to operate without the constraints and obligations of a collective agreement whenever it is economically convenient for them to do so. The danger is of course that in adopting this method of operation one may run afoul of the provisions of Section 89 of our Act. In the Pinsent case, board member McDonald observed in his addendum that "uncontradicted evidence in the Pinsent case clearly established that the only reason for the establishment of N. & L. Construction was to secure business that Pinsent was unable to secure through the advantage of non-union wage rates". He went on to empathize with the plight of private sector operators and this Board shares these views. However, almost all of the factors which persuaded the Board in the Pinsent case are present here. We have already discussed the "winding down" factor and have found that not to be determinative of the issue. The one factor which was stressed by counsel for the companies in this case was that no employees of Lester went to the Burin job. While in some cases this may be very persuasive, in the construction industry, it is of little or no weight. If this were to be a determining factor, all one would have to do is lay off employees when one project is finished, and then take on another project under a non-union bid, and hire new employees to do the new work.
The majority went on to find that successorship had occurred and ordered that Planet is bound by the collective agreement. Having reached this finding the Board found it unnecessary to deal with the unfair labour practice complaints.
J. V. McDonald in his minority decision strongly disagreed with the findings of the majority. In his view, before a successorship declaration can be made the union must establish that there has been a disposition of some identifiable and severable part of the predecessor's operation. Mr. McDonald stated that on the facts of this case he was unable to determine what distinct part of Lester's business had been transferred or otherwise disposed of to Planet. He noted that the majority in their decision did not identify what had been transferred or otherwise disposed of. It appeared to him that the majority was more concerned with establishing that Lester and Planet were one and the same, with the rationale being that if it could be found that the differences between the two were merely either superficial or imaginary, then one must be a successor to the other. Thus, in his view, the majority erroneously concluded that because of an apparently close relationship between the two companies in terms of ownership and control, one must by necessity be a successor of the other. Board member McDonald found that the evidence failed to establish that any coherent or severable part of Lester's business had been transferred to Planet and accordingly found that no disposition had occurred. He concluded:
I am left to wonder how the majority can so easily have disregarded the fact that Lester and Planet are two separate, active companies, and it is unclear to me, to say the least, how there can be any disposition such as the board describes when this is the case. I believe that the underlying rationale of the majority's decision is one that can only lead to awkward and unjust results, both in the present case and in others that may come before the Board in the future and, most importantly, is one which brings about a result which I believe was clearly not contemplated by the existing provisions of the Act.
Mr. McDonald also noted that the decision of the majority represented a dramatic alteration to the law and implied that in his view