DIVISIONAL COURT FILE NO.: 6/02

DATE: 20021101

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

R.A. BLAIR R.S.J., KURISKO J. and LALONDE J.

B E T W E E N:

INDUSTRIAL WOOD & ALLIED WORKERS OF CANADA, LOCAL 2693

Stephen Wahl, for the Applicant

Applicant

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DOMTAR INC., FOREST RESOURCES, ESPANOLA

Michael Hines, for the Respondent

Respondent

HEARD: October 28, 29, 2002

E X T E N D E D E N D O R S E M E N T

R.A. BLAIR R.S.J.:

Background

1This is an Application for judicial review to quash and set aside an order of an arbitration board dated October 9, 2001. The Board was chaired by Professor E.E. Palmer.

2The arbitration arose out of a dispute between the Union and the Employer concerning the activities of non-union employees of what were alleged to be “third party contractors” on the Upper and Lower Spanish Forests, the forest limits for which the Company held licences to harvest wood. This dispute was the major issue in a lengthy strike that took place between January and July 1999. The parties ultimately settled the strike by agreeing to refer the dispute to arbitration.

3There were two major issues that the Board was called upon to determine. One was whether Domtar’s wood harvesting operations were being carried on in violation of Article 3 of the Collective Agreement between the parties (the Recognition-Jurisdiction provision) by certain “Third Party Licence Operators” or their subcontractors. The Third Party Operators in question were Agawa Forest Products, McChesney Lumber, Elk Lake Planing Mill and Martel Lumber Company – all of which are wholly-owned subsidiaries of Domtar Inc. The second major issue for the Board to determine was whether or not it should declare that these Third Party Operators and Domtar were a single employer for purposes of labour relations, as contemplated by section 1(4) of the Labour Relations Act 1995 (“the Act”) and for purposes of the Collective Agreement.

4In referring the dispute to arbitration the parties expressly agreed that the Board would have the authority of the Ontario Labour Relations Board to determine “single employer” issues and to make declarations in that regard, pursuant to section 1(4) of the Act.

5The majority of the Board (Chairman Palmer and the Company representative) declined to make the single employer declaration sought by the Union, and ruled that there had been no violation of Article 3.01 of the Collective Agreement. The Union representative, Mr. Miron, dissented.

6Counsel for the Applicant Union made three substantial submissions, namely:

a) that the Board denied the Union natural justice and failed to give it full and fair opportunity to present its evidence, by refusing to order the further production of documentation sought by it from the Company;

b) that the Board erred in the exercise of its discretion in refusing to issue a single employer declaration, and that its decision in that regard was incorrect or, alternatively, patently unreasonable; and,

c) that the Board’s interpretation of Article 3.01 of the Collective Agreement was patently unreasonable.

7We are all of the view that the Application must be dismissed, for the brief reasons that follow.

Analysis

Denial of Natural Justice

8The Union was represented before the Board by Mr. Walter Dubinsky, a labour consultant. Beginning in September 1999, and repeatedly on various occasions thereafter, Mr. Dubinsky made written requests for production of large numbers of documents. These requests were resisted in part by the Company from time to time, and occasionally refused; but in the end there was much voluntary production and Union representatives attended at the Domtar premises in Espanola and Timmins where they were provided with access to many boxes of Company documents. At one point the Company suggested that certain of the documentation would be more easily available from the Ministry of Natural Resources – Third Party Overlapping Licences, Authorities to Commence Cutting, and Authorities to Haul – and the Union agreed to attempt to obtain the requested documentation from the Ministry. It got some, but not all of the documentation it wanted, and renewed its request for further production from the Company. More production was granted. The Union was still not satisfied and ultimately in December 2000 – after the Hearings had begun – it made a formal request to the Board for a Production Order.

9The Board declined to make the Order sought. From its subsequent reasons it appears the Board was of the view the production sought went mainly to the single employer issue and was unnecessary in view of the Company’s concession that on a factual “relationship” basis Domtar and the Third Party Operators met the test for single employer designation. The Company’s position simply was that the Board ought not to exercise its discretion in favour of such a declaration because what the Union was seeking to accomplish by the declaration sought was to expand its bargaining rights not just protect and preserve them. The Board felt there had been adequate production on the single employer issue.

10In his affidavit filed on behalf of the Union on the Application, however, Mr. McIntyre deposes that the production order was necessary not only on the question of whether Domtar and the Third Party Operators were associated or related businesses, but also to rebut Domtar’s assertion that the Union was attempting to expand its bargaining rights and on the issue of delay. There is nothing in Mr. Dubinsky’s correspondence regarding production, however, and Mr. Wahl was not able to direct us to anything in the Record, to indicate that the Board was ever advised of these additional grounds for production. In argument Mr. Wahl contended that the production was necessary to assist the Union in meeting the argument concerning the alleged violations of Article 3.01. While there may be something in this, viewed from the perspective of the list of demands made by Mr. Dubinsky, the point does not appear to have been made to the Board, and it does not appear to be the basis upon which Mr. McIntyre felt the additional production was warranted. We think the Board can hardly be faulted if it did not order production on grounds that were not put before it.

11In any event, Mr. Wahl was not able to point to any particular documentation the non-production of which could be said, in our view, to have been “prima facie crucial” to the Union’s case such that its exclusion would have “such an impact on the fairness of the proceeding [that it would lead] unavoidably to the conclusion that there had been a breach of natural justice”: Syndicat des employés professionnels de l’Université du Québec à Trois-Rivières v. Larocque (1993), 101 D.L.R. (4th) 494 (S.C.C.), at pp. 507-508. An administrative tribunal is the master of its own procedure, and its exercise of that jurisdiction in the course of a proceeding should not be lightly interfered with. A refusal to order production of documents is not, per se, a denial of natural justice: Howe v. Institute of Chartered Accountants of Ontario (1994), 19 O.R. (3d) 483 (C.A.) at p. 501. There must be a central impact on the fairness of the case, as described above, for a denial of natural justice to occur.

12Such was not the case here, in our view.

13We would not give effect to this ground of the Application.

Refusal to Issue a Single Employer Declaration

14As noted above, Domtar conceded at the hearing before the Board that the factual underpinning existed for a finding that Domtar and the Third Party Operators were associated or related businesses. However, the Company argued that the purpose of the Union in seeking a single employer declaration was to expand, rather than protect, its bargaining rights and scope of jurisdiction – a purpose not contemplated by section 1(4) of the Act – and that as a result the Board should not exercise its discretion in favour of granting such a declaration. It relied upon a number of labour law related decisions in support of its contention. The Board accepted Domtar’s arguments in this regard and declined to grant the declaration sought by the Union.

15Mr. Wahl submits the Board erred in exercising its discretion in this regard. He submitted that the Union had not asked for bargaining rights with respect to anything except wood harvesting activities on the Spanish Forest limits, and therefore that it was completely wrong on the facts of the case to say that the Union was seeking to expand its bargaining rights.

16This submission is inconsistent with the relief requested by the Union through Mr. Dubinsky at the Hearing. The Union’s claim – as articulated by the Majority – included the following:

(3) That “the limits and work sites” in article 3.01 of the collective agreement shall include all the forest limits upon which the entities named above¹ harvest forest products or are engaged in wood operations.

(4) That contractors who harvest forest products for any of the entities names above on “the limits and work sites” as described in item (3) above shall be considered to be bound by article 3.01 of the said collective agreement.

17Mr. Wahl – who was not at the hearing before the Board – indicated that his information is the Union did not seek bargaining rights beyond the Spanish Forest at the hearing and that he did not know what the source was for the Board’s articulation of the relief requested by the Union. However, the notes of Mr. Ramsay – a company representative who was at the Hearing – reflect Mr. Dubinsky’s oral summary of argument to the Board in almost exactly the same terms, and indicate that Mr. Dubinsky was seeking to extend the Union’s rights to other areas, such as the McChesney Pineland forest and areas covered by other forest management agreements. We therefore conclude that the Union was seeking to expand its bargaining rights beyond the Spanish Forest at the Hearing, and that the Board was entitled to take this factor into account in exercising its discretion.

18The more expansive approach to the Union’s jurisdiction is confirmed by its attempt to establish that “the Company” referred to in the Collective Agreement between the parties was “Domtar Inc.”, the entire corporate entity, and not just to the Forest Resources Division of Domtar at Espanola – contrary to the traditional interpretation of the relationship that had been in place for 40 years between the Union and Domtar’s predecessor employer, E.B Eddy Forest Products. Such a ruling would have had the potential to expand the Union’s jurisdiction considerably. The Majority rejected this argument of the Union as well, and that issue is not under review.

19Mr. Wahl argued that the standard of review on the section 1(4) issue is that of “correctness” rather than the customary arbitral standard of “patent unreasonableness”. He contends that because the arbitrators were exercising a jurisdiction normally exercised by the Ontario Labour Relations Board, and one therefore not within the arbitration board’s home territory, their decision is not entitled to the usual form of deference. We do not accept that submission. The arbitration board was exercising its jurisdiction as an arbitration board on a subject that had been specifically referred to it by agreement of the parties. It would defeat the purpose of arbitration if the Board’s decision were to be subject to appeal rights similar to those that would have been available in a court proceeding. Moreover, the arbitration board is an expert tribunal in the labour relations field, and section 1(4) of the Act is but one statutory element of a comprehensive labour relations scheme with which such boards are intimately familiar. Consequently, the Board in our view is entitled to deference in its decision-making, and the standard of review applicable – even on the section 1(4) issues – is that of patent unreasonableness. See, generally, Pezim v. B.C. (Superintendent of Brokers), [1994] 2 S.C.R. 557, at pp. 589-590; Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941, at pp. 956-957; Toronto Catholic District School Board v. O.E.C.T.A. (Toronto Elementary Unit) (2001), 55 O.R. (3d) 737 (C.A.).

20This is particularly so when the decision in question relates to the exercise of a discretion, as it does in relation to section 1(4). A Court will not interfere with a decision properly within the discretion of the tribunal under review unless the tribunal has applied an erroneous principle or disregarded or misinterpreted material evidence in a fashion that renders the decision clearly wrong: Cosyns v. Canada (AG) (1992), 33 O.R. (3d) 641 (Ont. Div. Ct.).

21We see no such error on the part of the Board in this case. Its decision with respect to the single employer issue was neither unreasonable nor patently unreasonable, on the record before it, in our view.

22We therefore reject the second ground of review put forward by the Applicant.

Interpretation of Article 3.01

23The third ground of review presented by the Union was that the Board’s interpretation of Article 3.01 of the Collective Agreement was patently unreasonable and therefore should be set aside.

24The salient provisions of Article 3.01, for purposes of this Application are as follows:

3.01(a) The Company recognizes the Union as the sole collective bargaining agency for all of its employees who are engaged in Woods operations on the limits, and on the work sites, of the Company. . . .

3.01(b) The employees of Contractors engaged by the Company on the limits and work sites of the Company shall be considered employees within the terms of this agreement; save and except . . .(the exceptions are not applicable here)

3.01(c) The Company and the Union agree that an operator who enters into a Third Party agreement with the Company and the Ministry of Natural Resources, and produces forest products for the Company of any of the six negotiating companies, shall have an agreement with the Union covering such operations.

25The Board examined the provisions of Article 3.01 and reviewed a long series of arbitral and other decisions pertaining to the issues – including some arbitral decisions involving these same parties and the same Collective Agreement. It determined, amongst other things,

a) that “the Company” in question was the Forest Resources division of Domtar operating out of Espanola, and not Domtar Inc. as a corporate entity;

b) that “Woods operations on the limits” meant harvesting operations of the employer on its Spanish Forests limits;

c) that “Work sites of the Company” meant locations of a more permanent nature pertaining to the harvesting operations on those limits; and,

d) that “Forest Products” should be interpreted to mean wood products defined by their immediate source (the Company position), as opposed to any wood product that originates from trees in a forest (the Union argument), and therefore that logs cut on the limits are forest products but when they pass through a sawmill and cut into timber the resulting boards, chips and sawdust are “mill products”.

26Having made the foregoing preliminary determinations, the Board then rejected the Union’s request,

a) for a ruling that the words “the limits and work sites” in Article 3.01 shall include all the forest limits upon which the entities named (i.e., Agawa, Martel, McChesney and Elk Lake) harvest forest products or are engaged in wood operations;

b) for a ruling that the contractors who harvest forest products for those entities on the limits and work sites shall be considered to be bound by Article 3.01(b); and,

c) for a ruling that contractors who harvest forest products pursuant to a third party agreement with those four entities or any of the six negotiating companies shall be bound by Article 3.01(c).

27Mr. Wahl submits that the Board “got it wrong” in these respects and that the decision of the Majority is patently unreasonable. He argues that the Board failed to recognize the central importance of the recognition-jurisdiction clause in a collective agreement and in effect undermined the bargaining rights of the Union by arriving at the conclusions it drew and permitting contracting out. He takes particular aim at the Board’s interpretation of the words “forest products”.

28Although a recognition clause is undoubtedly of central importance in a collective agreement, as the Supreme Court of Canada noted in British Columbia Telephone Co. v. Shaw Cable Systems (B.C.) Ltd.², the jurisprudence support the conclusion that such a clause, per se, does not necessarily preclude contracting-out by an employer: see, E. E. Palmer Q.C., Collective Agreement Arbitration in Canada, 3rd ed. (Butterworths: Toronto) at p. 447. As Mr. Wahl noted, however, the purpose of such a clause may be to regulate that activity. It is necessary to examine the facts of each case in relation to the language in the collective agreement in question, therefore. That is what the Board did in this case.

29The debate with respect to Article 3.01 focussed on the provisions of subparagraphs 3.01(b) and (c).

30Under Article 3.01(b) it is the employees of “Contractors engaged by the Company on the limits” who are covered by the Collective Agreement. Given the Board’s conclusion that “the Company” for these purposes is the Forest Resources Division of Domtar at Espanola, it is the activities of that Division, and not those of the “four other entities” (i.e., Agawa, Martel, McChesney and Elk Lake), which were to be assessed. The Union did not assert that the relationship between the Company and those other entities was one of “Contractor”; rather it concentrated on the relationship between those entities and the independent contractors they engaged on the limits for their purposes.

31The Board dealt with this issue at pages 31-32 of its award. The Majority said:

In the opinion of the Board this again (i.e. the Union’s Article 3.01(b) argument) is a variant of the Union’s unsuccessful request to have the four entities mentioned to be dealt with as part of the employer in this case. To fit within the meaning of Article 3.01(b) one would have to find that one of these four entities was “a Contractor engaged by the Company on the limits and work sites of the Company”. For example, it would be necessary to find Martel was engaged by Domtar Inc, Forest Resources, Espanola as a Contractor to carry out work on the employer’s limits and work sites. The Union, however, asks for a ruling based on a finding that it is not Martel that is the Contractor, but rather that it has contractors itself that are so bound. In short, again the Union is asking this Board to expand the definition of the Company bound by this Collective Agreement. We deny this request.

32The Board thus determined that the evidence before it did not establish that any of the entities in question were contractors “engaged by the Company” in the circumstances. We cannot conclude that this determination was patently unreasonable.

33The debate over Article 3.01(c) brings into play the dispute over the Board’s definition of the expression “forest products”. It decided that the phrase refers to wood products created in the forest, for purposes of this Collective Agreement. The Union contends the proper interpretation is that the phrase means wood products created from the forest. The Board also concluded that there was a distinction to be drawn between the term “wood fibre” in general and the term “forest products” in particular, as used in the Collective Agreement.

34There is some arbitral jurisprudence supporting these interpretations and there may be some contra. There is no such thing as arbitral stare decisis, however, and in any event it cannot be said that the Board’s interpretation of these expressions was patently unreasonable. Given the Board’s interpretation, its conclusion that none of the enterprises in question was supplying “forest products” to the Company, and therefore that Article 3.01(c) had not been violated, is not patently unreasonable either.

Disposition

35The Application for judicial review to quash and set aside the Board’s decision is therefore dismissed.

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36The Respondent is entitled to its costs, which we fix in the amounts of $25,000 plus disbursements of $4,529.48 plus GST.

R.A. Blair R.S.J.

I agree: Kurisko J.

I agree: Lalonde J.

Footnotes

1. 1i.e., Agawa Forest Products, Elk Lake Planing Mill, Martel Lumber Company, and McChesney Lumber Company.
2. 2(1995), 1995 101 (SCC), 125 D.L.R. (4th) 443.