National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) v. Pharma Plus Drugmarts Ltd. et al.

108 O.R. (3d) 96

2011 ONSC 4188

Ontario Superior Court of Justice,

Divisional Court,

Thomas, Ferrier and J. Wilson JJ.

October 4, 2011

Employment -- Labour relations -- Related employers -- Notice -- Applicant representing employees of drugstore chain in Ottawa -- Rival union bringing related employer applications under s. 1(4) of Labour Relations Act in respect of that drugstore chain and another chain -- Rival union and employers reaching settlement which not only declared two chains to be related employers but also declared rival union to be sole collective bargaining agent for all employees of other chain in Ottawa -- Applicant having no notice of settlement -- Labour Relations Board approving settlement and subsequently denying applicant's request for reconsideration -- Board breaching duty of procedural fairness by unreasonably requiring that applicant be certified to represent existing Ottawa employees of other chain in order to be entitled to notice -- Applicant entitled to notice of and having right to intervene in related employer applications -- Labour Relations Act, 1995, c. 1, Sch. A, S.O. 1995, s. 1(4).

Before a settlement that was the subject of the impugned decision of the Ontario Labour Relations Board, the applicant represented Pharma Plus employees in 22 stores in the Ottawa region, and the United Food and Commercial Workers Union (the "UFCW") represented Pharma Plus employees in 160 stores across Ontario, excluding Ottawa/Carleton. The UCFW brought two related employer applications pursuant to s. 1(4) of the Labour Relations Act, 1995 for Pharma Plus and Rexall stores in Peterborough and Hamilton. The UCFW and the employers reached a settlement that declared Rexall and Pharma Plus to be related employers. The settlement went beyond the relief requested in the applications and declared the UFCW to be the sole collective bargaining agent for all Rexall employees in Ontario, including future stores in the Ottawa region. The applicant had no notice of the settlement. The Board confirmed the settlement. It subsequently denied the applicant's request for reconsideration of the settlement approval on the basis that the applicant had no direct interest in the settlement as it did not represent Rexall employees. The applicant brought an application for judicial review of the Board's decisions.

Held, the application should be granted.

The Board breached the duty of procedural fairness by unreasonably imposing the prerequisite requirement that the applicant be the union certified to represent existing Rexall employees in Ottawa to be entitled to notice of the s. 1(4) related employer applications. The applications for a related employer declaration were public and contested. The intervening settlement arising from those applications did not transform the matter into a private agreement with more limited rights to intervene. The applicant was significantly affected, or directly and necessarily affected, by the decision granting UFWC rights to represent all Rexall employees in the Ottawa region. The applicant did not have to actually represent Rexall employees to have a sufficient interest to be entitled to notice and to participate.

APPLICATION for judicial review of decisions of the Labour Relations Board.

Cases referred to Bradley v. Ottawa Professional Fire Fighters Assn., 1967 160 (ON CA), [1967] 2 O.R. 311, [1967] O.J. No. 1017, 63 D.L.R. (2d) 376, 67 CLLC Â14,043 at 202 (C.A.); C.U.P.E. v. Canadian Broadcasting Corp., 1992 8644 (ON CA), [1992] 2 S.C.R. 7, [1992] S.C.J. No. 47, 91 D.L.R. (4th) 767, 137 N.R. 7, J.E. 92-918, 54 O.A.C. 161, 4 Admin. L.R. (2d) 294, 92 CLLC Â14,024 at 12136, 33 A.C.W.S. (3d) 736, affg 1990 8078 (ON CA), [1990] O.J. No. 772, 70 D.L.R. (4th) 175, 38 O.A.C. 231, 4 Admin. L.R. (2d) 286, 90 CLLC Â14,025 at 12222, 21 A.C.W.S. (3d) 219 (C.A.); Hoogendoorn v. Greening Metal Products and Screening Equipment Co., 1967 20 (SCC), [1968] S.C.R. 30, [1967] S.C.J. No. 75, 65 D.L.R. (2d) 641, 67 CLLC Â14,064 at 305, apld

Other cases referred to Canadian Transit Co. v. Canada (Public Service Staff Relations Board), 1989 9429 (FCA), [1989] F.C.J. No. 527, [1989] 3 F.C. 611, 99 N.R. 330, 39 Admin. L.R. 140, 16 A.C.W.S. (3d) 105 (C.A.); C.U.P.E., Local 101 v. London (City), 2004 94636 (ON LA), [2004] O.L.A.A. No. 427, 131 L.A.C. (4th) 56 (Arb. Bd.); Diversicare Inc. v. O.N.A., 1995 18445 (ON LA), [1995] O.L.A.A. No. 36, 47 L.A.C. (4th) 284 (Arb. Bd.); Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, 329 N.B.R. (2d) 1, 64 C.C.E.L. (3d) 1, 164 A.C.W.S. (3d) 727, EYB 2008-130674, J.E. 2008-547, [2008] CLLC Â220-020, 170 L.A.C. (4th) 1, 372 N.R. 1, 69 Imm. L.R. (3d) 1, 291 D.L.R. (4th) 577, 69 Admin. L.R. (4th) 1, 95 L.C.R. 65, D.T.E. 2008T-223; Freeport Hospital v. Ontario Nurses Assn. (December 21, 1993) (Craven); Grey Bruce Health Services v. Ontario Public Services Employees Union, Local 260 (Layoff Grievance), 2004 94749 (ON LA), [2004] O.L.A.A. No. 419, 131 L.A.C. (4th) 193 (Arb. Bd.); Inuit Tapirisat of Canada v. Canada (Attorney General), 1980 21 (SCC), [1980] 2 S.C.R. 735, [1980] S.C.J. No. 99, 115 D.L.R. (3d) 1, 33 N.R. 304, 5 A.C.W.S. (2d) 255; London (City) v. Ayerswood Development Corp., 2002 3225 (ON CA), [2002] O.J. No. 4859, 167 O.A.C. 120, 34 M.P.L.R. (3d) 1, 119 A.C.W.S. (3d) 664 (C.A.); Orillia Soldiers' Memorial Hospital v. Ontario Nurses Assn. (Bumping Grievance), 1997 CarswellOnt 662 (Div. Ct.), affg 1993 16697 (ON LA), [1993] O.L.A.A. No. 14, 34 L.A.C. (4th) 315 (Arb. Bd.); Pharma Plus Drugmarts Ltd., [2009] O.L.R.D. No. 1224 (L.R.B.); Pharma Plus Drugmarts Ltd., [2009] O.L.R.D. No. 3953 (L.R.B.); Pharma Plus Drugmarts Ltd., [2010] O.L.R.D. No. 2237, [2010] OLRB Rep. May/June 436 (L.R.B.); Pharmx Rexall Drug Stores Ltd., [2010] O.L.R.D. No. 3762 (L.R.B.); Simcoe Muskoka District Health Unit v. Ontario Nurses Assn., [2011] O.J. No. 3140, 2011 ONSC 4045, 282 O.A.C. 292 (Div. Ct.); Teamsters International Union, Local 847 v. Directors Guild of Canada, Ontario District Council, 2003 13648 (ON SCDC), [2003] O.J. No. 5097, 180 O.A.C. 97, 127 A.C.W.S. (3d) 601 (C.A.); T.W.U. v. Canadian Radio-Television & Telecommunications Commission, 1995 102 (SCC), [1995] 2 S.C.R. 781, [1995] S.C.J. No. 55, 125 D.L.R. (4th) 471, 183 N.R. 161, J.E. 95-1353, 31 Admin. L.R. (2d) 230, 55 A.C.W.S. (3d) 890; Weston Bakeries Ltd. v. Milk & Bread Drivers, Dairy Employees, Caterers & Allied Employees, Local 647 (Route Changes Grievance), 1999 35821 (ON LA), [1999] O.L.A.A. No. 40, 79 L.A.C. (4th) 189 (Gray)

Statutes referred to Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A, ss. 1(4), 66, (1)

Authorities referred to Brown, Donald J.M., and David M. Beatty, Canadian Labour Arbitration, 4th ed., looseleaf (Aurora, Ont.: Canada Law Book, 2011) Gorsky, Morley R., S.J. Usprich and Gregory J. Brandt, Evidence and Procedure in Canadian Labour Arbitration, looseleaf (Scarborough, Ont.: Carswell, 1991)

Anthony F. Dale, for applicant. R. Ross Dunsmore and Peigi Ross, for respondents Pharma Plus Drugmarts Ltd., Pharmx Rexall Drug Stores Ltd. and Katz Group Canada Ltd. Michael A. Church, for respondent UFCW Canada Local 175. Leonard Marvy, for respondent Ontario Labour Relations Board.

The judgment of the court was delivered by

J. WILSON J.: --

The Application

[1] The National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) ("CAW") brings this application for judicial review of four related decisions of Brian McLean, vice-chair of the Ontario Labour Relations Board (the "Board"), made in 2009 and 2010. The respondents Pharmx Rexall Drug Stores Ltd. ("Rexall") and Pharma Plus Drugmarts Ltd. ("Pharma Plus") are owned by the respondent Katz Group Canada Ltd. (collectively, the "Employers").

[2] The United Food and Commercial Workers International Union (the "UFCW") brought two related employer applications pursuant to s. 1(4) of the Ontario Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A (the "OLRA") for Pharma Plus and Rexall stores in Peterborough and Hamilton, Ontario.

[3] Prior to the settlement that is the subject of the April 7, 2009 decision of the Board [[2009] P.L.R.D. No. 1224 (L.R.B.)], CAW represented Pharma Plus employees in 21 stores in the Ottawa region. UFCW represented Pharma Plus employees in 160 stores across Ontario, excluding Ottawa/ Carleton.

[4] CAW received no notice of a settlement between UFCW and the Employers that declared Rexall and Pharma Plus to be a related employer, and that also declared UFCW to be the sole collective bargaining agent for all Rexall employees in Ontario, including future stores in the Ottawa region.

[5] Specifically, the four decisions of the Board that are the subject of this judicial review application determined as follows:

-- on April 7, 2009, the Board confirmed a settlement between the Employers and UFCW of the two outstanding related employer applications brought for Peterborough and Hamilton, as well as other certification issues between the parties. The settlement and the s. 1(4) declaration exceeded the relief requested by the UFCW in the applications. It confirmed that Rexall and Pharma Plus are a single employer for the purposes of the OLRA and that UFCW is the sole collective bargaining agent for Rexall employees in all of Ontario (the "April 7, 2009 Decision") [[2009] O.L.R.D. No. 1224 (L.R.B.)];

-- on October 29, 2009, the Board denied CAW's request for reconsideration of the settlement approval on the basis that CAW had no direct interest in the settlement, but provided the employees of a Rexall store in Ottawa (the "Beaverwood Road store") who were impacted an opportunity to make submissions through their representative, CAW (the "October 29, 2009 Decision") [[2009] O.L.R.D. No. 3953 (L.R.B.)];

-- on June 8, 2010, the Board varied the April 7, 2009 Decision to exclude its application to the Beaverwood Road employees, on the basis that they had not been given notice of the initial proceedings and they had brought their objection in a timely manner. The Board also dismissed an application brought by CAW pursuant to s. 66 of the OLRA for being moot (the "June 8, 2010 Decision") [[2010] O.L.R.D. No. 2237, [2010] OLRB Rep. May/June 436 (L.R.B.)]; and

-- on September 27, 2010, the Board refused CAW's request that it reconsider the scope of the June 8, 2010 Decision (the "September 27, 2010 Decision") [[2010] O.L.R.D. No. 3762 (L.R.B.)].

The Dispute

[6] On April 27, 2009, after having become aware of the April 7, 2009 Decision, CAW filed a Response and Request for Reconsideration regarding the related employer applications challenging the scope of the relief granted to UFCW insofar as it included bargaining rights for Rexall employees in the Ottawa region.

[7] It is the position of CAW that, at a minimum, it should have received notice of the application to endorse the settlement between the employers and UFCW that led to the April 7, 2009 Decision. CAW had represented the Pharma Plus stores in Ottawa for many years, and the related employer declaration should have recognized, or at least provided CAW an opportunity to speak to the Board of, this established relationship.

[8] CAW asserts that it was directly affected by the April 7, 2009 Decision for two reasons.

[9] First, CAW claims that its members' rights may be threatened by the expansion of Rexall stores in Ottawa (represented by UFCW) at the expense of the existing Pharma Plus stores in Ottawa (represented by CAW).

[10] Second, CAW submits that it should have been given an opportunity to make submissions about the scope of the proposed remedy and whether Ottawa should have been included in the related employer declaration made in favour of UFCW.

[11] Although CAW did not represent any Rexall employees at the time the matter first came before the Board, CAW had made unsuccessful attempts, which were rebuffed by the Employers, to seek certification of the only Rexall store in the Ottawa Region at the time, located on Beaverwood Road, in 2005 and again during the labour negotiations with the Employer in 2008. CAW and the Employer entered into a written agreement on October 24, 2008 with respect to terms that would apply if CAW was in the future successful in obtaining certification of the Beaverwood store.

[12] It is the position of UFCW and the Employers that CAW was not entitled to notice of the application that led to the April 7, 2009 Decision.

[13] CAW submits that the Board erred in several ways.

-- First, it was unreasonable for the Board to give no reasons for its April 7, 2009 decision.

-- Second, the Board decision, dated October 29, 2009, that CAW had no direct interest and thus no ground for standing in UFCW's applications was unreasonable.

-- Third, the Board misapplied s. 1(4) of the OLRA when it granted UFCW province-wide rights as an appropriate remedy in the facts of this case.

-- Fourth, the Board unreasonably found a related s. 66 termination application brought by CAW to be moot.

[14] The responding parties take the view that the decisions of the Board must be read and considered together as one decision. The reasons of the Board are entitled to significant deference and are reasonable. The application for judicial review ought to be dismissed.

Background Facts

[15] Prior to the April 7, 2009 Decision of the Board,

-- employees of Pharma Plus stores in most of Ontario, except Ottawa, were represented by the UFCW;

-- employees of Pharma Plus stores in Ottawa were represented by CAW;

-- employees of Rexall stores in Ontario were, in general, not unionized, but UFCW did hold bargaining rights for eight stores; and

-- the employees of the only Rexall store in Ottawa (Beaverwood Road) were not unionized, and the Employers had resisted the efforts for certification initiated by CAW in 2005 and 2008.

[16] Employees of any new Pharma Plus stores opened outside Ottawa would have automatically been represented by UFCW according to the provincial collective agreement in place at the time. Employees of any new Pharma Plus stores in Ottawa would have been represented by CAW.

[17] Katz Group Canada Ltd. began to open or refurbish certain drugstores in Ontario and to operate those stores under the non-unionized Rexall name, rather than the unionized Pharma Plus banner.

[18] UFCW took the position that the opening of Rexall stores in this manner violated its collective agreement with Pharma Plus and threatened its members. Consequently, UFCW initiated the two related employer applications in Peterborough and Hamilton pursuant to s. 1(4) of the OLRA, asserting that the collective agreement between UFCW and Pharma Plus would bind employees in Rexall stores in these locations.

[19] Section 1(4) of the OLRA provides as follows:

1(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.

[20] The Employers vigorously defended the related employer applications.

[21] CAW did not initiate a related employer application at this time. CAW was unaware of the two related employer applications initiated by UFCW.

[22] UFCW took steps to certify nine Rexall stores across the province. The efforts of UFCW were contested by the Employers, but certification occurred in eight of the contested locations.

[23] CAW took steps to certify the one Rexall store in the Ottawa region that was successfully challenged by the Employers.

[24] After the variety of contested proceedings between the Employers and UFCW, the Employers and UFCW on March 26, 2009 reached a comprehensive agreement that resolved all outstanding differences between them as part of the mediation offered by the OLRB. The settlement included the original two related employer applications regarding the Peterborough and Hamilton locations, and an agreement about a ninth Rexall store that was not yet certified.

[25] Counsel for UFCW confirmed that the settlement was a "new deal", not asked for nor anticipated, which evolved as a result of the negotiations. The document filed for approval before the Board contained many handwritten changes to the typed version of the proposed agreement.

[26] The settlement provided that UFCW was to be the sole collective bargaining agent for all Rexall drugstores in all of Ontario, including Ottawa/Carleton. This was not a result that could have been achieved had the applications proceeded before the Board for adjudication.

[27] The settlement went beyond what had been requested by UFCW in the two related employer applications and was qualitatively different from the initial starting point of UFCW in the negotiations.

[28] As well, the settlement contemplated a new collective agreement for new Rexall stores, with terms that were less advantageous to the employees as compared to either the existing UFCW-Pharma Plus or CAW-Pharma Plus collective agreements. Again, this was not a result that could be obtained in a contested proceeding before the Board.

[29] The exchange of the "gold" Pharma Plus collective agreement for the "bronze" proposed Rexall collective agreement for future Rexall stores benefited the Employers. UFCW benefited in the settlement by obtaining bargaining rights for all future Rexall stores across the province, including stores in Ottawa/Carleton, where it had not traditionally held bargaining rights for Pharma Plus stores.

The Beaverwood Road Rexall store in Ottawa/Carleton

[30] As mentioned above, CAW attempted in 2005 to certify the only Rexall store within the Ottawa/Carleton geographic area, which was located at Beaverwood Road. The Employers resisted these attempts to certify the Beaverwood Road employees. During the collective agreement negotiations between CAW and the Employer in 2008, the Employers refused to bring the Beaverwood Road store under the CAW-Pharma Plus banner, but agreed in a written agreement dated October 24, 2008 to allow CAW to renew its certification efforts with terms.

[31] The "Letter of Understanding" established between CAW and the Employers on October 24, 2008 provided:

The Company Agrees as follows:

1. The Union shall attempt to organize the Rexall store at in [sic] Manotick, located at 1160 Beaverwood Road, Manotick, Ontario.

2. The normal requirements under the Labour Relations Act of Ontario, with respect to Organizing shall apply.

3. In the event that the Union has sufficient support to allow for Unionization, the Company agrees this store shall fall under the current Collective Agreement between Pharma Plus Drugmarts Ltd. and the CAW. . . . . .

4. This settlement is made on a without precedent or prejudice basis to either parties position with respect to future stores that may be opened other [sic] a Banner other than a Pharma Plus store.

[32] It was the position of the Employers in the reconsideration application that the April 7, 2009 Decision terminated any rights that CAW may have had in the Letter of Understanding. They submitted that"[i]n light of the Boards order, dated April 7, 2009, the foregoing letter is now exhausted and void; the UFCW was awarded representation rights with respect to that store [on Beaverwood Road]."

[33] On August 29, 2009, CAW filed a separate application for certification as bargaining agent for employees of the Rexall store on Beaverwood Road in Ottawa.

[34] CAW then added an additional challenge to its application for certification on September 10, 2009 by applying for termination of the bargaining rights acquired by UFCW in the March 26 agreement under s. 66 of the Act (the "Termination Application").

[35] Section 66(1) provides:

66(1) Where an employer and a trade union that has not been certified as the bargaining agent for a bargaining unit of employees of the employer enter into a collective agreement, or a recognition agreement as provided for in subsection 18(3), the Board may, upon the application of any employee in the bargaining unit or of a trade union representing any employee in the bargaining unit, during the first year of the period of time that the first collective agreement between them is in operation or, if no collective agreement has been entered into, within one year from the signing of such recognition agreement, declare that the trade union was not, at the time the agreement was entered into, entitled to represent the employees in the bargaining unit.

[36] The Termination Application was based on the argument that UFCW had been voluntarily recognized as bargaining agent by the Employers and majority support of the affected employees had not been obtained as required by the OLRA. CAW challenged the settlement as being advantageous to both the Employers and UFCW at the expense of the Rexall employees across Ontario, who were now granted reduced benefits under the new collective agreement.

Review of the Board Decisions

The April 7, 2009 Decision

[37] On April 7, 2009, the Board approved the settlement between the Employers and UFCW based upon written submissions without a hearing. The Board granted the relief requested in the settlement, giving UFCW province-wide rights to all future Rexall stores. The Board did not give any reasons or detail the contents of the submissions it had been provided. The issue of extending the rights of UFCW to include Ottawa/Carleton was not specifically dealt with by the Board.

[38] On April 27, 2009, CAW brought a Request for Reconsideration of the April 7, 2009 Decision, which was dealt with by the Board in the October 29, 2009 Decision.

The October 29, 2009 Decision

[39] The Board determined in the Request for Reconsideration that CAW had not been entitled to notice of the settlement between UFCW and the Employers because the April 7, 2009 Decision did not affect CAW bargaining rights. It did not, at the time the reconsideration was requested, represent any employees who were "affected by the related employer applications or the settlement", and the settlement "did not affect the CAW bargaining rights as they existed at the time" (para. 8). In the Board's view"[t]he only thing [the settlement] does do, is to likely preclude any s. 1(4) application against Pharma Plus and Rexall in Ottawa that the CAW might have (but had not) brought" (para. 11).

[40] Consequently, the Board went on to conclude that CAW did not have a right to intervene and make submissions on the related employer s. 1(4) applications.

[41] The Board did note, however, that "the employer settled the applications in a way that gave the union [UFCW] a better result than it could have got had it been successful at hearing" (para. 2).

[42] The Board concluded that"[w]hile CAW does not have a direct interest in the matter it represents employees of the Beaverwood Road store who do have a direct interest in the matter" (para. 12).

[43] The Board concluded that"[s]ince [the employees] were employed in Ottawa at stores not covered by the related employer applications these employees would not have been given notice of the related employer applications" (para. 12). As they only found out about the proceedings when the employees learned that UFCW now represented them, these employees were given a right to be heard and a right to review the pleadings, represented by CAW.

The June 8, 2010 Decision (incorrectly labelled June 8, 2009 by the Board)

[44] The June 8, 2010 Decision considers the Termination Application brought by the CAW and the submissions of the Beaverwood store employees represented by CAW.

[45] The Board again affirms that CAW did not receive notice of the related employer applications as the "application did not affect the CAW or employees it represented" (para. 4).

[46] The Board then considered the submissions of CAW filed on behalf of the Beaverwood Road store employees. Their request for reconsideration was granted and the April 7, 2009 Decision was varied to exclude its application to the Beaverwood Road Rexall store employees.

[47] The Board found that, as the employees did not receive notice of the application, and as they complained promptly, they should be carved out of the ambit of the April 7, 2009 Decision.

[48] Specifically, the Board found that the Board erred in not ensuring that the Beaverwood store employees did get notice [at paras. 8 and 9]:

The circumstances which gave rise to this situation are unusual. The original two 1(4)/69 applications were filed with respect to stores in Peterborough and Hamilton. In its cover letter with respect to both applications, counsel for the UFCW specifically requested that the Board (and employers) give notice to the affected employees: "The responding parties will need to post notices of the respective applications in the appropriate stores". The Board directed the employer to post notice to employees (and would have without the applicant's request) in accordance with its usual practice in such applications. The employer advised the Board that it had posted notice in the stores in Peterborough and Hamilton.

The difficulty arose because subsequent to the filing of the 1(4)/69 applications the UFCW and responding party employers settled the matter in a way which affected employees in locations other than the original applications. Unfortunately, the Board did not ensure that those additional employees received notice that the Board may make a decision which affected their rights. However, only the Beaverwood Road store employees complained, and they did so within a reasonable period time (sic). (Emphasis added)

[49] The Board dismissed the CAW's Termination Application as being moot.

[50] After the June 8, 2010 Decision, the Board permitted the CAW application for certification at the Beaverwood Road store to proceed. CAW was certified as the bargaining agent for the Beaverwood store Rexall employees.

The September 27, 2010 Decision

[51] CAW sought reconsideration of the June 8, 2010 Decision and the dismissal of the Termination Application as moot.

[52] The Board dismissed the request, stating that "[m]uch of the request for reconsideration is largely an attempt to re- argue the case" (para. 3).

[53] The Board disagreed with the CAW submission that it had failed to deal with the Termination Application. The Beaverwood Road employees in the Ottawa area could have an interest in termination but they received "a full remedy" when they were carved out of the April 7, 2009 Decision. The Board took the view that those employees could obtain no "greater remedy" than being excluded from the application of the UFCW Rexall collective agreement. Therefore the Board concluded in reconsideration that application had properly been found moot.

[54] Implicit in the Board decision is that CAW could not pursue rights on behalf of Rexall employees outside Ottawa.

[55] On November 12, 2010, CAW filed the notice of application to Divisional Court for judicial review.

Standard of Review

[56] In this case, all parties agree that the appropriate standard of review for a decision of the Board under s. 1(4) or s. 66 of the OLRA is reasonableness.

[57] However, if there is a breach of natural justice in proceedings before the Board by failing to provide CAW with notice, there is no applicable standard of review. The question for a reviewing court is whether the rules of procedural fairness were respected in the circumstances: London (City) v. Ayerswood Development Corp., 2002 3225 (ON CA), [2002] O.J. No. 4859, 167 O.A.C. 120 (C.A.), at para. 10; Simcoe Muskoka District Health Unit v. Ontario Nurses Assn., [2011] O.J. No. 3140, 2011 ONSC 4045 (Div. Ct.), at para. 18.

The Issues

[58] Three interrelated questions must be answered: (1) Was CAW entitled to notice of and to participate in the initial s. 1(4) OLRA application before the Board? (2) Was the Board reasonable in its determination that CAW must have a direct existing interest by representing Rexall employees in order to be entitled to notification and the right to participate in the related employer application in the facts of this case? (3) If a direct interest is required, was the Board's conclusion reasonable in the facts of this case that CAW did not have a direct interest in the matter before the Board?

Analysis

[59] As outlined above, CAW submits that the Board erred in several ways.

-- First, it was unreasonable for the Board to give no reasons for its April 7, 2009 decision.

-- Second, the Board decision dated October 29, 2009 that CAW had no direct interest and thus no standing in UFCW's applications was unreasonable.

-- Third, the Board misapplied s. 1(4) of the Act in granting UFCW province-wide rights as an appropriate remedy in the facts of this case.

-- Fourth, the Board unreasonably found a termination application brought by CAW to be moot.

[60] We can deal summarily with the first and forth issues raised.

[61] We conclude it was not unreasonable for the Board initially in adopting a settlement reached between the parties to not provide reasons for its April 7, 2009 Decision. The parties did not appear before the Board and it would be unusual in approving a settlement to give reasons. This ground is without merit.

[62] With respect to the forth issue, we conclude that it was not unreasonable for the Board to conclude that the Termination Application with respect to the Beaverwood store was moot, as the Board had carved out this store and its employees from the ambit of the April 7, 2009 Decision. It was not unreasonable to dismiss the request for CAW to represent employees outside the geographic region of Ottawa.

[63] The other issues raised by CAW -- that is, the absence of notice, and the conclusions that CAW had no direct interest and hence no entitlement to notice or to an opportunity to challenge the scope of the s. 1(4) remedy granted by the Board in the April 7, 2009 Decision -- are problematic.

Procedural fairness and the question of notice

[64] The Board concluded, in accordance with the submissions of the Employers and UFCW, that CAW must have a direct interest in the matter before the Board on April 7, 2009 to trigger an obligation to provide notice of the approval of the settlement. The Board in sparse reasons cited no authority for its conclusions. The Board required CAW to have established bargaining rights for Rexall employees to be entitled to notice and to have the right to participate as intervenor to reopen the s. 1(4) related employer application.

[65] There does not appear to be any precedent directly on point dealing with the approval of a settlement by the Board between an employer and a union, which has by agreement "bumped" the potential future rights of a competitor union.

[66] We return then to basic principles.

[67] Counsel for UFCW argued that notice and fairness principles apply perhaps in other contexts, but in the labour law context the reality is that it is a "rough and tumble" world with few guidelines. Tough tactics are in play and the union that is the swiftest wins.

[68] A review of the case law does not appear to support the position of UFCW and the Employers.

[69] The courts have recognized a requirement that basic procedural norms of fairness be respected in labour proceedings and arbitrations. This includes a general rule that all interested parties be able to participate, and that third parties whose rights could be adversely impacted by an award be given notice beforehand: Brown and Beatty, Canadian Labour Arbitration, 4th ed., looseleaf (Aurora, Ont.: Canada Law Book, 2011), 1:5220, 3:1200, 3:1210.

[70] The right to notice in a proceeding, be it a lawsuit, an administrative proceeding or a labour proceeding, is a fundamental principle of fairness. Notice is part of the core of natural justice, the requirements of which will depend upon the circumstances of the case. In each case, the court must determine whether the party claiming the right to notice had a sufficient interest in the proceedings such that notice was required by the audi alteram partem principle: see, e.g., T.W.U. v. Canadian Radio-Television & Telecommunications Commission, 1995 102 (SCC), [1995] 2 S.C.R. 781, [1995] S.C.J. No. 55, at para. 6; Inuit Tapirisat of Canada v. Canada (Attorney General), 1980 21 (SCC), [1980] 2 S.C.R. 735, [1980] S.C.J. No. 99, at para. 27; Canadian Transit Co. v. Canada (Public Service Staff Relations Board), 1989 9429 (FCA), [1989] F.C.J. No. 527, [1989] 3 F.C. 611 (C.A.), at paras. 9-10.

[71] An indirect or contingent interest may be too remote and not sufficient to entitle one to notice: T.W.U., supra, at paras. 31-32; Canadian Transit, supra, at para. 26. However, the right to notice does not depend on proof of existing vested rights. The potential effect of a legal proceeding upon a third party may be sufficient to trigger the right to notice. As noted by Arbitrator Owen Gray in Weston Bakeries Ltd. v. Milk & Bread Drivers, Dairy Employees, Caterers & Allied Employees, Local 647 (Route Charges Grievance), 1999 35821 (ON LA), [1999] O.L.A.A. No. 40, 79 L.A.C. (4th) 189 (Arb. Bd.) [at para. 11]:

The potential effect on a third party of the outcome of a legal proceeding between others may be so direct and substantial that that third party is entitled as a matter of natural justice to participate as a party in the proceeding. Even if the potential effect on a third party is not so direct and substantial as to give the third party a legal right to participate, the tribunal may have a discretion to permit the third party's participation on such terms as it may consider appropriate. Labour arbitrators have the discretion to permit participation by employees or others whose interest in the matter may not be so direct and substantial as to be entitled to participate as a matter of natural justice: see Somerville Industries Ltd., [(1969), 20 L.A.C. 404 (Ont. Arb. Bd.)]. (Emphasis added)

[72] If based upon reason, common sense and fairness, a party ought to have been advised of matters that may impact upon their interests as the party may be significantly affected, or directly and necessarily affected, by the decision, then the party will be entitled to notice: C.U.P.E. v. Canadian Broadcasting Corp., 1990 8078 (ON CA), [1990] O.J. No. 772, 70 D.L.R. (4th) 175 (C.A.), affd 1992 108 (SCC), [1992] 2 S.C.R. 7, [1992] S.C.J. No. 47; Weston Bakeries Ltd. v. Milk & Bread Drivers, Dairy Employees, Caterers & Allied Employees, Local 647, supra.

[73] We conclude for the reasons to follow that the Board breached the duty of procedural fairness by unreasonably imposing the prerequisite requirement that CAW be the union certified to represent existing Rexall employees in Ottawa in order to be entitled to notice of the s. 1(4) related employer application.

The case law defining interested parties entitled to notice in the labour context

[74] Most of the cases considering the right of interested third parties to participate in labour matters have stemmed from two root decisions: Hoogendoorn v. Greening Metal Products and Screening Equipment Co., 1967 20 (SCC), [1968] S.C.R. 30, [1967] S.C.J. No. 75 and Bradley Ottawa Professional Fire Fighters Assn., 1967 160 (ON CA), [1967] 2 O.R. 311, [1967] O.J. No. 1017 (C.A.). Bradley was itself cited with approval in the majority judgment in Hoogendoorn.

[75] Hall J. in Hoogendoorn confirmed that an employee whose status was being affected by the grievance hearing was entitled to be represented in his or her own right, as distinct from being represented by the union, where the union was taking a position adverse to the employee's interests. For similar circumstances, see Orillia Soldiers' Memorial Hospital v. Ontario Nurses Assn. (Bumping Grievance), 1993 16697 (ON LA), [1993] O.L.A.A. No. 14, 34 L.A.C. (4th) 315 (Arb. Bd.), affd 1997 CarswellOnt 662 (Div. Ct.); Freeport Hospital v. Ontario Nurses Assn. (December 21, 1993) (Craver) (refd by Div. Ct., above); Diversicare Inc. v. O.N.A., 1995 18445 (ON LA), [1995] O.L.A.A. No. 36, 47 L.A.C. (4th) 284 (Arb. Bd.).

[76] The principle that an "interested" third party may intervene has been expanded beyond unionized employees to include other employees whose behaviour is at issue in the grievance, as well as government officials, independent contractors and third party employers: see, e.g., C.U.P.E., Local 101 v. London (City), 2004 94636 (ON LA), [2004] O.L.A.A. No. 427, 131 L.A.C. (4th) 56 (Arb. Bd.); Brown and Beatty, 3:1210; and Gorsky, Usprich and Brandt, Evidence and Procedure in Canadian Labour Arbitration, looseleaf (Scarborough, Ont.: Carswell, 1991-), 7.3(b)(iii).

[77] The most persuasive case similar to the facts before us is C.U.P.E. v. Canadian Broadcasting Corp., supra ("C.U.P.E."). The Court of Appeal concluded in that case that two third-party unions had been entitled to notice of certain arbitral decisions. The awards were overturned on the basis that "the failure to give notice of the arbitration to the Canadian Union of Public Employees and to the National Assn. of Broadcast and Electronic Technicians when the result of the arbitration could have a significant effect upon those unions constituted a denial of natural justice" (emphasis added).

[78] In C.U.P.E., competing unions were in disagreement about entitlement to be assigned staging and lighting work by the CBC. In the past, staging work had gone to one union and lighting work to another, both of which had a collective agreement with the CBC. A third union also had a collective agreement with the CBC and initiated a series of grievances regarding the assignment of this work, the result of which were two arbitral decisions designating the third union as entitled to the work. The first and second union had not been notified of the grievances and only became aware of the awards when CBC began assigning the work to the third union.

[79] The first and second unions sought judicial review to have the awards set aside but the Divisional Court denied the application. The Court of Appeal reversed the Divisional Court decision in a judgment by Carthy J.A., who adopted a "common sense" approach drawing on principles of fairness and pragmatism [at paras. 5, 6 and 9]:

My thinking starts with a practical, common-sense compulsion to put all these parties in one room, before one tribunal, to obtain one ruling on their differences. Upon analysis I find that legal precedent supports this view.

The practical rationale cannot be better put than in the majority decision in Re Municipality of Metropolitan Toronto v. Canadian Union of Public Employees, Local 43 (1989), 1989 9416 (ON LA), 5 L.A.C. (4th) 404. The grievance was by Local 43 of C.U.P.E. complaining that work to which they were entitled was being assigned to Local 79 of C.U.P.E. Local 79 wanted status before the arbitration board and Local 43 objected. In their reasons, the majority said at pp. 410 and 411:

The cases offer very little guidance on the consequence of a party being given status. It was pointed out in argument before us, that it would be unfair for Local 79 to have status in these proceedings and, if Local 43 were to succeed, process a similar grievance under their collective agreement.

The purpose of arbitration is to provide an expeditious settlement of disputes between employers and unions concerning the interpretation of their various agreements. It is a private system that the parties commit themselves to (albeit through legislative direction). It is intended to be practical, accessible and remedial.

Here we have one employer and two unions, each of which is bound to such a system of dispute settlement with that common employer. It is academically correct, but totally impractical, to say that in disputes such as the one before us, the board should deny status to the other union. . . . . . . . .

Continuing with a common-sense analysis, we have a two-party dispute in which the employer has limited interest and a third party's agreement has been interpreted, leading to an award that effectively directs the transfer of work assignments while the individuals who suffer are left to pursue grievances under their own collective agreements in hope of receiving a conflicting decision. . . . [T]here is no clear legislative path to resolution of these overlapping disputes though practicality in day-to-day labour relations demands that there be one. In fact, we were referred to a number of arbitration awards adopting some form of involvement by non-parties to an agreement in similar situations, indicating that, whatever the legal obligation, this is the usual practice. (Emphasis added)

[80] The following additional comments made by Carthy J.A. in C.U.P.E. regarding the question of fairness and where the line may be drawn between a private agreement and contested proceedings are also instructive [at paras. 15-17]:

The logic apparently lying behind the Divisional Court's reasoning [to deny the judicial review] is that collective agreements are private contracts and the resolution of rights within them is exclusively reserved to the parties. That would be so in negotiations to change the terms of an agreement but this exclusivity falls aside when arbitration is pursued.

It is then an adjudicative proceeding in an administrative framework. When C.U.P.E. brought this issue to the Divisional Court, N.A.B.E.T. was made an intervener by a consent order. If contested, its motion would undoubtedly have been allowed. No one would have tested its legal rights in any strict sense. The practical impact of the result of this proceeding is so direct that fairness dictates N.A.B.E.T.'s involvement. The same test would have been appropriate at the arbitration level. Arbitrators are working within a statutory framework to assure that employers and employees treat one another fairly within the context of their agreements, that disputes are efficiently resolved and that labour relations do not break down through the alternative of protracted court proceedings. Their awards can become judgments of the Federal Court when filed pursuant to s. 66 of the Canada Labour Code. They must be fair and should not be restricted to hearing only persons with a strict legal interest.

In my view it was unfair and constituted a failure of natural justice to deal with the employment opportunities of the C.U.P.E. and N.A.B.E.T. union members, in the circumstances of this case, in the absence of notice and an opportunity to seek involvement in the decision-making process. (Emphasis added)

[81] The respondents in that case submitted to the Court of Appeal that cases such as Hoogendoorn and Bradley could be distinguished because in those cases the employees' interests were finally determined, rather than simply affected. The Court of Appeal rejected this argument, at para. 11, finding:

It is true that the employees' legal rights were directly affected, but there is nothing in the reasons to limit the entitlement to that circumstance. The language of Laskin J.A. [in Bradley] at p. 317 O.R. is very broad:

The common law has been specially sensitive to deprivation of property or contractual advantages in proceedings of an adjudicative character without previous notice thereof to persons likely to be directly affected, unless there is clear statutory exclusion of such notice. (Emphasis added)

[82] As in Hoogendoorn, the Court of Appeal in C.U.P.E. was of the view that "the union members in the present case should have been entitled to notice and the opportunity to prevent loss of employment without the necessity of further proceedings" (para. 12).

[83] Although C.U.P.E. is distinguishable on its facts, we are of the view that the Court of Appeal's comments on procedural fairness in arbitrations are also applicable in the particular facts of this case, where the Board has approved a settlement that could impact another union, which outcome could not have been achieved through the adversarial resolution of the root applications, and where the proceeding in fact became adversarial when CAW objected.

[84] The Divisional Court considered the issue of whether a lack of notice to a third party union was a ground for overturning an arbitral decision on judicial review in Teamsters International Union, Local 847 v. Directors Guild of Canada, Ontario District Council, 2003 13648 (ON SCDC), [2003] O.J. No. 5097, 180 O.A.C. 97 (C.A.). Although Meehan J. dismissed the application for judicial review brought by the union seeking notice, and the facts of the case are also distinguishable from those before us at present, the principles confirmed in Teamsters are useful in assessing the issue before us.

[85] Meehan J. adopted the Supreme Court jurisprudence, stating, at para. 8"The Supreme Court of Canada has held a party is entitled to notice is one who is significantly affected or directly and necessarily affected by the decision. See C.U.P.E. v. C.B.C., 1990 8078 (ON CA), [1990] O.J. No. 772; affirmed S.C.C. 1992 108 (SCC), [1992] 2 S.C.R. 7 at p. 9, and Telecom. Workers Union v. Canada (C.R.T.C.), 1995 102 (SCC), [1995] 2 S.C.R. 781, at p. 797, para. 32" (emphasis added). He then noted, at para. 10"It appears in the cases cited in its favour by the applicant, the party entitled to notice was either bound by the collective agreement or there was a common employer or further a trade union interested in an issue which might effect them in another labour arbitration proceeding with the same employer."

[86] In Teamsters, the applicant had not applied to obtain bargaining rights for the groups involved, it did not have legal or representational rights to the work at issue, and it had already initiated parallel proceedings relating to the dispute before the OLRB, which would be open to judicial scrutiny in any event at their completion. However, it appears in this case that several of the factors enunciated at para. 10 are present -- CAW was bound by a collective agreement with the Employers, there was a common employer between CAW and UFCW, and CAW was interested in the related employer application as it may well affect it in another labour arbitration with the same employer.

[87] Other arbitration cases, while not contemplating precisely the same facts, demonstrate some of the circumstances when third party unions have been found to have an interest in an arbitral outcome that entitles them to notice. For example, in Grey Bruce Health Services v. Ontario Public Services Employees Union, Local 260 (Layoff Grievance), 2004 94749 (ON LA), [2004] O.L.A.A. No. 419, 131 L.A.C. (4th) 193 (Arb. Bd.), the Ontario Nurses' Association was granted intervenor status in an arbitration launched by another union relating to the employer's decision to lay off a number of registered practical nurses and replace them with registered nurses ("RNs"), who would be represented by ONA. Although no RNs had yet been hired, and thus none of ONA's members would be directly affected by the outcome, the arbitrator granted the ONA standing because "[t]o deny ONA status on the grounds that a decision upholding the grievances by itself will not directly result in ONA's rights being adversely affected, is to ignore reality . . . the impact of success of the OPSEU grievances is real, not merely speculative" (para. 6).

CAW is an interested party entitled to notice and to participate

[88] We are of the view that the principles outlined in C.U.P.E., Hoogendoorn, Bradley and the other cases cited above are applicable in the circumstances of this case. The applications for a related employer declaration are public and contested. The intervening settlement arising from the applications does not transform the matter into a private agreement with more limited rights to intervene.

[89] The settlement affected the rights of third parties and is enforceable as a Board order. The Board recognized the right of the Beaverwood store employees to notice and participation given their timely objection, but curiously failed to recognize the right of CAW to receive notice and to participate in the proceeding.

[90] We conclude that it was not a prerequisite that CAW actually represent Rexall employees to have a sufficient interest to be entitled to notice. There can be no doubt that CAW is significantly affected or directly and necessarily affected by the April 7, 2008 Decision granting UFWC rights to represent all Rexall employees in the Ottawa region.

[91] The likely effect of the April 7, 2009 Decision for CAW is twofold -- first, it limits the union's future representation rights; and second, it potentially undermines existing vested relationships.

[92] The repercussions of the UFCW-Employer agreement are to bump CAW from representing in the future Rexall employees in stores opened in the Ottawa region, and to benefit UFCW by enabling it to expand in the Ottawa/Carleton region, which was previously exclusive CAW terrain.

[93] As well, CAW expresses concern that the Employers may close Pharma Plus stores only to subsequently open a Rexall store as the Rexall collective agreement negotiated with UFCW is less beneficial to employees than the collective agreement that CAW has negotiated with the Employers for Pharma Plus employees. Obviously, such a tactic benefits the Employers, but not the employees that CAW presently represents.

[94] The CAW concern is not imaginary, or speculative. This concern has crystallized in two instances in Ottawa with respect to closure of two Pharma Plus stores since these proceedings began in 2009. In one instance, the Pharma Plus store was closed on one side of a mall and a Rexall store was opened on the other side of the same mall. In another instance, the Pharma Plus store was closed and a Rexall store opened a short distance away.

[95] We conclude that the requirement of the Board that CAW actually represent Rexall employees to be entitled to notice is unreasonable and does not accord with the case law or principles of natural justice and basic fairness.

[96] Once the Board contemplated expanding the related employer applications to include the Ottawa region, CAW was entitled to notice. CAW became an interested party entitled to notice as its contractual advantages were likely to be directly affected by an adjudicative proceeding (using the language in Bradley and relied upon in C.U.P.E. (C.A.), at para. 11) or as an entity that the result of the arbitration could have a significant effect upon (in the language of the Supreme Court in C.U.P.E.). We conclude that the practical impact of the April 7, 2009 Decision upon CAW, and basic principles of fairness, mandate CAW's involvement as intervenor in the related employer applications.

The agreement between CAW and the Employers is sufficient to meet the test of a direct interest

[97] Alternatively, if we are incorrect in the conclusions reached above, we are of the view that the agreement negotiated with the employer in October 2008 during the negotiations for the renewed collective agreement in the "Letter of Understanding" established between CAW and the Employers on October 24, 2008, referred to in para. 33 above, provides CAW with a sufficiently direct interest to be entitled to notice of the related employer applications once the Ottawa region was in play.

[98] In the written submissions provided to the Board on September 25, 2009, the Employers assert that"[i]n light of the Boards order, dater [sic] April 7, 2009, the foregoing letter is now exhausted and void; the UFCW was awarded representation rights with respect to that store [on Beaverwood Road]." This assertion by the Employers itself suggests that, prior to the April 7, 2009 Decision, CAW did have an acknowledged direct interest in relation to a store that was the subject of the Board's order.

Conclusions

[99] Answering the questions posed above, we conclude, in the particular circumstances of this case, that

-- CAW was entitled to notice of and to participate in the related employer application and to make submissions before the Board on April 7, 2009 about whether the Regional Municipality of Ottawa/Carlton should be part of the declaration made in favour of UFCW. The decision of the Board denying CAW the right to notice and to participate was a breach of the principles of natural justice;

-- the conclusion of the Board that CAW must have a direct existing interest by representing Rexall employees to be entitled to notification and the right to participate in the related employer application was unreasonable as the decision is not fair, is contrary to the principles of natural justice and is not supported by the case law; and

-- if there was a requirement to prove an existing direct interest, given the failed attempts at certification and the Letter of Understanding between the Employers and CAW concerning the Beaverwood Road store, we conclude that CAW did have a sufficient direct interest in the matter before the Board to be entitled to notice and to participate in the related employer application, once the Ottawa region was in play. We conclude that the conclusion of the Board that the CAW did not have a direct interest was unreasonable and not supported by the facts.

[100] We conclude that the reconsideration decision of the Board dated October 29, 2009 does not fall within a range of possible, acceptable outcomes which are defensible in respect of the facts and law as described in Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, at para 47.

Fashioning the Appropriate Remedy

[101] In fashioning the appropriate remedy, our goal is to correct the fault of a lack of notice to CAW and denial of the right to participate in any decision affecting future rights to represent employees in the Regional Municipality of Ottawa/ Carlton. It is our responsibility to put each of the parties in the same position prior to the point that the error occurred.

[102] We are aware that this decision may have an impact upon the settlement reached between UFCW and the Employers. In the circumstances, the parties assumed that risk.

[103] We are more concerned about the rights and stability of existing employees of Rexall stores in the Ottawa region. The newly constituted Board will have to determine the appropriate remedy for the existing Rexall stores in Ottawa and employees presently represented by UFCW, as well as the rights of future Rexall employees in any new stores that may be opened in the Regional Municipality of Ottawa.

[104] The application for judicial review is granted. The April 7, 2009 Decision is quashed, and the incorporation of the settlement between UFCW and the Employers into an order of the Board is of no force and effect. The related employer applications brought by UFCW for Hamilton and Peterborough are remitted to a different member or members of the OLRB.

[105] The parties agreed that the successful party should be entitled to costs fixed in the amount of $4000. The respondent Employers and UFCW shall be equally responsible for paying these costs to CAW.

Application granted.