Ontario Labour Relations Board

[1980] OLRB Rep. May 693

2195-79-U Service Employees Union, Local 204 AFL-CIO-CLC, Complainant, v. Doral Construction Limited and Michael Allen, Respondents.

BEFORE: M. G. Mitchnick, Vice-Chairman, and Board Members H. J. F. Ade and H. Simon.

APPEARANCES: Jeffrey Sack, Steven Shrybman and Tom Small for the complainant; M. P. Forestell, Q. C. for the respondents.

DECISION OF THE BOARD; May 29, 1980

1. This is a complaint under section 79 of The Labour Relations Act alleging that the grievors, Steve Kita, Mark Lariviere, Richard E. Mooney, Christopher Meskis, Albert Petti and Neil Schmaltz, were terminated by the respondent contrary to sections 56, 58, 61 and 63(2) of the Act. This matter was filed along with an application for consent to prosecute (Board File No. 2198-79-U) which has been held in abeyance.

2. The respondent is part-owner of the Seaway Shopping Mall in Welland, and until the incidents giving rise to this complaint, carried out its own maintenance and security on the premises. The complainant alleges that the six grievors, who were employed by the respondent for that purpose, became dissatisfied with their conditions of employment and as a result contacted the complainant on or about February 13, 1980. Membership cards were then signed by all six grievors. The complainant further alleges that at a meeting on February 14th with the respondent's General Manager, one of the employees, upon being refused a wage increase, advised the General Manager that the employees were already seeking the assistance of a trade union in any event. The next day all six of the grievors were advised that their work was being contracted out, and each was given two weeks' notice of termination. As a rebuttal to the inference which might otherwise be drawn from this sequence of events, the respondent states that it made the decision to contract out the grievors' work as early as January of 1980, and the news of the grievors' organizing activity merely hastened implementation of that decision, in order to avoid problems with section 70(2) (the "freeze" provision) of The Labour Relations Act.

3. This matter has been before the Board in a prior application under section 83 of The Labour Relations Act being Board File No. 2197-79-U, alleging that the respondent had engaged in an unlawful lockout in terminating the grievors, and requesting the Board to issue a cease-and-desist order. That application was dismissed in a decision of the Board dated March 19, 1980. The complainant, however, takes the position that certain critical matters of fact found by the Board in the course of that decision are now res judicata between the parties, and accordingly the respondent is now estopped from contesting those matters in the present proceedings. Specifically, the complainant relies on the finding of the Board in paragraph 7 of that decision "that the decision to contract out the cleaning and security work was taken on February 15th when Demont obtained acceptable terms from the two contractors" [emphasis added]. The complainant relies as well on the further statement contained in that paragraph that "I find on the evidence that the decision to terminate the employees was a direct response of the respondents to learning of the presence of a trade union", and the statement in paragraph 9 of the decision that: "There can be no doubt on the evidence in this case that the respondent's actions were the product of an anti-union sentiment". Certainly these were central issues, fully canvassed, with full opportunity to both parties to present their case, in the proceedings before the prior panel. There appear to be cogent reasons, both from the point of view of the complainant and the Board, not to have these issues re-litigated in the present proceedings. It is essential, however, to review the prior decision carefully, in order to determine what, as a matter of law, it actually did decide.

4. As noted above, the Board was faced with an application alleging that an unlawful lockout had taken place. Section 1(1)(i) of The Labour Relations Act defines "lockout" as follows:

"1.-(1) In this Act,

(i) 'lock-out' includes the closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of his employees, with a view to compel or induce his employees, or to aid another employer to compel or induce his employees, to refrain from exercising any rights or privileges under this Act or to agree to provisions or changes in provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer, an employers' organization, the trade union or the employees."

The Board in the prior proceeding accordingly addressed itself to two questions: Was the employer's action a response to its employees' exercise of their rights or privileges under the Act, and, if so, was the employer's action taken with a view to compel the employees to refrain from exercising those rights or privileges? The Board was unequivocal in determining the first question against the respondent, and that is the determination upon which the complainant now seeks to rely. The problem, however, is that the Board went on to determine the second issue in favour of the respondent, so that no order was made against the respondent at all; the application was dismissed. What then, for purposes of res judicata or estoppel, did that decision determine against the respondent? The answer appears to be: nothing at all.

5. The extent to which the Board is entitled (and indeed encouraged) to make use of its prior decisions between the same parties has been the subject of considerable comment in two recent Divisional Court decisions involving Tandy Electronics Limited (Tandy Electronics Limited v. United Steelworkers of America and Ontario Labour Relations Board, 79 CLLC ¶14,216; Tandy Electronics Limited v. United Steelworkers of America and Ontario Labour Relations Board, 80 CLLC ¶14,017). In particular, the Divisional Court stated at page 12,091 of the second decision:

"The extent to which they can be utilized must be restricted to the actual decision of the Board together with those findings of fact made by the Board that were essential to its decision. No other findings of fact or evidence that may be contained in the decisions should be considered."

Guidance as to what findings can be said to be "essential" to a decision can be found in the leading English case of Penn-Texas Corporation v. Murat Anstalt (No. 2), [1964] 2 Q.B. 647. That case arose out of the second in a series of applications involving the same parties on the same subject matter. The plaintiff, an American company, sought to have the Courts in England order production of documents against an English company. On the first application the Court decided a preliminary matter in favour of the plaintiff, specifically, that the Court had the power to order a limited company to produce documents. The Court went on, however, to dismiss the application because the documents being sought were not specifically identified. The plaintiff in the second application sought to rely upon the prior determination of the Court on the preliminary matter, and took the position that the defendant was estopped from contesting that determination. The issue proceeded to the English Court of Appeal, and is succinctly dealt with in the decision of Lord Denning M.R., commencing at page 660:

"The first thing to consider is what was actually decided by this court in Penn-Texas (No. 1), so far as the English company was concerned. It was a case under the Foreign Tribunals Evidence Act, 1856. The American company applied for an order that the English company should, by its proper officer, attend before the examiner and (1) give evidence on oath, and (2) produce documents. The result of the application was that no order was made at all against the English company....

The American company asked for leave to appeal to the House of Lords. Both this court and the Appeal Committee of the House of Lords refused leave. Note that there was no application by the English company for leave to appeal: for the simple reason that there was nothing for them to appeal against. No order had been made against the English company.

The American company have now remedied the defect in their earlier application. They have specifically identified the documents which they seek. And they request the court to make an order on the English company to produce them. The master and the judge have made an order for production. The English company now appeals to this court. They say that this court in Penn-Texas (No. 1) was wrong in saying ... that there was power to order a limited company to produce documents. They say that, just as, under the Foreign Tribunals Evidence Act, 1856, a limited company cannot be ordered to give evidence so also it cannot be compelled to produce documents.

The first question is whether it is open to the English company to raise this point at all.... In my opinion a previous judgment between the same parties is only conclusive on matters which were essential and necessary to the decision. It is not conclusive on other matters which came incidentally into consideration in the course of the reasoning: see the Duchess of Kingston's case, (1776) 2 Smith's L.C. (13th ed.) 644, 645; 20 S.T. 355 and Reg. v. Hutchings, (1861) 6 Q.B.D. 300, (C.A.). One of the tests in seeing whether a matter was necessary to the decision, or only incidental to it, is to ask: Could the party have appealed from it? If he could have appealed and did not, he is bound by it, see

Badar Bee v. Habib Merican Noordin, [1909] A.C. 615, 623, (P.C.) by Lord MacNaghten. If he could not have appealed from it (because it did not affect the order made), then it is only an incidental matter, not essential to the decision, and he is not bound: see Concha v. Concha, (1886) 11 App. Cas. 541, 552, (H.L.) by Lord Herschell. The ruling by this court in Penn-Texas (No. 1) (that there was power in the court to order a limited company to produce documents) was only an incidental matter. It was not essential to the decision. No appeal lay from it. It is not therefore res judicta between the parties. It has only the weight that falls to be attributed to it on the doctrine of stare decisis: . . ." [emphasis added]

6. In the present proceedings there is, strictly speaking, no question of stare decisis, since the findings sought to be relied upon were matters of fact rather than law. However, Lord Denning's discussion of the doctrine of stare decisis in the Penn-Texas case led him to comment further on what is meant when the court speaks of findings "necessary" to a decision. The pertinent discussion follows at p. 661:

"Those cases show that the House will not treat as absolutely binding any line of reasoning in a previous case which was not necessary to the decision: but will regard itself as at liberty to depart from it if convinced that it was wrong. Apply that to this case. The ruling on the second point in Penn-Texas (No. 1) was not necessary to the decision. The result would have been the same, even if the ruling had been the other way." [emphasis added]

Lord Denning goes on to say that, "the ruling is not therefore absolutely binding, and we are at liberty to depart from it if convinced it is wrong". The Board notes, however, that this final statement appears applicable only to findings of law, as in the Penn-Texas case. On findings of fact, it would appear that a tribunal is either bound by a prior finding, or it is not. If it is not, the tribunal must hear all of the evidence afresh, and form its own conclusions solely on the basis of the evidence before it.

7. This same issue is commented upon at some length in Spencer Bower and Turner, The Doctrine of Res Judicata (2nd ed. London: Butterworths, 1969), at page 51:

"When an action, or motion, or application, is dismissed by a judicial tribunal after a trial or hearing, it is often a question whether anything can be said to have been decided, so as to conclude the parties, beyond the actual fact of the dismissal. The answer to this inquiry depends upon whether, on reference to the record and such other materials as may properly be resorted to, the dismissal itself is seen to have necessarily involved a determination of any particular issue or question of fact or law, in which case there is an adjudication on that question or issue; if otherwise, the dismissal decides nothing, except that in fact the party has been refused the relief which he sought." [emphasis added]

and further at page 54:

"And it must be noticed that where a proceeding has been dismissed, no matter of fact expressly determined in the course of the dismissal will found an estoppel unless such a finding was necessary to the dismissal. So (in Australia) where in the first proceedings the court had accepted a plaintiff's submission that the resolution of a Municipal Council was valid, but had nevertheless proceeded to refuse plaintiff the relief which he sought, it was held that in a subsequent proceeding between the same parties the issue of the validity of the Council's resolution was not res judicata."

8. In support of his position, counsel for the complainant refers to the Board the case of Morgan Power Apparatus Limited v. Flanders Installations Limited, (1972), 1972 CanLII 1046 (BC CA), 27 D.L.R. (3d) 249 (B.C.C.A.) which cites the following oft-quoted passage from Henderson v. Henderson, (1843), 3 Hare 100,67 E.R. 313:

"In trying this question, I believe I state the rule of the Court correctly, when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.

The passage from Henderson v. Henderson, however, appears to the Board on a proper reading to purport to delineate only those matters which may be taken to have been decided against a party by a decision adverse to it, and in particular is most commonly quoted with regard to what has been termed "cause of action" estoppel. A review of the facts in the Morgan Power case discloses that to be true in that instance as well. The case does not purport, in the Board's view, to even address itself to the question of what matters may be found to have been conclusively determined against a party where the ultimate decision is in fact in the party's favour. The Morgan Power decision is, therefore, of no assistance to the complainant.

9. The Board finds the reasoning and conclusions in the Penn-Texas case to be applicable to the case at hand. Here certain determinations were made against the respondent in a prior application which were ''necessary~~ in the course of the Board's inquiry at the time, but which cannot be said to have been "necessary" to the Board's ultimate decision. The decision was to dismiss the application, and that was a conclusion which obviously relied in no way on the earlier determinations against the respondent. In addition, as noted in Penn-Texas, even if the respondent had felt grievously wronged by the manner in which the Board arrived at its conclusions on the preliminary determinations, it would not likely have been in a position to seek relief from the courts (in our situation, by way of judicial review) because it could show no prejudice to it in the Board's ultimate order, which was in its favour. The Board in the present proceedings believes therefore that there is no principle of law restricting the respondent's right to re-litigate the issues that were before the prior panel, and the Board must proceed with an examination of the evidence placed before it.

10. There is no dispute that Mr. Demont, the respondent's General Manager, was advised by Mr. Petti, one of the grievors employed on maintenance in the Mall, that the men had been talking to a union. That conversation took place on February 14th, 1980. The next day all of the grievors received notice of termination on the basis that their work had been contracted out. As noted above, the position of the respondent was that it was at that point in time simply implementing a decision to contract out that had been made sometime in January, before the respondent became aware of the grievors' union activity.

11. According to the respondent, it had been concerned about the cost of its maintenance and security for some time. These form part of a number of costs relating to the common areas of the Mall, which are apportioned amongst the tenants in the Mall and paid in conjunction with monthly rents. In December or November of each year the respondent makes an estimate of what it feels these costs would be for the ensuing year, and the tenants are charged accordingly. At the end of the year, the estimated cost is reconciled with the actual expense and adjustments are made to compensate for either a shortfall or an overpayment. Mr. Allen, the President of the respondent company, testified that he feels his company is under an obligation to manage these costs wisely on behalf of the tenants, and that indeed the obligation is almost a fiduciary one. A specific estimate was requested and received from a cleaning contractor, Mr. Rick Cassidy, in August of 1979. Mr. Demont told Mr. Cassidy, however, that the company was going to wait until the end of the year to make up its mind. The company makes up its own monthly cost sheets within 10 to 15 days of the end of each month, and Mr. Demont testified that from these he could see as the year-end approached that the costs of maintenance and security were continuing to escalate. He testified further that when he received the totals for the preceding twelve months in mid-January of 1980, he calculated that the cost-saving, based on Mr. Cassidy's August estimate, would be in the neighbourhood of $20,000.00. He testified that he then decided, after discussing the matter with Mr. Allen, to contract the work out to Cassidy, but felt he should delay implementation until he could check the company's year-end figures with the audited figures which would be available in mid-February. He acknowledges that he then, on February 14th, had the aforesaid conversation with Mr. Petti about the grievors' union activity, after which he immediately contacted Mr. Allen at the latter's club. Upon receiving this news, Mr. Allen rushed over to the Mall, and Mr. Allen and Mr. Demont together consulted with the company's solicitor. They were advised by the solicitor that as long as they had not yet received official notice of an application for certification, they could proceed with their decision to contract out the work. The next day Mr. Demont contacted Mr. Cassidy and asked him if his August estimate was still good. Mr. Cassidy replied that it would still be within a thousand dollars, and Mr. Demont asked for that in detail. The two men then signed a cleaning contract on that day. At the same time Mr. Demont arranged to contract the security work to an outside firm which had handled security for the Mall at some point in the past. The employees were then given notice of termination, effective the end of February.

12. When asked by the complainant's counsel whether, following the contracting-out of the maintenance work, the respondent received from its tenants an increased number of complaints about the quality of maintenance being performed, Mr. Allen testified that there were no more than usual. This led the parties into a time-consuming inquiry on this clearly collateral matter. The Board finds, however, that the collateral evidence, taken as a whole, was not sufficiently unequivocal to be of significant assistance in determining the issue before it. There was, in addition certain evidence tendered as to by-play between individual grievors and the members of management prior to the time of the terminations, but since the terminations had nothing to do with the conduct of the grievors, the Board finds little assistance in this evidence as well. The focal point of the inquiry must be the respondent's account of the sequence of events leading to the decision to contract out the work of the grievors.

13. In this regard, the Board does not doubt from the evidence that the respondent had, for some time prior to the terminations, been contemplating the possibility of contracting out. Even the evidence of those of the grievors who testified bears this out. There was, however, no concrete step ever taken in that direction following receipt of the August estimate, until after the disclosure of the grievors' union activity. If the respondent was indeed serious about making the change to an outside contractor, the logical time to have turned its mind to that question, recognizing as it did its "fiduciary" rule towards its tenants, would have been in November or December when it was making up the cost estimates on which the tenants' payments for the next twelve months would be based. At that point in time the respondent had in its possession all but the last month's cost sheet, and the Board notes there was no extraordinary cost development in the month of December which would have caused the respondent to view the situation any differently in January then in December (the actual costs for maintenance and security were in fact less than the budgeted costs for the month of December). Mr. Demont admitted on cross-examination that the respondent's own monthly cost sheets were quite accurate and tended to correspond very closely with actual year-end figures, so that it is difficult to accept that it was the absence of the auditor's statement alone which held up the respondent's business decision. Nor, on the evidence, does receipt of the auditor's statement provide a clear outer limit within which implementation of the decision would necessarily have occurred.

14. As indicated, Mr. Demont stated that he really came to the conclusion in mid-January, after talking to Mr. Allen, to proceed with the contracting-out. There is, however, as the complainant points out, absolutely no documentation going to Mr. Allen, the tenants, the contractor, or anyone else to confirm or clarify the extent of the respondent's thinking in January on the subject of contracting-out. More importantly, the Board notes from Mr. Demont's examination-in-chief that there was no mention whatever of Mr. Demont taking in January the same obvious step he took on February 15th (when he was clearly serious about contracting-out), and that was to telephone Rick Cassidy to see if his August estimate had changed. It was only during cross-examination, when the complainant's counsel began to focus on this point, that any mention of a January telephone call to Mr. Cassidy emerged.

15. The Board finds, therefore, on all of the evidence, that it was not until February 14th, following disclosure of the grievors' union activity, that the decision to contract out actually crystallized. Given the "inertia", as Mr. Allen put it, characterizing the respondent's action in this regard prior to February 14th, it is impossible to speculate when, if ever, the decision to actually make the change would have been made, in the absence of Mr. Petti's revelation. It is, of course, sufficient to support a complaint such as the Board has before it if the employer has acted even in part in response to lawful union activity. As stated in the Barrie Examiner case, [1975] OLRB Rep. Oct. 745, at paragraph 17:

"Given the requirement that there be absolutely no anti-union motive, the effect of the reversal of the onus of proof is to require the employer to establish two fundamental facts — first, that the reasons given for the discharge are the only reasons, and second that these reasons are not tainted by any anti-union motive. Both elements must be established on the balance of probabilities in order for the employer to establish that no violation of the Act has occurred."

16. We find that the decision to contract out the maintenance and security work, and to terminate the grievors, was made over the course of February 14th and 15th, and was motivated at least in part by the grievors' union activity. The respondents' actions, therefore, were a breach of at least section 58(a) of The Labour Relations Act. The grievors therefore were wrongfully terminated effective the end of February, and that termination continues to date. The Board accordingly directs that the grievors be reinstated in their former employment with the respondent forthwith, and be compensated for the value of wages and benefits lost as a result of their termination, with interest on the basis set out in Hallowell House Limited, [1980] OLRB Rep. Jan. 35. The Board is not satisfied that the circumstances in this case are such as to cause it to award in addition any special damages to the complainant, as requested by their counsel. The Board will remain seized on the issue of compensation to the grievors, in the event the parties are unable to reach agreement in that regard.