Ontario Labour Relations Board

[1984] OLRB Rep. February 225

2215-82-M Carpenters' District Council of Toronto and Vicinity on behalf of Locals 27 and 1304, United Brotherhood of Carpenters and Joiners of America, Applicant, v. Dominion Stores Ltd. and Mm-A-Mart Ltd.. Respondents

BEFORE: D. E. Franks. Vice-Chairman, and Board Members I. M. Stamp and W. F. Rutherford.

APPEARANCES: Douglas J. Wray and John Cartwright for the applicant, D. W Brady and Charles R. Robertson for the respondent.

DECISION OF THE BOARD; February 9, 1984

1. This is the referral of a grievance to arbitration pursuant to section 124 of the La­bour Relations Act.

2. The original grievance in this matter was filed on January 12, 1983 with the named employer Dominion Stores Ltd. The nature of that grievance is cited as follows:

"sub-contracting work covered by carpenters' collective agreement to a company not bound by that current agreement. The job location is Mm-A-Mart Store, 1910 Yonge Street, Toronto."

Subsequently, that grievance was referred to the Board pursuant to section 124 by the applicant naming as the respondent Dominion Stores Ltd. and Mm-A-Mart Ltd. The reference was made on January 27, 1983 and includes in schedule "C" the following statements:

"1. The Applicant and the Respondent, Dominion Stores Ltd., are par­ties to and bound by the Carpenters Provincial Collective Agreement.

2. The Applicant will be relying on Section 1(4) of the Labour Relations Act and requesting that the Board declare that the Respondent, Min-A­-Mart Ltd. is bound by the Carpenters Provincial Collective Agreement and has violated said collective agreement.

3. Alternatively, the Applicant will be relying on Section 63 of the La­bour Relations Act in that there was a sale of a business from Dominion Stores Ltd. to Min-A-Mart Ltd. with the result that Min-A-Mart Ltd. is bound by the Carpenters Provincial Collective Agreement and has vio­lated said collective agreement."

4. The matter was set for hearing on February 10, 1983. That hearing was adjourned by agreement of the parties to February 25, 1983. No hearing was held on February 25, 1983, and indeed, on February 28, 1983 the Board endorsed the record as follows:

"Having regard to the agreement of the parties, the Board hereby con­sents to adjourn this application sine die for a period not exceeding one year. Unless within that time, the parties request that the Board proceed with the matter, it will be terminated."

Subsequently, the applicant requested the Board to re-list the matter for hearing, and by letter dated April 14, 1983 stated:

"The Applicant's position is that the matter has been settled by the par­ties and we will be requesting that the Board endorse the record to reflect said settlement."

Subsequently, the respondent advised the Board that it denied that the matter had been settled. The matter was re-listed for hearing and the Board heard the evidence of the parties con­cerning the events surrounding the alleged settlement. This matter was treated at the hearing as a preliminary issue, since if the Board found there to be such a settlement, the Board would endorse the record accordingly.

4. The Board heard the evidence of Mr. James Nyman who was acting on behalf of the applicant, and Mr. Charles Robertson, who was at the time of the events in question, a lawyer on the labour relations staff of Dominion Stores Ltd. There is no real dispute as to the events in question. At issue is the interpretation to be given by this Board of these events.

5. As noted above, the referral of the grievance which raised the section 1(4) issue was scheduled for hearing by this Board on Friday, February 25th. On Thursday afternoon there was a call to the firm of Caley and Wray, the solicitors who had filed this referral of the grievance to arbitration from Mr. Robertson. That call was referred to Mr. James Nyman who in turn called Mr. Robertson at his office. Robertson opened the conversation by saying "what will it take to settle tomorrow's case". Robertson then proposed to Nyman two points. One, that Min-A-Mart would recognize the carpenters' provincial agreement for industrial, commercial and institutional construction and, secondly, that there would be no damages pay­able concerning the dispute in question and the grievance would, in effect, be withdrawn.

6. Mr. Nyman told Mr. Robertson that he would have to check this out with his client, which he did. Mr. Nyman' s evidence on this point is that his client wanted Min-A-Mart to sign a schedule "C" "recognition document" in relation to the carpenters' provincial col­lective agreement. Mr. Nyman then called Mr. Robertson and engaged in further discussions. At this point there emerges the only discrepancy in the evidence between Mr. Nyman and Mr. Robertson, namely, whether the schedule "C" issue was raised by Mr. Nyman or not. In any event, in the course of the conversation, both Mr. Nyman and Mr. Robertson agreed-that they had agreed to a settlement of the issue involving recognition by Min-A-Mart of the carpenters' agreement, and that the agreement would involve no damages and the grievance would be withdrawn. Further, that they agreed that the hearing of February 25th would be adjourned sine die. In addition, they would both call the Registrar and inform him of the ad­journment and Robertson would draft the terms of the agreement.

7. On Friday, February 25th it appears that on a number of occasions during the day, Mr. Nyman phoned Mr. Robertson to check about whether the settlement had been prepared. Late in the day, Robertson eventually contacted Nyman and informed him that Min-A-Mart wouldn't sign the settlement. At no time prior to this did Robertson suggest to Nyman that there was any limit to his authority and in his evidence Mr. Robertson agreed that it was rea­sonable for Mr. Nyman to assume that he (Robertson) had the authority to speak for both Dominion Stores Ltd. and Mm-A-Mart.

8. On the foregoing facts, the position taken by the applicant is quite simple. The ap­plicant, carpenters' union, made a deal to settle the section 124 grievance referral and that Min-A-Mart can't renege on that agreement. The applicant relied on Mr. Robertson's invitation to settle a grievance involving a section 1(4) issue as a representation that he had authority to settle the matter from both Dominion Stores Ltd. the parent company and Min-A-Mart, the allegedly related company. That is, Robertson must be taken as asserting that he represents both companies. The applicant argues that it is entitled to rely on this assertion of ostensible authority, and therefore requests the Board to endorse the record with the settlement as agreed by the parties. The applicant further notes that it would have been a breach of professional ethics from Mr. Nyman to call the principals and ask whether a solicitor has actual authority in such a matter.

9. The respondent argues that Mr. Robertson did not have the authority to bind Min-A-Mart, and further, that there was no representation by Min-A-Mart as principal to either the carpenters' union or to Mr. Nyman that Robertson had the authority to bind Mm-A-Mart. The respondent thus relies on the discussion in Hussey Seating Company (Canada) Limited [1981] OLRB Rep. Aug. 1138 at p. 1142:

"13. The doctrine of apparent or express authority has been analyzed in Freeman and Lockyer v. Buckhurst Park Properties (Magnal Ltd.,) [1964] 2 Q.B. 480 (C.A.), the leading case on the subject. In that case a group of four formed a limited company in order to purchase an estate with the intention of reselling it for development. While the four had the power to appoint a managing director, they never did so. Nevertheless, one of the four assumed the duties of a managing director with the knowledge and approval of the others. Without express approval of the others the same person hired a firm of architects and surveyors to prepare an ap­plication for planning. The company refused to pay the architects' fees on the grounds that the 'agent' had no authority to enter such a contract. In his reasons for finding that the company was bound by the contract, Diplock, L. J. defined apparent or ostensible authority, in contrast to ac­tual authority as: a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has au­thority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority so as to render the prin­cipal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although be generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the con­tractor by entering into a contract with the agent, operates as an es­toppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.

Diplock, L. J. cautioned:

.that where the agent upon whose 'apparent' authority the contrac­tor relies has no 'actual' authority from the corporation to enter into a particular kind of contract with the contractor on behalf of the cor­poration, the contractor cannot rely upon the agent's own represen­tation as to his actual authority. He can rely only upon a representation by a person or persons who have actual authority to manage or conduct that part of the business of the corporation to which the contract relates.

Four conditions which must be fulfilled in order to allow a contractor to enforce a contract entered into on behalf of the company by an agent who has no actual authority to bind the company are set down. These are:

(1) that a representation that the agent had authority to enter on be­half of the company into a contract of the kind sought to be enforced was made to the contractor;

(2) that such representation was made by a person who had 'actual' authority to manage the business of the company either generally or in respect of those matters to which the contract relates;

(3) that the (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and

(4) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent.

In the recent case of Rockland Industries Inc. v. Amerada Minerals Cor­poration (1980) 1980 CanLII 188 (SCC), 31 N.R. 393, the Supreme Court of Canada referred to Diplock's reasons in Freeman and Lockyer, supra, with the approval in accepting his interpretation of the doctrine of apparent authority.

14. This Board has dealt with the apparent or ostensible authority of an on-site representative to bind his employer to a collective agreement in three cases (see Vic Starchuk & Associates Inc., supra, Collegiate Sports Ltd., [1977] OLRB Rep. August 487 and Inspiration Ltd., [1967] OLRB Rep. Sept. 562. In Inspiration Ltd., supra, the earliest of the three cases, the Board described the issue before it as determining whether or not the company's on-site supervisor had the apparent authority to sign a col­lective agreement on behalf of the respondent company. The Board went on to state that:

'this (whether the representative had apparent authority) in turn is dependent on two factors, namely, whether David held himself out as having such authority, and whether Ouellette reasonably believed that he had such authority.'

This test was applied by the Board in both Collegiate Sports Limited, supra, and Vic Starchuk, supra. In the Inspiration case, supra the Board found that the on-site representative was the only member of management on the job from its commencement to the time that the agreement was signed, that this representative was responsible for hiring and that he made a representations to the union that he had authority to sign an agreement on behalf of the company. In these circumstances the Board found that both aspects of the test had been satisfied. In Collegiate Sports Limited the Board found that it was not reasonable for the union to con­clude that the on-site employee with whom contact had been made had the authority to sign a collective agreement on behalf of the company. In the Vic Starchuk and Associates Inc. decision, supra, the Board came to the opposite conclusion. However, in that case the respondent company made the proper remittances to the union trust funds and to the appro­priate association and altered its practice with respect to obtaining car­penters after the purported collective agreement had been entered into. The Board stated that there is 'evidence of a significant change in the respondents conduct dating from Brohman's signing of the collective agreement'. In our view the Vic Starchuk decision is based on conduct by the respondent which ratified the prior action of the on-site repre­sentative. As we have stated, even if ostensible authority cannot be es­tablished the subsequent conduct of the principal may nevertheless serve to ratify the agreement and create an estoppel."

In view of the foregoing, the respondent argues that under the Freeman and Lockyer v. Buckhurst Park Properties (Magnal Ltd.) case, the applicant is not entitled to rely on any assertion by Mr. Robertson that he has the power to act on behalf of Min-A-Mart.

10. We cannot accept the position of the respondent in the present matter. When Mr. Robertson made the overture to Mr. Nyman to settle this matter, Mr. Robertson was asserting his ostensible authority to act for both Dominion Stores Ltd. and Min-A-Mart Ltd. since the section 1(4) issue was at the very root of the grievance. It is clear that Mr. Robertson was either speaking for both Dominion Stores Ltd. or Min-A-Mart or he ought at point to have made clear to the applicant that he was not acting as the representative of both Dominion Stores Ltd. and Min-A-Mart. In view of his failure to do so, it was completely reasonable for Mr. Nyman to believe that he had such authority, and we are of the view that the applicant was entitled to rely on his statements. For Min-A-Mart to later take the position that Mr. Rob­ertson did not have authority from them as principal to settle the grievance flies in the face of the fact that they were named as a respondent together with Dominion Stores Ltd. in this matter. Accordingly, it is our view that the issue was settled in the discussions between Mr. Nyman and Mr. Robertson, and we propose to endorse the record in this matter accordingly.

11. Therefore, the Board declares that Min-A-Mart Ltd. is covered by a provincial col­lective agreement in effect between the Carpenters' Employer Bargaining Agency and Ontario Provincial Council, United Brotherhood of Carpenters and Joiners of America.

12. Since in the settlement the union agreed to waive any financial claims to damages arising out of the grievance, and indeed, to withdraw the grievance as part of the settlement, it is not necessary for us to make any further declarations or findings with respect to the pres­ent matter.