The Bricklayers, Masons Independent Union of Canada, Local 1 v. The Masonry Contractors' Association of Toronto Inc. and Parent Masonry Limited, 1986 CanLII 1527

[1986] OLRB Rep. December 1751

0466-84-M The Bricklayers, Masons Independent Union of Canada, Local 1, Applicant, v. The Masonry Contractors' Association of Toronto Inc. and Parent Masonry Limited, Respondents

BEFORE: R. A. Furness, Vice-Chairman, and Board Members H. Kobryn and W. H. Wightman.

APPEARANCES: Maureen Farson and John Meiorin for the applicant; David R. Roth well, Joe De Caria and William Jahn for The Masonry Contractors' Association of Toronto Inc.; no one for Par­ent Masonry Limited.

DECISION OF THE BOARD; December 19, 1986

1The applicant has referred a grievance concerning the interpretation, application, administration or alleged violation of two collective agreements to the Board for final and binding determination.

2The applicant requested leave of the Board to amend the style of cause by adding "Early Spring Investments Limited" as a respondent in this reference. After considering the repre­sentations before it, the Board ruled that it would give the applicant the option of either (a) pro­ceeding against the two named respondents (because the Board would not add "Early Spring Investments Limited" as a respondent without notice of this reference from the Board) or (b) seek­ing an adjournment so that the applicant might make a written request to add "Early Spring Investments Limited" as a party respondent. The applicant elected to proceed without adding "Early Spring Investments Limited" as a party respondent.

3There was no dispute that Parent Masonry Limited ("Parent") and The Masonry Con­tractors' Association of Toronto Inc. (the "Association") are bound by two collective agreements with the applicant. The collective agreements became effective on May 31, 1982, and remained in effect until May 31, 1984. One collective agreement covered bricklayers, stonemasons and their apprentices. The other collective agreement covered bricklayers' assistants.

4In February of 1984, the applicant grieved that Parent had failed:

(a) to remit welfare payments and welfare reports to the applicant from May 1983 to February 1984 and ongoing in contravention of article 24 of the collective agreements;

(b) to remit union dues and assessments with a list of the names and amounts corresponding to those dues and assessments from May 1983 to February 1984 and ongoing in contravention of article 25 of the collec­tive agreements;

(c) to pay the additional charges required under article 26 of the collective agreements in respect of untimely payments of union dues and welfare payments from May 1983 to February 1984 and ongoing;

(d) to pay travelling time in accordance with article 14 of the collective agreements to employees working in Zone 2 from July 1983 to Septem­ber 1983, inclusively;

(e) to make time cards and records of hours worked for each employee available to the applicant pursuant to article SB of the collective agree­ments; and

(f) to pay employees properly and to make proper welfare and union dues checkoff payments in violation of articles 9,10, 14, 18, 24 and 25 of the collective agreements.

5Articles SB, 9, 10, 14, 18, 24, 25, 26 and 28 of the collective agreements state:

5. B) Each Contractor shall furnish his employees with a time card and record the hours worked by each employee and after payment the Employer will keep such records at least a period of twenty four months in accordance with Section 11 of the Ontario Employment Standards Act. Such records shall be made available to the Union if a dispute arises.

6. PAYMENT OF WAGES

A) Pay period shall not exceed 7 calendar days. All wages shall be paid during work­ing hours.

B) When paid by cheque, the employee shall receive same not later than 4:00 p.m. on Thursday.

C) When paid by cash, payment made no later than 4:00 p.m. Friday.

10. HOLIDAYS AND VACATION WITH PAY

A) Vacation pay shall be paid at the rate of 10% of gross wages earned.

B) All vacation pay is to be paid in the month of July as prescribed by Federal and Provincial regulations, except those cases regulated by Article #18.

14. TRAVELLING EXPENSES

For the purpose of travelling expenses, all the area of Ontario is to be divided in three zones.

A) Zone 1: The City of Toronto to the boundary line mentioned on Zone 2 below, no travelling expenses.

B) Zone 2: $12.00 per day is to be paid out beyond the east boundaries of Highway 12 at the Lakeshore then North to the Town of Myrtle, then west to the Township of Claremont and Stouffville then continuing further west to the Township of Oak Ridges using the King Side Road as a boundary line to the Town of Bolton, then in a southerly direction to the Township of Victoria then Georgetown and Spyside to Milton, then using Highway #25 as the westerly boundary line follow that boundary in a southerly direction to the Lakeshore. To and using the outer boundaries of the connecting Highways in a direct line of Hamilton, Guelph, Barrie, Lindsay and Osha­wa. Where a zone boundary line passes through a built up area, the outer limits of the built up are shall be deemed to be within the zone.

C) Zone 3: All the area beyond Zone #2, the travel expenses shall be paid at

$25.00 per day.

D) TRAVELLING TIME WILL BE PAID WEEKLY, PROVIDED:

1. The designated crew must be able to function. 2) The crew must remain on job site until 11:00a.m.

2. Contractor or foreman has the option to send a crew home before 11:00a.m. due to inclement weather.

18. LAY-OFF NOTICE AND QUIlTING

A) One hour's advance notice shall be given and paid for whenever men are dis­missed. Termination of employment shall take place at the end of the regular working day, except for incompetency. Employees will be permitted to leave the job one-half hour after notice is given, in order that they may catch street cars or buses before the rush hour on account of the difficulty of carrying their tools on crowded cars and bus­es.

B) Wages receivable shall be paid within 24 hours. Unemployment Insurance Separa­tion Certificate and Vacation Pay not given to the employee at the time of severance shall be sent by registered mail within 72 hours.

C) Any employee who voluntarily leaves his employment shall have his wages, Unem­ployment Insurance Separation Certificate and Vacation Pay by the next regular pay day.

24. WELFARE

The parties hereto agree that the Welfare Plan presently in existence shall continue. The amount of monies to be paid by the Employers into the Welfare Fund shall be 95~ per hour earned for each Journeymen, Bricklayer and Stonemason employee (Bricklayer Assistant Employee) covered by the bargaining unit. The Welfare Report and remittance shall be paid on or before the 15th of the month following that month for which contributions are earned.

The Union shall have the option to apply portions of wages of this agreement to implement and extend the members' benefits and will notify the Employers to make such deductions and remit such amounts as are required in accordance with this agreement. Upon the exercise of the option by the Union, the wage rates will be auto­matically amended accordingly.

25. CHECK-OFF

A) The Employers shall deduct from the pay of each employee covered by this agree­ment, from the first pay of each month, such Union dues and assessments as estab­lished by the Union and shall remit same with a list stating therein names and amounts from whom deductions were made and shall forward same to the Secretary Treasurer of the Union not later than the 15th of that month, this not to include col­lections of arrears of Union dues.

B) The Employers agree to require all present employees to become members of the Union in the following manner:

1. Each Employer shall supply the Union with a list of the names of his employees within ten (10) days of the signing of this agree­ment.

2. The Union shall return the list of employees to the Employer noting therein those employees who are not members of the

Union.

3. The Employers shall require that each employee who is not a member of the Union shall become a member within forty-eight

(48) hours, upon receipt of the returned list.

C) Whenever any member of the Employers has no Bricklayers in its employ, the Union must be notified in writing of such before the 15th of each month as long as this condition may exist.

26. PENALTIES

A) Any Employer which fails to remit monies required in accordance with Article 24 (Welfare) and Article 25 (Check-Off) by the 15th of the month will be assessed a charge of 1% on the money owing. If any such Employer has failed to make the same remittances by the end of the month in which they became due, an additional charge of 2% of the monies owing will be assessed.

B) If after exhausting the grievance procedure, and [sic] Arbitration Board has issued a decision making a finding of a violation of Articles 8, 9, 10, 14, 24, 25A of this agreement, the violating party shall be liable to pay a penalty of $500.00 to the other party as well as a further penalty of 10% of any monies owing by that party to the other party.

28. GUARANTEE

Monetary guarantee by the Employers to the Union on all monetary Articles and Clauses of this collective agreement excluding Article #26, Penalties Clause A & B.

A) The Masonry Contractors' Association of Toronto on behalf of all its members will guarantee up to a maximum cumulative amount of Thirty Thousand Dollars ($30,000.00) on all monetary parts of this collective agreement between the parties being the Wages, Vacation Pay, Welfare Trust Fund remittances, Union Check-Off and Travel Expenses and will pay such amounts to Local #1 only when the parties hereto have exhausted all ways and means of collecting same including the procedures as explained in grievance and arbitration procedures in this collective agreement against a member of the Association who is in default in complying with the monetary terms of collective agreement obligations to his employees.

B) The above mentioned (M.C.A.T. $30,000.00 guarantee) will not apply when Local #1 requests payment on monetary terms of contract agreement when a member is delinquent beyond the terms of the contract agreement.

6Although Parent did not appear at the hearing, it stated in paragraphs 6 and 7 of its reply:

6. The replies given to the grievance, if any:

The respondent Parent Masonry Limited did advise the Applicant that payment of sums due could not in the summer of 1983 be made, but would be forthcoming. From August, 1983 the Respondent Parent Masonry Limited suffered critical financial diffi­culties culminating in its cessation of operations in early February of 1984. Statements made by the Respondent Parent Masonry Limited to the Applicant were made hon­estly and in good faith and without any intent to defraud, deceive or interfere with the rights of the Applicant or any of its members. The respondent Parent Masonry Lim­ited has no assets, is not operating and has no income.

7. The respondent makes the following submissions: (The respondent's defence to the arbitration, including all objections to the arbitrabil­ity should be set out in this paragraph.) (attach additional sheets if necessary).

(a) The applicant has failed to communicate the total or particulars of the mon­etary defaults alleged;

(b) See paragraph 6 above.

7. The Association in paragraph 7 of its reply stated:

7The respondent makes the following submissions:

(The respondent's defence to the arbitration, including all objections to the arbitrabil­ity should be set out in this paragraph.) (attach additional sheets if necessary.)

(a) The applicant has failed to seek the assistance or intervention of the res­pondent MCAT;

(b) The applicant has apparently failed to pursue the remedies available to it and its members in the circumstances;

(c) The applicant has failed to communicate the total or the particulars of the monetary defaults alleged;

(d) In any event, the applicant is not entitled to enforce the penalties referred to in excess of compensation to be proven.

8Parent did not appear at the hearing. Having regard to the evidence before it, the Board finds that Parent has violated the collective agreements as alleged by the applicant, namely, articles 9, 10, 14, 18, 24 and 25. The Board therefore directs Parent Masonry Limited:

(a) to remit welfare payments and welfare reports to the applicant from May 1983 to February 1984 and ongoing in accordance with article 24 of the collective agreements;

(b) to remit union dues and assessments with a list of the names and amounts corresponding to those dues and assessments from May 1983 to February 1984 and ongoing in accordance with article 25 of the collective agreements;

(c) to pay the additional charges required under article 26 of the collective agreements in respect of untimely payments of union dues and welfare payments from May 1983 to February 1984 and ongoing;

(d) to pay travelling time in accordance with article 14 of the collective agreements to employees working in Zone 2 from July 1983 to Septem­ber 1983, inclusively;

(e) to make time cards and records of hours worked for each employee available to the applicant pursuant to article SB of the collective agree­ments; and

(f) to pay employees properly and to make proper welfare and union dues checkoff payments in violation of articles 9,10, 14, 18, 24 and 2S of the collective agreements.

9Having regard to the evidence before it, the Board finds and accordingly directs Parent Masonry Limited to pay to The Bricklayers, Masons Independent Union of Canada Local 1 the sum of $33,673.64 with respect to the violations of the collective agreement covering bricklayers and stonemasons and the sum of $21,955.99 with respect to the violations of the collective agree­ment covering bricklayers' assistants.

10It appears to the Board that the applicant has distinct claims against the Association in view of the clear wording of the guarantee in article 28 of each collective agreement. The wording is unambiguous in its application of the guarantee to each collective agreement. Article 28 contains the heading "Monetary guarantee by the Employers to the Union on all monetary articles and clauses of this collective agreement...." [emphasis added]. Part A of article 28 states that the Association "will guarantee up to a maximum cumulative amount of $30,000.00 on all monetary parts of this collective agreement" [emphasis added]. Under Part A of article 28 the guarantee operates "only when the parties have exhausted all ways and means of collecting same including the procedures as explained in grievance and arbitration procedures in this collective agreement against a member of the Association who is in default in complying with the monetary terms of collective agreement obligations to his employees" [emphasis added]. The guarantee is found separately in each collec­tive agreement. The Association argued that the true intent of the parties was to limit the maxi­mum cumulative guaranteed amount to $30,000.00 for each member company. The Association further argued that the evidence of the witnesses and the use of the word "cumulative" in article 28 supports this conclusion.

11In our view, there is no ambiguity in the meaning of the guarantee such as to justify reli­ance on extrinsic evidence as to the intentions of the parties to the collective agreements. The guarantee is clearly referable to the monetary portions of each collective agreement with the mem­ber company whether or not more than one collective agreement is in existence between the par­ties. In our opinion, there is no language in the collective agreements which would limit the amount payable for each company. The word "cumulative" does not have this effect. Where "cumulative" is used, the limitation is placed at "a maximum cumulative amount of thirty thousand dollars ($30,000.00) on all monetary parts of this collective agreement.... The word "cumulative" refers to the sum of $30,000.00 and is not qualified by additional language. The parties to the col­lective agreements have not inserted any limiting language although they could easily have done so had they wished. The emphasis in the guarantee by repetition of the words "this collective agree­ment" indicates that the collective agreement forms the parameters of this obligation. Therefore, two guarantees, each in a separate collective agreement, give rise to the possibility of two separate claims which may involve the Association in a maximum cumulative liability of $60,000.00.

12Article 28 is qualified by the words "all ways and means". The grievance and arbitra­tion procedures are clearly included in "all ways and means" and it is clear that "all ways and means" extends beyond the grievance and arbitration procedures. The use of "all" and the plural ways and means" indicate that more than one method was contemplated by the parties to the col­lective agreements. By implication, the exhaustion of the grievance and arbitration procedures is only part of the obligation embraced by the phrase "all ways and means".

13It is appropriate to consider the nature of a guarantee and the obligations which arise under it. Properly speaking, a guarantee is a promise to answer for the debt, default or miscarriage of another person. See 13 C.E.D. (Ont. 3rd) ¶2 p. 51, Duncan, Fox & Co. v. North & South Wales Bank (1880), 6 App. Cas. 1 at p. 11 and Forster v. Ivey (1901), 2 O.L.R. 480. In view of the oner­ous nature of an obligation undertaken by a guarantor, a strict construction of a guarantor's obliga­tion is justified. The rule is that a guarantor's liability is limited to the terms of his contract and that the contract must be strictly construed. See Lloyd's v. Harper (1880) 15 Ch.D. 290. The process of collective bargaining by the parties in Ontario is based upon the concept of voluntarism and the parties may include anything in their collective agreements which is not contrary to law. There is no justification here, as was argued by the applicant, for limiting the obligation of the applicant to grievance and arbitration by special concerns of labour relations. The guarantee provi­sions in article 28 are highly unusual and where the condition precedent is broadly worded there is no reason to believe that the parties intended to narrow the application of the condition precedent. In our view, the phrase "all ways and means" ought to be fairly construed as "all ways and means of collection available at law to the parties".

14However, because of the Rights of Labour Act, R.S.O. 1980, c.456, the remedies avail­able to a trade union for the enforcement of obligations under a collective agreement are limited at law to grievance and arbitration under the Labour Relations Act (and collection measures flowing therefrom when such an award is filed with the court), and remedies which by statute are explicitly available in respect of trade unions and obligations under collective agreements. The procedure in the Mechanics Lien Act, R.S.O. 1980, c.261 (now the Construction Lien Act, S.O. 1980, c.6) falls into the latter category because the filing of a lien does not involve court action, is available in respect of wages owed under a collective agreement and is assignable by the individual workman to his trade union representative. The inclusion of a mechanics lien in "all ways and means" is con­sistent with the commercial realities in the construction industry. The existence of the lien remedy is known to the parties. Indeed, the applicant was certainly familiar with and employed the lien remedy against another employer as well as endeavouring to use the same remedy against Parent. In Citadel Assurance Co. v. Johns-Manville Canada Inc. 1983 CanLII 52 (SCC), [1983] 1 S.C.R. 513, the Court implied that either a written or implied obligation to exhaust all remedies before the creditor could collect on a guarantee, would reasonably include the mechanics lien remedy where the parties were engaged in the construction industry. At common law the creditor was not required to exhaust all remedies against the debtor before demanding payment from the guarantor. However, the creditor was required to safeguard all security which on the debtors default might be available to the guar­antor. See Snell's Principles of Equity, 28th ed. p.466. It is not clear whether the opportunity to take out a mechanics lien can be characterized as a security for these purposes. The Supreme Court in Citadel General Assurance Co. v. Johns-Man ville Canada Inc., sup ra, described the prop­osition as "not free from doubt". The Court was, however, clearly of the view that an implied term obliging the claimant "to exhaust all other remedies before claiming under the bond" would include the obligation to take out a mechanics lien. In the instant case, the obligation is explicit in the guarantee. In our opinion, the parties intended to use the words "all ways and means" to expand on the creditor's obligations at common law so as to remove any doubt from the obligation to take out a lien.

15At what point is the applicant entitled to seek the assistance of the Association? By the terms of article 28, the Association is required to pay upon the performance of a number of condi­tions precedent, that is to say, a) when a member "is in default in complying with the monetary terms of collective agreement obligations to his employees"; b) when "the parties hereto have exhausted all ways and means of collecting" the amount owed; and c) specifically where the griev­ance procedure has been exhausted. Since the obligation of attempting collection is on the "parties hereto", it appears that the applicant is entitled to seek the assistance of the Association at some point after the default has occurred but before the Association is called upon to indemnify the applicant. That is to say, the obligation to exhaust "all ways and means” is one which is mutually agreed to by the applicant and the Association as guarantor. The Association neither knew, nor reasonably could have been expected to know, of Parent's default unless or until so informed by the applicant. In these circumstances, the Association could not intervene until informed of the default by the applicant. The evidence clearly establishes that John Meiorin, the secretary-trea­surer of the applicant, knew several months before it informed the Association of the continuing default by Parent of its obligations under the collective agreements. Mr. Meiorin, no doubt moti­vated by considerations of kindness, in his judgement permitted Parent to try and arrange mort­gage financing and other financial assistance in order to preserve the financial integrity of Parent. However, at this time Parent was clearly in default of its obligations under the collective agree­ments and Mr. Meiorin, in his judgement, permitted these events to get out of hand and critically delayed enforcing rights in the form of mechanics liens or of instituting grievance and arbitration procedures under the collective agreements. In our judgement, it was not until it was far too late that Mr. Meiorin on behalf of the applicant informed the Association of the default of Parent. By this time it was far too late for the Association to monitor and protect its guarantee under the col­lective agreements. Since the Association's obligations to the applicant only became operative on the condition precedent that all ways and means of collection, including grievance arbitration, be exhausted, the Association had no rights which might have been asserted against Parent until such time as the condition precedent was performed. It appears that the reason the joint obligation of exhausting remedies is placed on the "parties" rather than the applicant, is to allow the Associa­tion the opportunity to monitor the applicant's collection efforts to ensure the Association's equita­ble rights against Parent were not jeopardized by the loss of security through delay or neglect.

16In addition to the arguments discussed above, the Association denied liability because it said that the applicant effectively lost the benefit of the lien remedy through delay attributable through negligence or lack of good faith. The guarantee requires all remedies to be exhausted, and the remedy not pursued in a timely, diligent, good faith manner cannot be said to be "exhausted". The applicant cannot contract out of its own negligence without clear words to that effect. Accord­ingly, a condition precedent to the Association's liability has not been met. The argument here is essentially one of construction, the construction that would give reasonable efficacy to the terms agreed upon in the collective agreements. The condition precedent to the Association's liability is a course of action by the applicant, not of inaction. It would be absurd to allow the applicant to avoid its obligations under the guarantee simply by its delay and default. The very purpose of the condition precedent is to circumvent the common-law right of the applicant to seek relief against the Association without pursuing any remedies against Parent. The condition precedent thus must be construed with the protection of the guarantor in mind. At common law, the party may not con­tract out of its own negligence without clear words of necessary implication: see Gertsen et al., v. Municipality of Metropolitan Toronto, et al. (1974) 1973 CanLII 606 (ON HCJ), 2 O.R. (2d) 1. To construe the condition prece­dent in such a way as to allow the applicant to act in an untimely fashion would have the effect of excusing it for its own negligence.

17For the foregoing reasons, this reference succeeds against Parent and is dismissed as against the Association.