The Electrical Power Systems Construction Association v. International Association of Bridge, Structural and Ornamental Iron Workers, 1987 CanLII 3076

[1987] OLRB Rep. August 1079

1923-86-M The Electrical Power Systems Construction Association, Applicant v. International Association of Bridge, Structural and Ornamental Iron Workers, Respondent

BEFORE: S. A. Tacon, Vice-Chair, and Board Members J. Murray and P. V. Grasso.

APPEARANCES: Harvey Beresford, Robert Atkinson, Ivar Starasts and David McKee for the applicant; Bernard Fishbein, James Phair, Michael Zimmerman and Brian Fleming for the respondent.

DECISION OF THE BOARD; August 25, 1987

1. This is a referral of a grievance to arbitration pursuant to section 124 of the Labour Relations Act. The applicant seeks to recover approximately $14,000 from a former employee, Brian Fleming, paid in respect of room and board allowance under article 26 of the relevant collective agreements. The applicant asserts these monies were paid as a result of an allegedly inaccurate declaration by Fleming as to his regular residence.

2. The respondent trade union raised two preliminary objections, namely, that the applicant employer cannot recover monies from an individual through the respondent trade union as party to a grievance and that the grievance should be dismissed as untimely in any event. The parties agreed, and the Board concurred, that it was appropriate first to rule on the preliminary objections. Thus, the Board heard evidence and submissions solely with respect to those two preliminary issues.

3. In the above context, the parties submitted the following agreed statement of facts:

STATEMENT OF FACTS

1. The Applicant and the Respondent have been parties to successive collective agreements detailed in paragraph 1 of Appendix" A" to the Applicant's Referral under section 124 of the Labour Relations Act.

2. On or about May 27, 1981, Brian Fleming commenced employment as an ironworker-welder at the Bruce Nuclear Power Generating Project. During the term of Mr. Fleming's employment, his terms and conditions of employment were covered by the provisions of the collective agreements entered into by the Applicant and the Respondent.

3. On or about May 27, 1981, Brian Fleming applied for a room and board allowance under Article 26 of the 1978 Collective Agreement, declaring that his regular residence was 30 Regent Street, Unit 47, Hamilton, Ontario. (Exhibit 1 is a copy of this application dated May 27, 1981).

4. During the term of his employment until on or about May 4, 1983, Mr. Fleming received a room and board allowance based on the declaration referred to in paragraph 3.

5. During the winter of 1983, the Ontario Provincial Police conducted a criminal investigation which led to the laying of charges against Mr. Fleming under the federal Narcotics Control Act.

6. As a result of these charges and Mr. Fleming's inability to attend work, Mr. Fleming was dismissed from his employment on May 4, 1983 for cause.

7. Information supplied by the Ontario Provincial Police to representatives of the Applicant shortly after May 4,1983, indicated a possible discrepancy between Mr. Fleming's address and the address referred to in paragraph 3. Representatives of the Applicant believed that Mr. Fleming may have improperly received room and board allowance since May 27, 1981.

8. The Applicant had in the past been faced with other cases of a subsequent discovery of alleged improper receipt of room and board allowance by former employees. The applicant's practice in such situations was to turn the matter over to the police for full investigation and prosecution of criminal violations and, following the outcome of the police investigations, to then take action in the courts if necessary to retrieve the improperly received room and board allowance.

9. In accordance with this practice, the matter of Mr. Fleming's room and board allowance claim was turned over to officials of the Kincardine Detachment of the Ontario Provincial Police in May, 1983.

10. As a result of the subsequent O.P.P. investigation, an information was laid on September 5, 1983, charging Mr. Fleming with fraud under section 338(1) of the Criminal Code in connection with the room and board allowance claim.

(Exhibit 2 is a certified true copy of the information).

11. The information was ultimately withdrawn at the request of the Crown on October 15, 1984. (See Exhibit 2).

12. In early November, 1984, Corporal James Renwick of the Kincardine detachment of the O.P.P. met with Mr. Rick Saltes, Personnel Officer at the Bruce Generating Plant, to give Mr. Saltes the factual details of the investigation carried out by the O.P.P. in connection with Mr. Fleming's room and board allowance claim.

13. Following receipt of this information, the Applicant decided to attempt to contact Mr. Fleming to demand repayment of the room and board allowance.

14. Attempts were made by the Applicant to locate Mr. Fleming's then current address. By mid-December, 1984, the Applicant obtained information that Mr. Fleming's address was 142 Duke Street, Apartment 9, Hamilton, Ontario.

(Exhibit 3 is a Security Investigation Report dated December 14, 1984).

15. Letters dated January 3, 1985 and January 22, 1985, were sent to Mr. Fleming at the Duke Street address requesting repayment of the room and board allowance.

(Exhibit 4 is a letter from Mr. Saltes to Mr. Fleming dated January 3, 1985. Exhibit 5 is a registered letter from Mr. Mark, Project Accountant, to Mr. Fleming dated January 22, 1985).

16. When no response was received, Ontario Hydro's internal solicitors were requested, by letter dated February 1, 1985, to commence civil action to recover monies paid to Mr. Fleming in respect of the room and board allowance.

(Exhibit 6 is a copy of a letter dated February 1,1985, from Mr. Mark to Mr. E.R. Finn, Hydro solicitor).

17. A Statement of Claim was issued by Ontario Hydro against Mr. Fleming in the District Court of Ontario on February 28, 1985.

(Exhibit 7 is a copy of the Statement of Claim).

18. Mr. Fleming appeared by his solicitors, Koskie and Minsky, and brought a motion to the District Court of Ontario for an Order dismissing the claim.

(Exhibit 8 is a copy of Mr. Fleming's Notice of Motion dated April 10, 1985).

By Order dated May 21, 1985,the Honourable Judge Matlow dismissed the motion.

(Exhibit 9 is a copy of the Order of Judge Matlow dated May 21, 1985 and Exhibit 10 is a copy of His Honour's reasons for decision).

19. By notice dated May 27, 1985, Mr. Fleming appealed to a High Court Judge from the Order of Judge Matlow.

(Exhibit 11 is a copy of the Notice of Appeal dated May 27,1985).

20. By order dated August 15, 1985, the Honourable Mr. Justice O'Brien allowed the appeal and dismissed the action brought by Ontario Hydro.

(Exhibit 12 is a copy of the Order of Mr. Justice O'Brien and Exhibit 13 is a copy of His Lordship's reasons for decision).

21. By notice dated August 29, 1985, Ontario Hydro appealed to the Divisional Court from the Order of Mr. Justice O'Brien.

(Exhibit 14 is a copy of the Notice of Appeal).

22. The appeal was heard on March 7, 1986 and by order dated March 13, 1986, the Divisional Court dismissed the appeal.

(Exhibit 15 is a copy of the Order of the Divisional Court and Exhibit 16 is a copy of the Court's reasons for decision).

23. By notice dated March 25, 1986, Ontario Hydro applied to the Ontario Court of Appeal for Leave to Appeal the decision of the Divisional Court.

(Exhibit 17 is a copy of Ontario Hydro's Notice of Motion for Leave to Appeal the decision of the Divisional Court).

24. By Order dated April 28, 1986, Leave to Appeal was refused by the Ontario Court of Appeal.

(Exhibit 18 is a copy of the Order of the Ontario Court of Appeal).

25. The within grievance was commenced on June 24, 1986. [The exhibits referred to are not reproduced herein.]

26. By way of amplification of paragraph 8 of the agreed statement of facts, applicant's counsel stated that a variety of means for pursuing overpayments had been utilized where the individuals in question remained employees. For example, on occasion, "current" employees had been prosecuted where payments were made because of the allegedly fraudulent statements by those employees or recovery sought through the grievance and arbitration process under the collective agreement. In some instances, individuals were terminated for such misconduct and, subsequently, recovery of monies was sought through the courts. With respect to "former" employees, however, the applicant had never utilized the grievance and arbitration procedures in the collective agreement to seek to recover such payments. In the instant case, the applicant did not file a grievance, because, in its view, Fleming was no longer an employee when the alleged misconduct was discovered and, thus, the appropriate route for redress lay through the courts.

27. Also by way of amplification, respondent's counsel agreed that the applicant had utilized a variety of means to recover monies allegedly wrongly paid to employees as set out in the preceding paragraph. Counsel added that the respondent view the entire question of the "recovery" of such monies, including the route followed to enforce repayment, as controversial.

28. The Board next sets out the able and thorough submissions of counsel with respect to the preliminary issues.

29. With respect to the first preliminary argument, counsel for the respondent asserted that the applicant had not alleged that the union had violated the collective agreement nor claimed relief against that party. Thus, as Fleming was not a party to (although admittedly bound by) the collective agreement and no misconduct or relief was alleged or claimed against the actual party to the collective agreement, counsel contended the grievance must be dismissed. In essence, counsel argued that the applicant could not utilize the grievance and arbitration process to recover monies allegedly improperly paid out to individuals. Counsel referred to the following cases in support: Re Metropolitan Toronto Apartment Builders Association (1972), 1972 CanLII 2016 (ON LA), 1 LAC (2d) 201 (H.D. Brown); J. G. Rivard Limited, [1976] OLRB Rep. Sept. 540 (Rivard #1); J.G. Rivard Limited, [1980] OLRB Rep. July 1009 (Rivard #2); The Electrical Power Systems Construction Association, [1976] OLRB Rep. Dec. 825; Ainsworth Electric Co. Limited, [1977] OLRB Rep. July 399; Ontario Hydro, [1986] OLRB Rep. Aug. 1137; Fred Farkas et al and Heist Industrial Services (1963), 63 CLLC ¶16,263; Ontario Hydro, [1985] OLRB Rep. Apr. 582; Eastern Sheet Metal and Mechanical Contractors, [1981] OLRB Rep. Jan. 26; Re Ontario Produce Co., Oshawa Foods Division of Oshawa Group Ltd. (1986), 1986 CanLII 6697 (ON LA), 26 LAC (3d) 159 (O'Shea); Ontario Hydro, [1985] OLRB Rep. June 896.

Counsel submitted, in connection with Rivard #2, that section 50 does not parallel section 147(1) of the Act and, moreover, section 50 has been held to be a declaratory rather than substantive provision. Even if section 50 could be regarded as substantive, counsel asserted that, following Eastern Sheet Metal, supra, it was now too late to "convert" a section 124 application to a 89 complaint. It is useful here to note that applicant's counsel clarified that the applicant was not arguing that section 50 was a substantive provision.

8. As to the second preliminary objection, respondent's counsel contended that article 34.5 established a mandatory time limit of thirty days for the filing of a grievance by the employer. From whatever point that thirty day period was measured, from the date Fleming's affidavit was filed on April 7,1985, to refusal of leave to appeal by the Ontario Court of Appeal on April 28, 1986, it was submitted that thirty day period was exceeded. Moreover, counsel stressed that the wrong guess" as to the appropriate forum for recovery did not cure the delay. A number of cases wherein the Board dealt with the issue of timeliness were cited in support: The Lummus Company Canada Limited, [1976] OLRB Rep. Jan. 980; Ontario Hydro, [1987] OLRB Rep. Apr. 574; Sinclair Welding Limited, [1981] OLRB Rep. Dec. 1822; Ontario Hydro-Darlington G.S., [1986] OLRB Rep. July 1014; Sheller-Globe of Canada, Ltd., [1982] OLRB Rep. Jan. 113 upheld (1983), 1983 CanLII 1655 (ON HCJ), 42 O.R. (2d) 73 (Ont. Div. Ct.); The Corporation of the City of Mississauga, [1982] OLRB Rep. Mar. 420; Concrete Construction Supplies, [1982] OLRB Rep. Oct. 1446; Catherine Whittaker, [1985] OLRB Rep. Apr. 621. Counsel then submitted that, while section 44(6) of the Act permitted an extension of the time limits provided in collective agreements, there had been no reasonable grounds given for such an extension in the instant case. It was reiterated that the initial selection of the wrong forum was not sufficient. Absent reasonable grounds for the extension, it was asserted the issue of prejudice to the respondent need not be considered. In the alternative, counsel emphasized the general prejudice flowing from the prospect of having to litigate a grievance on the merits after the passage of such a long time. Further, the respondent was not privy to some documentation (e.g. police reports) and the factual background to the case was complex in light of the definition of "regular residence" in the collective agreement. Finally, counsel urged the Board to conclude that any apparent unfairness in refusing to hear the merits was not unusual and must be placed in the context that the delay in filing was within the control of the applicant. Cases referred to in connection with section 44(6) included: Re Pamour Porcupine Mines Ltd. (Schumacher Division) (1976), 1976 CanLII 2174 (ON LA), 12 LAC (2d) 122 (Dunn); Re Tend-R-Fresh Plant, United Co-operatives of Ontario (1983), 1983 CanLII 4892 (ON LA), 13 LAC (3d) 90 (H.D. Brown); Re Corporation of the City of Toronto (1977), 1977 CanLII 2963 (ON LA), 16 LAC (2d) 123 (Abbott).

9. Counsel for the applicant stressed that the applicant was seeking the recovery of monies wrongly paid out rather than damages or other penalty. That Fleming was not a party to the collective agreement was irrelevant, it was submitted, given that he was bound by that collective agreement. To deny arbitration to recover funds wrongly paid out on this distinction would insulate employees from relief for breaches of the document to which they, by statute, must adhere. Counsel cited common situations where a union was seeking redress from an employer on behalf of an individual grievor and where a union was seeking relief from an employer through that employer's bargaining agency as comparable analogies which illustrated the irrelevancy of the "party to/bound by" distinction. It was also emphasized that the collective agreement itself, in article 34.5, provided for the filing of policy or specific grievances by the employer and the latter term could only signify grievances against individuals. While counsel conceded that section 50 of the Act was not an "offence" section, he argued that the statutory remedial authority of an arbitrator extends beyond declarations to binding awards as against individual employees. That Fleming was no longer an employee when the applicant learned of the alleged overpayment should not eliminate the applicant's right of recovery through an arbitral determination as to the quantum due and enforcement through the courts if necessary. Counsel contended that section 124 of the Act required the referral of grievances by a party and against a party but that section did not restrict relief to a party to the collective agreement. Counsel also noted that reciprocity of rights and obligations under collective agreements supported the applicant's assertion that the employer could be granted relief against an individual employee through his/her bargaining agent just as an individual employee could gain redress against his/her employer through that bargaining agent. Cases referred to in support on this aspect include: Re Bennett & Wright Contractors Ltd. (1969), 1969 CanLII 1475 (ON LA), 20 LAC 187 (Godin); Re H. Fine & Sons Ltd. (1984), 1984 CanLII 5166 (ON LA), 15 LAC (3d) 236 (Roach); Standard Coil Products (Canada) Ltd. (1971) 1971 CanLII 1911 (ON LA), 22 LAC 377 (P.C. Weiler); Canadian Admiral Corp. (1967), 1967 CanLII 1049 (ON LA), 19 LAC 1 (Arrell); Re St. Joseph's Hospital, London (1985), 1985 CanLII 5359 (ON LA), 20 LAC (3d) 390 (Kates); Ontario Hydro. [1983] OLRB Rep. Sept. 1547; Hamilton Street Railway Co. v. Northcott (1966), 66 CLLC ¶14,157 (SCC); Re Samuel Cooper & Co. Ltd. (1973). 1973 CanLII 461 (ON HCJDC), 35 DLR (3d) 501 (Ont. Div. Ct.)

10. With respect to the issue of timeliness, counsel reiterated that the situation was novel, that neither arbitral jurisprudence nor the courts had previously recognized that the arbitral route should be followed where the employer had no knowledge of the circumstances giving rise to the grievance until after the employment relationship was severed. It was argued that the applicant had acted diligently throughout to recover the monies at issue and Fleming could have no doubt that he was being pursued for repayment. Essentially, counsel submitted the novelty of the instant case constituted reasonable grounds for an extension of the time limits in the collective agreement pursuant to the Board's authority in section 44(6) of the Act and Fleming should not be permitted to hide behind a procedural defect in the totality of the circumstances. Counsel also pointed to the six year limitation period at common law for contractual claims as a relevant factor in determining whether the time limits should be extended. Moreover, counsel submitted there was no evidence that the respondent would be prejudiced by a hearing on the merits at this juncture, let alone the "substantial" prejudice required in section ~(6). Again, it was argued Fleming could not claim surprise that the employer was pressing for recovery of the alleged overpayment. Indeed, absent evidence of actual prejudice, prejudice could not be presumed to flow from the delay in filing the grievance as the merits of the case would have been prepared or reviewed when the claim was filed. Counsel contended the caselaw with respect to timeliness under section 89 of the Act was not useful given the absence of a section comparable to section 44(6). In Ontario Hydro, [1987] OLRB Rep. Apr. 547, counsel noted that the Board had construed section 44(10) liberally to permit recovery under earlier collective agreements and, in paragraph 35 of that decision, had indicated that recovery was limited to the period specified because of a reliance interest. It was argued that concept was not applicable to the instant case of alleged unjust enrichment. In conclusion, counsel submitted that the test in section 44(6) of the Act was satisfied and, thus, notwithstanding its acknowledgment that the time limits in article 34.5 of the collective agreement were mandatory, the time limit should be extended so as to permit an adjudication of the merits. Cases cited in support were: Re Algoma Contractors Ltd. (1980), 1980 CanLII 4027 (ON LA), 25 LAC (2d) 292 (Hinnegan); Re Becker Milk Company Ltd. (1978), 1978 CanLII 3436 (ON LA), 19 LAC (2d) 217 (Burkett); Re Queensway General Hospital (1984), 1984 CanLII 5242 (ON LA), 17 LAC (3d) 9 (Swan); Re Greater Niagara General Hospital (1981), 1981 CanLII 4449 (ON LA), 1 LAC (3d) 1 (Schiff).

11. In reply, respondent's counsel disputed the novelty of the situation, asserting that courts regularly refused to entertain claims involving an interpretation of a collective agreement. Rather, counsel submitted it was a recognized route for a party to obtain a declaration at arbitration as to the contract interpretation and then enforce recovery of monies through the courts. Counsel reiterated his view that no reasonable explanation for the delay had been given and disputed that the employer had acted diligently. It was argued that the Board jurisprudence regarding timeliness was applicable as the considerations going to the exercise of the Board's discretion under section 89 to refuse to entertain a complaint were not unlike the test for arbitral extension of time limits in section 44(6). Finally, counsel asserted the reference to a "specific grievance" in article 34.5 of the collective agreement need not necessarily refer to a claim against an individual employee but could mean a specific incident (e.g., a particular walkout) alleging misconduct by the union.

12. Given the Board's conclusion with respect to the second preliminary objection, the Board does not consider it appropriate to reach a determination as to whether the applicant can recover damages or, specifically in this instance, an alleged improper overpayment, as against an individual employee through a grievance formally against a trade union but specifying the individual concerned. That is, the Board intends to consider the second preliminary objection, that the grievance should be dismissed as untimely, on the assumption, but without deciding, that the respondent fails on its first preliminary objection. The issue as to whether a section 89 complaint or grievance should be heard on the merits notwithstanding a delay in initiating the process is not new. The Board has a discretion in section 89 of the Act to refuse to entertain a complaint because of delay. That discretion is not exercised in a mechanical fashion but it is well recognized that labour relations policy reasons may militate against an adjudication of a complaint on the merits, rather than the delay merely going to the question of the appropriate remedy: Sheller-Globe, supra; Corporation of the City of Mississauga, supra. In the arbitral forum, as well, there is a statutory discretion in section 44(6) of the Act to relieve against time limits in a collective agreement provided there are reasonable grounds for the extension and the opposite party will not be substantially prejudiced thereby. The more recent arbitral jurisprudence focuses on a number of factors in determining whether the arbitrator's discretion should be exercised under section 44(6) including, the nature of the grievance, the length of the delay, the reason for the delay, the stage in the process at which the delay occurred, whether the grieving party was responsible for the delay or acted with due diligence and, of course, whether the opposite party would be prejudiced by an adjudication on the merits: Re Greater Niagara General Hospital, supra, including the cases cited therein; Re Becker Milk Company, supra. Again, the exercise is not mechanical but an assessment of the factors in the context of the specific circumstances of each grievance. It must also be emphasized that section 44(6) was enacted to enable arbitrators to resolve the actual grievance between the parties, to avoid the dismissal of a grievance solely on technical grounds. This statutory authority was predicated on the premise that the parties' collective bargaining relationship was better served by adjudication of the merits of disputes.

13. Section 124 of the Act provides an alternative route to arbitration for the construction industry. In hearing such grievances, the Board has the authority of an arbitration panel, including the discretion in section 44(6) of the Act to relieve against time limits. While the arbitral jurisprudence on the exercise of that discretion, therefore, is relevant, the Board must also be sensitive to the statutory purpose of section 124, namely, to provide an extraordinarily expeditious mechanism for adjudicating grievances in the construction industry: see, for example, The Lummus Company, supra. Not only may the grievance and arbitration process in the collective agreement be bypassed but, in accordance with section 124(2), the hearing shall be convened within fourteen days after receipt of the application.

14. In the instant case, the applicant learned of the alleged overpayment in May 1983 following Fleming's dismissal from his employment. Criminal charges for fraud were laid in September 1983 and subsequently withdrawn in October 1984. In November 1984. the applicant was aware of the factual details of the police investigation. Following unsuccessful attempts to contact Fleming by mail, a civil action was commenced in February 1985. In May 1985, a motion seeking to strike the employer's claim was dismissed. That decision was reversed on appeal, that is, in August 1985, the employer's action was dismissed. The employer's appeal to the Divisional Court was dismissed in March 1986. Following the refusal of leave to appeal to the Ontario Court of Appeal on April 28, 1986, the grievance was filed on June 24, 1986. The employer now seeks an adjudication on the merits as to whether Fleming violated the collective agreement and should reimburse the employer for approximately $14,000 in respect of room and board allowance paid out for the period May 27, 1981 to May 4, 1983.

15. In the Board's view, the delay in this case is considerable and not justified. It is accurate to state that the applicant exercised due diligence with respect to pursuing its claims in the courts and that, throughout, Fleming was aware that the applicant was seeking recovery of the alleged overpayment. Further, there may well have been reasonable grounds for extending the time limits in the collective agreement, given the circumstances, had the grievance been filed in October 1984 when the criminal charges were dropped or even in August 1985 following the dismissal of the applicant's civil action. The Board is not indicating that such would have been its decision as the delay was considerable even at those points. In any event, the applicant chose to rely on its rights of appeal within the courts and only when that route was finally exhausted did the applicant seek to invoke section 124 of the Act. Indeed, the applicant waited virtually two months after leave to appeal was refused before filing the grievance. In the Board's opinion, there was no reasonable basis for delay in initiating the grievance process, at the very latest, after August 1985, when the court plainly stated its view that the matter involved the interpretation of a collective agreement and the courts were not the proper forum for that adjudication. Moreover, the applicant acted on legal advice (although not counsel of record in the instant proceedings) in restricting pursuit of its claims to the courts.

16. The Board, in section 89 complaints, has expressed the view that pursuit of redress in other forums may not constitute reasonable grounds for delay in filing a complaint with the Board: see, for example, Sheller-Globe, supra. The Board regards this admonition as even more compelling with respect to section 124 grievance referrals. The statutory purpose of providing an extraordinarily expeditious mechanism to resolve grievances in the construction industry, because of the nature of the construction industry itself, would be negated by an exercise of the Board's discretion in section 44(6) where a party had full knowledge of the factual basis for its claim and yet chose to exhaust what it regarded as other avenues for redress before filing a section 124 application (cf. The Electrical Power Systems Construction Association, supra). Notwithstanding an arbitral discretion to extend time limits so as to resolve the actual dispute between the parties, there are occasions, as in the instant case, where the benefits of an adjudication on the merits are outweighed by competing policy considerations. Thus, the Board declines to exercise its discretion under section 44(6) of the Act to extend the time limit provided in the collective agreement. There was no dispute that that limit (in article 34.5) had long since passed.

17. For the foregoing reasons, the Board upholds the respondent's second preliminary objection and, accordingly, this application is dismissed.