Ontario Public Service Employees Union v. The Ontario Legal Aid Plan, 1989 CanLII 3092

Ontario Public Service Employees Union v. The Ontario Legal Aid Plan

[1989] OLRB Rep. August 862

0595-86-R; 0596-86-U; 0828-86-R; 0829-86-U; 1399-86-R; 1400-86-U; 1898-86-R; 1899-86-U Ontario Public Service Employees Union, Applicant v. The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada & Community Legal Education Ontario, Respondents v. The Ontario Association of Legal Clinics ("OALC") and York Community, Interveners; Ontario Public Ser­vice Employees Union, Complainant v. Community Legal Education Ontario, The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Ross Irwin, Respondents v. York Community Services, Intervener; Ontario Public Service Employees Union, Applicant v. The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Tenant Hotline Inc., Respondents v. York Community Services, Intervener; Ontario Pub­lic Service Employees Union, Complainant v. Tenant Hotline Inc., The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Ross Irwin, Respondents v. York Community Services, Intervener; Ontario Pub­lic Service Employees Union, Applicant v. The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Neighbourhood Legal Services, Respondents v. The Ontario Association of Legal Clinics ("OALC") and York Community Services, Interveners; Ontario Public Service Employees Union, Complainant v. Neighbourhood Legal Services, The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Ross Irwin, Respondents v. York Community Services, Intervener; Ontario Public Ser­vice Employees Union, Applicant v. The Ontario Legal Aid Plan under the administration of the Law Society of Upper Canada and Injured Workers' Consul­tants, Respondents; Ontario Public Service Employees Union, Complainant v. Injured Workers' Consultants, The Ontario Legal Aid Plan under the Administra­tion of the Law Society of Upper Canada and Ross Irwin, Respondents

BEFORE: Ian C. Springate, Vice-Chair, and Board Members J. A. Rundle and C. A. Ballentine.

APPEARANCES: Elizabeth Lennon and Raj Anand for the applicant/complainant; Brian Smeenk and Ross Irwin for the Ontario Legal Aid Plan under the Administration of the Law Society of Upper Canada and Ross Irwin; John Page and Taivi Lobu for Community Legal Education Ontario; Anneli Talvila and Judy Welkovitch for Tenant Hotline Inc.; John Page for Neighbour­hood Legal Services; Jean Hyndman for Injured Workers' Consultants; Larry Taman and Philip Tunley for Ontario Association of Legal Clinics; David Cote and Joan Milling for York Commu­nity Services.

DECISION OF IAN C. SPRINGATE, VICE-CHAIR AND BOARD MEMBER C. A. BALLENTINE: August 29, 1989

INTRODUCTION

1. These are a number of applications under section 1(4) and complaints under section 89 of the Labour Relations Act all brought by the Ontario Public Service Employees Union ("the union"). By way of the section 1(4) applications, the Union requests declarations that the Ontario Legal Aid Plan ("OLAP") is a common employer with four community legal clinics namely: Com­munity Legal Education Ontario ("CLEO"), Tenant Hotline Inc., Neighbourhood Legal Services and Injured Workers' Consultants. Although the section 89 complaints were initially drafted in broader terms, at the hearing the union requested that the Board declare that OLAP and Mr. Ross Irwin, OLAP's Clinic Funding Manager, had breached section 70 of the Act by engaging in intimidation or coercion to compel members of the boards of directors of the respondent clinics to refrain from fulfilling their obligations under the Act.

2. The hearings in this matter took approximately 25 days to complete. A number of indi­viduals were called as witnesses and several hundred pages of documentary evidence were filed. This decision does not purport to set out all of the evidence. We have, however, sought to summa­rize the main points of evidence.

3. At the commencement of the hearings both the Ontario Association of Legal Clinics and York Community Services sought standing to intervene in the proceedings. Both organizations indicated that they could provide relevant information to the Board and both contended that they had an interest in the proceedings because of the possible precedent setting nature of the section 1(4) applications. The request of that the two organizations that they be given standing to inter­vene was supported by OLAP but opposed by the union. In that neither York Community Services nor the Ontario Association of Legal Clinics would be directly affected by any determination the Board might make in these proceedings, by way of an oral ruling a majority of the Board (Ms Run­dle dissenting) denied their request for standing. The majority did note that if the parties to the proceedings were of the view that officials of the two organizations could provide information rele­vant to these proceedings, those individuals could be called as witnesses. During the hearing Ms Joan Milling, the executive director of York Community Services, was, in fact, called as a witness.

4. Most, if not all, of the clinics named as respondents sought, but were denied, extra funding from OLAP to pay for legal counsel to represent them. Three of the clinics retained coun­sel, but dispensed with counsel's services part way through the hearings because of a lack of funds. All of the clinics indicated to the Board that they are opposed to being declared to be a common employer with OLAP. Injured Workers' Consultants took the position that OLAP had, in fact, interfered with its operations but contended that the Board should remedy the situation by simply directing OLAP to cease and desist from any further interference.

OLAP AND THE CLINIC SYSTEM

5. OLAP is administered by the Law Society of Upper Canada ("The Law Society") pur­suant to the Legal Aid Act. OLAP's operations are overseen by two committees of the Law Soci­ety. One committee, the Legal Aid Committee, is responsible for the provision of legal aid through means other than community clinics. This includes a program by which OLAP provides low income individuals with a certificate which entitles them to select a lawyer whose fees will be paid by OLAP. The other committee of the Law Society is the Clinic Funding Committee. This Com­mittee oversees the distribution of OLAP funds to the various community legal clinics.

6. The clinic system came into being in response to a recognition that the program which enables an individual to retain a member of the private bar pursuant to an OLAP certificate does not meet all of the legal needs of the poor. The certificate program generally applies only to legal issues of a "serious~' nature. This limitation fails to take into account the fact that for the poor issues such as landlord-tenant disputes and an individual's entitlement to social security benefits can be of major importance. Further, many of the issues of particular concern to the poor fall out­side the areas of law generally practiced by members of the bar. Frequently the issues involved do not actually require the direct involvement of a lawyer, but can be handled by a knowledgeable lay person with ready access to legal advice.

7. The first community legal clinics were established outside the legal aid framework. Most received their funding from a variety of government and charitable sources. In 1976 the Provincial Government passed legislation providing for the funding of community legal clinics by OLAP on a systematic on-going basis. This funding allowed for a rapid growth of the clinic system. New clinics were established to meet the needs of communities which had not been served by the original clin­ics. At the commencement of these proceedings, 52 clinics were being funded by OLAP.

8. The original clinics, including the four involved in these proceedings, benefited greatly from OLAP funding. It not only provided them with with more money, but also gave them access to a constant flow of funds. The clinics ceased to be dependent on a series of ad hoc grants from a variety of sources. One negative result of OLAP funding, however, was that grants from non­OLAP sources began to be cut back. Other donors increasingly adopted the position that because the clinics were now being funded by OLAP, their clinic grants could be diverted to other worthy causes.

9. As noted above, Ms Joan Milling, the executive director of York Community services, was called as a witness. Ms Milling testified that in addition to serving as a community legal clinic, York Community Services provides a wide-range of medical and social services to its clientele. These non-legal services are supported by funds from a variety of sources, most notably the Minis­try of Health, the Ministry of Community and Social Services, the Ministry of Corrections, the Ministry of Housing, the Federal Immigration Department, the City of York and the Municipality of Metropolitan Toronto. OLAP points to York Community Services as an example of a clinic which receives substantial non OLAP funds. It appears, however, that the funds utilized for the legal aspects of York Community Services operations come primarily, if not exclusively, from OLAP. More importantly for the purposes of these proceedings, the clinics which are party to these proceedings neither provide the same range of services nor have the same outside funding sources as does York Community Services.

10. Apart from clinics connected with a law school, for a clinic to be funded by OLAP, its operations must be overseen by a volunteer board of directors. Most clinics employ at least one staff lawyer, as well as a number of lay persons classified as community legal workers. At one time there were twice as many community legal workers as lawyers employed in the clinic system, although the numbers of each are now about equal. Certain of the early clinics operated as "collec­tives", whereby no one individual was responsible for the day to day management of the clinic. Over time, however, many of these clinics adopted a management structure whereby a director, who was often a lawyer, became responsible for managing the clinic's operations.

11. An underlying premise of the clinic system is that each clinic will be "independent" and thus able to provide independent legal advice to its clients. The regulation under the Legal Aid Act which governs the funding of community legal clinics defines a clinic eligible to receive funding as follows:

'clinic' means an independent community organization providing legal services or para-legal ser­vices or both on a basis other than fee for service.

The regulation does not define the term "independent". The regulation does indicate, however, that the independence of each clinic is not absolute, since each is accountable for the proper use of the public funds which it receives.

12. In a 1978 study of the clinic system, Mr. Justice Grange concluded that clinics should remain free from any governmental control and be allowed to run their affairs like a private law firm, subject only to the duty to account for public funds and the competence of the services they render. In this regard, he commented as follows:

The boards must continue to govern the affairs of the clinics, both as to policy and administra­tion, subject only to accountability for the public funds advanced and for the legal competence of the services rendered. The public which advances the funds for the delivery of legal services has a legitimate interest in ensuring that they are spent for that purpose and that the services rendered are of an acceptable professional level. I think the matter should be viewed in this light. The boards have control over the operations of their clinics and the committee may inter­fere in that control only if it can bring the interference within one or other of the public's legiti­mate spheres of interest.

The above statement appears to be generally accepted by all of those involved in the operation and funding of the clinics. There is, however, considerable disagreement as to the point at which con­cern for the appropriate use of public funds justifies the involvement of OLAP in the administra­tion of a particular clinic. A decision of the Divisional Court set out later in this decision suggests that for the purpose of ensuring that public funds are being properly spent, OLAP is entitled under the clinic funding regulation to involve itself in the internal affairs of a clinic provided it does not thereby interfere with the independence of the clinic in rendering or delivering quality legal ser­vices to the community.

THE FUNDING PROCESS

13. As noted above, in matters relating to the clinic system, the Law Society acts through the Clinic Funding Committee. Pursuant to the regulation referred to above, this committee is responsible for establishing policy and guidelines with respect to the funding of community legal clinics. Routine matters relating to clinic funding are handled by the "clinic funding staff', all of whom are employees of the Law Society. Initial funding decisions are made be the clinic funding staff, but they can be appealed to the Clinic Funding Committee either as of right or, in some cases, only with leave of the Committee. Mr. Ross Irwin, the clinic funding manager, is the senior member of the clinic funding staff.

14. Funds for the clinic system are provided by the Ministry of the Attorney General and it is the Attorney General who determines the amount of money allocated to the clinic system each year. Funds allocated by the Attorney General are for the clinic system as a whole, and not for specific clinics. The amount allocated to each clinic is ultimately determined by the Clinic Funding Committee.

15. The funding process for individual clinics commences with the clinic submitting an application for funds in January of each year. The application must include a detailed breakdown of the clinic's activities during the preceding fiscal year. This includes a report on the number of clinic files which involved a staff member representing a client before a court or tribunal. The courts and tribunals in question must be listed. Also required is a report on the average caseload of clinic lawyers and community legal workers as well as a breakdown of files into the various areas of law involved. An application for funds must also include a list of the clinic's board of directors with their respective occupations and an indication of which board members come from the client com­munity served by the clinic. The staff of the clinic are to be listed by name and position, along with the salary he/she is receiving.

16. The clinic funding staff reviews each application, and in connection therewith generally meets with the clinic's board of directors in February or March. The clinic funding staff then pre­pares a funding decision setting out the proposed funding of the clinic for the next fiscal year. Cer­tain general terms and conditions, which apply to all clinics, will be made conditions of funding. Special terms and conditions may also be included. The Board of a clinic may either accept the decision of the clinic funding staff or seek to appeal the matter to the Clinic Funding Committee.

17. A specific portion of the funds allocated to each clinic is designed to cover personnel costs. Other OLAP funds cannot be used for personnel costs. Personnel funds are allocated pursu­ant to a formula which takes into account the number of lawyers, community legal workers and support staff positions at the clinic funded by OLAP, as well as the experience of the individuals occupying those positions. Although a clinic receives a set amount of money attributable to each staff member, the clinic is not required to actually pay that sum to the staff member in question. Rather, personnel funds are provided to the clinic as a "pool", and it is up to the Board of Direc­tors to allocate funds to specific individuals. Variations exist in the amount paid to staff members at the different clinics. For example, in 1985/86, the staring salaries for new employees across the clinic system had a range of $15,000 to $20,000 for support staff; $17,500 to $25,225 for community legal workers and $20,000 to $25,750 for lawyers.

18. Although personnel funds are provided to clinics as a "pool", a general term and condi­tion imposed on all clinics is that personnel funds which otherwise would be surplus as a result of staff vacancies not be spent without OLAP approval. The purpose of this term and condition is to ensure that clinics not divide up surplus funds among the remaining staff as a bonus or retroactive pay increase. A clinic may request funds to hire additional staff. In support of such a request the clinic must include a job description for each existing member of its staff, job descriptions for the additional staff requested and revised job descriptions for existing staff should new staff be added. In assessing requests for new staff, a prime concern of the clinic funding staff is to balance the rela­tive needs of different clinics in different parts of the province.

OLAP POLICIES AND GENERAL TERMS AND CONDITIONS OF FUNDING

19. One of the general terms and conditions of funding imposed on all clinics is that its board of directors develop and maintain a procedure for investigating complaints against the clinic. Such complaints can come from a client of the clinic, a party adverse in interest to a clinic client or a member of the public. The clinic's complaints procedure must accord with a complaints proce­dure policy set by the Clinic Funding Committee. A clinic is required to advise a complainant that if not satisfied with the clinic's disposition of a complaint, he/she can request that the matter be investigated by the Clinic Funding Committee. The Clinic Funding Committee's procedure empowers it to receive submissions or conduct a hearing with respect to any complaint against a clinic. The Committee may then make recommendations to the clinic with respect to the com­plaint, but the Committee may not actually alter the disposition of complaint by the clinic. The committee's procedure provides that if the Committee is not satisfied with the clinic's disposition of a complaint, the Committee shall so notify the clinic's board of directors and provide it with notice that its future funding may be jeopardized by reason of the clinic's disposition of the complaint.

20. Another general term and condition relates to the financial eligibility of clients. This is aimed at ensuring that clinics generally limit their services to low income individuals. Each clinic is required to adopt financial eligibility guidelines which must not exceed a maximum set by the Clinic Funding Committee. A clinic may provide services to an individual who does not meet the financial eligibility criteria set by the Clinic Funding Committee, but if it does so it must subse­quently file a report with OLAP relating to the incident.

21. A general term and condition of funding is that the ownership of capital assets utilized by clinics, such as office equipment and typewriters, be vested in the Law Society. In 1984, follow­ing a survey relating to the needs of the various clinics for word processing equipment, OLAP invited bids from various supply companies and then decided what equipment to purchase. OLAP also decided which of the clinics would obtain word processors. Leased assets are leased by the clinics concerned, although OLAP may require that it negotiate the leases. In 1983 CLEO was asked not to renew a rental agreement for a postal meter without first discussing the matter with the clinic funding staff.

22. Because certain clinics were only open to the public for brief periods each day, in 1985 the Clinic Funding Committee set an hours of access policy which requires that clinics be open to the public seven hours a day, Monday to Friday. The only stated exceptions are for statutory holi­days and up to four hours per week for staff training and meetings. When testifying in these pro­ceedings, Mr. Irwin indicated that the clinic funding staff regarded holidays other than statutory holidays as coming within the exceptions.

23. Each clinic receives funding for employee fringe benefits based on a percentage of its salary pool. The percentage is somewhat higher for the relatively small number of clinics which do not take advantage of a group benefits plan for employees paid for directly by OLAP. This policy includes medical and dental coverage, a long term disability plan as well as life insurance. Among the clinics which have not opted into the plan are the those connected with a law school since their employees are covered by a university plan, as well as York Community Services which has its own group plan. At the time of the hearings into these proceedings, OLAP was investigating the estab­lishment of a pension plan which individual clinics could decide to opt into or not. On September 23, 1986 Mr. Irwin turned down a request by the union that it be directly involved in designing the pension plan. Mr. Irwin indicated that the clinic funding staff had decided to ask the Ontario Asso­ciation of Legal Clinics to constitute a group of clinic representatives for consultation purposes, and that any participation in the consultation process would have to be done through that group.

PERSONNEL POLICY GUIDELINES

24. In the majority of cases, clinic employees are not represented by a trade union. The Ontario Public Service Employees Union represents employees, other than lawyers, at some 12 clinics, including the four involved in these proceedings. The union was certified to represent the employees of Neighbourhood Legal Services in 1980, Tenant Hotline in 1982 and CLEO in 1984. The union acquired its bargaining rights with respect to the employees of Injured Workers' Consul­tants by way of a successor trade union declaration in 1980. Employees of at least one other clinic are represented by the United Steelworkers of America, while those at York Community Services are represented by the Canadian Union of Public Employees. In each case, the employer is the individual clinic, and the union involved obtained its bargaining rights by reference to a bargaining unit comprised only of employees at that one clinic.

25. The evidence indicates that there has been remarkably little conflict between the union and the various clinic boards of directors. Generally, the boards have been desirous of paying their employees as much as possible, subject to the constraints imposed by their limited budgets and the fact that funds designated by OLAP as non-personnel funds cannot be used for personnel pur­poses. A number of clinics have agreed to provide their staff with paid leaves and holidays more generous than those found in most collective agreements. It appears that these benefits have been viewed by the clinics and the union as one way by which the clinics can partially offset their inabil­ity to pay higher wages.

26. In 1983 the Clinic Funding Committee became concerned that some of the clinics were providing overly generous benefits to their staff. At the Committee's direction, the clinic funding staff developed a draft personnel policy. In January of 1984 the Clinic Funding Committee circu­lated the draft personnel policy to all of the clinics and requested their reaction to it. At the same time, the Committee noted that it was considering making it a term and condition of funding effec­tive April 1, 1985 that all clinics comply with the proposed policy. The Committee required that each clinic specify by April 1, 1984 whether or not it complied with the proposed personnel policy on an item-by-item basis and provide an explanation for any items of non-compliance.

27. The proposed personnel policy was quite detailed, and covered such matters as the hours of work of staff, when staff could be paid overtime, the rate of overtime and the number of vacation days staff could earn each year. Also included in the proposed guideline was a specific list of paid staff holidays, detailed provisions respecting maternity leave, the payment of employees on maternity leave, the accumulation of sick leave days as well as paid and unpaid leaves of absence.

28. The draft personnel policy met with strong resistance from the clinic boards which viewed it as a form of interference with their ability to manage their respective clinics. The draft personnel policy was also opposed by the Union. On March 29, 1984, Ms Rosemary Tait, the pres­ident of Local 525 of the Union, forwarded letters to nine clinics where the Local's members were employed, including Neighbourhood Legal Services, Tenant Hotline, Injured Workers' Consul­tants and CLEO. Part of that letter read as follows:

The local union has traditionally held the position that it is in our interests and in the interests of our clients to support the notion that our employers are autonomous and have exclusive juris­diction (subject, of course, to the collective bargaining process) to set clinic policy, direct the delivery of service and determine terms and conditions of employment. Many of the Directors can acknowledge that this position has been reflected in collective bargaining. Despite the vary­ing degrees of union staff involvements in policy setting and directing service delivery, we believe that this position has prevailed to date.

The imposition of standard personnel policy flies in the face of the Board's historical and ongo­ing attempts to remain autonomous, threatens to seriously undermine labour relations in the clinics, and is initiating some reconsideration in the union of the prevailing position that you are our employers.

29. On December 12, 1984 The Clinic Funding Committee wrote to the boards of the vari­ous clinics advising them that the Committee had decided not to impose a mandatory personnel policy. It indicated that it would instead issue personnel policy guidelines to be used by the clinic funding staff when assessing the personnel policies of the various clinics.

30. The clinic funding staff subsequently proposed special terms and conditions of funding for five clinics, including Tenant Hotline and Injured Workers' Consultants, where leaves and vacations greatly exceeded those provided for in the personnel policy guidelines. The proposed special terms and conditions covered maternity leaves, sick leaves and statutory holidays. The five clinics all sought leave to appeal the special terms and conditions to the Clinic Funding Committee, but such leave was denied. One of the clinics, namely Community Legal Services (Ottawa­Carleton), negotiated a new collective agreement containing provisions which did not conflict with the special terms and conditions. The other four applied for judicial review of the Committee's decision. They claimed that the special terms and conditions improperly interfered with their inde­pendence and would force them to breach their collective agreements with the union. In a decision released August 27, 1986, the Divisional Court dismissed the application for judicial review. The details of the special terms and conditions imposed on the five clinics, as well as the judgement of the Divisional Court, are set out in full in that portion of this decision dealing with Injured Work­ers' Consultants.

TENANT HOTLINE

31. Tenant Hotline commenced operations in 1975 prior to the advent of OLAP funding. It was a specialty clinic which provided assistance to tenants, primarily those resident in the City of York. In recent years the effectiveness of Tenant Hotline suffered as a result of a number of fac­tors, including conflict between varying groups within the clinic and an unwillingness and/or inabil­ity on the part of its board of directors and senior staff to effectively manage its affairs. The Clinic Funding Committee imposed on a number of special terms and conditions on the clinic, including the terms and conditions relating to personnel matters already referred to. Prior to the end of the hearings into these proceedings, the Clinic Funding Committee determined that it would not con­tinue to provide funding to Tenant Hotline. The clinic then ceased operations. In light of the clos­ing of Tenant Hotline, the applicant did not pursue its application and complaint with respect to the clinic.

COMMUNITY LEGAL EDUCATION ONTARIO

32. Unlike other community legal clinics, CLEO does not provide direct legal representa­tion or assistance to individuals. It was founded in 1974 by a group of law students to provide legal education and information to the public. Its goal was to promote public awareness and understand­ing of the law as well as to improve public access to the legal system. CLEO developed programs directed to a number of different audiences, including immigrants, women in crises, youth, inmates in correctional facilities, community workers and the general public. Although CLEO produced some "hard copy" literature, much of its programming was delivered through seminars, libraries and the school system.

33. In its early years CLEO received funding from a number of sources, most notably the Law Foundation. It first received OLAP funds in 1976. During the first year that it received OLAP funds, CLEO received approximately 50 per cent of its grant revenue from OLAP, another 25 per cent from the Law Foundation and 25 per cent from other sources. Over the years, however, CLEO became increasingly dependent on OLAP funds. By 1985, 91 per cent of its grants came from OLAP, nine per cent from the Law Foundation and no grants came from any other sources.

34. CLEO's practice of providing legal education and information to a wide range of groups brought it into conflict with the clinic funding staff. The clinic funding staffs concerns were essen­tially two fold. The first related to the fact that CLEO did not restrict its activities to low income audiences. The second arose out of the view that CLEO's goal of providing legal education to the general public was not reasonable, and that CLEO could best provide public legal education by working with, and providing material for, the community legal clinic system.

35. In 1980 CLEO appealed to the Clinic Funding Committee against a requirement imposed on all clinics that they implement financial eligibility guidelines. The appeal was unsuc­cessful. In 1981 CLEO and the clinic funding staff agreed that the clinic funding staff would do a general review of CLEO's operations. The impetus for the review came from a concern on the part of the clinic funding staff as to the appropriateness of OLAP continuing to fund CLEO, as well as CLEO's increasing dissatisfaction with OLAP's funding methods. The review was performed by Mr. Irwin, at the time a member of the clinic funding staff. Mr. Irwin produced a 110 page report in which he made a number of recommendations related to CLEO's internal operations. He also recommended that CLEO restrict its OLAP funded programs to low income audiences, that it not use OLAP funds for its library and school programs and that it adopt a strategy for the delivery of public legal education and information by utilizing the system of community legal clinics. Follow­ing the clinic funding staffs review, CLEO began to restrict its operations to three target audi­ences, namely youth, women and the clinic system.

36. At a funding meeting held in February 1984, Mr. Irwin advised the CLEO board that the level of tangible services provided by the clinic was not acceptable. He contended that although the clinic had targeted the three audiences of women, youth and the clinics, CLEO had not iden­tified any specific legal issues important to the low-income groups within these audiences and was therefore unable to develop specific programs to meet those needs. In response to these conten­tions, the representatives of the CLEO board contended that 1983 had been largely taken up with shifting the focus of the clinic's operations and the initiation of new programs. Mr. Irwin then indi­cated that the clinic funding staff would look for more tangible results from CLEO during 1984.

37. Mr. Irwin, accompanied by two other members of the clinic funding staff, met with rep­resentatives of the CLEO board on March 21, 1985. During the course of the meeting, Mr. Irwin was given a copy of a collective agreement which had been negotiated between CLEO and the Union. On or about March 28, 1985 Mr. Irwin telephoned Mr. Fyshe, the chairman of the CLEO board, and asked to meet with him and other representatives of the board to discuss the collective agreement. Such a meeting was held on April 3, 1985. At that meeting Mr. Irwin referred to a pro­vision of the agreement which stated that $7,298 in surplus OLAP personnel funds would be dis­tributed to employees "In the event such funds become available, upon approval by the OLAP". As noted above, any OLAP funds designated for personnel costs which become surplus as a result of staff vacancies cannot be spent without approval from OLAP. Mr. Irwin contended that the col­lective agreement provision in question reflected an attempt on the part of the CLEO board to cir­cumvent OLAP's policies regarding surplus funds. Mr. Irwin noted that he did not view the matter as a serious problem. This doubtless reflected the fact that without the approval of OLAP, the money could not be distributed to employees. Such approval was never forthcoming.

38. The collective agreement also contained a formula by which salary funds would be dis­tributed among various staff. The formula indicated that the total funds available for salaries would be comprised of OLAP's allocation for personnel costs, a Law Foundation grant and net revenue from the sales of CLEO produced material. Mr. Irwin contended that any revenue from the sale of material should go into programming, not salaries. Mr. Fyshe responded that CLEO had a long­standing practice of using revenue from the sale of material for salaries. Mr. Irwin also expressed concern about a clause in the collective agreement which provided that in the event of staff turn­over, a new employee could be hired at a salary of $2,000 less than the lowest paid employee within the relevant job category. Mr. Irwin regarded this provision as an attempt to provide exist­ing staff with greater salaries at the expense of newly hired staff. Mr. Fyshe, however, insisted that the clause was not designed to establish a ceiling on the salaries of new staff, but rather to set a floor so as to protect their salaries.

39. As indicated above, Mr. Fyshe was the main spokesperson for the CLEO board at the April 3, 1985 meeting. It is clear that in rather strong language Mr. Fyshe rejected all of Mr. Irwin's concerns. According to Mr. Fyshe, he viewed Mr. Irwin's statements about the $2,000 pay differential as an attack on his personal integrity. Mr. Fyshe wrote to Mr. Irwin on April 10, 1985 and again rejected his concerns about the collective agreement. The collective agreement provi­sions were not again raised by Mr. Irwin, and according to Mr. Irwin were not a factor in the events described below.

40. On April 16, 1985 a letter from Mr. Irwin, dated April 15, 1985, was delivered to the CLEO offices. The letter stated that the clinic funding staff had decided that no OLAP funds should be provided to CLEO for the 1985/86 fiscal year. The letter indicated that this decision was based, in part, on the fact that the quantity of materials/programs distributed or implemented by CLEO was below an acceptable level, given the funds available to the clinic. Mr. Irwin further claimed that CLEO's programs and materials appeared to be random, lack focus, be sporadic in implementation and that the quality of materials and programs produced had been below an acceptable level. He also alleged that CLEO continued to direct its services at target audiences and topics not within its financial eligibility guidelines.

41. A CLEO board of directors meeting had previously been scheduled for the evening of April 16, 1985. Partway through that meeting Mr. Irwin and two other members of the clinic fund­ing staff arrived. Mr. Fyshe, the chairman of the CLEO board, indicated that the board members were not in a position to discuss Mr. Irwin's letter. Mr. Irwin replied that he had not come to dis­cuss the letter, but only as a courtesy to the board. Shortly thereafter Mr. Irwin and his colleagues left the meeting. A discussion then ensued as to what course the board should follow. A decision was reached to appeal the decision of the clinic funding staff to the Clinic Funding Committee. The CLEO board also began to organize for the appeal.

42. In May or early June 1985, the Law Foundation announced that it was reducing its grant to CLEO from $40,000 the previous year to $25,000, and that in future years it would not be mak­ing any grant at all. CLEO had previously used the Law Foundation grant to pay the salary of its executive director as well as part of the salary of one other employee. At about this time, the CLEO's executive director, who was not a lawyer, submitted her resignation. This left CLEO with nine staff, all of whom were now being paid out of OLAP funds. OLAP, however, was providing the money on the basis that it was funding only seven positions.

43. By this point in time, members of the CLEO board and staff had become divided into two groups. One group, which included Mr. Fyshe and Mr. John Friendly, the clinic's staff lawyer and now acting executive director, felt there was some validity in the criticisms being expressed by the clinic funding staff. The other group rejected the criticism and believed that CLEO should con­tinue as before. At a meeting of the CLEO board of directors on June 26, 1985, Mr. Friendly con­tended that it was unlikely that the Clinic Funding Committee would uphold the proposal to defund CLEO, but given the problems at the clinic the Committee would likely impose a number of special terms and conditions. Mr. Friendly argued that it would be best for CLEO if the terms and conditions were actually written by those involved with the clinic. Mr. Friendly further indi­cated that based on a discussion between himself and Mr. Irwin, he believed the matter could be resolved through negotiations with the clinic funding staff rather than at an appeal hearing before the Clinic Funding Committee. Following Mr. Friendly's presentation, the CLEO board appointed a negotiating committee to meet with the clinic funding staff. The negotiating committee was com­prised of board members Sharon Baker, Doug Brown and Joana Kuris. Ms Kuris was also a staff lawyer at another clinic. The board empowered the committee to advise the clinic funding staff that CLEO was prepared to make the production of materials for the clinic system its most essen­tial activity. Given the clinic's recent history, it is reasonable to assume that the board as a whole was prepared to adopt this position only because the clinic funding staff had decided that CLEO should be defunded.

44. Mr. Irwin and Susan Ellis of the clinic funding staff met with the CLEO negotiating committee on July 15, 1985. Ms Kuris outlined the new position adopted by the CLEO board. Mr. Irwin testified that he was pleasantly surprised with what he heard since it represented a fundamen­tal change for CLEO. In this regard he noted that OLAP had never proposed that CLEO direct all of its activities to the clinic system. During the meeting Mr. Irwin was advised of the decision of the Law Foundation to reduce and then eliminate its grant to CLEO. There then ensued some dis­cussion as to how this would impact on CLEO's staffing complement. Ms Baker testified that she asked Mr. Irwin if OLAP would provide the money to pay severance pay to any laid off employ­ees, to which Mr. Irwin replied that no funds would be provided for this purpose and that in lieu of severance pay CLEO should provide staff with lengthy notices of lay-off.

45. After at least one more meeting, a draft agreement to settle CLEO's defunding appeal was reached between the CLEO negotiating committee and the clinic funding staff. On or about August 28, 1985 the CLEO board distributed the terms of the draft agreement to its staff. The bar­gaining unit employees met on September 3rd to discuss the terms. They concluded that CLEO should reject the draft and proceed with its appeal against the decision to defund the clinic. When the members of the CLEO board subsequently met to consider their next step, they were picketed by CLEO staff members. Mr. Fyshe testified that with OLAP contending that they were incompe­tent managers and the staff now suggesting that they were anti-union, the members of the board, all of whom were volunteering their time, seriously considered closing down the clinic. Rather than doing so, however, they voted not to ratify the proposed agreement but to proceed with the appeal to the Clinic Funding Committee. To cover the possibility that the appeal might not be successful, the board gave conditional notices of termination to the staff effective November 22, 1985.

46. The appeal hearing before the Clinic Funding Committee commenced on October 18, 1985. The hearing did not finish. On the basis of an off the record discussion with Ross Irwin and the Clinic Funding Committee, Mr. Friendly became certain that the Committee was not going to defund CLEO, but that it would impose special terms and conditions on the clinic. By letter dated November 1, 1985 Mr. Friendly advised the members of the CLEO board of his assessment of the situation and enclosed a paper headed up "Future Directions" which he described as setting out proposed special terms and conditions of funding "As CLEO would like them". In his letter Mr. Friendly indicated that the Future Directions document was basically a reworking of the draft set­tlement earlier worked out between Mr. Irwin and the CLEO negotiating committee, but with some changes to bring the document more into line with CLEO's goals and objectives.

47. A meeting of the CLEO board of directors was held on November 7, 1985. There was a lengthy discussion concerning the Future Directions document during which several changes were made to its wording. Following this, the CLEO staff were invited to attend the meeting. The staff were already aware of the Future Directions document since a number of them had assisted Mr. Friendly in its preparation. A secret ballot vote was held separately among the board members and the staff concerning the acceptability of the document as a basis for negotiating a settlement with the clinic funding staff and/or continuing the appeal before the Clinic Funding Committee. Both groups voted in favour of the document. A copy of the Future Directions document was then for­warded to Mr. Irwin.

48. Mr. Irwin met with Mr. Friendly and Mr. Fyshe on November 15, 1985. At this meeting Mr. Irwin indicated that he was agreeable to accepting the Future Directions document as a basis for settling CLEO's appeal to the Clinic Funding Committee, except that while the document called for the hiring of a managing director, it did not indicate that this position was to be filled by a lawyer. Mr. Irwin was of the view that the managing director should be a lawyer and, failing that, another clinic position should be converted into a position for a second staff lawyer. By letter to Mr. Fyshe dated November 22, 1985, Mr. Irwin proposed that the director/lawyer issue be argued before the Clinic Funding Committee when the appeal hearing recommenced. The Clinic Funding Committee subsequently concluded that while it would be desirable if a new managing director had experience in the practice of law, it would not make this a condition of funding.

49. A condition of the 1985/86 funding certificate issued to CLEO was that the clinic com­ply with the terms of the Future Directions agreement entered into between its board and the clinic funding staff, as well as certain schedules attached to that agreement. Portions of the agreement and schedules are set out below:

50. CLEO will become the clinic system's central facility for the development, produc­tion, and distribution of PLET (public legal education and information) programs and materials. CLEO will devote, in the manner set out below, its clinic funding resources exclusively to the needs of clinics and their clients.

51. CLEO, as part of the clinic system, will share the same general low-income mandate which governs the affairs of the other clinics in the system. All of the CLEO's services and materials will be directed to the existing and potential clients of community legal clinics.

52. CLEO will provide the Committee or its staff with special reports. These reports will be appended to its quarterly statements, until March 31, 1987. They will outline, in a format to be agreed upon, the progress made in the following areas:

a. production quotas;

b. deadlines;

c. planning;

d. quality of products;

e. appropriateness of materials;

f. work in progress;

g. requests in hand;

h. distribution of programs and materials;

i. costing.

1. Restructuring

CLEO will restructure its internal affairs to made the most efficient use of its resources to meet its clinic programming objectives.

50. Following the resignation of its executive director, CLEO had nine staff members. Once a new executive director was hired, the number would be back to ten. OLAP, however, had been funding the clinic on the basis of seven positions. During the settlement discussions, Mr. Friendly and Ms Kuris had pushed to have OLAP permanently fund eight positions. Mr. Irwin had resisted such an arrangement, but so as to ensure that the clinic could immediately hire an execu­tive director, he did agree that OLAP would fund an eighth position until June 30, 1986. With the express intent of avoiding any layoffs, the bargaining unit employees voted to continue to split the current funds among the existing staff. At a CLEO board meeting held on April 16, 1986, Mr. Dan Kellar, a union steward at CLEO, advised the board of the staff's position and formally requested that no staff be laid off. Notwithstanding Mr. Kellar's presentation, at the same meeting the board passed a motion to reduce the staff to seven by June 30, 1986. As it happened, several staff mem­bers subsequently voluntarily left CLEO's employ and accordingly no staff members were actually laid off.

51. The CLEO staff concluded that the CLEO board had decided to reduce the staff to seven by June 30, 1986 at the insistence of Mr. Irwin. According to Mr. Ron Bishop, who replaced Mr. Kellar as a union steward, the staff had previously understood that the number of staff would be reduced to seven, but only by attrition and without any time line. Mr. Kellar testified that it was Mr. Irwin's action in allegedly requiring the lay-off of employees which more than any other con­sideration led the CLEO staff to request that the union file a section 1(4) application. There is, however, considerable conflict in the evidence as to whether or not the reduction of staff was actu­ally required by Mr. Irwin.

52. The evidence establishes that on a number of occasions Mr. Irwin indicated that in his view CLEO should reduce its staffing levels to the number of positions it was being funded for. Further, a statement of facts filed at the commencement of the hearings by counsel for OLAP stated that it was a condition of the settlement of CLEO's defunding appeal that the number of staff employed with OLAP funds would correspond to the number of positions for which OLAP provided funds by June 30, 1986. Mr. Irwin, however, insisted that such had not been the case. He testified that he had never insisted that CLEO reduce its staff to seven and had never set a deadline of June 30, 1986 for it to do so. According to Mr. Irwin, a number of clinics "squeeze out" addi­tional positions from OLAP funds and the clinic funding staff had never taken any steps to stop them. Mr. Irwin acknowledged that his discussions with the CLEO negotiating committee assumed a staff of seven, but stated that this was because once he had make it clear that OLAP would only permanently fund seven positions, the CLEO representatives themselves worked on the basis that the clinic's staff would be reduced to seven.

53. The evidence of Mr. Fyshe, the chair of the CLEO board, was somewhat unclear on the issue of whether the clinic had been required to reduce its staff. According to Mr. Fyshe, be per­sonally believed that CLEO had too many staff members with the result that staff were being underpaid. He wanted the number of staff reduced to seven. Mr. Fyshe also testified, however, that he understood it to be an implicit part of the settlement agreement that CLEO would reduce its staff to seven. Mr. Friendly, on the other hand, testified that Mr. Irwin had never insisted that CLEO lay off any staff. He stated that this had been a decision made by the CLEO board, and that the CLEO board had also decided that the restructuring should be completed by June 30, 1986. According to Mr. Friendly, at the time the board members were aware that certain staff members would likely be leaving the clinic prior to the June 30, 1986 date. For her part, Ms Kuris testified that it had remained open for the clinic to continue to employ more than seven staff, and that Mr. Irwin's only comment in this regard was that OLAP would only provide funds for seven positions.

54. On the evidence, we are led to conclude that as a condition of settling the defunding appeal, Mr. Irwin did not insist that CLEO reduce its staff to seven by June 30, 1986. We base this decision in part on the evidence of Ms Kuris, Mr. Friendly and Mr. Irwin, three individuals actively involved in negotiating the terms of settlement. We have also relied on the fact that while the settlement agreement covers a range of topics in some detail, it makes no reference to staffing levels. Had staffing levels and a date for meeting those staffing levels been part of the settlement, it seems logical to assume that the matter would have been covered in the agreement.

55. Mr. Irwin proposed that he serve on the hiring committee for CLEO's new executive director. The CLEO board rejected this proposal, although it did invite Mr. Irwin to sit on the committee as a non-voting member. The clinic hired Ms Taivi Lobu, a lawyer, as its new executive director. According to Mr. Fyshe, Ms Lobu has turned out to be "just marvelous". After Ms Lobu commenced working at the clinic, the clinic board established a restructuring committee to oversee the changes required to implement the New Directions agreement. Another committee was estab­lished, with representation from other clinics, to assess the requirements of the clinic system for legal material. Since the signing of the New Directions agreement, CLEO has almost completely eliminated its involvement with conferences and seminars and now concentrates on the production of hard copy. In line with the new directions agreement, CLEO has effectively become a central facility for the development and production of public legal educational material for the clinic system as a whole. Mr. Irwin and the clinic funding staff are apparently quite pleased with the manner in which CLEO has been fulfilling this role. Mr. Fyshe testified that OLAP's involvement in CLEO's affairs has now been reduced to a minimum.

NEIGHBOURHOOD LEGAL SERVICES

56. Neighbourhood Legal Services serves a low income community within the City of Toronto. It was founded as a collective, and until the events described below functioned without any management staff. It appears that in the late 1970's the clinic's effectiveness suffered as a result of internal strife, and certain staff members who were more concerned about making a social state­ment than serving the legal needs of the poor. This situation changed somewhat when a number of staff members were dismissed by the clinic's board of directors. Although Mr. Irwin was not on the clinic funding staff at the time of these occurrences, he testified that when he joined the staff in 1980 he formed the impression that in the past the clinic had been "totally bizarre". He also con­cluded that Neighbourhood Legal Services was one of the weakest clinics in the clinic system.

57. At the time of the events giving rise to these proceedings, NLS employed only one per­manent support person. In the result, community legal workers and lawyers were required to per­form most of their own secretarial and clerical work. On February 4, 1983 Mr. Irwin wrote to the chair of the NLS board with respect to clinic's application for funding for 1983/84. In his letter, Mr. Irwin stated that the clinic funding staff was concerned that NLS did not employ sufficient support staff to ensure the efficient delivery of legal services. Mr. Irwin advised the clinic board that the clinic funding staff did not intend to take any immediate action with respect to this matter, except to require that NLS prepare a report relating to its use of support staff. The preparation of such a report was made a special term and condition of funding for 1983/84.

58. The clinic funding staff decided to adopt a more activist approach with respect to the operation of NLS following the departure from the clinic of one of its staff members. This employee, who was referred to in the evidence both as Ms Bernadette Maxam and Bernadette Maxan, was a resident of the Regent Park Ontario Housing project. In August of 1978 she was hired by NLS as a community outreach worker. She proved to be a hardworking individual, who knocked on doors, distributed flyers and generally made Regent Park residents aware of NLS's activities. In 1981 Ms Maxam was appointed a community legal worker. Because of difficulties she experienced in analyzing legal problems and communicating effectively in writing, however, Ms Maxam proved unable to function effectively in this position. Notwithstanding that these difficul­ties were evident throughout both her regular and an extended probationary period, Ms Maxam was made part of the clinic's permanent staff. For a time other staff assisted Ms Maxam with her work, but in or about June of 1983 they indicated to the board of directors that they were no longer willing to do so. After a review of the situation by the board's personnel committee, the board decided that Ms Maxam's employment should be terminated.

59. In subsequent discussions between the personnel committee, members of the clinic staff and Ms Maxam, it was agreed that the appropriate resolution of the situation would be for the board to provide Ms Maxam with references and severance pay equivalent to six months salary, in return for which she would tender her resignation. The board of directors insisted that any imple­mentation of this agreement be subject to approval by OLAP. Ms Cynthia Wilkey, the then chair of the board's personnel committee, testified that this position was adopted out of a concern as to how OLAP might react to the settlement, as well as the fact that if the settlement funds were to be paid as a lump sum, they would have to come from OLAP. The clinic board also decided to seek legal advice from Ms Beth Symes, a solicitor who had previously acted for the clinic.

60. Following the conclusion of the settlement discussions with Ms Maxam, Ms Wilkey contacted the clinic funding staff. On or about July 28, 1983, Ms Wilkey and other members of the board of directors met with Mr. Irwin. Mr. Irwin expressed the view that the entire situation was indicative of inadequate and incompetent management on the part of the NLS board. Mr. Irwin also indicated that OLAP would not approve a six month payment to Ms Maxam unless such a move was supported by a legal opinion from Ms Symes. A written legal opinion from Ms Symes was provided to Mr. Irwin. It indicated that because of the length of time that Ms Maxam had been employed at NLS, the clinic would likely be unable to demonstrate that it had cause to dismiss her summarily for incompetence, and that in the circumstances six months' severance pay was not unreasonable. Mr. Irwin subsequently recommended to the Clinic Funding Committee that OLAP funds be advanced to the clinic so as to allow it to make a lump sum payment to Ms Maxam. The Committee agreed with the recommendation and the funds were advanced to the clinic. Deduc­tions were made from subsequent OLAP payments to the clinic to cover the advance. As a condi­tion of the advance, Mr. Irwin insisted that the position occupied by Ms Maxam be "frozen" and not filled without prior consultation with the clinic funding staff.

61. At about this time, the Clinic Funding Committee directed that an operations review be conducted of the NLS clinic. At a funding meeting held on November 4, 1983, Mr. Irwin proposed that the NLS board establish its own committee to conduct the operations review. He also pro­posed that the clinic funding staff act as a resource to such a committee and be involved in the development of the committee's agenda, time line and work. In addition to the operations review, Mr. Irwin proposed that changes be made to the staffing at the clinic. At the time there were two vacancies at the clinic in addition to the frozen position formerly held by Ms Maxam. One of the vacancies had formerly been filled by a lawyer, the other by a community legal worker. Mr. Irwin proposed that the position formerly occupied by the lawyer be filled by a lawyer who would also serve as the director of the clinic, and that the second position be filled by a qualified legal secre­tary. He also proposed that the clinic funding staff participate in the hiring for the two positions and that the hiring of any specific candidates be subject to approval by the clinic funding staff.

62. In a letter to the NLS board dated November 11, 1983 Mr. Irwin repeated the proposals he had made at the November 4th meeting. Part of his letter read as follows:

Hiring Decisions

The clinic funding staff also proposed that two steps be taken by the Board of Directors: hiring a lawyer/Director to fill the position previously occupied by Bev Wise; and hiring a qualified legal secretary to fill the position previously occupied by sandy MacEachern. We also proposed that the clinic funding staff participate in the hiring for these positions, and that the hiring of any particular candidates be subject to the approval of the clinic funding staff. we recommend that these positions be filled as soon as possible, and in any case not later than February 1, 1984.

While we appreciate that the two hiring decisions outlined above represent fundamental changes in the existing staffing component at the clinic, the clinic funding staff has concluded that the implementation of these changes are absolutely essential as initial steps which must be taken immediately if the general operations review over the next year is to be successful.

63. Subsequent to Ms Maxam's departure from the clinic, the NLS board had set up an organization and structures committee. This committee was charged with both reviewing the reporting arrangements between the board and its staff and also with performing the preparatory work for a full review of the clinic's organization, structure and management. By letter dated December 20, 1983 Ms Nancy Vander Plaats, the then chair of the NLS board, advised Mr. Irwin that the clinic proposed to continue with its plan for its own review with the assistance of an out­side consultant. Ms Vander Plaats did note that the clinic funding staff could assist the review by providing information to NLS concerning management models and staffing in other clinics. The implication contained in Ms Vander Plaats' letter was that apart from providing such information, the clinic funding staff would not have any involvement in the review.

64. In her letter, Ms Vander Plaats indicated that during the course of its proposed review, the clinic would look closely at the staffing suggestions proposed by Mr. Irwin. She advised Mr. Irwin that the clinic had decided to immediately hire a full time community legal worker as well as a lawyer on a six month contract position. This ran counter to Mr. Irwin's proposal that the clinic hire a lawyer-director as well as a legal secretary, that the clinic funding staff be involved with the hiring process, and that any hiring decision be subject to approval by the clinic funding staff.

65. The rejection of Mr. Irwin's proposals by the NLS board brought a quick response from the clinic funding staff. By letter dated January 18, 1984 Mr. Irwin advised the board that the clinic funding staff would initiate its own review of the clinic as part of its consideration of the clinic's application for funding for 1984/85. Mr. Irwin also indicated that the clinic funding staff intended to include a special term and condition in the clinic's certificate that it hire a lawyer/director and a legal secretary effective April 1, 1984. The relevant portion of the letter read as follows:

First, I want to confirm that the clinic funding staff intends to include a special term and condi­tion in your clinic's 1984/85 clinic certificate requiring the Board of Directors to hire a lawyer/Director and a qualified legal secretary, effective April 1, 1984. I am also confirming that this special term and condition will provide that job descriptions for the positions be approved by the clinic funding staff, that the clinic funding staff will participate in the hiring interviews, and that the hiring of any particular candidate for Director will be subject to the approval of the clinic funding staff. I am therefore confirming my request made to you by telephone in Decem­ber that the Board of Directors not enter into any contractual obligations in this fiscal year for replacement staff for any periods beyond March 31, 1984, in order to ensure that your Board of Directors may implement its terms and conditions of funding for 1984/85 without difficulty.

66. A funding meeting attended by representatives of the clinic funding staff, the NLS board and the NLS staff was held on February 28, 1984. Prior to this meeting, the NLS board had attempted to hire a lawyer on a six months' contract, but because there were no candidates for the position it had hired a lawyer on a permanent basis. At the meeting on February 28th the clinic funding staff indicated that they viewed this action as a demonstration of bad faith on the part of the NLS board. The clinic funding staff then requested that the members of the NLS staff who were present be excluded from the meeting. After the staff members had left, Mr. Irwin advised the the NLS board representatives that in light of both the board's refusal to accept the proposals of the clinic funding staff and its action in hiring a lawyer in the face of the opposition from the clinic funding staff, the staff was not prepared to recommend funding for NLS for the 1984/85 funding year. Mr. Irwin indicated that the NLS application for funds would go directly to the Clinic Funding Committee without any recommendation from the clinic funding staff.

67. Mr. Irwin testified that the decision to refer the NLS funding application directly to the Clinic Funding Committee was not meant as a threat to the NLS board, although he acknowledged that it appeared to have this effect. Ms Wilkey's testified that due to the possibility of the clinic being defunded, the board members present advised Mr. Irwin that they were agreeable to hiring a lawyer/director and to conducting an operations review with the clinic funding staff acting as a resource. In subsequent discussions, an arrangement was worked out for the establishment of a three-person committee. One member of the committee was to be a representative of the NLS board, one a representative of the clinic funding staff and the third a community representative acceptable to both the board and the clinic funding staff. This committee was to develop a "short­list" of candidates for the lawyer/director position, from which the NLS board would choose a lawyer/director. The details of this agreement were set out in a February 29, 1984 letter to the NLS board from Mr. Irwin as follows:

I am writing to confirm the agreement reached between your Board of Directors and the clinic funding staff at the funding meeting on Tuesday, February 28, 1984 concerning the hiring of a lawyer/Director by your clinic, and the procedures which will be followed in that process. Your Board of Directors and the clinic funding staff have agreed that the board of Directors will hire a lawyer/Director for the clinic as soon as is reasonably possible, in accordance with the follow­ing procedures:

1. A Shortlist Hiring Committee will be constituted and will be composed of one repre­sentative of your Board of Directors, one representative of the clinic funding staff, and one community representative who is acceptable to both.

2. The members of the Shortlist Hiring Committee shall have equal votes on all matters, and the majority vote shall rule.

3. Applicants who are currently staff lawyers at Neighbourhood Legal Services have the right to apply for the position of Director and shall be given full consideration by the Shortlist Hiring Committee, and shall be included on the shortlist if skills and qualifi­cations are higher than, or reasonably equal to, others included on the shortlist.

4. The job description, a list of skills and qualifications for the position, and wording for the job advertisement are to be recommended by the NLS Selection Committee in consultation with the clinic funding staff member of the 5hortlist Hiring Committee. Once the 5election committee and the clinic funding staff representative agree on the job description, a list of skills and qualifications for the position, and working for the job advertisement, they shall be approved by the NLS Board of Directors, and there­after shall be submitted to the Shortlist Hiring Committee for use in recommending candidates.

5. The Board of Directors of Neighbourhood Legal Services will then decide on the hir­ing of a particular candidate from those recommended by the Shortlist Hiring Com­mittee.

6. As its representative on the shortlist committee, the NLS board selected Mr. Bob Brosius, a board member who is also a chartered accountant. The clinic funding staff representative was Ms Susan Ellis, a member of the staff. The NLS board proposed that Ms Barbara Hall be the community representative on the committee, a proposal accepted by the clinic funding staff.

7. A further funding meeting attended by representatives of NLS and clinic funding staff was held on March 20, 1984. During this meeting, the clinic funding staff proposed that the perfor­mance of a general operations review by the NLS board, in consultation with the clinic funding staff, be made a special term and condition of the clinic's funding for 1984/85. The clinic raised no objection to such a condition. The clinic funding staff also proposed that certain other special terms and conditions be included in the certificate. One was that the board of directors ensure that open job competitions be held for any staff vacancies occurring in 1984/85. This proposed condi­tion related to events in February, 1984 when a vacant community legal worker position was tem­porarily filled by moving the clinic secretary into the position without first advertising the vacancy. The clinic funding staff contended that vacancies in community legal clinics should only be filled following an open job competition.

8. Another proposed term and condition proposed by the clinic funding staff was worded as follows:

Support Staff Arrangements

a. The Board of Directors shall reclassify one community legal worker position to create a second support staff position in the clinic in 1984/85.

b. This reclassification shall be implemented no later than July 31, 1984.

71. The clinic funding staff also proposed that the number of clinic staff funded by OLAP be reduced from 8 to 7. The eighth position was the one formerly held by Ms Maxam. The conten­tion of the NLS board was that the position in question should be converted into a support posi­tion, which would result in the clinic having two lawyers, four community legal workers and two support staff. The clinic funding staff rejected such an arrangement. It was of the view that the eighth position should be eliminated and that another community legal worker position be con­verted into a support staff position. This would result in the clinic having two lawyers, three com­munity legal workers and two support staff.

72. The proposed deletion of the eighth position, the proposed special terms and conditions referred to above, as well as a term proposed for NLS and all other clinics that the clinic report on its compliance with the Clinic Funding Committee's draft personnel policy, were all appealed to the Clinic Funding Committee.

73. The shortlist hiring committee reported in or about June 1984 that it had selected two applicants for the lawyer/director position. Both of these individuals were interviewed by the NLS board. Early in August the NLS board concluded that neither of the candidates was acceptable. According to Ms Wilkey's evidence, the board made this decision with "considerable trepidation" because of the clinic funding staffs possible response, but felt they were in a position of having to make a bad management decision or pleasing the clinic funding staff. Mr. Irwin attended at a NLS board of directors meeting held on or about August 23,1984. At the meeting Mr. Irwin insisted that the board's action in not hiring one of the two individuals put forward by the short list commit­tee was a breach of the agreement negotiated in February. He further stated that in consequence of this alleged breach and the time that had passed, the clinic funding staff would immediately pro­ceed with its own operations review of the clinic to be conducted by Ms Susan Ellis.

74. During the August 23, 1984 meeting, the appeal of NLS to the Clinic Funding Commit­tee, which was then scheduled to be heard on September 12, 1984, came up for discussion. There is some conflict in the evidence as to who raised the matter and what precisely was said. It is clear, however, that there was some reference to the fact that the events relating to the hiring of a lawyer/director would likely be raised at the appeal hearing. According to Ms Wilkey, from this discussion the members of the NLS board formed the opinion that at the appeal hearing the clinic funding staff would request that additional terms and conditions be imposed on the clinic or even that the clinic be defunded.

75. Following the August 23rd meeting, the NLS board decided to seek a legal opinion as to the ability of the Clinic Funding Committee to defund the clinic. To this end, Ms Wilkey contacted Beth Symes. Ms Symes subsequently advised Ms Wilkey that based on a discussion with Mr. Irwin, it was her opinion that the clinic was in "deep trouble", and that it should consider making a deal with the clinic funding staff rather than pursuing its legal options. Ms Symes indicated that Mr. Irwin was amenable to a deal provided a director and legal secretary were hired as quickly as possi­ble. Ms Symes noted that Mr. Irwin was prepared to have the NLS board and clinic funding staff agree on a mutually acceptable candidate for the director position. Ms Symes suggested that Ms Joana Kuras, a staff lawyer at another clinic, might prove to be such an individual.

76. At some point in late August or during September, 1984, the NLS executive committee interviewed Ms Kuras for the position of executive director. Also present at the interview were Ms Symes and, as an observer, Ms Ellis from the clinic funding staff. The two NLS staff lawyers subse­quently expressed an interest in being interviewed for the position. One of these lawyers had ear­lier applied for the job, but had been rejected by the shortlist hiring committee. The other lawyer had been called to the bar less than a year before. On September 25, 1984 Mr. Brosius, the chair­man of the NLS board, wrote to Mr. Irwin to advise him that the NLS executive committee pro­posed to interview the two staff lawyers that evening, and expressed the hope that Ms Ellis would be able to attend. The letter further indicated that the NLS executive committee would be making a recommendation concerning the hiring of an executive director at a meeting of the clinic's board of directors scheduled for September 27, 1984.

77. Mr. Brosius' letter was delivered to Mr. Irwin's office some time during the day on Sep­tember 25, 1984. Mr. Irwin's reply to Mr. Brosius was also delivered that same day. In his reply Mr. Irwin stated that the proposed interviews of the two staff lawyers was "not acceptable" and would constitute a breach of the shortlist hiring committee agreement entered into between the NLS board and the clinic funding staff. The letter stated that any further breach of the agreement would be regarded as demonstrating a lack of good faith, "with serious consequences".

78. The evidence does not indicate whether or not the NLS executive committee actually proceeded to interview the two staff lawyers for the executive director position. What is clear is that the NLS board offered the position to Ms Kuras. This resulted in the clinic having three law­yers, one more than it was funded for. The board of directors then terminated the services of the most recently hired staff lawyer. The lawyer was provided with a letter of reference from Mr. Irwin stating that his termination was related to the creation of an executive director position and not based on any negative conclusions concerning his performance as a staff lawyer.

79. In September 1984 Rev. E. Frerichs, an individual with considerable experience in the administration of public service organizations, was elected to the NLS Board of Directors. He was subsequently elected Chairman of the Board. Mr. Irwin had suggested Rev. Frerichs' name to the NLS board after being asked who might be willing to serve as a board member. This was at a time when there was significant turnover among board members. The evidence indicates that no pres­sure was brought on the clinic to elect Rev. Frerichs to the board. Further, there is nothing in the evidence to indicate that Mr. Irwin ever suggested that Rev. Frerichs be elected chairman of the board. Shortly after his election to the board, Rev. French reached the conclusion that NLS needed to tighten its management structure and that its board needed to claim more freedom from its staff.

80. The NLS appeal against the elimination of one of the positions being funded by OLAP was heard by the Clinic Funding Committee in October or November, 1984. On the basis that the position formerly occupied by Ms Maxam had not been utilized effectively, the Committee dis­missed the appeal. It appears that based on the agreement of the NLS clinic to hire a second sup­port person, this matter was not dealt with in the appeal.

81. Ms Ellis prepared an interim report concerning her review of NLS in October of 1984. Her report was critical of a number of aspects as the clinic's operations. This included the fact that individual caseworkers were spending a substantial amount of time performing receptionist duties and doing much of their own tying.

82. At a funding meeting held on February 24, 1986 as well as in a follow up letter dated March 4, 1986, Mr. Irwin expressed the view that the board and staff of the clinic had made great strides in addressing the problems at the clinic. He also commended the clinic for some of its recent work. Mr. Irwin went on, however, to describe as "not acceptable" the manner in which the clinic had been using a word processor. The word processor, which was owned by the Law Society, had been assigned to NLS early in 1986 on the basis that it needed this type of equipment. The equip­ment was placed on the second floor of the clinic where it was utilized for about two hours in the morning by the clinic's secretary. The secretary worked downstairs on the main floor in the afternoon. According to Ms Esther Ishimura, the then Vice-President of the union local, the union wanted the word processor placed upstairs because of concerns for the health of anyone sitting in front of it all day and also because the secretary wanted privacy when working on it. Mr. Irwin indicated that unless the situation was remedied, the word processor would be removed from the clinic.

83. In May of 1986, NLS proposed that the matter of the work processor be resolved by OLAP funding an additional position for an intake worker, which would serve to free up the clinic secretary and allow her to spend more time on secretarial duties. Mr. Irwin indicated that no extra OLAP funds would be provided for such a position. In discussions with Mr. Irwin, Rev. Frerichs claimed that part of the problem with respect to the word processor involved certain job descrip­tions which the clinic had negotiated with the union. Mr. Irwin's reply was that this was a problem the clinic would have to address and that unless the situation improved the word processor would be removed. Mr. Irwin assured Rev. Frerichs that a member of the clinic funding staff would come and evaluate the clinic's use of the equipment before any final decision was made to actually remove it.

84. In early October of 1986 Ms Vaughan of the clinic funding staff telephoned Rev. Fre­richs and advised him that she intended to spend two days reviewing the clinic's use of the work processing equipment. This was confirmed in a letter to Rev. Frerichs dated October 8, 1986. Ms Vaughan was, however, denied entry into the clinic to perform the review. Later in October the word processor was moved to the first floor of the clinic. Mr. Irwin was notified of this move. He was also advised that a member of the clinic's support staff was being promoted into a vacant com­munity legal worker position and she, in turn, would be replaced by a qualified legal secretary. On October 28, 1986, the NLS board and the union entered into a memorandum of agreement provid­ing for changes in the work duties of certain employees. The changes were made to enable more effective use of the word processor. Given these events, on November 3, 1986 Mr. Irwin advised the board of the clinic that the clinic funding staff would defer its evaluation of the use of the word processing equipment.

85. Ms Kuras started as the NLS director in November, 1984. In March of 1985, under her direction, the clinic commenced an operations review. The review was conducted by the board and staff of the clinic. Mr. Mike Balkwill of the Ontario Association of Legal Clinics assisted as a resource person and facilitator. It was made a term of the clinic's 1985/86 certificate that the review continue and that progress reports be provided to the clinic funding staff. The review resulted in a number of changes to the clinic's operations. In response to these changes, the clinic negotiated new job descriptions with the union. The clinic funding staff has apparently been increasingly pleased with the operation of the clinic. According to Mr. Irwin, the last two funding certificates issued to the clinic did not contain any special terms or conditions, and that with respect to the 1987/88 funding year, the clinic funding staff did not even require that it meet with the NLS board.

INJURED WORKERS' CONSULTANTS

86. Injured Workers Consultants was originally incorporated in 1971. It is a specialty clinic which primarily represents workers with respect to workers' compensation claims. Except for rela­tively small sums received as contributions from injured workers and the payment to staff for instructing on workers compensation matters, the clinic is totally funded by OLAP. In his evidence Mr. Irwin agreed that some 95 per cent of the clinic's funds come from OLAP. Ms Rosemary Tait, formerly a community legal worker and administrative coordinator at the clinic, testified that the clinic had attempted to raise money from foundations and various levels of government, but were consistently turned down when the potential donor discovered that the clinic was already being funded by OLAP.

87. Historically, the staff of Injured Workers' Consultants functioned as a collective. There was no manager, although a community legal worker did serve as a coordinator. The clinic did not have a lawyer on staff. If a community legal worker required legal assistance, he/she utilized the services of duty counsel. The clinic also did not employ a full-time secretary. This meant that the community legal workers spent much of their time performing clerical and secretarial functions. All employees were paid the same wage, regardless of what they were doing or how long they had been doing it. Mr. Irwin viewed the collective structure of Injured Workers Consultants, as well as its lack of a secretary, as among the reasons why, in his view, the productivity of the clinic was below an acceptable level. He also formed the opinion that the lack of a staff lawyer meant the clinic was unable to provide a full range of legal services and that the community legal workers were not being properly supervised.

88. Early in 1984 the clinic's board of directors concluded that it really did need to employ a legal secretary, and requested extra funding so that it could create such a position. On February 24, 1984 Mr. Irwin wrote to the board and advised it that the clinic funding staff was opposed to the clinic receiving any extra money to create a new position. He further stated that the clinic fund­ing staff proposed to make it a special term and condition of funding for the 1984/85 fiscal year that the clinic hire a legal secretary and a lawyer. In his letter, Mr. Irwin set out the proposed special terms and conditions as follows:

89. Staffing Component

a. The Board of Directors shall alter its existing staffing component of nine community legal workers to a staffing component consisting of one lawyer, seven community legal workers, and one legal secretary.

b. This alteration of the existing staffing component of the clinic shall be accomplished through attrition at the first available opportunities, and the secretarial position shall be created first.

c. A staff position shall be deemed vacant and available for conversion in accordance with this term and condition:

(i) upon termination, resignation, or dismissal or any existing employee; or

(ii) upon the granting of any leave of absence, with or without pay, for a period exceeding one month, other than in accordance with the maternity or sick leave provisions of the clinic's collective agreement.

89. Injured Workers' Consultants sought leave to appeal to the Clinic Funding Committee against the proposed special terms and conditions, and also against the denial of additional funds to immediately hire a legal secretary. The Committee denied leave to appeal with respect to the request for additional funds, but did grant leave with respect to the proposed requirement that the clinic employ a lawyer. By decision dated January 15, 1985, the Committee declined to make the employment of a staff lawyer a condition of funding.

90. As part of the general terms and conditions imposed on all clinics for the 1984/85 fiscal year, Injured Workers' Consultants was required to report on its compliance with the Clinic Fund­ing Committee's draft personnel policy. The clinic filed such a report on or about March 28, 1984. The report indicated that the clinic was not in compliance with many of the provisions of the Com­mittee's draft personnel policy. With respect to eight specific items relating to vacations, statutory holidays, paid maternity leave, sick leave, unpaid leave of absence and leave for the purpose of standing for election, the report noted that the clinic was in non-compliance because of a conflicting provision contained in its collective agreement with the union.

91. A funding meeting with respect to the 1985/86 fiscal year was held between representa­tives of the clinic funding staff and the board of Injured Workers' Consultants on February 25, 1985. During this meeting, the clinic funding staff voiced concern about the fact that two staff rep­resentatives sat on the clinic's nine member board of directors. The clinic funding staff further indi­cated that it had been inappropriate for these two staff members to sit in on board discussions and votes regarding the board's ratification of the collective agreement, even though they themselves did not vote. The clinic funding staff also reviewed the clinic's personnel policies and the extent to which they exceeded the Clinic Funding Committee's personnel guidelines.

92. Mr. Irwin wrote to the Injured Workers' Consultants board on March 6, 1985. In his letter he indicated that the clinic funding staff proposed to make it a special term and condition of funding that the clinic not utilize OLAP provided funds to pay for benefits in excess of certain sti­pulated limits. In this regard, his letter read as follows:

PERSONNEL POLICY

In accordance with the directions of the Clinic Funding Committee, the clinic funding staff has reviewed the personnel policies presently in place at your clinic. As we discussed at the funding meeting, IWC's personnel policies exceed the Committee's Guideline in a number of areas, including:

• Vacations (4 weeks, years 1-4; 5 weeks, years 5-10; 6 weeks thereafter)

• Sick leave (24 days per year, with carry over)

• Holidays (15 days per year)

• Maternity leave (UIC sup. to 17 weeks + 6 mths. leave A 50% full pay, whether or not the employee is eligible for UIC benefits)

• Paternity leave (2 months A 50% full pay or, in the case of a primary caring parent, the same as maternity leave provisions)

• Adoption leave (6 months leave with supp. to UIC to 95% of full salary; or 50% of full salary)

Our overall assessment is that these paid leave provisions greatly exceed the acceptable range contemplated by the Clinic Funding Committee when it adopted the Guideline and accepted the view that some flexibility should be preserved in this area for individual Boards. As we indicated at the funding meeting, the only interest of the Clinic Funding Committee in this area is to ensure that acceptable standards are adopted by Boards of Directors with respect to the expen­diture of funds provided by the Ontario Legal Aid Plan. The Ontario Legal Aid Plan has no interest in regulating the actual terms of employment between you Board of Directors and its employees; this area remains a matter entirely within the control of the Board of Directors, and subject to the contractual obligations which it undertakes with its staff, either individually or though the collective bargaining process.

The clinic funding staff has therefore decided to include the following special term and condition of funding in your clinic's 1985/86 clinic certificate:

2.Use of Legal Aid Funds

a. The Board of Directors shall ensure that funds provided by the Ontario Legal Aid Plan are not used to pay clinic staff on leaves of absence or absent from work, except as hereinafter provided, within the following categories:

(i) holidays;

(ii) maternity leave;

(iii) paternity leave;

(iv) adoption leave;

(v) sick leave.

b. Notwithstanding (a) above, the funds provided by the Ontario Legal Aid Plan may be used to pay clinic staff on leaves of absence, as follows:

(i) up to 11 paid holiday days per year;

(ii) where an employee is eligible for UIC benefits during a maternity leave, up to the maximum payable pursuant to a supplementary unemployment benefits plan approved by the Commission during the 17-week period of UIC entitlement;

(iii) up to 5 days paid paternity leave.

(iv) where an employee is eligible for UIC benefits during an adoption leave, up to the maximum payable pursuant to a supplementary employment benefits plan approved by the Commission during the period of UIC entitlement;

(v) up to 15 days paid sick leave per year.

93. When testifying in these proceedings, Mr. Irwin acknowledged that when the clinic funding staff proposed the special term and condition it did not know how much time the staff at Injured Workers' Consultants had been away from work on leaves or the amount of production lost as a result of such leaves.

94. The collective agreement binding on Injured Workers' Consultants was stated to run from April 1, 1983 to March 31, 1985. The proposed special term and condition was to become effective April 1, 1985, after the stated expiry date of the collective agreement. Having regard to the realities of the bargaining process, however, and the "freeze" provisions of section 79 of the Act, it would have been reasonable to assume that the terms of the collective agreement would continue to be binding on the parties for some period thereafter. It appears that the terms of the agreement actually remained binding on the parties until February 19, 1986 when a new agreement with a term of April 1, 1985 to March 31, 1986 was entered into. This new agreement contained similar provisions to those in the prior collective agreement which conflicted with the proposed special term and condition.

95. Two other clinics which negotiated collective agreements jointly with Injured Workers' Consultants, namely Central Toronto Community Legal Clinic and Metro Tenants' Legal Services, were also faced with the same proposed special term and condition. Similar terms and conditions were also proposed for Tenant Hotline and Community Legal Services (Ottawa-Carleton). All five clinics sought leave to appeal the special terms and conditions to the Clinic Funding Committee. The clinic funding staff opposed the granting of leave. A position paper prepared by the clinic funding staff in April, 1985 in support of its position read, in part, as follows:

96. It is submitted that the provision of clinic staff leaves of absence impinges directly on the amount of time available for, and the quality of client services. Thus the CFC's responsibility to the public for the proper expenditure of public funds and the quality of legal services is the basis of its jurisdiction to establish limits on the use of these Legal Aid funds.

97. It is submitted that the obligations of the Boards of Directors pursuant to their con­tractual obligations to employees and pursuant to the Ontario Labour Relations Act, do not, in any way, prevent the CFC from exercising its jurisdiction to regulate the use of Legal Aid funds in this way.

98. On June 4, 1985 Mr. Hugh Guthrie, the then chairman of the Clinic Funding Commit­tee, advised Dr. James Meuser, the chairman of the board of Injured Workers' Consultants, that the clinic's request for leave to appeal the proposed special term and condition had been denied. The requests for leave to appeal of the other four clinics were also denied. On July 19, 1985 Dr. Meuser wrote to Mr. Guthrie to advise him that the clinic's board had unanimously voted not to sign a certificate containing the special term and condition pending an application for judicial review. By letter dated September 3, 1985, Mr. Thomas Bastedo, now the chair of the Clinic Fund­ing Committee, advised Dr. Meuser that Injured Workers' Consultants would continue to be funded by OLAP pending the resolution of the judicial review application, but at the 1984/85 rate. Mr. Bastedo also indicated to Dr. Meuser that OLAP funds could not be utilized for the judicial review application.

99. On April 9, 1986 Mr. Irwin wrote to the Injured Workers' Consultants board enclosing the terms of a proposed funding certificate for the 1986/87 fiscal year. Included was a special term and condition similar to that proposed for 1985/86 which the clinic had refused to accept. About this time, there was considerable discussion and correspondence concerning the funding levels for Injured Workers' Consultants and the other three clinics involved in the judicial review. On May 14, 1986 Mr. Irwin advised the board of Injured Workers' Consultants that if the clinic signed the proposed 1986/87 certificate, including the special term and condition, it would receive funding at the 1986/87 level both for personnel and operating costs. Mr. Irwin also indicated, however, that if the clinic decided not to sign the 1986/87 certificate pending the outcome of the judicial review application, it would receive grants to cover its operating costs at the 1986/87 level, but grants to cover its personnel costs only at the 1984/85 level. On or about May 28, 1986 the board of Injured Workers' Consultants advised Mr. Irwin that it was not prepared to sign its 1986/87 certificate pending the outcome of the judicial review application.

100. In a joint factum the four clinics involved in the application for judicial review made the following arguments with respect to their relationship with the union. References to certain legal authorities at the end of each paragraph have been omitted:

101. It is respectfully submitted that the Legal Aid Regulation must be read in a manner consis­tent with the Ontario Labour Relations Act, R.S.O. 1980, Chap. 228.

102. With respect to the existing collective agreement, their observance is a statutory obligation on the part of the applicants.

103. It is submitted that the Legislature did not contemplate that the applicants be allowed to enter into collective agreements and then be forced to breach them.

104. Furthermore, the action of the respondents constitutes wrongful direct interference in the pre-existing contractual relationship between the applicants and the Union, by intentially induc­ing or procuring the breach of that contract, or preventing or hindering its performance.

105. Where a legislature has desired to create a situation where an employer may be prohibited from paying part of the compensation or benefits provided for in a collective agreement, special statutory authority has been provided.

106. Since the Legal Aid Fund is virtually the exclusive source of funding for the applicant, it is specious to maintain that the conditions herein do no directly regulate the personnel policies of the applicants or preclude them from paying benefits with non-legal aid funds.

107. with respect to both existing and future collective agreements,

(a) It is submitted that it was not the purpose of Part X of the Legal Aid Regulation to draw the respondents into the vortex of collective bargaining between the applicants and the Union. Nor was it intended to put the respondents in the position of qua-employer. Yet the imposition of the conditions herein would have just those results.

(b) Furthermore, by imposing benefit levels lower than those established in the existing collec­tive agreements, the respondents are effectively fixing those benefits. The respondents are thus attempting to dictate terms of future collective agreements without undertaking the responsibil­ity of collective bargaining.

99. The respondents to the judicial review application, namely the Law Society, The Clinic Funding Committee and The Director of Legal Aid, filed a factum which made the following points:

2/ The argument as to independence

25. It is respectfully submitted that the Respondents have a duty to supervise the use of public funds. It is submitted that the condition in this case carries out that duty. It does not interfere with the clinics' operation of their legal aid work nor with any aspect of their administration other than personnel policies. It is essential to the public interest that there be some limits on such policies.

26. While the Respondents do not have to go so far, it is respectfully submitted that the Appli­cants' present personnel policies are unreasonable. It is submitted that the Respondents would have been derelict in permitting public funds to be used to fund those policies.

3/ The argument as to collective bargaining

27. It is respectfully submitted that the condition imposed by the Respondents does not affect the Applicants' position with regard to the union. It must be an express or implied term of any collective agreement that the rights negotiated thereunder are limited by the funds available to the corporation involved, where that corporation is funded by the public purse.

28. Further, it is submitted that the union can not argue that the Applicants failed to bargain in good faith when the Applicants are simply complying with a lawful term of their funding:

"The duty to bargain in good faith does not regulate the content of collective agree­ments, but only the manner in which they are negotiated."

USWA Loc. 13704 v. Can. Industries Ltd. [1976] OLRB Rep 199 (OLRB).

In that case, the Board held that there was no conflict between the duty to bargain in good faith and the obligation to comply with the Anti-Inflation Act. (The case is referred to in CED (3d) Volume 18, Part IV, paragraph 198.)

100. The Divisional Court released its judgement with respect to the application for judicial review on August 27, 1986. That judgement is set out in full below:

McRAE J.: (Orally)

This is an application for judicial review of a decision of the committee established pursuant to the regulations under the Legal Aid Act wherein the committee set conditions with respect to personnel benefits dealing with members of maternity leave, paternity leave, adoptive leave, sick leave and statutory holidays for the applicant legal aid clinics.

The main thrust of the argument of the applicants is, that the establishment of these conditions is an improper and unlawful interference with the independence of legal aid clinics prescribed by the regulations of the Legal Aid Act. we are not persuaded by this argument. Section 150 in Part 10 of Regulation 575 reads:

150.-(1) It is the function of the Committee, and it has power,

(a) to direct the staff in the administration of this part;

(b) to establish policy and guidelines in respect of the funding of clinics;

(c) to review and make recommendations to the Director in respect of applica­tions for the funding of clinics, including such terms and conditions of fund­ing as the Committee considers advisable;

In our view, section 150 gives the committee broad power to set guidelines for the spending of public money by legal aid clinics.

The conditions of the certificates complained of do not interfere with the independence of the clinic in rendering or delivering quality legal services to the community. The respondent com­mittee did not exceed its mandate but merely performed its public duty to ensure accountability of public funds.

We also are not persuaded that the conditions set by the committee would result in an infringe­ment of the Labour Relations Act in the present circumstances.

The applicants further submit that the conditions would force a breach of their collective agree­ment with the Union and refer to the decision of Lord Denning M.R. in the case Torquay Hotel Co. Ltd. v. Cousins and Others. The principle of law set out by Lord Denning is as follows:

The principle of Limley v. Gye (1853) 2 E. & B. 216 is that each of the parties to a contract has a "right to the performance" of it: and it is wrong for another to procure one of the parties to break it or not to perform it. That principle was extended to step further by Lord Macnaghten in Quinn v. Leathem [1901] A.M. 495, so that each of the parties has a right to have his "contractual relations" with the other duly observed. "it is," he said at p. 510, "a violation of legal right to interfere with contrac­tual relations recognized by law if there be no sufficient justification for the interfer­ence."

The clause "no sufficient justification" in our view, is dominant. Here, the act com­plained of is pursuant to valid legislative authority and is sufficient justification.

For those reasons the application is dismissed.

101. Following the dismissal of the application for judicial review, the board of Injured Workers' Consultants signed a 1985/86 funding certificate containing the special personnel term and condition. The special term and condition did not foreclose the clinic from meeting its collec­tive agreement obligations with non-OLAP funds, but as noted above, OLAP funds account for some 95 percent of the clinic's revenues. Ms Susan Howlett, a community legal worker employed by the clinic, took maternity leave from March 15 to September 15, 1987. Pursuant to a collective agreement provision, once her entitlement to receive unemployment insurance maternity benefits was exhausted, Ms Howlett became entitled to receive a further nine weeks of paid leave. The clinic utilized all of the funds it had obtained from lecturing fees and donations from injured work­ers in an attempt to cover the extra payments. After about six weeks, however, these funds were exhausted and the payments ceased. Ms Howlett filed a grievance. The board did not dispute her entitlement to additional payments but indicated that it had no funds with which to pay her.

DECISION

102. Section 1(4) of the Labour Relations Act provides as follows:

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

103. OLAP contends that its activities are not associated or related to those of the three clin­ics and, accordingly, section 1(4) can have no application to these proceedings. We disagree. OLAP and the three clinics are involved in providing legal services to the poor. The clinics do so directly. OLAP do so, in part, by providing the clinics with over 90 percent of their revenues. OLAP places conditions on the use of those funds and monitors the activities of the clinics to ensure that the money is not spent for purposes other than those approved by OLAP. These con­siderations lead us to conclude that OLAP and the respondent clinics are, in fact, engaged in asso­ciated or related activities.

104. A second precondition for the application of section 1(4) is that associated or related entities be under common direction or control. In most instances, common direction or control over different legal entities arises from the fact that they have common owners, officers or direc­tors. Common direction or control can, however, also arise in other fact situations. For example, in Evans Kennedy Construction Limited, [1979] OLRB Rep. May 388, the major shareholder and manager of a construction company also directed the affairs of a second construction company owned by a close personal friend who knew nothing about the construction industry. The Board found the two company's to be under common direction or control. A similar conclusion was reached in J. H. Normick Inc. [1979] OLRB Rep. Dec. 1176. That case involved J. H. Normick, a large woods operator which maintained close control over the operations of a subcontractor retained to cut timber pursuant to a timber cutting licence held by Normick. The Board also found there to be a common direction or control in Brantwood Manor Nursing Homes Limited [1986] OLRB Rep. Jan. 9. That case involved a nursing home which contracted with certain outside agen­cies to perform house-keeping, laundry, maintenance and nursing aid functions but retained sub­stantial control over how the functions were to be performed.

105. In the instant case, the three clinics receive almost all of their revenue from OLAP. This, by itself, does not mean that OLAP and the clinics are under common direction or control. It does, however, mean that OLAP is in a position to influence the management and operations of the clinics. Following an indication from the clinic funding staff that if it did not do so it might be defunded, Neighbourhood Legal Services changed its management structure from a collective to a hierarchical model with a director. To avoid having the clinic defunded, the board of Injured Workers' Consultants signed a funding certificate which effectively required that it apply certain personnel terms it did not agree with. Also in response to the possibility of being defunded, CLEO adopted the view expressed by the clinic funding staff that the clinic should concentrate on the pro­duction of hard copy for use by the clinic system. Although a number of board members at CLEO had themselves been in favour of such a move, it was only after clinic funding staff had proposed to defund the clinic that the board as a whole agreed to the change. Given these considerations, we are satisfied the three clinics are, in fact, under the common direction or control of both OLAP and their respective boards of directors.

106. The two statutory preconditions for the Board to make a common employer declaration with respect to the three clinics have been met. Section 1(4), however, leaves to the Board a dis­cretion as to whether or not it will actually make such a declaration. The Board's practice is to exercise that discretion and make a common employer declaration only where there exists a legiti­mate labour relations rationale for doing so. Thus where a unionized entity has sought to escape its collective bargaining obligations by directing work to a related non-union entity, the Board has made a common employer declaration to prevent the erosion of the union's bargaining rights. See: Great Atlantic and Pacific Company of Canada [1981] OLRB Rep. March 386. The Board has also made a common employer declaration in instances where two or more related entities with sepa­rate work forces have been carrying on an integrated operation. The declaration was made in order to ensure a viable structure for collective bargaining. See: Walters Lithographing Company [1971] OLRB Rep. July 406. A common employer declaration has also been made to ensure that a union is able to deal directly with a person or company processing real economic control over employees, rather than someone who is their employer in name only. See J. H. Normick Inc., op. cit.

107. In the instant case no concern arises about a transfer of work to escape the union's bar­gaining rights. Further, in that the union was content to acquire its bargaining rights on a clinic by clinic basis, there is also not a concern about viable bargaining structures in the sense of the scope of individual bargaining units. In support of its request for a common employer declaration, the union contends that its ability to bargain wages and benefits at the clinics is restricted by the level of funds they receive from OLAP. The ability of many employers to agree to higher wage levels, however, is conditioned by the level of their revenues, whether they come from a funder or from one or more customers. This factor alone is not, in our view, a sufficient basis to make a common employer declaration. On the facts of this case we also do not view the general conditions of fund­ing and policies that are applied to all clinics as justifying a 1(4) declaration, particularly given that the union did not take the position that OLAP was a co-employer at the time it acquired its bar­gaining rights. In our view, this case turns on the issue of whether OLAP has so involved itself in the affairs of the respondent clinics that to ensure meaningful collective bargaining the union should be able to negotiate with OLAP as well as the clinics.

108. With respect to CLEO, it is clear that the position adopted by the clinic funding staff together with the threat of being defunded led the clinic's board of directors to decide to shift the clinic's operations away from seminars and conferences towards the production of hard copy for the clinic system. Any resulting impact on personnel matters, however, such as changes to employee job descriptions, was indirect and not directly mandated by OLAP. The detailed con­cerns raised by Mr. Irwin in April, 1985 with respect to the contents of the newly negotiated collec­tive agreement were vigorously rejected by the chair of the clinic's board and apparently were not a consideration in the clinic funding staff's subsequent determination that CLEO should be defunded. It will be recalled that it was a belief on the part of the union and CLEO staff that Mr. Irwin had insisted that the number of staff at the clinic be reduced by June 30, 1986, even if employees had to be laid off to meet this target, that was largely responsible for the decision to file the section 1(4) application. As noted above, however, we are satisfied that although Mr. Irwin disapproved of the clinic's action in employing a greater number of staff than it was being funded for, apart from refusing the clinic extra funds, he was prepared to allow the clinic to continue to employ extra staff. The decision to reduce the number of staff was made by the CLEO board. Given these considerations, we are led to conclude that although OLAP involved itself with the internal operations of CLEO, this involvement did not impact on personnel and labour relations matters to such an extent as to warrant the making of a common employer declaration.

109. OLAP involved itself in a major way with the internal operations of both Neighbour­hood Legal Services and Injured Workers' Consultants. Because of concerns that the clinic might otherwise be defunded, the NLS board agreed to the clinic funding staff's proposal that the clinic cease to function as a cooperative and hire a director. Members of the clinic funding staff were then involved in the hiring process for this position. When the clinic's executive committee indi­cated that it intended to interview the clinic's two staff lawyers for the position, Mr. Irwin responded that this was "not acceptable". When the services of one of these lawyers was later ter­minated, he was provided with a letter of reference from Mr. Irwin. OLAP was also involved in such personnel-related matters as the composition of the clinic's staff, the process by which vacant positions were to be filled and the assignment of staff to a particular piece of equipment. At Injured Workers' Consultants, OLAP, over the ongoing objections of the clinic's board of direc­tors, made it a condition of funding that the clinic follow a number of personnel policies at variance with the terms of its collective agreement with the union. Although this limitation related only to the expenditure of funds provided by OLAP, the reality of the situation was that the clinic would either have to get the union to alter the terms of the collective agreement so as to conform with the conditions set by OLAP, or breach the agreement. When one of the clinic's staff took a leave in excess of the terms set by OLAP, the clinic tried to meet its collective agreement obligations, but was unable to do so. Given the detailed involvement of OLAP in personnel issues at both Neigh­bourhood Legal Services and Injured Workers' Consultants, we are satisfied that the collective bargaining process would be best served by bringing OLAP into the bargaining process. Accord­ingly, we are satisfied that OLAP and the clinics should be treated as a single employer for the pur­poses of the Labour Relations Act.

110. At the hearing, counsel for OLAP contended that due to the purpose of community legal clinics and the regulation governing their funding, it would be inappropriate for the Board to make OLAP a common employer. He further suggested that for the Board to do so might result in a clinic no longer being "independent" as required by the regulation. This Board is not charged with the responsibility of interpreting and applying the clinic funding regulation. It is, however, charged with interpreting and applying the Labour Relations Act, a statute which governs employ­ment relations at both Neighbourhood Legal Services and Injured Workers' Consultants. Our con­clusion that OLAP and the clinics should be declared to be a single employer does not serve to inject OLAP into personnel and industrial relations matters at the clinics, but simply recognizes that OLAP, in the furtherance of its mandate, has already involved itself with such matters. We also note that a declaration by the Board applies only for the purposes of the Labour Relations Act and no other.

111. In reaching our decision we have rejected OLAP's contention that the Board should refrain from making a section 1(4) declaration since to do so would expand the scope of the union's bargaining rights to other OLAP employees. We are satisfied that a declaration can be limited to the staff employed at the two clinics in question.

112. We have also rejected the contention of OLAP that the Board should refuse to grant a common employer declaration because of the union's delay in bringing these applications. Instances where the Board has declined to grant a common employer declaration due to delay have generally involved situations where a union has stood by and not sought to protect its bargaining rights while a non-union work force has been assembled and employed over a considerable period of time. The Board has declined to make the declaration on the basis that the employees involved should have a say in whether or not they will be represented by a union. See: ElIwall and Sons Construction Limited, [1978] OLRB Rep. June 535. In the instant case, if the union were relying solely on the situation as it existed at the time it acquired its bargaining rights, we would likely decline to make a common employer declaration. This is because had the union made such a request during the course of the certification and/or successor trade union proceedings, the clinics and/or OLAP might have adopted a different position with respect to those proceedings. In the instant case, however, the events which justify the exercise of the Board's discretion to grant a common employer declaration occurred subsequent to the union obtaining its bargaining rights. With respect to the Injured Workers' Consultants, the related employer application was brought a few weeks after the Divisional Court had upheld OLAP's ability to impose a special term and con­dition with respect to personnel-related matters and the clinic had accepted that term and condi­tion. There cannot reasonably be said to have been any delay at all. At Neighbourhood Legal Ser­vices, direct OLAP involvement in personnel matters goes back to at least 1983. We do not, however, believe that the failure of the union to make a related employer declaration at that time foreclosed it from making a later application based upon OLAP's continuing involvement in per­sonnel related matters. In particular, it is not alleged that OLAP has been prejudiced by the fact the union did not bring an earlier common employer application during or subsequent to 1983.

113. We turn now to consider the section 89 complaints alleging a breach of section 70 of the Act. At the hearing the union indicated that it was pursuing these complaints in the alternative, and only with respect to those clinics for which the Board declined to made a common employer declaration. Section 70 provides as follows:

No person, trade union or employers' organization shall seek by intimidation or coercion to compel any person to become or refrain from becoming or to continue to be or to cease to be a member of a trade union or of an employers' organization or to refrain from exercising any other rights under this Act or from performing any obligations under this Act.

There is nothing in the evidence to indicate that either OLAP or Mr. Irwin sought to compel the board members at CLEO, by means of intimidation or coercion, to refrain from exercising their rights under the Act, or from performing any obligations under the Act. In the result, the section 89 complaints cannot succeed.

114. Having regard to all of the foregoing, the Board hereby declares that with respect to bargaining unit employees at Neighbourhood Legal Services, the Ontario Legal Aid Plan Under the Administration of the Law Society of Upper Canada and Neighbourhood Legal Services con­stitute a single employer for the purposes of the Labour Relations Act. The Board further declares that with respect to bargaining unit employees at Injured Workers' Consultants, the Ontario Legal Aid Plan under The Administration of the Law Society of Upper Canada and Injured Workers' Consultants constitute a single employer for the purposes of the Act. In all other respects, these applications are dismissed.

DECISION OF BOARD MEMBER JUDITH RUNDLE; August 29, 1989

1. I dissent from the position taken by the majority. It is my view that this decision is wrong in terms of labour relations policy, wrong in law, and can only result in the closure of the two clinics in respect of which the majority proposes to make a "single employer" declaration. The majority's decision would result not only in the loss of jobs by those employed in those clinics, but the removal of the very important legal services which they provide to the needy communities which they now serve.

2. For the Board to be able to issue a declaration under Section 1(4), the two criteria of the section must exist: the entities in question must be carrying on associated or related activities or businesses; and they must be under common direction or control.

3. The finding of the majority that the Ontario Legal Aid Plan under the Administration of the Law Society of Upper Canada and Neighbourhood Legal Services, on the one hand, and OLAP and Injured Workers Consultants, on the other hand, fulfill these criteria is wrong in my respectful opinion. That finding is inconsistent with the legislation and regulation under which the clinics and OLAP operate. It is inconsistent with the findings of the Divisional Court that several clinics including IWC are in fact "independent" from OLAP notwithstanding the key restrictions complained of in this case.

4. OLAP and the clinics operate under the Legal Aid Act and the accompanying Regula­tion. The entire purpose and design of the regulatory framework, as well as the policies of the Clinic Funding Committee of OLAP, is that they are designed to avoid control of the clinics by OLAP. The regulation provides:

"'Clinic' means an independent community organization providing legal services or paralegal services or both on a basis other than fee for service."

The evidence disclosed that this definition of a clinic as an "independent community organization" was inserted in the Regulation after the Report of the Commission on Clinical Funding, by the Hon. Mr. Justice Grange in 1978. That report emphasized that Legal Aid Clinics were in fact inde­pendent, and that the Regulation must ensure that they remain so. At p.2 of his Report (OLAP Exhibit #2) he stated:

Section 147 of the Regulation makes provision for the funding of "independent community based clinical delivery systems" and I approve of the term "independent" because it recognizes that clinics are to be free from any governmental control and are to be allowed to run their affairs, in effect, like a private law firm (subject to their duty to account for public funds)."

Again at page 22 of his Report, Mr. Justice Grange stated:

"(c) Role of Governing Board of Clinics: Most of the clinics are indeed community based and community controlled, generally by a Board of Directors elected or drawn from the community served by the clinic. The object is two-fold: first, to give the community, the intended beneficiar­ies, some control over the delivery of legal services; and second, to involve the deliverers of those services in the affairs of the community... .Much of the credit must go to the strong role played in their development and operation by the Boards of Directors. If the movement is to develop and progress with the continuing confidence of the clients, that role must not be eroded. The Boards must continue to govern the affairs of the clinics, both as to policy and administra­tion, subject only to accountability for public funds advanced and for the legal competence of the services rendered. [The passage then continues as quoted at paragraph 12 of the majority decision]".

5. In my view, a declaration that OLAP and either of these clinics "constitute a single employer for the purposes of this Act "is inconsistent with the Clinic Funding Regulation. The majority, in making such a declaration, is in effect altering the legal relationship between -- and the required separation of -- OLAP and these clinics. This is, in my opinion, beyond our jurisdiction.

6. A clinic cannot be "an independent community organization" while at the same time being bound together with OLAP as "one employer for the purposes of the Labour Relations Act. If a clinic is "independent",it by definition is not under the "common direction and control" of another entity such as OLAP. While one recognizes that these two phrases are found in different pieces of legislation, they nonetheless have opposite or contradictory meanings. Therefore, given that these clinics have been found to be independent and eligible for funding, I do not see how this Board can conclude otherwise.

7. An example of this contradiction relates to the employment of clinic employees under the Regulation, OLAP has no authority to employ anyone who works in a clinic. The Regulation only authorizes the Clinic Funding Committee to have certain Clinic Funding Staff "for the pur­poses of the administration of this part" of the Regulation (S 4(1)(g) of the Regulation). Yet, the decision of the majority makes OLAP the employer of clinic employees. This in turn would make OLAP responsible for all of the obligations of an employer under the Labour Relations Act with respect to clinic employees. These obligations include, recognize the Union, negotiate with the Union, abide by the various collective agreements. These obligations are clearly beyond the juris­diction and power of the Clinic Funding Committee and its staff under the Regulation. How can this Board have the jurisdiction to require the Clinic Funding Committee or its staff to take on obligations over and above those given to them by their Regulation. Surely, that would require a change in the legislation.

8. I would support this conclusion with the fact that the Divisional Court of the Supreme Court of Ontario has found, in the case of four clinics, including IWC, that the conditions placed on funding by OLAP were not so intrusive that they infringed upon the clinics independence. (I do not believe there was an application for Judicial Review of the decision.) In its decision, the Divi­sional Court stated as follows: (Tab. 41, OLAP Book I)

McRae J.: (Orally)

This is an application for judicial review of a decision of the committee established pursuant to the regulations under the Legal Aid Act, wherein the committee set conditions with respect to personnel benefits dealing with matters of maternity leave, paternity leave, adoptive leave, sick leave and statutory holidays for the applicant legal aid clinics.

The main thrust of the argument of the applicants is, that the establishment of these conditions is an improper and unlawful interference with the independence of legal aid clinics as prescribed by the Regulations to the Legal Aid Act. We are not persuaded by this argument. Section 150 in Part 10 of Regulation 575 reads:

150.-(1) It is the function of the Committee, and it has power,

(a) to direct the staff in the administration of this part;

(b) to establish policy and guide-lines in respect of the funding of clinics;

(c) to review and make recommendations to the Director in respect of applica­tions for the funding of clinics, including such terms and conditions of fund­ing as the Committee considers advisable;

In our view, section 150 gives the committee broad power to set guidelines for the spending of public money by legal aid clinics.

The conditions of the certificates complained of do not interfere with the independence of the clinic in rendering or delivering quality legal services to the community. The respondent com­mittee did not exceed its mandate but merely performed its public duty to ensure accountability of public funds.

We also are not persuaded that the conditions set by the committee would result in an infringe­ment of the Labour Relations Act in the present circumstances.

With respect, the majority's decision that IWC and OLAP are under common direction and con­trol is inconsistent with the above noted Divisional Court decision. Given that the Court has verified that IWC remains "independent" within the meaning of the Regulation, despite the restrictions complained of regarding the spending of OLAP funds for certain benefits, I am of the view that the two decisions cannot stand together.

9. In my view, another reason to reject the applications for declarations pursuant to Sec­tion 1(4) is that it seems clear that IWC and NLS cannot continue to be funded once such a decla­ration becomes effective. Mr. Irwin testified that for a clinic to be funded it must be independent. Under the Regulation the Clinic Funding Committee has no jurisdiction to fund a clinic which is not independent. Mr. Irwin and many other witnesses called on behalf of OLAP -- including board members and clinic managers -- testified that the control of labour relations by the clinic boards is a critical element in their ability to manage their respective clinics. If OLAP is to become involved as a co-employer for all purposes under the Labour Relations Act, as part of its obligation to negotiate and administer collective agreements, in many aspects of the operation and management of these clinics Professor M. J. Mossman, a former Clinic Funding Manager, testified that one cannot separate union concerns from other matters. The negotiation of working conditions, salaries, job descriptions and work loads affects the clinic's decisions regarding what activities it can and will undertake. If OLAP were involved in such negotiations, Professor Mossman testified that very lit­tle would be left for a clinic to decide on its own regarding the provision of legal services. Mr. Irwin testified that the loss of independence and community control would "raise a serious ques­tion as to whether such a clinic remains fundable within the meaning of the Regulation".

10. In my view, it is clear that the two clinics could not be funded because they would no longer be independent. There are two serious results from this conclusion. First, the employees of these clinics would be thrown out of work. Second, the clientele of these clinics -- those who are too poor to be able to pay for these legal services and who are not well served by the Legal Aid Certificate Program -- would be left without the very valuable legal services which these clinics pro­vide.

11. The majority states:

"This Board is not charged with the responsibility of interpreting and applying the Clinic Fund­ing Regulation."

With respect, I disagree with that statement where the interpretation of the Regulation is, as here, necessary in the exercise of the Board's functions. Secondly, the Board must not ignore the practi­cal implications of its decision -- to do so would in my view be a failure to properly fulfill our man­date. In this case there is no question of union avoidance or any anti-union conduct by the respon­dents and no "mischief' which Section 1(4) is designed to remedy. It is wrong to issue a decision which may ensure and will at the very least put at risk, the impoverished clientele and the staff of these clinics.

12. Section 1(4) was enacted to cure the mischief that results from being unable to identify the employer, and in order to prevent the erosion of union bargaining rights through the shuffling of employees from one corporation to another. The Board outlined this purpose in Industrial Mine Installations Ltd., [1972] OLRB Rep. Dec. 1029:

"Section 1(4) is obviously contemplated to cure the mischief that results from being unable to properly define and tie down the employment relationship. In many situations where companies have a close relationship an employee may be shifted from one company to another so that his employment relationship, at any given period, is difficult to define in terms of one employer. So too, the number of employees employed by one of those companies at any given time may be impossible to ascertain.

Prior to the enactment of section 1(4), where such situations existed, it was difficult to define the employment relationship and to determine the proper employer for certain purposes under the Act. For example, in certification proceedings it was necessary to determine the proper employer in order to determine whether the union had sufficient membership among employees to be certified.

Also, in some situations where a union had been granted bargaining rights for the employees of one employer, the employees could be shifted to another associated or related employer with the result that the bargaining rights which had been earned by the trade union for the employees was lost.

So, too, in the case where associated or related employers joined in a common enterprise and used one work force, which was shifted and transferred from time to time, the certification with respect to one employer only was, in effect, a certification of a segment of the total enterprise, and could seriously impair the totality of the business operations by inhibiting the shifting of employees between union and non-union segments of the enterprise. It was also possible in situations where associated or related legal entities could be represented by different trade unions so as to cause the bargaining rights within the single enterprise to be unduly fragmented. An example of the type of situation were section 1(4) was applied is found in Walters Lithographing Company Limited, et al.,[1971] OLRB Rep. 406.

It is these types of situations that the interest of the parties in having the Board treat separate employers as constituting one employer for the purpose of the Act became apparent, and it is for that reason that section 1(4) was enacted." [Emphasis added]

It would seem obvious that the mischief which the Board described in that case does not exist in this one.

13. The Board has in a number of cases described the "usual indicia of control". In Ethyl Canada, [1982] OLRB Rep. July 998, the Board listed the following indicia:

a) Common share ownership;

b) Common directors;

c) Whether the target entity has a financial interest in the unionized entity;

d) Whether the target entity has lent money to or guaranteed the unionized entity's debts;

e) Whether the target entity receives any benefit or suffers any prejudice from the profi­tability or demise of the unionized entity;

f) What would happen to the target entity if the unionized entity goes out of business;

g) whether the target entity has control over the unionized entity's employees or their terms and conditions of employment;

h) Whether the businesses share banking, accounting or legal services, or office space;

i) Whether there is any interchange of employees;

j) Common signs or logos in letterhead;

k) Common office staff;

I) whether any particular volume of work is guaranteed.

14. Counsel for the respondent OLAP referred us to various cases where the Board looked at whether Section 1(4) was applicable to subcontracting relationships. These cases are relevant because in a sense OLAP is contracting with each clinic for the provision of legal services, at a cer­tain cost and with certain conditions. OLAP and the clinics annually sign a funding "Certificate", which is really a contract. The analogy to a commercial subcontracting arrangement is therefore appropriate.

In Charming Hostess Incorporated, [1982] OLRB Rep. April 536, the Board stated as follows at p.550:

"The Board accepts that there may be subcontracting relationships which can be characterized as a form of joint venture and could fall within the ambit of Section 1(4). The Board adverted to that possibility in Ontario 474619 Ltd., Supra. The more closely the purchaser of employee ser­vices controls when, where, how, by whom and at what price the employee services are pro­vided, the more the activities will appear to be under joint control or direction. If at the same time the subcontractor is effectively dominated by the purchaser and it appears that the notion of a subcontract is introduced not to provide independent managerial and employee skills, but rather a separate "non-union" corporate vehicle which permits the purchaser to have the same work performed in much the same way as before but beyond the ambit of its collective agree­ment, the Section 1(4) declaration might well be warranted. It was considerations as such as these which appear to have prompted the Board to issue 1(4) declarations in Donald A. Foley Limited, [1980] OLRB Rep. April 435, and J. H. Normick Inc., [1979] OLRB Rep. Dec. 1176, even though there was no direct financial ownership of the subcontractor in either case."

In Caressant Care Nursing Home, [1984] OLRB Rep. Nov. 50, the Board stated as follows at paragraph:

"We recognize that there is in any business relationship, apart from perhaps fixed term con­tracts, the right of termination of the arrangement by the customer, which as a practical matter, requires a contractor to be more or less responsive to, or at least give full and careful consider­ation to, any complaints by its customers. The question is, whether on an ongoing basis, the contractor really has taken over control and responsibility for the selection, training and super­vision of the employee work force, and is truly independent in making the decisions that it does." Federated Building Maintenance Company Limited, [1985] Rep. Nov. 1585, the Board stated as follows at pages 1594-1595:

"On the other hand, while many subcontracting arrangements may arguably fall within a literal reading of the language of section 1(4) we do not think the statute was ever intended to collapse the vast majority of bona fide subcontracting relationships. Section 1(4) is clearly discretionary and should be applied only where there is clear evidence of the mischief it was intended to avoid.

.Obviously Federated will have to take into account its competitors and the capacity of its cus­tomer to pay, and it may choose to adopt a collective bargaining posture emphasizing those themes; but that does not make 0 & Y the 'real employer' of Federated's employees or warrant the invocation of section 1(4). There can be no confusion in the minds of the employees as to who their employer really is, nor was there when the Union sought certification in 1978, and in succeeding years negotiated several collective agreements directly with Federated."

Paragraph 36 states:

"Because there is considerable competition for the services which Federated supplies, 0 & Y may have considerable leverage but this is no more than a customer would normally have in a favourable market and is not the kind of control which, in itself, would warrant a 'related employer' declaration under section 1(4) of the Act. Nor do we think that much turns on the specificity of the cleaning contract. Detailed contracts of this kind are quite common in the industry, are necessary, given the size and complexity of 0 & Y's building, and in any event are not analytically different from the kind of detailed contracts found in other sectors of the econ­omy (in the construction industry for example). A degree of functional interdependence is inevi­table, and implicit in many subcontracting arrangements. what is significant here is the absence any other indicia of relatedness or the mischief which section 1(4) was designed to prevent."

[Emphasis added].

The subcontracting cases boil down to questions of (a) the presence or absence of normal indicia of relatedness or (b) whether the parties bona fide intend that the subcontractor shall exercise func­tional control over its employees; and (c) the presence or absence of the mischief that Section 1(4) was designed to prevent.

15. With respect to the normal indicia of control set out in paragraph 13 above, one must note the following with respect to OLAP and IWC and NLS:

• no common ownership;

• no common directors or offices;

• no common management;

• no common employees;

• OLAP has no authority to appoint and has never appointed anyone to the Boards of IWC or NLS;

• IWC & NLS have no authority to appoint or be involved in the appoint­ment of Clinic Funding staff;

• no common premises;

• no interchange of employees;

• no shared banking, accounting or legal services;

• no indication to the public that the organizations are one entity;

• no common signs, logos or letterhead;

• no transfer of work between the clinics and OLAP;

• no control over the flow or transfer of work by OLAP;

• OLAP receives no benefit nor suffers any prejudice from the viability or demise of a respondent clinic.

OLAP does not control the employees or the labour relations or personnel policies of IWC or NLS. Furthermore:

• OLAP staff does not supervise or direct the clinics' staff in the per­formance of their work;

• OLAP is not involved in any clinic - union negotiations, nor do clinic boards consult with OLAP in this regard. They may, but do not nec­essarily, report the content of their final agreements to OLAP;

• OLAP personnel are not involved in grievances or arbitrations at the respondent clinics;

• OLAP staff are not involved in the discipline of clinic staff;

• OLAP staff are not normally involved in hiring clinic staff, and in the exceptional circumstances when they have been involved, it has been in a consultative role only (e.g. sitting on the Short List Hiring Com­mittee which made recommendations to the NLS Board regarding the executive director position, and sitting in as an observer during the interview of Ms Kuras for that position).

16. On the question of financial interest, OLAP has no financial interest in either IWC or NLS in the normal sense of an ownership interest. OLAP does provide each clinic with a consider­able amount of money each year. I agree with the majority at paragraph 105, where they state that, "This by itself, does not mean that OLAP and the clinics are under common direction and con­trol."

17. The majority however assert that OLAP's financial clout puts it "in a position to influence management and operations of the clinic." I see nothing in Section 1(4) which states that the Board may issue a single employer declaration whenever a party in a financially superior posi­tion is in a position of influence. If that were the case, every dominant client and every financial institution to which an employer is indebted would be subject to such a declaration. Section 1(4) was not intended to have such a broad sweep.

18. With respect to the parties' intentions we heard much evidence, and received many doc­uments, which demonstrate graphically that the Boards of these clinics and their employees believe passionately in the need to maintain clinic independence and to be as free as possible from OLAP influence and interference. The witnesses were virtually unanimous in that belief, with only some of the unionized employees having changed their views.

Dan Kellar, a Union Steward, was called as a witness by the Union. He stated that the Union had negotiated with CLEO's Board of Directors because they were seen as the employer by the Union and the employees. He stated that it has been important to the Union that each clinic be recog­nized as an individual employer. He testified that:

"I believe many employees believe it is important for a Board to retain as much authority and autonomy as possible because they were connected with the client. Employees in the system wished to support the autonomy of their Board of Directors."

This is consistent with the Union view set forth in paragraph 28 of the majority decision.

19. The policies of the Clinic Funding Committee also make it clear that OLAP intends to protect and foster clinic independence, rather than control and direct them. In the Clinic Funding Committee policy statement dated May, 1985 (OLAP Exhibit 51) the Committee stated as follows at p.5:

"The Clinic Funding Committee therefore accepts that one of the primary goals of the Commit­tee and its staff is to foster the development of a strong, community-based system of indepen­dent legal clinics which deliver high quality legal services "

At page 12 of the same policy they state:

"The Committee's policy is to meet its overall responsibility for the delivery of these legal ser­vices by fostering the development of strong community-based independent legal clinics. The autonomy of individual clinics will be respected to the greatest extent possible without unduly compromising the overall goal of delivering high quality and important legal services in an effec­tive and efficient manner."

20. The Clinic Funding Committee's specific procedures are to the same effect. For exam­ple, its Complaints Policy (OLAP Exhibit 9(d)) provides that the Committee may investigate a complaint received from a member of the public regarding a clinic, however the Committee has no power to dictate to the clinic how the complaint should be resolved.

21. The Clinic Funding Committee has a guideline regarding the financial eligibility of cli­ents (they must generally be eligible for Legal Aid). However, each clinic is entitled to promulgate its own financial eligibility guidelines provided that they are not inconsistent with those of the Clinic Funding Committee. In addition, the policy allows a clinic to provide service to clients who do not fall within the clinic's own guideline. Mr. Irwin testified that the policy allows a clinic board,

"absolute discretion" in this regard. They are only required to file an exception report with the Committee. The frequency and stridency with which various clients, including IWC and NLS, reject the suggestions, guidelines or wishes of the Clinic Funding Committee and its staff leaves no doubt that the clinics are well aware of their right and ability to operate independently of the fun­der.

22. With respect to the presence or absence of the mischief Section 1(4) was designed to prevent, it is to be noted that there is no problem here of readily identifying the employer. There is no question of the erosion of union bargaining rights. The evidence discloses that the Union has had a viable collective bargaining relationship with both IWC and NLS.

23. IWC and NLS are two entities which have their own boards of directors elected by their own members, their own management, employees and internal structures. They can and do decide for themselves what areas of law they will concentrate on, what communities are to be served, the nature of the legal services to be provided, how the clinic is to be organized, the employee compli­ment of the clinic, and the terms and conditions of employment of their respective employees. They are able to obtain funding from other sources for activities or employee benefits which OLAP does not fund. None of these activities are controlled by OLAP. OLAP is operated by its own committees and management and staffed by its own employees.

In my view it cannot be concluded that either IWC or NLS and OLAP are under common control or direction. Any doubt in this regard is resolved by reviewing the normal indicia of control referred to above and by recognizing that the purpose of Section 1(4) is not put into play in these cases.

24. In her final arguments on behalf of the Union, Ms Lennon stated that she was placing primary reliance on the general regulatory framework and the General Terms and Conditions of funding which are included in all clinics' funding certificates.

I agree with the majority decision at paragraph 107 rejecting this argument.

"On the general facts of this case, we also do not view the general conditions of funding and pol­icies that are applied to all clinics as justifying a 1(4) declaration, particularly given that the Union did not take the position that OLAP was a co-employer at the time it acquired its bar­gaining rights."

25. Ms. Lennon also stated in her final arguments that she was not relying, to any significant degree, on the anecdotal evidence regarding the various events which took place at the respondent clinics. Given that the Union's primary argument has been rejected and that it abandoned its argu­ment based on the anecdotal evidence of suggested instances of interference in clinic affairs by OLAP, it is curious that the majority's decision is based on such anecdotal evidence, given that the Board rejects the argument regarding the general conditions of funding, the application should be dismissed.

26. The majority state at paragraph 106 that it is the Board's practice to exercise its discre­tion under Section 1(4) "where there exists a legitimate labour relations rationale for doing so". I would respectively submit that I am not aware that the Board has ever stated the basis for exercis­ing its discretion in such broad sweeping terms.

The Board has stated in Federated Building Maintenance, Supra, that Section 1(4) "is clearly dis­cretionary and should be applied only where there is clear evidence of the mischief it was intended to avoid". The mischief on purpose was spelled out in the Industrial Mine Installations case quoted earlier. None of the purposes of this section would be fulfilled by issuing declarations in this case.

27. The Board has often stated that it will decline to exercise its discretion where the appli­cation has not been made within a reasonable period of time of the knowledge that two or more respondents are closely related (see e.g. Act Builders (Eastern) Ltd., [1979] OLRB Rep. June 465)). In this case the relationship of OLAP to the clinics has not materially changed from the time that the Union obtained bargaining rights. In fact. the evidence was, with respect to NLS, that there is currently less involvement by the Clinic Funding Staff in the affairs of NLS then at any time before.

28. Another reason I respectfully dissent from the Majority Award is that it appears to be based on several findings of fact which I believe are not supported by the evidence.

29. At paragraph 105 the majority state:

"To avoid having the clinic defunded the Board of Injured Workers' Consultants signed a cer­tificate which effectively required that it apply certain personnel terms it did not agree with."

Further reference is made to the personnel policies of IWC at paragraph 109. As set out in para­graphs 30 and 92 of the majority decision, IWC's leave policies were found to "greatly exceed the acceptable range contemplated by the Clinic Funding Committee". These include 4 weeks paid vacation after one year of employment and five weeks after five years; 24 days paid sick leave per year, accumulating from year to year; 15 paid holidays per year; paid maternity and adoption leave; and two months' paid paternity leave. As Mr. Irwin's letter stated:

"...The only interest of the Clinic Funding Committee in this area is to ensure that acceptable standards are adopted.. .with respect to the expenditure of funds provided by the Ontario Legal Aid Plan. The Ontario Legal Aid Plan has no interest in regulating the actual terms of employ­ment between your Board of Directors and its employees; this area remains a matter entirely within the control of the Board of Directors...

The term and condition of funding is quoted at paragraph 92 of the majority decision. It does not require any change in the clinics personnel policies. Rather it states as follows:

"The Board of Directors shall ensure that funds provided by the Ontario Legal Aid Plan are not used to pay clinic staff on leaves of absence or absence from work, except as hereinafter pro­vided..."

Thus the condition of funding simply specifies the purposes for which OLAP funds may and may not be used. The individual clinic may have whatever personnel policies it wishes, no matter how foolish they might seem to OLAP, so long as they do not use OLAP funds to provide benefits beyond those which it has agreed to fund. As the Divisional Court stated, such a condition does not interfere with clinic independence. The Clinic Funding Committee was simply ensuring that public funds were used responsibly.

30. OLAP did not make it "a condition of funding that the clinic follow a number of per­sonnel policies at variance with the terms of its collective agreement with the Union" (paragraph 109 of the majority award). The Clinic Funding Committee was careful not to do that. In fact, IWC maintained those same benefits in the next collective agreement it negotiated, following the signing of the certificate containing the condition in question. Obviously IWC was well aware they were not required to change their benefit policies.

IWC was free to seek funds from other sources to provide benefits beyond the level funded by OLAP and they did so. We only have evidence of one single case of IWC's inability to meet its col­lective agreement obligations. This was the case of Ms Howlett who received paid maternity benefits for only six of the nine weeks provided under the Union agreement. As the majority state, the fact that funds are limited cannot form the basis for a Section 1(4) declaration. The fact is that IWC was never required to, and never did, change any of its personnel policies as a result of any­thing OLAP did! How then can IWC be said to be under the direction or control of OLAP?

31. The majority state at paragraph 105 that:

"Following an indication from the Clinic Funding Staff that if it did not do so, it might be defunded, Neighbourhood Legal Services changed its management structure from a collective to a hierarchical model with a director."

NLS board member, Cindy Wilkey, testified that even before Mr. Irwin suggested the hiring of an Executive Director in November 1983, "The Board did have problems with the collective model, but we did not want to do a change abruptly". She also stated that "The Board was anxious to change the staffing components." She later testified, "We considered an Executive Director desir­able, it would help resolve problems." Another board member, Eilert Ferichs, who had much experience with public service organizations, testified that shortly after he joined the Board of NLS in September, 1984, he concluded that the Board needed to tighten its management structure to claim more freedom from its staff. The following statements are made in a letter from NLS to Mr. Irwin dated August 23, 1984 ((NLS exhibit E(25)), which is prior to the hiring of an Executive Director and the commencement of any operational review:

"The Board of Directors believes that the prompt hiring of an acceptable Executive Director is one of its most urgent priorities, not only to satisfy the requirements of OLAP, but primarily to more effectively manage the operations of Neighbourhood Legal Services on a day to day basis. We trust that you are not in disagreement with this basic priority

You have informed us that you are commencing immediately with a management review of Neighbourhood Legal Services. We are pleased that you are assigning a high priority to this review, because of the many important and valuable insights it may offer in the management of NLS. We have supported the idea of management review since it was initially proposed and we look forward to co-operating with Susan Ellis carrying out this review".

32. Ms Ellis did an interim report in the fall of 1984 but the major operational and manage­ment review was carried out internally by NLS commencing in March 1985. It was pursuant to this internal process that the clinic altered its committee structure, reporting relationships and in nego­tiation with the Union, the clinic job descriptions.

33. With respect to the suggestion of a threat to defund, no such threat was ever made. After the Board rejected Mr. Irwin's proposals of November 1983, regarding the hiring of an Exec­utive Director and a qualified legal secretary and the process for an operational review, Mr. Irwin stated in his letter of January 18, 1984, that the Clinic Funding Staff would proceed with their review as directed earlier by the Clinic Funding Committee. A review is just that, and there is nothing in it which implied defunding. At the February 28th meeting no threat of defunding was made. Mr. Irwin simply stated that in view of the problems he had experienced with NLS, their application for funding for the next fiscal year would go directly to the Clinic Funding Committee, without any recommendation (either for or against) from Clinic Funding Staff. Such a referral is clearly not tantamount to a recommendation to refuse funding.

34. Ms Wilkey testified that she felt that they were now "under threat of defunding", she also testified that no one on her Board, including herself, were familiar with the Regulation. Ms Wilkey also testified that they were ignorant of OLAP's policies on clinic funding. They were also unfamiliar with procedures for appealing to the Committee, defunding procedures and procedures regarding terms and conditions of funding proposed by the Clinic Funding Staff. Ms Wilkey tes­tified "The process was what we were afraid of', and "We didn't know what implications it would have." At the same Board meeting the Board asked Mr. Irwin to explain the ramifications of refer­ring their application for funding directly to the Clinic Funding Committee. He told them it meant they would have to justify its grant to the Committee on their own. Ignorance of the legal rights of the clinic on the part of the Board members cannot form a basis for any suggestion of a threat of defunding having been made, where one was not actually made or intended.

35. The suggestion that the NLS Board was coerced into agreeing to any suggestion by

OLAP does not agree with the history of the relationship between NLS and the Clinic Funding

Staff. For example:

• NLS maintained its collective model for a long period knowing that CFS felt it was inefficient;

• NLS decided on its own to dismiss Ms Maxim and negotiated her severance with her;

• NLS rejected the two candidates proposed by the Short List Hiring Committee for the Executive Director position;

• NLS proposed to interview two internal candidates for the position of Executive Director knowing that Mr. Irwin was strongly opposed.

36. Mr. Irwin stated in re-examination that NLS was a good example of a clinic not being required to follow the wishes of the Clinic Funding Staff because "we could not impose our advice".

37. The involvement of the Clinic Funding Staff with respect to the hiring process for the Executive Director, was limited to having one person on the "Short List Hiring Committee". This Committee made recommendations to the NLS Board of Directors, which retained the final authority in the hiring decision. Given that the NLS Board retained the final authority, with respect to both the hiring decision and the job description for the position, the involvement of the OLAP staff member on the search committee can hardly be taken as an element of common direc­tion or control.

38. For all of the foregoing reasons, no purpose would be served by the issuance of the dec­larations. In my view only a considerable degree of harm and difficulty would result, both to the employees of the clinic and their clients.