Canadian Paperworkers Union v. Grant Forest Products Corporation, 1991 CanLII 6133

Ontario Labour Relations Board

[1991] OLRB Rep. July 848

2223-90-FC Canadian Paperworkers Union, Applicant v. Grant Forest Products Corporation, Respondent

BEFORE: Judith McCormack, Vice-Chair, and Board Members W. A. Correll and R. R. Montague.

Appearances

APPEARANCES: Douglas J. Wray, Andre Foucault and Robert Kirkey for the applicant; Michael G. Horan, Peter Lynch and Roy Carlyle for the respondent.

Decision of the Board

DECISION OF THE BOARD; July 16, 1991

1. On the agreement of the parties, the name of the respondent is amended to read:

"Grant Forest Products Corporation".

2. This is an application under section 40a of the Labour Relations Act for a direction to settle the parties' first contract by arbitration. On January 29, 1991, the Board issued such a direction. We now provide our reasons.

3. The applicant union was certified on March 21. 1990 to represent approximately 200 employees who are engaged in manufacturing waferboard, oriented strand board and stabilized strand board at the respondent company's plant in Englehart, Ontario. These three products are composite structural boards of various properties and marketability which are sold primarily as substitutes for plywood. The company started production in 1982 with waferboard, and undertook a major expansion in 1987 when it built a second line for manufacturing oriented strand board and to a much lesser extent, stabilized strand board, which are both structurally superior to wafer-board.

4. Since 1983, employees at this plant have been represented by another certified bargaining agent, the Grant Waferboard Employees Association, whose most recent collective agreement expired on December 31, 1989. Both parties appeared to feel that the relevant sequence of events before us encompassed the negotiations which preceded that last agreement, together with a previous attempt by the applicant to organize employees, and as a result, they led evidence in this regard.

5. The negotiations between the Association and the company commenced in May of 1987, about the time groundwork had started for the oriented strand board line expansion. Owen Little, the company's production manager and a member of the company's bargaining committee, told the Board that negotiations had started early because the company wished to have them out of the way so that it would have two years without the possibility of labour unrest. The format for negotiations was relaxed, informal, and low-key. No written proposals were made by either side. Rather, the articles of the previous collective agreement were photocopied on to pages, and the Association committee and the company committee reviewed them each in turn. If agreement was reached, that article was signed and put aside. If there was no consensus, the article was rewritten until the committees were satisfied with it.

6. Bargaining continued in this fashion until July of 1987 when it appears that negotiations tapered off. There was little or no bargaining activity between July and the beginning of December. Michael Hunter, a national organizer for the applicant, testified that the applicant was approached by the Association executive during the first week of December. It appears from Mr. Little's testimony that at that point, Peter Grant, the owner of the company, became personally involved in negotiations and several offers were made by the company during the second week of December. On December 10th, Mr. Hunter filed an application for certification with the Board and booked a meeting hall for a union meeting. On the same day, the company made an offer to employees which included a wage increase of 15.9% over two years. Mr. Hunter told the Board that this offer was conditional upon immediate ratification and upon employees not meeting with the applicant. However, it became apparent in cross-examination that this evidence was hearsay, and in light of the availability of first hand evidence in this regard, we are not inclined to place any weight on it. The company's offer was subsequently accepted by employees and the applicant did not become certified until after another organizing campaign at the end of 1989. It appears that after the applicant became certified in March of 1990, some of the members of the Association executive subsequently became members of the applicant's local executive. Shortly after certification, the company voluntarily began deducting dues and remitting them to the applicant.

7. Notice to bargain was given by the applicant on April 26, 1990, and nineteen days of negotiations were held between May and October of 1990. In October, negotiations broke down and employees engaged in a legal strike which continued at the time these hearings were held.

8. The company's negotiating committee consisted of Ron Carlyle, Pauline Edwards, Owen Little and Ken fletcher. The union's committee was composed of Andre Foucault, Jerry Woods, Rob Kirkey, Ellis Wray, Grant Tibo, Joel Acton and Tim Williams. Mr. Carlyle, then the company's Director of Administration, and Mr. Foucault, a national representative for the union, acted as spokespersons for their respective committees. Generally speaking, both of these individuals possess considerable knowledge with respect to collective bargaining. Mr. Foucault has participated in forty to fifty sets of negotiations over the last few years, only one of which ended in a strike. These included two sets of negotiations for first contracts. Mr. Carlyle has several degrees and has taught labour relations, including collective bargaining, at a local community college. His actual face-to-face bargaining experience is quite limited but he has practical experience in other aspects of labour relations. Both testified at length before us and described in great detail a relatively sophisticated set of negotiations to which we now turn.

9. The parties met for the first time on May 8th, 1990. At that meeting, they discussed the format for bargaining. It was evident that although this was the first collective agreement between these particular parties, both sides were working from the previous collective agreement between the Association and the company. On the other hand, it was also clear that although the Association had in fact been certified, both sides considered that this was the first time employees had been represented by a "real" union. Mr. Foucault testified that employees perceived that the employer had been deeply upset and was extremely resentful of employees organizing, and that there was a price to be paid for it. There was no first hand evidence in this regard, and we are not inclined to accept this perception as a fact, but it does explain a certain tenseness on the part of the union committee.

10. Mr. Foucault explained at the outset of the first meeting that employees had certain expectations of the unionizing process which the union would endeavour to fulfill. Mr. Carlyle indicated that the company wished to improve its relationship with the union, which Mr. Foucault took to be a reference to the strains involved in the changeover in representation to the applicant. Mr. Carlyle then proposed that there be a signing off procedure familiar to him from his experience at the bargaining table and from his reading. In addition, he wished to put the signed-off articles into a computer data base system. Mr. Foucault was opposed to a formal signing off procedure as a number of articles in the collective agreement were interdependent, and he wanted the parties to be able to go back and make adjustments if necessary. In his view, his normal routine, which was simply to write "resolved" in his handwriting and the date next to the article in question, would be sufficient. Although he was not opposed to the company using a data base system, he did not feel it was necessary for the union to agree or disagree on this point as it was something the company could do on its own without the union's permission. Mr. Carlyle suggested in his testimony that the procedure he contemplated involved merely initialling agreed-upon provisions. However, it appears that he did not explain this at the time, because, he testified, Mr. Foucault did not ask for such an explanation. The parties did agree to deal with non-monetary items first. The rest of the first day of negotiations was taken up with the presentation by Mr. Foucault of the union's proposal and his explanation of them. Sometime during that day, Mr. Carlyle informed the union committee that the company would be tabling a number of its own proposals.

11. On May 14th, the next day of negotiations, the company gave the union a document one hundred and ninety pages in length which contained its proposals. Mr. Carlyle testified that the company's priorities in this regard were controlling costs, including employee benefits and premium pay, enlightened health and safety provisions, the creation of job function modules and the training associated with them. The reason there were so many language proposals, according to Mr. Carlyle, was that some of the wording in the previous collective agreement was ambiguous or overlapped with other articles.

12. The union was concerned about both the volume of proposals and about the concessionary content of a number of specific proposals. It also appeared to the members of the union committee that the company was attempting to mitigate the effect of negotiations by making proposals to counter the union's proposals, and they were concerned that some of the proposals affected the integrity and security of the bargaining unit. On the other hand, Mr. Carlyle, Mr. Fletcher and Mr. Little all testified that the company's proposals had been at least drafted, if not typed, prior to the company receiving the union's proposals, and Mr. Little told the Board that the members of the company committee did not change much in their proposals after they received those of the union. Mr. Foucault identified the following proposals as causing particular concern on the part of the union committee, some of which will be discussed in more detail below:

a) A group of proposals which would have the effect of restricting the national union's right to attend certain union-management meetings, and which prescribed the composition and numbers of the union's negotiating committee.

b) Changes to the recognition clause which would result in greater leeway for the company to contract out work and to use supervisors to perform bargaining unit work.

c) Changes to the management's rights clause which appeared to be aimed at enhancing those rights and attenuating the effect of the collective agreement on them.

d) Language which would result in the union paying any overtime premium resulting from the absence of an employee on union business. Subsequently, the company proposed that the union pay both such premium and the salary of the replacement employee.

e) Changes which would double the length of the probationary period.

f) Changes which would give the company the right to approve material posted on the union's bulletin boards.

g) Changes which would allow the company to transfer employees into the bargaining unit and be credited with seniority from their date of hire.

h) Changes in the recall from layoff provisions which stipulated that if an employee did not notify the company of a change of address or telephone number, he would be subject to termination.

i) Amendments which would change the title of the discipline provisions to "Behaviour Modification" and would replace a reference to employees with poor performance to employees with "deviant behaviour".

j) Changes which would replace the tool insurance coverage with a flat amount.

k) Changes which would place caps on drug and dental benefit usage.

1. Changes which would eliminate the payment of a premium for work on Sundays or scheduled days off.

13. In addition, the company presented the union with a thick binder of material which included a thirty-two page loss control program. This in turn included sections on leadership and administration, management training, planned inspections, job task analysis and procedures, incident investigation, job/task observations, emergency preparedness, organizational rules, accident/incident analysis, employee training, personal protective equipment, health control services, program evaluation system, purchasing and engineering controls, personal communications, group meetings, general promotion, hiring and placement, books and reports, off the job safety, definitions and general health and safety rules. The person in management who was in charge of occupational health and safety was now to be called the Loss Control Manager. The union objected to this, as it seemed to indicate that there was no priority for employee safety, as opposed to property damage or loss. Mr. Foucault also said that the union was prepared to look at loss control separate and apart from health and safety, but was not prepared to incorporate this document into the collective agreement. Eventually, the company took this document off the table, advising the union that it would be proceeding with it anyway.

14. The next three days of bargaining were taken up with the rest of the company's proposals, a response by the union to the first half of the company's proposals, the company's response to that and the union's counterproposal on all non-monetary items. Each time the company responded, the committee submitted an entire document covering all articles of the collective agreement, whether or not they had been resolved. In addition, each proposal was placed at the head of a separate sheet of paper underneath the previous language with space below it for comments. The combination of these factors meant that each time the company presented its position, committee members gave the union between 100 and 200 pieces of paper. There was some variation on this. It appears that some resolved articles were omitted from the material subsequently and some were not. In addition, the description of items was a little confusing. For example, under certain articles the company put "above language okay". This did not indicate whether there had been any change from the previous language or the company's previous position. On May 17th the company briefly adopted the union's method of focusing only on the items in dispute for one round, according to Mr. Carlyle because the person who usually did the paperwork was unavailable. The company then reverted back to its previous method, submitting, for example, one hundred and ninety-two pages of proposals on June 13th, and a document one hundred and thirty-six pages in length on June 15th.

15. The union committee members felt obliged to review all the material submitted by the company, both to ascertain the company's position and lest they be taken to have accepted any advertent or inadvertent changes even in agreed-upon items. The result was fairly time-consuming, and Mr. Foucault made objections in this regard at regular intervals. Mr. Carlyle testified that the company used this format because the union had refused to sign off resolved articles. He was also under the impression that the company's approach reflected the procedure used previously in bargaining with the Association, although it was clear from Mr. Little's testimony that in many respects it was quite different.

16. Negotiations continued in this fashion. By June 15th, the volume and concessionary nature of the company's proposals, the unwieldiness and slowness of its bargaining format, and the lack of significant movement in the company's positions had alarmed the union. Mr. Foucault testified that it was taking the union committee almost a whole day simply to review the company's proposals and formulate a response because of the volume of paper. It was at this point that the company changed its proposal with respect to leave for union business, with the effect that the union would not only be required to pay the wages of the absent employee and any overtime premium, but the wages of the replacing employee as well. The result was that the company would pay nothing for the day's work. According to Mr. Foucault, this was the last straw for the union and the union committee decided to apply for conciliation.

17. Conciliation took place on July 31st, and the company at that time presented another comprehensive document incorporating four different typefaces. There was a legend on the front indicating that one typeface represented the previous collective agreement language, another the articles agreed upon, another new proposals, and the last was for footnotes or comments. Mr. Carlyle was a little unclear in his testimony as to whether this represented any change in the company's position or not. Initially, he told the Board that it was a proposal, rather than a summary of the company's position. When it was pointed out in cross-examination that there was no movement on the company's part, he said that it was a summary. Mr. Foucault testified that it was presented as a recapitulation of bargaining, but that in fact there were some changes buried in it. It appears that by this point, the company was using a computer, despite the fact that the union had not agreed to sign off the articles.

18. This new format was initially welcomed by the union committee members who hoped that it would clear up some of the previous confusion, but they soon found it even more difficult to review than the previous format because the typefaces were distracting. Nevertheless, the union responded on July 31st, and on August 1st presented a job ranking program. Later that day, the company presented its position, again in the four typeface format and in addition, presented a lengthy emergency preparedness manual designed to go with the loss control material it had submitted earlier for the union's endorsement. Bargaining continued on August 2nd and 3rd, and then recommenced August 8th, 9th and 10th.

19. On August 9th, the union expressed its concern that the concessionary proposals were still on the table and insisted that the company review its position again. The company responded on August 10th with a set of proposals which did not include any significant movement on the con-cessionary items. As a result, Mr. Foucault testified, the union felt that it was negotiating with itself. Considerable evidence was led by both parties as to why and how negotiations ended at this point. The union's evidence indicated that the company refused to negotiate further because one of its committee members was going on vacation, despite the fact that the company had earlier indicated that it was prepared to negotiate in his absence, and a union committee member had cancelled his own vacation as a result. The company's evidence was to the effect that the union had indicated that it was breaking off negotiations. In any event, it appears to us that whether or not the company was prepared to continue to negotiate at that point, the session would have ended because the union objected to the company's lack of movement. Subsequently, the union called a meeting and received a strike mandate of 94%.

20. A presentation by the company's financial advisor with respect to the company's financial position was scheduled for September 13th, the next day of negotiations. Robert McLeod, a chartered accountant, presented a series of figures to the union in this regard. The union committee asked a number of questions, one of which related to the interpretation of the figures. Mr. McLeod agreed in his testimony that he had said at this point that any set of figures could be interpreted differently. Mr. Carlyle then interjected that these were facts, and offered to allow a person chosen by the union to review the company's books. He told the Board that he intended to allow the union complete access to the company's books, subject only to a confidentiality condition. Mr. Foucault testified that Mr. Carlyle invited the union to have its accountant go over only the figures Mr. McLeod had presented, an offer which would not have yielded any more information than the union already had. The offer appears to have been a spur of the moment response to the union's skepticism about Mr. McLeod's presentation, and was not referred to again in negotiations.

21. The union did not take up the offer. Mr. Foucault said that the committee's concern about the information was not that it was not accurate as far as it went, but that it was incomplete. In particular, he said, there were other companies owned by Mr. Grant or his family which were closely linked to this one, with assets passing back and forth. In his view, having the union s accountant review the figures presented by Mr. McLeod would not provide the missing information.

22. On September 13th, the company also presented its latest position on the non-monetary issues, again without significant movement on the concessionary proposals. Mr. Foucault told Mr. Carlyle that there was no point in the company coming back with a position the next day which continued to include the concessions on union business, benefits, shift premium and tool allowance, and that it would only aggravate the parties' relationship. The following day, there was an exchange between Mr. Foucault and Mr. Carlyle in which the former indicated that unless the concessionary items were removed, the union would be applying for a no-board report. Mr. Carlyle testified that the company had intended to present its reworked Sunday premium proposal that day but did not get a chance. On September 20th, the Minister of Labour notified the parties that a conciliation board would not be appointed.

23. On October 10th, the parties met in mediation. At this point, the company began making proposals in the same format as the union's, and both parties were initialling them as they were resolved. By about 9:00 p.m. that evening, all non-monetary issues had been settled. Generally speaking, most were resolved by an agreement on something close to the status quo. Shortly after midnight, the company made its first offer on the monetary items. That offer amounted to the status quo on most items, but included the proposed caps on benefits and the elimination of the Sunday premium. Wages were pegged at a 0% increase for the first year, and a 4.9% increase for maintenance employees for the second year. The latter increase consisted of the company's earlier proposal to transfer the money resulting from the elimination of the Sunday premium into wages.

In fact, the majority of employees would not have received any increase the second year as well, since only those who did not work shifts would benefit. The union had presented its monetary items at an earlier stage, and there had been no discussion of most of them since non-monetary items had been dealt with first. The company's final offer did not respond to most, if not all, of the union's proposals.

24. At the time the offer was presented to the union, there was little explanation of it. Mr. Carlyle referred to the company's difficult financial situation and advised the union that it had to understand that the company was in a sixty-four million dollar loss position. The union then caucused to consider the offer and shortly thereafter, requested a face-to-face meeting with the company to clarify whether this was the company's final offer or whether there was room to negotiate.

25. In this second meeting, Mr. Carlyle mentioned that he had made a mistake and that the company's loss position was actually thirty million dollars. This disparity heightened the union's concerns about the reliability of the financial information from the company. Mr. Foucault then asked whether the offer was the company's final offer. Mr. Carlyle said something to the effect that no offer was final until the agreement was signed. Mr. Foucault continued to press him, and Mr. Carlyle admitted that this was in fact the company's final offer.

26. Negotiations broke off, and at a union meeting scheduled for October 11th, employees voted to reject the company's final offer and strike. Jerry Woods called Mr. Carlyle at home to advise him of this, and the strike began that evening. Mr. Carlyle made arrangements to meet with local president Rob Kirkey to indicate to the union what the company's strike protocol would be. He testified that he wanted to make sure that the union understood that benefit coverage would cease, and he also advised Mr. Kirkey that the company was not going to operate. If the company decided to operate during the strike, it would forewarn the union. The union agreed to take over the benefit coverage for employees, and the company agreed to let the union use the company's benefit number. There have been no formal discussions since the commencement of the strike.

27. It is this sequence of events which the union alleges demonstrates both that the company failed to make reasonable or expeditious efforts to conclude a collective agreement, and that the company adopted uncompromising bargaining positions without reasonable justification. At the hearing, the union withdrew an allegation that the company had refused to recognize the union's bargaining authority. The company asserted that it had made meaningful and constructive efforts to negotiate a collective agreement, and that it was willing to compromise on all issues but monetary ones, for which it had reasonable justification.

28. Section 40a(2) provides as follows:

40a.-(2) The Board shall consider and make its decision on an application under subsection (1) within thirty days of receiving the application and it shall direct the settlement of a first collective agreement by arbitration where, irrespective of whether section 15 has been contravened, it appears to the Board that the process of collective bargaining has been unsuccessful because of,

(a) the refusal of the employer to recognize the bargaining authority of the trade union;

(b) the uncompromising nature of any bargaining position adopted by the respondent without reasonable justification;

(c) the failure of the respondent to make reasonable or expeditious efforts to conclude a collective agreement; or

(d) any other reason the Board considers relevant.

29. In Nepean Roof Truss Limited, [1986] OLRB Rep. July 1005, the Board described section 40a as a "unique facilitative tool", which reflects the Legislature's acknowledgement of the significance of a first collective agreement. It does not, however, supplant the primacy of the collective bargaining process and although the section should be given a liberal construction, it was not intended to provide automatic access to arbitration in all cases where parties cannot agree. Instead there must be a causal connection between one of the conditions set out in section 40a(2) and the unsuccessful negotiations.

30. The Board has interpreted "reasonable" in both section 40a(2)(b) and 40a(2)(c) in a similar manner. In Formula Plastics Inc., [1987] OLRB Rep. May 702, the Board had this to say about the meaning of "reasonable" in section 40a(2)(b):

24. But was the employer's position taken without reasonable justification? Much depends on our interpretation of "reasonable" in this regard. Obviously the employer in this matter did have reasons for taking this position in the sense that it hoped to achieve a contract provision of benefit to itself. However, in our view, "reasonable" must mean something more than simply a rational relationship between a bargaining position and a party's sell-interest. This test is so minimal that it would make the relief provided by section 44I~a(2)(b) virtually inaccessible, a result which we find inconsistent with the remedial nature of this provision. Reviewing the section as a whole, and having regard to the Board's analysis in Nepean Roof Truss, supra, and Juvenile Detention Centre (Niagara), [1987] OLRB Rep. Jan. 66, we find it difficult to conclude that the legislation was designed to do no more than ensure that parties were looking after their own interests in a logical way.

25. Rather, in our view, the word "reasonable" imports an objective element into our consideration of the respondent's justification for its position. It is not simply a matter of whether the justification is reasonable from the respondent's point of view, or even from the applicant's. The legislation draws us into an unavoidable assessment of whether a given proposal or position is reasonable in objective terms, a task which to some extent takes the Board into unchartered waters.

26. This is so, in part, because reasonableness is a relative concept; what is reasonable depends largely, if not entirely, upon the context in which such an examination is to be made. In considering section 40a(2)(b), such a context will include both the general landscape of labour relations and the specific labour relationship between the parties. In many cases such an assessment will also require the weighing and balancing of the opposing interests of the parties which they seek to pursue by way of their negotiating positions.

27. Moreover, while the Board has had occasion to scrutinize negotiations in the past, notably in the course of determining bad faith bargaining complaints, the nature of our inquiry under section 40a is significantly different. The jurisprudence developed under section 15 reflects a conscious intention to avoid reviewing the fairness or reasonableness of negotiating proposals as an exercise in itself (see for example, Canada Trustco, [1984] OLRB Rep. Oct. 1356). Rather, the Board's interest on a section 15 inquiry centers on whether a manifestly unreasonable proposal indicates the presence of bad faith on the part of a party, or a failure to make every reasonable effort to make a collective agreement. To the extent that section 40a requires us to examine the intrinsic reasonableness of a negotiating position, it represents a departure from the jurisprudence which has evolved under section 15.

28. The variety and social authority of the competing interest involved, together with the complex dynamics of the collective bargaining process make this task a difficult one. It requires a delicate assessment of the many differing factors which may be operating in and upon a given labour relationship, an assessment which must be approached from a perspective closely attuned to the practices and climate of labour relations at any particular point in time. Indeed, it is fair to say that this is a provision which will require the Board to draw heavily on its own expertise in labour relations.

31. In Alma College, [1987] OLRB Rep. Dec. 1453, the respondent asked the Board not to follow the Formula Plastics test, but rather to interpret "reasonable" in section 40a(2)(b) as requiring only that the employer have a legitimate, business-related reason for its position. The Board rejected that argument, and adopted the Formula Plastics approach both in that case and subsequently in Crane Canada Inc., [1988] OLRB Rep. Jan. 13; MacMillan Bloedel Building Materials Limited, [1990] OLRB Rep. Jan. 58; Bourque Consumer Electronics Service Inc., [1990] OLRB Rep. Aug. 821; Venture Industries Canada, Ltd., [1990] OLRB Rep. Aug. 904 and Kraus Carpet Mills Limited, [1971] OLRB Rep. Jan. 50.

32. In Crane Canada, supra, the Board applied the Formula Plastics approach to the interpretation of "reasonable" in section 40a(2)(c) as well. However, it is worth noting that under section 40a(2)(b) the respondent's bargaining position must be both uncompromising and without reasonable justification to trigger a first contract direction. In contrast, section 40a(2)(c) is framed disjunctively so that the failure of the respondent to make reasonable or expeditious efforts may result in such a direction.

33. Turning first then to the issue of whether the company made reasonable or expeditious efforts to conclude a collective agreement, we do have some concerns about the overall pattern of bargaining in this matter. Those concerns are based on the cumulative effect of the number of company proposals, their content, the rationales advanced for them, the point at which they were withdrawn or modified, and the format of the company's bargaining approach.

34. The first element of this configuration is the unusually large number of proposals made by the company. Regardless of when those proposals were prepared, it is difficult not to see them as an attempt to offset or neutralize the union's proposals, either as anticipated or as received. The company's proposal on tool allowance provides a good example of this. The existing plan provided for the replacement of tools which were damaged, stolen or lost. The union proposed in addition a $300 annual allowance to buy new tools as technology required and to replace broken or worn tools. The company proposed a $300 allowance instead of the current tool coverage. By June 19th, the union had withdrawn its proposal and opted for the status quo. However, the company continued to maintain its proposal until October 10th when it, too, agreed to the status quo.

35. Mr. Carlyle initially suggested that the reason the company persisted in its proposal even after the union's proposal had been withdrawn was that the company had not understood that the union's allowance proposal was in addition to the current coverage and not instead of it. However, when his attention was drawn to the fact that even the company's negotiating notes describe the union as clarifying this point on May 17th, the day after the company presented its proposal, and the company's proposal was not dropped until October 10th, Mr. Carlyle indicated that the company maintained its position because it was better for the company from an administrative point of view. That may well have been the case. At the same time, the similarity in content of the parties' proposals suggest that the company's position was designed to have precisely the effect it did in neutralizing the union's proposal.

36. Moreover, the unusual volume of company proposals in this situation cannot be explained to any significant degree by either the company's stated goals for bargaining, or by Mr. Carlyle's references to ambiguous or overlapping language in the previous collective agreement. The proposals went far beyond the company's goals described by Mr. Carlyle, and did little to clear up any confusion. Indeed, in some cases the proposals reduced the clarity of an article rather than increasing it.

37. Our concerns in this regard cannot be separated from the content of a number of the proposals which involved concessions by the union, or provisions which provided employees with less than current working conditions. The scheme of the Act suggests that a firm status quo is the foundation on which productive negotiations are based. Indeed, the rationale for the freeze provisions set out in section 79 is to provide a stable floor for bargaining, and to prevent an employer from reducing current working conditions so as to shift the locus of bargaining downwards. (See A. E.S. Data Limited, [1979] OLRB Rep. May 368 and A.N. Shaw Restoration Ltd., [1978] OLRB Rep. June 479.) Of course, we are not considering a breach of the freeze provisions in this case which involves different issues. Nevertheless, that jurisprudence is a useful backdrop in considering concessionary proposals which have a similar effect in shifting the locus of bargaining from improvements in working conditions to maintaining the current ones. In a first contract situation, that effect often raises the question of whether the company is seeking to suggest to employees that unionization has been of little or no benefit to them. As a result, proposals of this nature call for particular alertness on the part of the Board. Indeed, the Board has directed the arbitration of first contracts in a number of cases where the respondent made concessionary proposals, including MacMillan Bloedel Building Materials Limited, supra; Peacock Lumber Limited, [1990] OLRB Rep. May 584 and Bourque Consumer Electronics Service Inc., [1990] OLRB Rep. Aug. 821. This is not to suggest that concessionary proposals will necessarily result in first contract directions. Obviously, each case must be decided on its specific facts and circumstances.

38. In this case, the existence of the Association's expired collective agreement provides a codification of the status quo in terms of working conditions for employees. As a result, that status quo is more specific and detailed than it might otherwise be. This tends to highlight the concessionary nature of some of the respondent's proposals. And while we find it somewhat disconcerting to be considering the negotiations between the union and the company in the first contract context where there have been previous contracts between the Association and the company, this case provides a graphic illustration of the wisdom of the Board's decision in Bourque Consumer Electronics, supra, where the Board found that section 40a applied to situations where it was a first collective agreement between the two parties, regardless of whether each had previously negotiated collective agreements with other parties. It was obvious that despite the base provided by the Association's agreement, the parties were experiencing not atypical first contract difficulties in developing a productive relationship.

39. The problems raised by the large number of company proposals and the concessionary nature of some of them are compounded by the fact that the reasons provided for were weak or conflicting. This is true even though we are examining this sequence of events under 40a(2)(c) rather than 40a(2)(b), since the company did eventually compromise on many of its proposals. It is obvious that one of the distinctions between the language of sections 40a(2)(c) is that the former speaks to a reasonable justification for an uncompromising position, while the latter refers to reasonable efforts to conclude a collective agreement. Nonetheless, in assessing whether the respondent failed to make expeditious or reasonable efforts to conclude a collective agreement, the reasons for its proposals are relevant in the sense that frivolous, gratuitous, or poorly supported proposals may indicate a pattern of bargaining that falls within the ambit of this subsection. Undoubtedly what constitutes reasonable or expeditious efforts will depend on the circumstances, and one would expect to see more compelling reasons for a proposal which is maintained for a longer period in bargaining than for one which is withdrawn or modified early in the process. At the same time, the existence of a significant number of proposals unsupported by cogent reasons calls for heightened scrutiny on the Board's part. This will be particularly true where the proposals address sensitive areas such as union representation or job security.

40. We note that considerable evidence was led by both sides with respect to the union s objections to the slowness of the process, and whether this had interfered with the company's ability to present its rationales for the various positions it took. After reviewing that evidence at some length, we conclude even from the company's testimony that the union's objections had little impact on the company's conduct, and that it had ample opportunity to make its reasons for its proposals known, generally when it wished to do so. At most, the company was required to wait until the next meeting to present its reasons on two occasions. Even when that occurred, it was as much the product of when negotiating sessions started and stopped as it was the result Mr. Foucault's urgings with respect to speeding up the process. More typical is Mr. fletcher's description of one occasion when Mr. Foucault interrupted Mr. Carlyle on the subject of loss control, and told Mr. Carlyle to pick up the pace. The result was simply that Mr. Carlyle continued with his explanation of the proposal, but spoke more quickly.

41. In this context, it is useful to look at some examples to provide the flavour of the problem.

(a) One group of proposals made it clear that the company wished to have a hand in deciding who would represent the union in various contexts. The Board has said that a union has the right to choose its own representatives, and that this is an area in which employers may not participate or interfere. (See, for example, McDonnell Douglas Canada Limited, [1988] OLRB Rep. May 498 and cases referred to therein.) As a result, we would expect to see some compelling reasons for this incursion into the union's territory, reasons which were not forthcoming in this case.

(b) The union had proposed a relatively common clause which would allow employees to take time off for union business with the company paying the employee for the time taken and the union reimbursing the company in this regard. The company proposed a provision requiring the union to reimburse it both for the absent employee wages but also for any overtime premium paid to a replacement employee. As indicated earlier, on June 15, 1990, the company modified its position so that its proposal had the effect of the union paying not only for any overtime premium but also for a replacement employee's straight time wages. The result was that whenever an employee was absent on union business, the union would reimburse the company for the absent employee's wages, and pay the full amount of the replacement employee's wages together with any overtime premiums. The company would not be required to pay any wages at all for the work performed that day. Mr. Carlyle had no explanation for this move, other than that he had not intended this result. These articles were not resolved until October 10th.

(c) The company sought to double the length of the probationary period from three months or 90 days to six months or 120 working days, whichever was greater. Since many employees work twelve hour shifts (and thus seven shifts in a two week period), 120 working days might take in a very considerable period of time. Mr. Carlyle explained to the Board that the company was about to embark on a new training program, and that it needed a longer time to evaluate employees because an extended training period would be necessary. Both he and Mr. Little agreed in cross-examination that most employees were hired at the general labourer level and Mr. Carlyle confirmed that it takes no more than a week to train a general labourer. In that sense, the proposal seems gratuitous. The company's references to a future training plan for all employees do not adequately explain the scope and degree of this change.

(d) The effect of the company's proposal in the area of seniority was to allow it to transfer any employee into the bargaining unit who would then be credited with seniority from his or her date of hire. (The current provision provided that seniority was retained and accumulated outside the bargaining unit for up to twelve months.) Mr. Carlyle told the Board that there were two reasons for the company's proposal; the first was to allow a more extended period of time for training first line supervisors, and the second was to provide for employees who had been removed from the bargaining unit temporarily to write training modules. Neither of these reasons explain why the proposal is drafted so as to include persons who have never been in the bargaining unit, and it is not clear why a year would not be adequate to train a first line supervisor. Mr. Carlyle agreed in cross-examination that he had not told the union in bargaining about the training rationale for the proposal, and that the module writer problem was not raised until the end of negotiations, although he subsequently changed his testimony on the latter point.

(e) The company proposed that if an employee did not notify the company of any change of address or telephone number, he would be subject to termination. Mr. Carlyle told the union that the reason for this proposal was that the company wanted to have current addresses and telephone numbers because in one case, they had been unable to contact an employee. The previous collective agreement already provided for an employee's termination if he failed to return to work within 15 days from the date of mailing a notice by registered mail to his last known address. The company's proposal seems draconian in the circumstances.

(f) The company proposed to replace the current title of the discipline article with "Behaviour Modification", and to replace the phrase "an employee will be counselled for poor performance" with "an employee will be counselled for deviant behaviour". Predictably, the union committee members felt insulted, and indicated to Mr. Carlyle that the language raised visions of rats and shock therapy. Mr. Carlyle then responded that it was all in the eye of the beholder if the union thought employees were rats. There did not appear to be any particular reason for these changes, except perhaps a certain degree of editorial zeal. In that sense, this proposal seems both gratuitous and likely to create unnecessary controversy at the bargaining table.

42. In general, it is possible to say that the reasons advanced for a number of the company's proposals were either weak or were the subject of conflicting testimony on the part of the company's witnesses. This is problematic particularly when combined with some of the other bargaining difficulties we have described. We say this despite the fact that we are well aware that parties will often pad their bargaining positions at the outset to leave themselves room for negotiations. In addition, we are loathe to prescribe to parties at what point proposals should be withdrawn or modified. Bargaining is an art, not a science, involving consideration of many different factors, and employing a variety of strategic approaches. There is no one model of negotiations to which the parties must adhere, and in our view, they should be given considerable latitude in their bargaining tactics. At the same time, we are not prepared to condone excessive padding or the maintenance of weak positions for such lengthy periods of time that the effect is that reasonable or expeditious efforts to conclude a collective agreement are not being made by a party. Among other things, the Board will look at the overall pattern of bargaining under this subsection, and a pattern that suggests a party is going through the motions, however elaborately, may attract the application of section 40a(2)(c).

43. In the circumstances before us, these difficulties are further compounded by the company's negotiating style which involved the submission of large amounts of material, inevitably slowing down the process. The constant resubmission of items not in dispute and the volume of material presented at each session significantly contributed to the lack of progress. The reasons the company advanced for its format, that is, its past practise with the Association and its desire to use a computer data base, simply do not stand up to closer scrutiny. This volume of material was not submitted in the previous negotiations with the Association, and there was no need to do so to employ the use of a computer.

44. Mr. Carlyle suggested that the company's approach was necessary because the union would not sign off items. In fact, Mr. Foucault was prepared to write "resolved" and the date in his handwriting on the documents, which he felt was sufficient. We are not prepared to comment generally on the utility or sufficiency of signing off procedures in these circumstances. Certainly both the initialling of proposals and Mr. Foucault's method are common. But where the union committee members were prepared to commit themselves in writing with respect to resolved proposals, we do not see how the company's resubmission of those proposals was either necessary, or indeed provided it with any additional protection.

45. In summary then, the company made a large number of proposals, some of which. included regressive changes to the status quo. The reasons for a number of those proposals were weak or conflicting, and many were dropped or compromised relatively late in the process. The form in which the proposals were made was time-consuming and confusing. The overall effect was a sort of "busy work" bargaining, in which the parties spent a great deal of time over nineteen days of negotiations only to arrive back at a position very close to the status quo.

46. It is true that there is a certain bloodless quality to these negotiations, which were civil and sophisticated on the whole. In that sense there is no "smoking gun". However, the Board has said that there is no requirement to find bad faith, antipathetic animus or egregious conduct on the part of the respondent before section 40a will be triggered (see Nepean Roof Truss, supra; Formula Plastics, supra; and Crane Canada, supra). Rather, as the Board observed in Formula Plastics, supra:

39. We note particularly that the provisions of 40a(2)(b) are not necessarily predicated on any egregious conduct on the part of an employer. There is no requirement of bad faith or anti-union animus (although these factors may be relevant) and a direction to settle a first contract by arbitration is not a penalty visited upon an employer. Rather section 40a as a whole represents the identification of a series of situations in which the Legislature has determined that a malfunctioning labour relationship requires a special mechanism to repair or strengthen it. Indeed, it may well be that some of the provisions of section 40a will apply even where the respondent's conduct stems from ignorance, inexperience or ineptitude.

47. As a result, it is not necessary for us to speculate why the company conducted itself as it did, and whether it reflected some hostile motivation or merely inexperience. Rather, we observe that a bargaining approach which has the effect of keeping the parties running in one spot at the bargaining table instead of promoting meaningful discussion and compromise with respect to improvements in working conditions, is a source of concern in the first contract context. Having regard to the volume of the company's proposals, their contents, the rationales advanced for them, the point at which they were withdrawn or modified and the format of the company's bargaining approach, we find that the company failed to make reasonable or expeditious efforts to conclude a collective agreement.

48. The union also asserted that the company's final offer represented an uncompromising bargaining position adopted by the respondent without reasonable justification. In this regard, counsel pointed to the wage offer, which incorporated the company's Sunday premium proposal as well, and the benefits cap proposal, both of which we now set out in more detail.

49. The company proposed usage ceilings on the current benefit plans of $2,000 per family for drug benefit and $5,000 per family for dental benefits over the period of the collective agreement. Mr. Carlyle testified that the reason for this proposal was that there was an automatic escalator clause of 5% per year on the premium for the current coverage because there were no ceilings on usage, and the company's financial consultant had informed him that the company should be controlling its costs better in the benefit area in light of the company's financial problems which are set out below. He admitted in cross-examination that the 5% escalator would be eliminated if the ceilings were $4,000 per year for drugs, and $6,500 per year for the dental plan. Mr. Carlyle then indicated that the proposal had been the company's opening position. Subsequently he agreed that it had been part of the company's final offer. Although he said the company had been prepared to continue to negotiate the caps at the time it made its final offer, he acknowledged that he had not indicated this to the union, but rather had said to the union committee that it was a final offer.

50. Mr. Foucault testified that two members of the union bargaining committee would have been directly affected by the caps as they had dependents with illnesses which required extensive medication. Mr. Carlyle disputed this, although he also told the Board that the company's figures were arrived at by asking the company's finance department what the upper limit was on drug and dental benefit usage for a single employee on a yearly basis. He also agreed that the total savings from the company's offer would be roughly $5,000 per year.

51. In addition, as noted previously, the company proposed to eliminate a premium paid to employees for working on a Sunday or a scheduled day off. This affected approximately 2/3 of employees who worked rotating shifts, mostly production workers. The premium was to be replaced with a $2.00 flat rate for Sunday work and an amount of 65z an hour which would be rolled into wages. Mr. Carlyle testified that the company wished to move the money from the premium into the wage rates for recruiting purposes. It appears that on one occasion when the company had attempted to recruit maintenance employees in Elliot Lake, there were several comments to the effect that the wage rates were too low. However, both Mr. Carlyle and Mr. Little testified that they had had no difficulty in attracting production employees. Mr. Carlyle agreed that the proposal did not amount to a cost-saving to the company. There are approximately sixty-four maintenance employees who would have benefited from this proposal because they would receive the wage roll-in without being affected by the elimination of the premium. The goal of the company was that the remaining two-thirds of employees would break even.

52. Mr. Carlyle told the Board that part of the rationale for this proposal was that employees already received overtime premiums on a daily and weekly basis. However, there was no dispute that employees might work on Sundays and days off and not be eligible for overtime, depending on how many hours they had previously worked that week. Mr. Carlyle also agreed that the company could call in employees on scheduled days off, and then reschedule them for the remainder of the week in such a way as to avoid overtime. He then suggested that the premium provided motivation for employees to absent themselves from work and then come in on a day off and receive the premium. He did acknowledge that the company had control over which employees were called in for those days.

53. The union's objections to the proposal included the fact that even for those employees whom the company anticipated would break even, there were marginal losses. In addition, employees only lost no money if there was no wage increase, since the premium had been indexed to wages. This latter fact also meant that there would be long term losses because the flat rate would not necessarily increase in the same manner as the premium would have done when wages increased. The overall effect of the proposal was that a wage increase for the maintenance employees would be financed by other employees. No compensation was provided for the premium for working on a scheduled day off. The company then came up with a subsequent proposal which utilized variable increases to wages instead of the flat 65g. This had the effect of eliminating the marginal immediate losses the union had pointed out, but not the indirect or long term losses.

54. The Sunday premium proposal was originally designed to address that premium only. Subsequently, it became the company's wage offer. The effect of the proposal was there would be no increases in either the first year or second year of the contract for production employees, and an increase of 4.9% in the second year for maintenance employees. All other monetary items were to remain the same.

55. The company's justification for both its wage offer and the benefit cap proposals was that the company had been experiencing serious financial losses. It was apparent from the evidence presented that there were two key elements in those losses: a substantial drop in the price for the company's products and an increase in the company's operating costs, particularly the interest charges on the financing for the 1987 expansion. The evidence indicated that although prices were fairly volatile and could rise and fall even on a daily basis, there had been a downward trend since 1988. The company has an exclusive sales contract with Abitibi-Price Inc. and William Chalmers, who handles the company's account at Abitibi-Price, told the Board that the market was at the lowest point he had ever seen. He acknowledged that there were dramatic price increases listed for some months in the material provided for 1989, but he explained those as anomalies due to market fluctuations relating to Hurricane Hugo and environmental concerns about the spotted owl. More recent increases were related to the strike at this company and the temporary closure of another waferboard mill which had produced fears of shortages. Mr. Chalmers told the Board that there were seasonal fluctuations in price as well, with increases in the summer as a result of housing construction. In this regard, Mr. Foucault testified that the industry was a cyclical one, that there were high and low points, and that industry negotiators kept in mind even at the low points that they were bargaining for a collective agreement that would last for the next couple of years. There was no dispute that the company had been producing to almost full capacity before the strike.

56. We were left with a number of unanswered questions about the company's financial justification for the final offer. One of the major problems was that the financial information presented by the company was incomplete. Complete and accurate financial data is critical in this kind of case, if we are to determine whether the company's financial condition provides reasonable justification for its position. More particularly, the financial documents presented by the company both to the union in bargaining and to the Board at the hearing raised more questions than they answered. The document prepared by Mr. McLeod and given to the union on September 13th is in a somewhat unusual format. This was explained by Mr. McLeod as an attempt to make the information on it more accessible than normal financial statements and to focus in on the company's losses. In fact, the document is rather less informative than a financial statement, and indeed is so selectively focused on the company's losses that it is not particularly persuasive. For example, Mr. McLeod acknowledged that the dollar figures that made up the cost per ton figures did not deal with the cost of production per unit which would vary with total output, and did not deal with the production increases which were within the mill's capacity. The production figures, which played a critical role in the calculation of other figures in the document, are not included on it. Mr. Carlyle explained this deficiency by saying that these figures were made available to certain employees on a weekly basis. This suggests that these employees would have had the foresight to have kept this data for the years set out in Mr. McLeod's document, having anticipated that they would need it to analyze the figures he presented. This seems somewhat unrealistic. Other missing information included a substantial figure for insurance proceeds to cover the damage from a recent fire. In addition, the percentage columns setting out the breakdown of production costs do not add up to 100%. Although this was explained to the Board by Mr. McLeod to some extent, it contributed to the document's obscurity at the bargaining table. Indeed, it appears that even members of the company's bargaining team had some difficulty understanding it.

57. Excerpts from the company's financial statements were presented to the Board at the hearing, but these were also somewhat selective. They were produced and dealt with by Mr. McLeod who did not prepare them and was initially somewhat hesitant about identifying them. The excerpts presented referred to a number of accompanying notes which were not produced, nor was there any balance sheet. This last fact is significant because, as Mr. McLeod pointed out, the statement of income merely shows whether the vehicle is going backwards or forwards, while the balance sheet provides a view of what it looks like. To determine if the company's wage offer was reasonably justified by its losses, we needed to know the complete financial picture.

58. This is particularly true since there appeared to be more than one company owned by either Mr. Grant or his family which had some role in the respondent's operating costs. We do not suggest that the mere presence of non-arm's length companies necessarily impacts on the kind of financial information required in these circumstances. However, in this case, where those other companies appeared to be involved to some extent in the respondent's financial affairs, it was important to ensure that our picture of those affairs was not distorted by their involvement. For example, the data presented both to the union and the Board to show the downward trend in prices utilized net sales price figures. These are the prices from which freight, U.S. duty, cash discounts and Abitibi-Price's commission has been subtracted. However, Mr. Chalmers agreed in cross-examination that another company owned by Mr. Grant's brothers and sisters delivers most of the Canadian loads for the company and a significant proportion of the U.S. bound loads. Given that price levels were pointed to as the key element in the company's financial difficulties, accurate information in this regard was important, and this evidence raises some question about the breakdown of those freight costs. Although the trucking company was not owned by Peter Grant, we do not find the fact that it was owned by his brothers and sisters reassuring, particularly in light of the fact that the respondent company's antecedents were in the Grant family as well. In addition, Mr. McLeod testified that approximately eight million dollars in interest charges in 1990 were related to the carrying charges for financing the expansion with respect to the oriented strand board line. In cross-examination it became clear that Grant Development Corporation, another company owned by Mr. Grant, had handled the expansion, although Mr. McLeod had some difficulty describing its role in this regard. He testified that the development company had not acted as a general contractor, although he said that it had sourced out and provided various trades and supervision. He also said that it was not a payroll company, and described it variously as a conduit for hiring people, an accounting device for managing the project with a separate set of books, and a corporate shell. Mr. Fletcher agreed in cross-examination that it now had a significant number of employees. It also appears that Grant Development Corporation handled the company's repairs after the recent fire and performed a certain amount of ongoing maintenance for the respondent. Mr. McLeod agreed that maintenance costs had tripled between 1988 and 1989, which he ascribed to the expansion.

59. In other words, the involvement of these other companies focuses attention on the importance of complete financial information from the respondent. Unfortunately, that information was not forthcoming and what was presented was not done in a manner that inspired confidence. For example, Mr. McLeod initially gave the Board the impression that he was an independent accountant, providing financial services to the company to some extent at arm's length. He also testified that his role with respect to the company had not changed over the time of his involvement. In cross-examination it emerged that he had previously been a director of the company for three years and the treasurer for two of those years, although he had no ownership interest. He has an office next to Mr. Grant's at the plant and a large percentage of his business is providing financial services to the respondent, Grant Development Corporation, a retail outlet company owned by other members of the Grant family, and other Grant family interests.

60. In this context, we have also considered the evidence with respect to Mr. Carlyle's offer to the union to have an accountant review the financial information. In light of the circumstances of the offer, the nature of Mr. McLeod's presentation, Mr. Fletcher's testimony in this regard and the limited degree of financial disclosure on the part of the company generally, we find it unlikely that the company seriously and sincerely intended to open up its books to the union in the unlimited manner Mr. Carlyle suggested in his testimony. Indeed, if that was what Mr. Carlyle intended, he did not communicate it to the union as Mr. Foucault evidently understood that it was limited only to the information in Mr. McLeod's document of September 13th. Having regard to both the context and the limitations of the offer, we do not think it can be said that it either shores up the veracity of the company's assertions or demonstrates the reasonableness of its justification.

61. We accept that the market was poor for the company's product in the sense that prices were low at the time in question, and that the company was experiencing some level of financial difficulty. However, in the absence of more complete financial information, we are not prepared to leap to the conclusion from these facts alone that the company's offer was reasonably justified. This is in part because of the factors noted earlier, indicating the cyclical nature of the market, the volatility of prices, the relationship of other companies owned by Mr. Grant or his relatives which played a role in this company's operating costs, and the selective presentation of the financial information. However, in part our reluctance stems from the fact that these are all relative figures. For example, as noted earlier, the savings to the company as a result of the proposed benefits cap was roughly $5,000 per year. The company's gross sales in 1989 were approximately $56,000,000. No doubt even small economies are helpful to some extent for a company in financial difficulties, both with respect to the bottom line and in the context of keeping lenders happy. However, the adamancy with which this proposal was put seems out of proportion to the savings which could have been expected from it. There must be some proportionality between the company's position and its overall financial picture. To conclude on limited evidence that the fact of financial difficulties alone justifies this kind of final offer without a proportionate relationship between the nature and degree of those difficulties, the offer and the overall detailed financial picture, might allow parties to pull the wool over the Board's eyes. This is particularly so where even the $5,000 saving was available to the company at a higher cap level, leaving unexplained its refusal to move on the lower caps it had proposed.

62. In this case our confidence in the company's assertions was further undermined by the fact that the company was not conducting itself in other respects as if it was subject to the degree of financial crisis it asserted. For example, Mr. Carlyle agreed that the company was continuing with its plans to spend three million dollars over the next three years for modular training for current employees. It was not alleged that deficiencies in training played any role in the company's financial difficulties. We have no doubt that training is important, but at the same time, this plan is somewhat at odds with the financial picture the company wished to present, where a saving of $5,000 in the benefit plans was so critical as to warrant an uncompromising position.

63. We also note Mr. Fletcher's testimony to the effect that when the company's committee originally discussed its proposals, they considered the fact that the company was in poor financial shape and had significant losses. Nonetheless, they were anticipating that they could offer some attractive wage increases. In addition, the committee members discussed the company's Sunday premium proposal at a time when they still anticipated being able to provide fairly substantial wage increases. As late as August 9th, the company had not yet reached a conclusion that there would be no increases. Mr. Fletcher's perception was that there would be a wage offer in addition to the Sunday premium proposal. He only became aware that there would be no wage increases on October 9th in discussions to prepare for the last negotiating session. We note that both the downward trend in prices and the company's recorded losses which were used to justify the final offer extended back to 1988. As a result, both were apparent even at the point at which the company was still considering proposing a substantial wage increase.

64. This last point not only casts some doubt on the company's rationale but also highlights the ambiguity in its evidence with respect to who made the decision about the final offer. It is clear from the evidence of Mr. Little and Mr. Fletcher that it was not a decision of the company's negotiating committee. Mr. Little testified that prior to the time Mr. Carlyle put the financial offer on the table, there had been no discussion of what it would be. He found out about it only when Mr. Carlyle made the offer. It was explained to the company's committee after it was made that the reason for the proposal was the financial condition of the company. The committee was not aware that it was a final offer until Mr. Carlyle said this in response to Mr. Foucault's questions. Indeed, Mr. Fletcher testified that he was fully expecting the union to come back with a counterproposal, and the committee had discussed what the union might do, and where the company had room to move.

65. Mr. Fletcher was under the impression that the decision with respect to the final offer was made by the company's directors, Peter Lynch and Mr. Grant, although Mr. Carlyle handled communications with them. Mr. Carlyle said that he had consulted Mr. McLeod, Mr. Lynch and Mr. Grant with regard to the offer, although he also said it was his own decision. Mr. McLeod, on the other hand, testified that he had no input into the offer, and was not aware of the offer until it was put to the union.

66. If the final offer was Mr. Carlyle's decision, it raises a number of concerns about his lack of information with respect to the company's financial situation. He clearly had some difficulty understanding Mr. McLeod's September 13th document, and told the Board he had not seen the financial statements before these proceedings. As late as October 10th when the final offer was presented, he made a mistake indicating that the company's financial losses were twice as high as they were. Even the corrected thirty million dollar figure was obtained by analyzing Mr. McLeod's document, Mr. Carlyle testified, although it was evident in the hearing that his familiarity with that document was limited. For example, he told the Board that this figure represented losses for a three year period between 1988 and 1991, including damage suffered from a major fire. Mr. McLeod, on the other hand, testified that the insurance proceeds had almost entirely compensated the company for the fire damage. Mr. Carlyle also agreed that he did not know how much the company had actually lost over this period in dollar terms, although Mr. Grant had told him the company had lost money for the last couple of years. As a result, if the final offer was Mr. Carlyle's decision, it is somewhat difficult to make the connection between the company's financial circumstances and the offer when Mr. Carlyle appeared to be so uninformed with respect to the former. If, on the other hand, the final offer decision was made by Mr. Lynch and Mr. Grant, it is not clear why they did not give evidence as to their reasons. We do not feel it is necessary to go so far as to draw an adverse inference as to what their evidence might have been, as counsel for the union urged. The fact is that their failure to testify simply adds to the incompleteness of the picture in considering what the rationale was for the final offer and whether it was reasonably justified.

67. There was no dispute that the final offer was uncompromising. The only issue in this regard arose with regard to the benefit cap proposals on which Mr. Fletcher and Mr. Little indicated that the company had some flexibility. However, there is no doubt that they were included in the offer which Mr. Carlyle expressly told the union was final, and nothing was said to the union which suggested otherwise. We are well aware that parties will sometimes describe a position as final as part of the posturing that goes on during negotiations. Nevertheless, a party who represents a proposal as final in first contract negotiations may well be taken at its word. This is particularly so where as here, the respondent watched negotiations break down over the proposal and did nothing to correct the impression that it was not final. At the very least, the respondent's conduct was misleading, and tends to undermine its assertion that the benefit cap proposals were still open for negotiation.

68. We therefore concluded that the company adopted an uncompromising position in the form of the final offer, and on the evidence before us, that position did not have reasonable justification. In addition, we found that the process of collective bargaining was unsuccessful both because of the company's failure to make reasonable or expeditious efforts to conclude a collective agreement described earlier, and because of the unreasonable and uncompromising nature of the company's final offer. For all these reasons, we directed that the parties' first contract be settled by arbitration. Our findings in this regard make it unnecessary for us to rule on whether the applicant was entitled to pursue arguments with respect to section 40a(2)(d).

69. Finally, the majority of the Board wishes to address our preliminary ruling which is the subject of our colleague's partial dissent. There is no doubt that the respondent was considerably late in filing the material required by Practice Note #18, and we were singularly unimpressed with the reasons for that tardiness. In this respect, we share many of our colleague's concerns. The problem in this case is that the consequences suggested are drastic in natural justice terms, that is, that the respondent would not have been permitted to lead any evidence at all. In that sense, this case can be distinguished from both Teledyne Industries Canada Limited, [1986] OLRB Rep. Oct. 1441 and Philips Air Distribution Limited, [1989] OLRB Rep. June 642 where the Board ruled against parties wishing to introduce additional evidence or supplementary material.

70. Because the consequences are so significant, we are of the view that it should be crystal clear to a respondent in these circumstances that such consequences may in fact result. Our concern in this regard has to do with the wording of Practice Note #18 which indicates that parties will not be permitted to adduce evidence of any material fact not disclosed in the material filed with the Board. In fact, the respondent in this case did file its reply and the other material required, even though these documents were filed late. We might be inclined to interpret this language as meaning that the material must be filed in accordance with the practice note, including the time limits set out therein, but for the wording of Practice Note #19 which stipulates precisely this, in contrast to Practice Note #18. As a result, we did not feel it was appropriate to exercise our discretion to visit such severe consequences on the respondent, where notice of those consequences was less than clear.

Decision of Board Member Rene R. Montague

DECISION OF BOARD MEMBER RENE R. MONTAGUE; July 16, 1991

1. I concur with the majority's decision in their finding under section 40a of the Labour Relations Act for the direction to settle the parties first contract by arbitration. My dissent is in the majority's ruling made with regard to Practice Note #18. In accordance with Practice Note #18, section 1, the union provided the respondent employer with all relevant materials as required on November 23, 1990. In accordance with Practice Note 18, section 5, the respondent employer should have filed with the Board any reply to the application within ten days from the date the application was received by the employer. Accordingly, the employer should have provided the reply on or before December 3, 1990. The reply was in fact received on December 10, 1990. A respondent's reply is to include a detailed statement identifying those statements in the application with which the respondent agrees and disagrees setting out the material facts etc. which constitute the respondent's version of the matters raised in the application. All other relevant facts etc. are to be included in the respondent's reply.

2. The Board has had the opportunity to examine the procedures required under section 48 of the Act and the Practice Note #18. In Teledyne Industries Canada Limited, [1986] OLRB Rep. Oct. 1441, the union attempted to introduce as evidence material which was not raised in the union's application. The Board ruled at paragraph 5:

……that it would not permit that line of questioning to be pursued because no allegations of that nature had been particularized or even made in Schedule A to the application (in which an applicant is required, by Practice Note #18, to set out a detailed statement of material facts, acts and omissions on which it intends to reply) even though the union claimed that this alleged improper design was one reason why this application was brought.

3. Similar circumstances occurred in Philips Air Distribution Limited, [1989] OLRB Rep. June 642, at paragraph 6. The union attempted to introduce a supplementary statement to its statement which was filed pursuant to Practice Note #18. The Board noted that the time requirement under subsection 40(a)(2) states:

…..has been treated by the Board as a direction to deal with first contract applications in an expeditious manner, indeed, even more so than with most other matters coming before the Board, with some sense of urgency. In order to maximize the chances of completing first contract applications within thirty days, the Board has prepared Practice Note 18 which imposes strict requirements on the parties with respect to the nature and timing of filings

After that ruling by the Board, the union withdrew the application on the grounds that it was procedurally deficient.

4. The Board has drawn the labour relations community's attention to the timeliness requirements in jurisdictional dispute complaints and made it clear the requirements must be met. In Spruce Falls Power & Paper Company Limited, [1989] OLRB Rep. June 645, the Board stated at paragraph 7:

……Practice Note #15, which adopts procedures similar to those contained in the practice notes on first collective agreement arbitration, should indicate to the community that the Board is serious in its efforts to adopt and follow procedures which will assist in the resolution and adjudication of jurisdictional disputes.

At paragraph 8, the Board stated:

Paragraph 8 of Practice Note #15 provides that parties will not be permitted to adduce evidence at the hearing of any material fact not disclosed in the material filed with the Board, except with leave of the Board. The wording of the paragraph indicates that a party who fails to comply with

the Rules and Practice Note will not be permitted to introduce certain evidence unless that party can satisfy the Board that the circumstances warrant granting leave. Although the Board may consider any factors it considers relevant, particular significance will be given to the reason why a party has failed with the Rules and Practice Note.

5. Practice Note #18, section 5, mandates the respondent to reply within ten days; the word "must" is used. A respondent cannot file nor rely on material filed after the deadline. The Board's approach in the above mentioned cases is reinforced in its correctness when one examines Re UAW and Massey Ferguson Industries, 1979 CanLII 1802 (ON HCJ), 94 D.L.R. (3d) 743 (Div. Ct.). In this case the Court was required to determine whether the use of "must" should be read as mandatory or directory. In determining the issue Reid, J. stated, at paragraph 745:

The word "must" is a common imperative. It is hard to think of a commoner. There is no dictionary of stature of which I am aware that accords the word any other connotation. In its presence or future tense it expresses command, obligation, duty, necessity and inevitability...

The Court also stated, at page 746:

Since "must" bears only one meaning, an imperative one, it is inappropriate and unnecessary to search in the context for something that strengthens it.

6. Counsel for the respondent employer has relied upon Del Equipment Limited, [1989] OLRB Rep. Jan. 19. In that case counsel for both parties had agreed to an adjournment, but counsel for the applicant had asserted that the Board was required to complete the hearing within thirty-days of receiving the application. In that case, the delays which ate up the scheduled hearing dates were devoted to settlement talks. Further, the applicant was partly responsible for the delay in hearing the case within the thirty-day limit. Counsel for the employer relies upon the words of the Board where it states, at paragraph 17:

….To have the legislation operate in such a draconian manner would make a mockery of natural justice and fairness and would be inimical to the development of good labour relations between the parties. The legislation does not specifically abridge the rules of natural justice or fairness, and where the legislation has not specified any result, much less, such a startling one, we cannot accept that this was its intent.

7. These statements by the Board were made in regard to an assertion by the union that if the Board cannot complete the hearings within the time period, then a first contract arbitration should be directed. These comments were not made with regard to the time limits for the respondent's reply to the applicant's application.

8. It cannot be said that natural justice has been denied the respondent when the respondent's counsel did not file the application within the specified time periods. Counsel for the employer states in his letter to the Board of December 11, 1990 that prior commitments precluded travel to the employer's site to meet with the employer's bargaining committee. These circumstances are similar to the circumstances when counsel requests an adjournment on the grounds that counsel has a prior commitment. The Board has repeatedly stated, for example, in Teledyne Industries, supra that the Board will not grant an adjournment unless it is on the consent of the parties or if there are exceptional extenuating circumstances. In this situation, it is simply unacceptable for counsel to claim he could not prepare the reply within the time limits because the counsel had a prior commitment. There is a plethora of management labour lawyers in this province and an employer is not entitled to relief if it hires one who is unable to accommodate its needs and the Act's requirements.

9. As the above cases illustrate, when the union has failed to comply with Practice Note #18, the union is precluded from introducing as evidence that evidence which would rely on material facts not submitted. This is simply a case of "what is good for the goose is good for the gander" and as the Board is a non-partisan neutral body, it must rule that the employer cannot rely on any evidence other than that submitted within the time limits.