[1994] OLRB Rep. February 181
2601-93-G United Brotherhood of Carpenters and Joiners of America, Local 2041 Applicant v. Spencer Construction Company Ltd. and Ian Spencer, Responding Parties
BEFORE: S. Liang, Vice-Chair.
DECISION OF THE BOARD; February 23, 1994
This is a referral of grievance to arbitration, made pursuant to the provisions of section 126 of the Labour Relations Act. In this referral, the applicant, the United Brotherhood of Carpenters and Joiners of America, Local 2041 ("the union") has requested remedial relief against Spencer Construction Company Limited and Ian Spencer. Among other things, the union requests an order that both respondents be directed to pay damages for breaches of the collective agreement.
On January 20, 1994 at 9:30 a.m., the time and date set for the hearing of this matter, no one appeared for the respondents. I waited until 10:00 a.m. in case they had been unavoidably delayed, and then proceeded with the hearing, being satisfied that notice of the hearing had been sent to the respondents at the last registered address for the corporation, and at the residence address of Mr. Spencer.
I heard the evidence of Richard Brown, Carol Sabourin and Todd Dalley and received documents relating to the issues before me. I also have before me a letter written by Mr. Spencer dated January 19, 1994, and further written submissions from the union with respect to the legal issues raised, dated February 1, 1994. Having regard to the evidence and material before me, I make the following findings and orders.
The title of these proceedings is amended to reflect the correct name of the company: "Spencer Construction Company Ltd." The Board finds that Spencer Construction Company Ltd. is bound to the provincial collective agreement between The Carpenters Employer Bargaining Agency and The Ontario Provincial Council, United Brotherhood of Carpenters and Joiners of America, effective from August 1, 1992 to April 30, 1995. The Board finds that Spencer Construction Company Ltd. has violated this agreement, in failing to pay wages and associated benefits to Richard Brown, Carol Sabourin and Todd Dalley. These wages and benefits are owing from work performed by these employees in August and September of 1993.
The Board finds that the damages owing to these individuals amounts to $3,047.75 for Mr. Brown, $870.78 for Mr. Sabourin and $2,595.76 for Mr. Dailey. The Board orders that the total damages of $6,514.29 be paid to the union forthwith, on behalf of these individuals. The union has also requested that the Board order payment of $45.75 in accordance with Article 9 of the collective agreement, setting out liability of an employer for liquidated damages for failure to make timely payment of benefit contributions. Having regard to the evidence before us and the provisions of the collective agreement, including Article 9.15, the Board orders Spencer Construction Company Ltd. to further pay, as damages for its violation of the collective agreement, the sum of $45.75, to the union on behalf of the trustees of the pension and benefit funds.
As indicated above, the union has also requested relief against Ian Spencer personally. There is no dispute that Mr. Spencer is the President, one of two Directors of the company, and appears to be its controlling mind. There is also no dispute that Mr. Spencer is not personally bound to the collective agreement. In requesting an order against Mr. Spencer, the union relies on the provisions of the Ontario Business Corporations Act, 1982 ("the OBCA") and the Employment Standards Act ("the ESA"). Sections 131(1) and (2) of the Business Corporations Act, 1982 state:
(1) Directors' liability to employees for wages. - The directors of a corporation are jointly and severally liable to the employees of the corporation for all debts not exceeding six months' wages that become payable while they are directors for services performed for the corporation and for the vacation pay accrued while they are directors for not more than twelve months under the Employment Standards Act, and the regulations thereunder, or under any collective agreement made by the corporation.
(2) Limitation. - A director is liable under subsection (1) only if,
(a) he is sued while he is a director or within six months after he ceases to be a director; and
(b) the action against the director is commenced within six months after the debts became payable, and
(i) the corporation is sued in the action against the director and execution against the corporation is returned unsatisfied in whole or in part, or
(ii) before or after the action is commenced the corporation goes into liquidation, is ordered to be wound up or makes an authorized assignment under the Bankruptcy Act (Canada), or a receiving order under the Bankruptcy Act (Canada) is made against it, and in any such case, the claim for the debts is proved.
- Section 58.20(1) of the Employment Standards Act states:
58.20(1) Liability of directors.-The directors of an employer are jointly and severally liable for
wages as provided in this Part if,
(a) where an employer is insolvent, the employee has caused a claim for unpaid wages to be filed with the receiver appointed by a court with respect to the employer or with the employer's trustee in bankruptcy and the claim has not been paid;
(b) an employment standards officer has made an order that the employer is liable for wages, unless the amount set out in the order has been paid or the employer has applied to have reviewed it;
(c) an employment standards officer has made an order that a director is liable for wages, unless the amount set out in the order has been paid or the employer or the director has applied to have it reviewed; or
(d) an adjudicator acting under subsection 67(3) or a referee acting under section 68 or 69 has made, amended or affirmed an order that the employer is liable for wages or that the directors are liable for wages and the amount set out in the order has not been paid.
- The union also relies on sections 45(8) and 126 of the Labour Relations Act which provide:
45.- (8) An arbitrator or arbitration board shall make a final and conclusive settlement of the differences between the parties and, for that purpose, has the following powers:
To determine the nature of the differences in order to address their real substance.
To determine all questions of fact or law that arise.
To interpret and apply the requirements of human rights and other employment-related statutes, despite any conflict between those requirements and the
terms of the collective agreement.
To grant such interim orders, including interim relief, as the arbitrator or arbitration board considers appropriate.
To enforce a written settlement of a grievance.
126.-(1) Despite the grievance and arbitration provisions in a collective agreement or deemed to be included in a collective agreement under section 45, a party to a collective agreement between an employer or employers' organization and a trade union or council of trade unions may refer a grievance concerning the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable, to the Board for final and binding determination.
(2) A referral under subsection (1) may be made in writing in the prescribed form by a party at any time after delivery of the written grievance to the other party, and the Board shall appoint a date for and hold a hearing within fourteen days after receipt of the referral and may appoint a labour relations officer to confer with the parties and endeavour to effect a settlement before the hearing.
(3) Upon a referral under subsection (1), the Board has exclusive jurisdiction to hear and determine the difference or allegation raised in the grievance referred to it, including any question as to whether the matter is arbitrable, and subsections 45 (6.3), (8), (8.1), (8.3) and (9) to (12) apply with necessary modifications to the Board and to the enforcement of the decision of the Board.
(4) The expense of proceedings under this section, in the amount fixed by the regulations, shall be jointly paid by the parties to the Board for payment into the Consolidated Revenue Fund.
In the union's submission, section 45(8)(3) of the Labour Relations Act gives the Labour Relations Board, as an arbitration board hearing a referral of a grievance pertaining to the construction industry, the power to apply the provisions of both the OBCA and the ESA. It is submitted that both of these are "employment-related statutes" within the meaning of section 45(8)(3). Even without section 45(8)(3), it is submitted that in hearing grievances referred under section 126, the Board acts as a creature of statute, and has the power to apply the general law in its determination of disputes under collective agreements.
The evidence discloses that Spencer Construction Company Ltd. was petitioned into bankruptcy on October 25, 1993. The union has submitted a claim with the trustee in bankruptcy for the unpaid wages and benefits, which has not been paid yet.
The union submits that its claim on behalf of the three employees fulfills all of the conditions for directors' liability set out in section 131 of the OBCA. This grievance constitutes an "action", has been commenced while Mr. Spencer is still a director, has been commenced within six months after the debts became payable, and does not exceed six months' wages that became payable while Mr. Spencer was director of the corporation, or twelve months' vacation pay.
Given that section 131(1) specifically refers to sums which payable under a collective agreement, it is submitted that it must have been the intent of the Legislature that in a grievance brought under a collective agreement for unpaid wages and benefits, a union could enforce the liability of a director on behalf of employees. In the union's submission, if section 131(1) does not allow an employee to recover unpaid wages under a collective agreement against a director by way of a grievance arbitration, then there is no recourse since the law precludes a civil action to enforce rights under a collective agreement.
In any event, the provisions of the ESA also provide for directors' liability for unpaid wages, and the facts of this case fall within those provisions.
For the purposes of this decision I will assume, without finding, that both the Business Corporations Act, 1982 and the Employment Standards Act are "employment-related statutes" within the meaning of section 45(8)(3) of the Labour Relations Act.
I am unable to conclude that the Board has the jurisdiction to enforce the provisions of either the OBCA or the ESA as if it were either a civil court in which a civil action has been commenced, or an employment standards officer making an order under the latter statute.
The Board derives its jurisdiction in relation to grievance arbitrations in the construction industry from section 126 of the Labour Relations Act. That section states that a party to a collective agreement may refer to the Board a grievance concerning the "interpretation, application, administration or alleged violation of the agreement". [emphasis added] Section 45(1) describes arbitrations as relating to "differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement..." It is within the context, therefore, of the arbitration of differences between the parties that arise in relation to a collective agreement, that section 45(8)(3) must be read. Section 45(8)(3) provides an arbitrator with certain powers to the extent that the arbitrator is engaged in determining differences between parties to a collective agreement as to the obligations under that collective agreement.
Also of relevance is the definition of "collective agreement" found in the Act, which states that it is an agreement between an employer or an employers' organization, on the one hand, and a trade union or a council of trade unions on the other hand.
In the case before us, the employer is Spencer Construction Company Ltd. It is this entity which is a party to the collective agreement, and which has undertaken certain obligations under the agreement. There is nothing in this collective agreement which sets out obligations on the part of directors of the corporation. There is no dispute that the directors before us are not party to the collective agreement.
The obligations of the directors which the union seeks to enforce through this grievance are not found in the collective agreement. Rather, they are obligations imposed by statute. Apart from the statutes imposing these liabilities, an employee would have no right of action against a director for unpaid wages.
Therefore, to the extent that the source of the director's obligations for unpaid wages and benefits is not the collective agreement, but is found in the provisions of statutes, I find that this is not a matter which arises from the "interpretation, application, administration or alleged violation of the agreement".
The nature of the problem posed by the union's submission is highlighted if one were to consider some other scenarios. If section 45(8)(3) gives the Board the power to enforce the provisions of the OBCA and the ESA against a person who is not a party to the collective agreement, then there is no reason why a grievance could not be brought as against the directors only, without any reference to the corporate employer and without any need to prove a violation of the agreement by the corporate employer. In the case before us, for example, where the liability of a director in the context of a bankruptcy is not contingent on a successful action or an order of an employment standards officer against the employer, accepting the union's argument, the Board would have the power to order remedial relief directly against the director without any finding of a violation of the agreement by the employer. There is also no reason why a grievance could not be brought as against shareholders, who in certain circumstances are also made liable for unpaid wages under the ESA. In all these examples, it is difficult to see how the dispute concerns a difference between the parties to a collective agreement arising from the obligations found in the collective agreement.
Whatever the scope of the language of section 45(8)(3), I do not find that it is intended to expand the nature of grievance arbitrations so that the Board is engaged in enforcing the rights and obligations of persons who are not parties to the collective agreement ,. and where the source of these rights and obligations is established outside of the collective agreement.
There is no doubt that by statute, the Legislature in Ontario has altered common-law notions of privity of contract so that not only an employer which is party to a collective agreement, but that employer's directors and (in certain instances) shareholders, may become liable for unpaid wages. By this decision, I make no findings as to whether the conditions for finding directors' liability in the case before us have been made out. I simply conclude that grievance arbitration is not the mechanism by which to enforce this liability.
I am unable to agree with the union's submissions that the result of the Board declining to enforce the provisions of the OBCA, would be to leave an employee covered by a collective agreement in a worse position than an employee not covered by a collective agreement. There is no reason why both would not have the same access to an order of an employment standards officer under the ESA, which provides for directors' liability equivalent to that provided for in the OBCA. Further, it appears that courts in Ontario will not preclude a civil suit to collect unpaid wages where an interpretation of a collective agreement is not required: see George W. Adams, Canadian Labour Law, (2nd ed.) and the cases cited therein.
It should be stressed that my findings are not intended to delimit or apply to the exercise of an arbitrator's powers under section 45(8)(3) in relation to the employer which is a party to the collective agreement. It may be that in dealing with a grievance alleging a violation of a collective agreement by an employer, section 45(8)(3) provides an arbitrator with the authority to enforce obligations which are imposed on that employer by statutes. I do not have to determine the scope of this authority. Neither do I have to determine the extent to which this authority must be linked to an issue relating to the administration, interpretation, application, administration or alleged violation of a collective agreement, which is a question for another day.