United Brotherhood of Carpenters and Joiners of America, Local Union 2050 v. Toronto Dominion Bank, 1995 CanLII 10032

[1995] OLRB Rep. December 1500

2320-95-G United Brotherhood of Carpenters and Joiners of America, Local Union 2050, Applicant v. Toronto Dominion Bank, Responding Party

BEFORE: M. K. Joachim, Vice-Chair, and Board Members W. H. Wightman and H. Peacock.

APPEARANCES: N. L. Jesin and Bryon Black for the applicant; F. G. Hamilton and Sharon Flanagan for the responding party.

DECISION OF THE BOARD; December 12, 1995

1. This referral of a grievance to arbitration pursuant to section 126 of the Labour Relations Act, 1992 (now section 133 of the Labour Relations Act, 1995) was filed with the Board on September 14, 1995. For ease of reference the applicant will be referred to as "the union" or "the Carpenters" and the responding party will be referred to as "the employer" or "the Bank" throughout the remainder of this decision.

2. This grievance involves the interpretation and application of a previous decision of the Board. In United Brotherhood of Carpenters and Joiners of America Local 785 v. Toronto Dominion Bank, [1995] OLRB. Rep. May 686 ("TD Bank") a different panel of the Board held that the Bank is bound to the provincial collective agreement between the Carpenters Employer and Employee Bargaining Agencies, (the "Carpenters Provincial Agreement") and also held that the union was estopped from relying on the subcontracting provisions of the provincial agreement until the issuance of the above decision. At paragraph 95, the Board stated:

95. In the result we have decided that the requisite notice which brings to an end the estoppel and which appropriately considers the past reliance of the Bank comes with the issuance of this decision. The estoppel therefore does not apply to contracts entered into after this date. With this decision the Bank knows that the union is asserting its bargaining rights and intends to enforce those bargaining rights. As a result of this decision the Bank also knows that its arguments of abandonment have not been accepted, it is required to recognize the union and comply with all of the provisions of the collective agreement including the sub-contracting provisions. It knows that any future dealing with outside contractors will be affected by those bargaining rights and can govern itself accordingly (see also for example Aluma Systems Canada Inc., [1994] OLRB Rep. Nov. 1469).

3. The Board's decision in TD Bank, dated May 1, 1995, was issued on May 3, 1995. The Bank sent a Letter of Intent to enter into a contract with respect to construction work at the Owen Sound Toronto Dominion Bank, 901-2nd Avenue East (the "Owen Sound" project) to Al-Jen Construction on June 13, 1995 and subsequently signed a contract with it on August 1,1995. Al-Jen Construction is not a signatory to the Carpenters Provincial Agreement.

4. The union asserts that the Bank is in breach of Article 4 (the subcontracting provision) of the carpenters' collective agreement because it entered into a contract with a non-signatory to the agreement, after the issuance of the TD Bank's decision of May 3,1995. The Bank asserts that the bidding process on the Owen Sound project began before May 3, 1995 and therefore it was not affected by the TD Bank decision.

5. The Board heard the evidence of Michael Grey, vice-president and chief architect at the Bank, Sharon Flanagan, assistant manager of employment standards at the Bank, and Bryon Black, manager of local 2050 of the Carpenters.

The Bidding process

6. The Bank is involved in approximately 200 - 300 construction projects yearly. The preparation of construction contracts over $100,000 is done by the architects' department in conjunction with real estate officers operating out of four operating divisions. Projects for less than $100,000 are managed by the operating divisions. The chief architect receives a requisition or work order from the real estate officer setting out the needed renovation, expansion or new construction. The architects' department prepares a preliminary design, which is approved by the relevant operating division. The design must then be approved by the building committee. Then, the bid documents (drawings and specifications) are prepared. Towards the end of this process, the operating division is asked for a list of "preferred clients" who are general contractors. Any contractor who has not already done so is asked to fill out a form CCA-11 outlining their previous projects, dollar values, Bank affiliation, etc. to enable the Bank to determine their fitness for the contemplated project. It is standard Bank policy to obtain at least three bidders to any contract, and where possible, to give preference to Bank customers.

7. Once the architects' department has the list of bidders and the bid documents are prepared, they telephone the contractors to inquire if they are interested. The interested contractors are sent the bid documents, and invited to submit a bid by the closing date. Bid documents consist of the following: invitation to bid; instruction to bidders, bid form or company letter head, supplementary bid form, list of subcontractors, supplementary general conditions, specifications, drawings, schedules, and addenda issued during the bid period. The instruction to bidders states, among other things, that "the lowest bid or any bid will not necessarily be accepted & the Bank reserves the right to reject any & all bids." None of the documents submitted indicated any policy or procedure prohibiting the cancellation of the bid process, prior to the award of the contract. The Bank views the invitation to bid as the start of the contract process and notes that the instruction to bidders states that it will form part of the contract.

8. The bidding procedure is reviewed by the Bank's internal investigation department which conducts regular inspections of the bidding process and issues directives to improve the system. Mr. Grey testified that his department has no authority to deviate from the instructions of the inspection department.

9. A tender log is prepared in respect of each project and records the progress of the bid.

The Owen Sound Project

10. The tender log prepared in respect of the Owen Sound project indicates that the work involved addition and renovation. The architects' department received a preliminary list of bidders on April 4,1995. Mr. Grey contacted the potential bidders by telephone on April 28 to ascertain their interest in bidding. The list of bidders was finalized on May 2, 1995 and the bid documents were issued by courier on May 2, 1995. The deadline for bid submissions was May 24, 1995. As will be discussed further below, although the TD Bank decision was issued on May 3, the Carpenters Provincial Agreement was not applied to this project. The architects' department made a recommendation on May 26, 1995 that Al-Jen Construction's bid be accepted. On June 12, 1995, the architect's department received authority to award the contract. On June 13, 1995 AI-Jen Construction was faxed a Letter of Intent, advising that its bid had been accepted and enclosing contract documents for execution. On August 1, 1995 a contract was signed between Al-Jen Construction and the Bank with respect to the Owen Sound project.

The TD Bank Decision

11. Mr. Grey testified that the Bank received no warning of the issuance of the Board's decision in TD Bank between the last day of hearing in November 1994 and the issuance of the decision in May 1995. Ms. Flanagan testified that the Bank was unable to anticipate the various outcomes of the pending Board's decision and therefore the Bank did not have in place any contingency plans with respect to dealing with the decision. Following receipt of the TD Bank decision, a meeting was held on May 11, 1995 with several senior Bank executives and the Bank's general counsel to discuss the decision. A memorandum was issued to the operating divisions advising as follows:

Due to a recent Ontario Labour Relations Board ruling, until further notice, as of May 3, 1995 all future construction projects undertaken by the Bank in Ontario will be obliged to use members of the Carpenter's Union for all work covered by the Carpenter's Collective agreement and performed by the United Brotherhood of Carpenters and Joiners of America.

We will be providing you with a revised clause to be included in our tender documents that covers this point. We will also be giving you a list of trades covered by the jurisdiction of the UBCJ of A.

If jobs have been issued for tender prior to May 3, 1995 please proceed as usual. If jobs have been issued for tender after May 3,1995 please delay the closing of the tender until we can prepare and have approved the revised wording to include in our contract documents. For jobs about to go to tender, please delay the issue of the tender call until we can have the revised wording approved for inclusion in our contract documents.

12. When asked the reasons for adopting this course of action Mr. Grey responded "you can - but didn't want to stop the process...."

13. Over the course of the next month and a half the Bank prepared and revised a clause to be included in future contract documents to comply with the TD Bank decision. The process was completed by approximately July 11, 1995.

14. As a result of this process adopted by the Bank, the Owen Sound project, which had been issued for tender on May 2,1995, proceeded without regard to the TD Bank decision. Mr. Grey testified that one of the contractors in the Owen Sound tender was in a contractual relationship with the Carpenters. However, he indicated that he was not prepared to award the project to that contractor on that basis because in his view it would not be fair to the other contractors. He indicated that the option of retendering, and thereby delaying, the project would have affected the profitability of that particular branch.

The Union's Arguments

15. The union relied on paragraph 95 of the TD Bank decision, quoted above. The union acknowledged that it was estopped from asserting the union security clauses of the collective agreement, and in particular, the subcontracting clause, against the Bank until the issuance of the Board's decision on May 3, 1995. On a plain reading of the TD Bank decision, the estoppel does not apply to contracts entered into after that date. They argued that the Bank entered into the contract with Al-Jen Construction on June 13 or August 1, clearly after May 3, 1995. Al-Jen is not a signatory to the Carpenters Provincial Agreement. Accordingly, the Bank is in breach of Article 4 (the subcontracting provision) of that agreement.

16. The union argued that the Bank's position that the TD Bank decision only applied to bids processed before May 3, amounts to a request to reconsider or vary the TD Bank decision.

17. The union noted that the Bank did not take any steps to prepare for the pending TD Bank decision and argued that the union should not suffer from their lack of preparation.

The Bank's Arguments

18. The Bank argued that it acted reasonably and responsibly in response to the TD Bank decision. The Bank asked the Board to consider the lack of warning before receipt of the TD Bank decision, the difficulty of anticipating the potential outcomes, and the necessity to review the decision, draft a new clause, and amend its internal policies in response to the decision.

19. The Bank argued that paragraph 95 of the TD Bank decision, when read as a whole, incorporates by reference the decision of the Board in Aluma Systems Canada Inc., [1994] OLRB Rep. Nov. 1469 ("Aluma Systems"). In Aluma Systems the issue was whether the employer (referred to in the decision as "Aluma Systems" or "UMACS") a large supplier of rental scaffolding, was bound to the Labourers' ICI collective agreement and, if so, whether and how long the union should be estopped from asserting its rights under that agreement. The Board held that Aluma Systems was bound to the applicable collective agreement but that the union was estopped from asserting its rights until the issuance of the Board's decision. At paragraph 72, the Board stated:

In this case, we are of the view that the appropriate time frame for the estoppel is in reference to the date of issuance of this decision. Thus, any contracts which UMACS had bid on or any project commenced prior to the date of this decision may be completed in the manner to which the employer had already committed. However, any work tendered and received after the date of this decision would have to be done in compliance with the responding party's obligations under the provincial ICI agreement with the Labourers' International Union of North America. Our intent is that the terms of the agreement are to be applied to work obtained after the issuance of this agreement.

20. The Bank argued that the reference in paragraph 95 of the TD Bank decision to the Aluma Systems decision indicates that the Bank is not bound to the Carpenters Provincial Agreement with respect to bids commenced prior to May 3, 1995.

21. The Bank noted that the bid process is associated with costs and that it accords with the reasonable expectations of the parties that bids should be completed on the terms upon which they are commenced. The Bank referred to Leading Investments v. New Forest, 1981 CanLII 1700 (ON CA), 34 OR. (2d) 175 (Ont. C.A.) which stands for the proposition that a Court should be guided by the reasonable expectations of the parties so long as it is compatible with their contract. The Bank also referred to the Board's test of reasonable expectations of employees in statutory freeze cases, as set out in Canadian Union of United Brewery Flour, etc. Workers v. Simpsons Ltd. (1985) 85 CLLC 14, 233.

Decision

22. In the Board's view, the meaning of paragraph 95 of the TD Bank decision is clear. In that panel's words, "the estoppel therefore does not apply to contracts entered into after [the issuance of the decision]". The TD Bank decision was issued on May 3, 1995. The Bank entered into a contract with Al-Jen Construction after that date, either on June 13, 1995 through its Letter of Intent or on August 1, 1995 when it executed the contract documents. At that time, by virtue of the TD Bank decision, the Bank was bound to the terms of the Carpenters Provincial Agreement. There is no dispute that the Bank did not comply with that agreement in entering into its contract with Al-Jen Construction. Accordingly, the Bank is in breach of the agreement.

23. The Board rejects the Bank's argument that paragraph 95 of the TD Bank decision incorporates the Aluma Systems decision by reference. We read the reference to Aluma Systems in paragraph 95 as support for the Board's decision to end the estoppel on the issuance of the Board's decision. Paragraph 95 must be considered in light of the Board's discussion of the length of the estoppel beginning at paragraph 87. It should be noted that in TD Bank the employer had argued that the estoppel was permanent and pertained in effect for the entirety of the agreement. The union had argued that any estoppel was brought to an end with a telephone call referred to earlier in the decision or with the filing of its grievance. The Board rejected both arguments and determined instead that the estoppel ended with the issuance of its decision, and, in our opinion, referred to Aluma Systems as an example of a Board decision in which the length of an estoppel was determined in a similar way.

24. In paragraph 95 of TD Bank, the Board specifically stated that the "estoppel therefore does not apply to contracts entered into after the issuance of this decision". In Aluma Systems, the Board ruled that the estoppel did not apply to "any contracts which UMACS had bid on or any project commenced prior to the date of this decision". There is a difference between entering into a contract and making a bid or tender, or commencing a project. The remedies ordered in Aluma Systems and TD Bank are not the same. Therefore,to read paragraph 95 of the TD Bank decision as incorporating Aluma Systems by reference would create an internal inconsistency in the TD Bank decision. We decline to find that the Board in the TD Bank decision intended such an inconsistent result.

25. We note that the position of the responding party in TD Bank is significantly different from the responding party in Aluma Systems. In Aluma Systems, the employer was in the position of a contractor who bids on projects. The bid price could be affected if the employer were bound to a collective agreement. The Board in Aluma Systems appears to recognize the potential prejudice which the employer could suffer if a bid made before the issuance of the Aluma Systems decision was accepted, and the employer was required to meet the bid price and fulfil its obligation under the Labourers Provincial Agreement. In this case, the circumstances are different. The Bank is not in the position of a contractor with respect to the bidding process. The Bank does not bid on projects; rather, it accepts bids. The prejudice to the Bank arises at the time the Bank enters into a contract the timing of which is entirely within its own control. The Bank does not suffer any significant prejudice in interrupting the bidding process. It is only once the Bank has accepted a bid which does not include an agreement to comply with the Carpenters Provincial Agreement, that the Bank could be prejudiced by subsequently being obliged to comply with that agreement.

26. To the extent that the employer's arguments amount to a request to substitute the remedy ordered in Aluma Systems decision for that ordered by the Board in TD Bank, we decline to do so. This panel will not reconsider or vary the Board's decision in TD Bank.

27. With respect to the Bank's argument that it needed time to respond to the TD Bank decision, the Board finds that the panel in TD Bank specifically considered that need in its decision. In deciding on the length of the estoppel, the Board in TD Bank stated, at paragraph 87:

87. ... The length of time during which a trade union is prohibited from asserting bargaining rights which otherwise exist is a matter to be determined on the facts. Perhaps, in unusual and exceptional cases it may be that the estoppel is "permanent". Thus, for example, if the conduct of the union is such that the employer cannot resume its position even upon the giving of reasonable notice by the trade union, it may be that the estoppel is permanent or irrevocable. More typically however the facts and circumstances of the estoppel cases dictate a result which is not a "permanent" estoppel, but an estoppel for a period of time sufficient to enable the employer which changed its position, or which relied on the trade union's conduct to its detriment, the time necessary to place itself in the same position it was in prior to the conduct or actions which gave rise to the estoppel, or the detriment on the trade union's representations. The estoppel or the suspension of the enforcement of bargaining rights is thus ended upon the giving of reasonable notice which enables the employer the opportunity to resume its former position vis-a-vis the union's existing bargaining rights.

28. In reaching its decision that the estoppel does not apply to contracts entered into after the issuance of the decision, the Board in TD Bank must be taken to have considered the principles it enunciated above. In the TD Bank case the Board drew a clear line to establish when, in its view, it was fair to end the estoppel. It drew that line at the point when the Bank entered into a contract, after May 3, 1995. In our view that line is a reasonable and appropriate one. With respect to any contracts entered into after May 3, 1995 the Bank was in a position to comply with the term of the Carpenters Provincial Agreement. We reject the Bank's argument that it could not or should not be expected to interrupt its bidding process. There is no compelling reason why it cannot do so. The Bank's own instruction to bidders state that the Bank may decide to reject any or all of the bids tendered.

29. We note that there is some inconsistency in the Bank's position that it cannot reasonably be expected to interrupt its bidding process. In its memorandum to operating divisions dated May 11, 1995, the Bank stated:

If jobs have been issued for tender prior to May 3, 1995 please proceed as usual. If jobs have been issued for tender after May 3, 1995 please delay the closing of the tender until we can prepare and have approved the revised wording to include in our contract documents. For jobs about to go to tender, please delay the issue of the tender call until we have the revised wording approved for inclusion in our contract documents. [emphasis added]

30. To the extent that tenders have been issued after May 3, 1995 and before the instructions issued on May 11, 1995, the Bank was prepared to interrupt its bidding process. The Board sees no difference between the interruption which might be caused to the bidding process for those tenders issued between May 3, 1995, and May 11, 1995, and those tenders issued before May 3, 1995.

31. On the Owen Sound project, the Bank issued its tender to the contractors on May 2, 1995. According to Mr. Grey's evidence, an instruction to bidders is included with the tender documents and form part of the eventual contract. The instruction to bidders specifically provides that the Bank may decide to reject any or all bids. In our view, there is no compelling reason that the Bank could not have cancelled the tender and retendered, or modified the existing tender, to achieve compliance with the TD Bank decision. The bids were not received until May 24, 1995. The Letter of Intent to enter into a contract with Al-Jen Construction was not sent until June 13, 1995 and the contract was not executed until August 1,1995. The Bank entered into a contract well after May 3, 1995. It was obliged to comply with the Carpenters Provincial Agreement with respect to that contract. It did not do so. Accordingly, the Bank breached the Carpenters Provincial Agreement.

32. The matter is remitted to the parties to determine the damages owing as a result of this breach. If the parties are unable to resolve this issue, this panel remains seized.