Ontario Construction Secretariat v. The Labourers' International Union of North America, 1995 CanLII 9924

Ontario Labour Relations Board

[1995] OLRB Rep. May 655

2214-94-U; 2215-94-U Ontario Construction Secretariat, Applicant v. The Labour­ers' International Union of North America, and The Labourers' International Union of North America Ontario Provincial District Council, Responding Parties v. Sheet Metal Workers' International Association, Intervenor; Ontario Construc­tion Secretariat, Applicant v. Sheet Metal Workers' International Association and Ontario Sheet Metal Workers' Conference a.k.a. Ontario Sheet Metal Workers' and Roofers' Conference, Responding Party

BEFORE: Robert Herman, Vice-Chair, and Board Members F. B. Reaume and G. McMenemy.

APPEARANCES: Ian Roland, Ian McGilp, Paul Wollaston and Bill Jamieson for Ontario Construc­tion Secretariat; John Moszynski and Nick Barbieri for Labourers; David McKee, Dennis E. Maes for the Sheet Metal Workers' International Association; J. Raso and George Ward for Ontario Sheet Metal Workers Conference; Ariane Siegel for Attorney General of Ontario.

DECISION OF THE BOARD; May 31, 1995

1. These are related applications brought by the Ontario Construction Secretariat against various unions or union organizations, under the provisions of section 91 of the Labour Relations Act, alleging breaches of section 155(6) of the Act. Section 155 was added to the Act by way of a recent amendment, and reads as follows:

155.-(1) This section applies with respect to a corporation established under a regulation under this section.

(2) The objects of the corporation are to facilitate collective bargaining in, and otherwise assist, the industrial, commercial and institutional sector of the construction industry including,

(a) collecting, analyzing and disseminating information concerning collective bargaining and economic conditions in the industrial, commercial and insti­tutional sector of the construction industry;

(b) holding conferences involving representatives of the employer bargaining agencies and the employee bargaining agencies; and

(c) carrying out such additional objects as are prescribed.

(3) The corporation is not an agency of the Crown.

(4) The members of the corporation shall be appointed in the prescribed manner and shall con­sist of equal numbers of representatives of labour, management and the Government of Ontario.

(5) The board of directors of the corporation shall be composed of all the members of the corpo­ration.

(6) The employer bargaining agencies and the employee bargaining agencies shall make pay­ments to the corporation in accordance with the regulations.

(7) The corporation may make a complaint to the Board alleging a contravention of subsection (6) and section 91 applies with respect to such a complaint.

(8) The Lieutenant Governor in Council may make regulations,

(a) establishing a corporation without share capital;

(b) governing the corporation including,

(i) providing for its dissolution,

(ii) governing the appointment of members, and

(iii) prescribing additional objects;

(c) governing the payments to be made to the corporation by the employer bargaining agencies and the employee bargaining agencies including pre­scribing methods for determining the payments.

(9) A regulation made under subclause (8)(b)(ii) may provide for the selection, by persons or organizations, of persons to be appointed as members.

2. Pursuant to section 155(8), the Lieutenant Governor in Council enacted O. Reg. 187/93, which came into effect on June 1, 1993, and which established the applicant Ontario Construction Secretariat (or "Secretariat") as the corporation envisaged in subsection 1 of section 155. The reg­ulation also provided that designated employer and employee bargaining agencies each must make certain specified monthly payments to the applicant, in amounts "equal to one cent for each hour" earned by an employee represented by a bargaining agent that is part of an employee bargaining agency and working for an employer represented by an employer bargaining agency. The respond­ing unions fall within the categories so described, but have refused to remit the sums to the appli­cant, thus leading to the instant litigation.

3. As required by section 155(7), the instant complaint is brought pursuant to the provi­sions of section 91. At this stage, the parties are agreed that the Board deal first with the constitu­tional issue raised, whereby the responding parties all assert that the Legislation and regulation thereunder are unconstitutional, and ought not to be enforced by the Board. Accordingly, the instant decision deals only with the constitutional question. The Attorney General of Ontario has intervened on this issue, supporting the constitutionality of the provisions.

4. The parties were agreed as to the relevant facts (with one or two minor discrepancies that are not significant), and were further agreed that the Board need not entertain oral submis­sions with respect to the constitutional issue, but could dispose of this matter on the basis of the agreed facts and the materials filed. And because the facts are so extensively set out in the filed materials, we only provide a summary of them.

The Facts

5. Since 1977, when the Legislature amended the Labour Relations Act to provide for sin­gle trade province-wide collective bargaining in the industrial, commercial and institutional sector of the construction industry (the "I.C.I."), province-wide designated bargaining agencies have been statutorily responsible for bargaining on behalf of employers and unionized employees in this sector of the industry.

6. Bargaining has been on a single trade basis. Thus, a single "employer bargaining agency" is responsible for bargaining for all employers employing unionized trade employees in a particular trade in the I.C.I., wherever situated in the province. Similarly, a single "employee bar­gaining agency" has been responsible for bargaining on a province-wide level for all of its constitu­ent trade unions, whose members are engaged in work in the same trade.

7. In 1990, the Minister of Labour announced a review of this province-wide single trade bargaining system, and appointed George Adams (now Mr. Justice Adams) to conduct it. One of the recommendations in his Report was "that all employee and employer bargaining agencies, together with government, be required to form and fund a central body that will administer the collection and analysis of construction collective bargaining data and the collection and analysis of other relevant industry data to further enhance province-wide single trade bargaining. This body shall also be required to convene industry meetings at least twice a year and to issue regular reports of the industry. Such reports and conferences will better inform the bargaining parties and increase the opportunities for understanding and cooperation" (Review of Province-Wide Single Trade Bar­gaining Process in the Industrial, Commercial and Industrial Sector of the Ontario Construction Industry, hereinafter referred to as the "Adams Report"). The Adams Report was released in July 1991. Accepting its recommendations, the government enacted Bill 158, which contained the pro­visions of what is now section 155 of the Act. Royal assent was given on December 19, 1991.

8. Section 155(1) states that section 155 applies with respect to a corporation established under a regulation under that section. Pursuant to section 155(6), the funding of the corporation by employer bargaining agencies and employee bargaining agencies was to be accomplished through payments made to the corporation in accordance with the Regulations. Prior to the issuance of any regulation pursuant to section 155, representatives of both construction trades and construction employers in the sector formed a Joint Committee to make recommendations to the Minister as to the appropriate regulation. In turn, the Joint Committee held a conference, attended by delegates or representatives of interested participants, at which the delegates debated and considered mat­ters related to the establishment and maintenance of what came to be named the Ontario Con­struction Secretariat.

9. The conference established nine working groups, consisting of delegates evenly divided between employer and union representatives, which considered a number of issues at the confer­ence itself, and later reported their conclusions. With respect to the issue of funding of the corpo­ration to be established through the regulation, six of the nine working groups supported the rec­ommendation of the Joint Committee that the appropriate method and level of funding would be to require that one cent per hour per employee be collected by each employee and employer bar­gaining agency. The three remaining working groups took alternative positions. In the result, the Joint Committee reported back to the conference that it was going to recommend to the Minister that the implementation of funding be based upon one cent per hour each from labour and man­agement, effective as of May 1, 1993.

10. The Joint Committee submitted its recommendation to the Minister of Labour in March, 1993. Ontario Regulation 187/93 was enacted on April 21, 1993, and established the appli­cant Ontario Construction Secretariat. The Regulation came into effect on June 1, 1993. It reads as follows:

REGULATION MADE UNDER THE

LABOUR RELATIONS ACT

ONTARIO CONSTRUCTION SECRETARIAT

1.-(1) A corporation without share capital is established under the name Ontario Construction Secretariat in English and Secretariat ontarien a la construction in French.

(2) In this Regulation, "Secretariat" means the Ontario Construction Secretariat.

2. The advancement of the unionized construction industry in Ontario is prescribed as an object of the Secretariat in addition to the objects set out in subsection 152(2) of the Act.

3.-(1) The Secretariat shall have twenty one members consisting of seven members representing labour, seven representing management and seven representing government.

(2) One of the members representing labour must be an executive officer of the Ontario Provin­cial Building Trades Council.

(3) One of the members representing management must be an executive officer of the Construc­tion Employers' Co-ordinating Council.

(4) The members shall be appointed by the Minister.

(5) Only the following members have voting rights:

1. The members representing labour other than the member who is an execu­tive officer of the Ontario Provincial Building Trades Council.

2. The members representing management other than the member who is an executive officer of the Construction Employers' Co-ordinating Council.

(6) Subsection (5) applies with respect to the voting rights of members as members and as direc­tors.

4.-(1) On an interim basis until the membership of the Secretariat is constituted in accordance with section 3, the Secretariat shall have fifteen members consisting of five members represent­ing labour, five representing management and five representing the Government of Ontario.

(2) The interim members of the Secretariat shall be appointed by the Minister.

5.-(1) This section governs the payments that the employer bargaining agencies and the employee bargaining agencies are required, under subsection 152(6) of the Act, to make to the Secretariat.

(2) Payments must be made by the employer bargaining agencies and employee bargaining agencies designated by the Minister under subsection 141(1) of the Act.

(3) Payments are due on the 15th day of each month. The first payments are not due until the 15th day of September, 1993.

(4) The payment that an employee bargaining agency must make is equal to one cent for each hour described in subsection (6) earned by an employee represented by a bargaining agent that is part of the employee bargaining agency.

(5) The payment that an employer bargaining agency must make is equal to one cent for each hour described in subsection (6) earned by an employee of an employer represented in bargain­ing by the employer bargaining agency.

(6) The hours referred to in subsections (4) and (5) are hours earned in Ontario in the indus­trial, commercial and institutional sector of the construction industry in the third calendar month preceding the day the payment is due.

6. If the Secretariat is dissolved, the property of the Secretariat remaining after the payment of all debts and liabilities shall be distributed or disposed of to charitable organizations.

7. This Regulation comes into force on the 1st day of June, 1993.

8. Thereafter, the Secretariat engaged in numerous activities, including proposing budgets and business plans, and retaining consultants for various projects. For our purposes, the critical fact is that on August 24, 1993, the Secretariat advised all designated employee and employer bar­gaining agencies that pursuant to the regulation, remittances were due to the Secretariat as of Sep­tember 15, 1993. The responding parties have failed to remit the amounts so owing.

9. There are a few other relevant facts. A number of unions were opposed to the recom­mendations of the Joint Committee about funding, both with respect to the source of the funds and their quantum. However, the government accepted the recommendation of the Joint Committee in this regard. The government did not otherwise independently investigate and consider the appro­priate funding mechanism and level.

10. When the new regulation was passed, a number of provincial agreements, binding upon the responding unions, had already been negotiated and settled, and these agreements did not take into account the additional one cent per hour required by the regulation.

11. Ontario Regulation 187/93 contained a number of other provisions. The objects of the corporation were set out in section 155(2) of the Act. To these, the regulation added as an addi­tional object of the Secretariat "the advancement of the unionized construction industry". The Regulation determined the number of members, at twenty-one, comprised of seven representatives each from labour, management, and government. Only the Labour and Management members were granted voting rights. On dissolution of the Secretariat, should that occur, the remaining property of the Secretariat was to be distributed to charitable organizations.

The Law

15. There are a number of grounds of constitutional objection, and they rest upon a chal­lenge to the collection of the remittances required under the regulation. The first issue is whether the legislative subject matter is taxation, or the regulation of labour. The latter is an exclusively provincial matter. If the subject matter is labour relations, the Board must also consider whether the payments required are in the nature of administrative fees or levies, or more properly are taxa­tion. A second issue arises only if the Board concludes that the subject matter is properly charac­terized as taxation. In that case, the Board must consider whether the fees imposed by the regula­tion are direct taxation, within the provincial authority, or indirect taxation, as asserted by the responding parties, and thus beyond the provincial legislative authority. These questions arise within the confines of section 92(2) of The Constitution Act, 1867.

16. In any event, the responding parties also allege that the legislation and regulation con­travene Section 2(d) of the Charter, in that they constitute an impingement upon the responding parties' freedom of association, contrary to the Charter, and are not saved by section 1 of the Charter.

17. We turn first to consideration of whether the statutory provisions and regulation are properly characterized as taxation, or as provisions dealing with valid provincial labour relations purposes, to which the administrative fees levied are an appropriate adjunct.

18. The origins of the legislative amendment can be found in the review conducted by George Adams, and his subsequent Report. No part of that review mandate, nor the Report itself, encompassed the issue of taxation in the province, either direct or indirect. Rather, the Minister identified a concern about the I.C.I. sector of the construction industry and considered it appropri­ate to have a person expert in the area conduct a review. That individual canvassed the relevant communities, received input and deputations, and reported back to the Minister his recommenda­tions. The Adams Report considered labour relations issues in the province, and not revenue, financial or taxation issues.

19. The legislative amendment evolved directly from this review. Through subsequent con­sultation and input from the affected trades and employers in the industry, and through the mecha­nism of a Joint Committee representative of both constituencies, it was recommended to the Minis­ter that the regulation contain a funding provision similar to the one which was passed. When one views the history leading up to the legislation and the regulation, including the Adams Report, the detailed participation of the affected trades and employers, the previous legislative regime dealing with the I.C.I. in the province, and the activities of the affected players subsequent to the passing of the regulation, it is apparent that the legislation and regulation were both designed to and do tn fact deal with the regulation of labour relations in the province. This is a subject matter constitu­tionally within the authority of the province.

20. Since we are satisfied that the legislative provisions fall properly within the constitu­tional jurisdiction of the province, to regulate labour relations matters within the province, we next ask whether the fees required by virtue of the regulation constitute a tax, direct or indirect, or an administrative fee levied for provincial labour relations purposes. On this ground as well, we are satisfied that the province has acted constitutionally.

21. Again, it assists to trace the history of the development of the regulation. The Adams Report identified a problem in the industry, and recommended that an agency of the sort in ques­tion be established and funded to collect and analyze construction collective bargaining data, and other relevant industry data, in order to further enhance province-wide single trade bargaining. While the Adams Report did not deal with the details of the funding, it clearly recognized the need to establish a mechanism for the funding of such an agency. That need was considered in some detail by the affected trade unions and employers, through the conference that was set up by the Joint Committee to consider the nature of the agency and how it should operate. It was the Joint Committee that recommended the "one cent for each hour" which ultimately found its way into the regulation, and which is here challenged by the responding parties.

22. Under the regulation, the payments are to be collected by the employer and employee bargaining agencies, and are to be forwarded or paid to the Secretariat. The Secretariat, as stated in section 155(3) of the Act, is not an agency of the Crown. The funds so collected are to be col­lected and used only for purposes of the Ontario Construction Secretariat. No part of the funds, at least under the current regulation, will find their way into government coffers. For example, the regulation indicates that upon dissolution of the Secretariat, should this occur, the property remaining in the Secretariat will be distributed or disposed of to charitable organizations, and not to the government.

23. Nor can it be said that the Secretariat is really the alter ego or some other manifestation of the government. The regulation requires that the majority of the twenty-one members of the Secretariat shall be comprised of representatives from labour and management. And it is only these representatives who will be voting members of the Secretariat.

24. In these circumstances, we do not conclude that the Secretariat itself, or the sums required to be paid to it pursuant to the regulation, are unconstitutional. Those sums are collected only for purposes of the Secretariat, in order to enable the Secretariat to conduct its business and fulfil its objectives. In our view, this scheme is one involving the administration and collection of administrative levies required to fund the agency, an agency which properly falls within provincial jurisdiction. As such, these fees are not in the nature of a tax.

25. More particularly, we accept as appropriate the approach adopted by the Supreme Court of Canada in Allard Contractors Ltd. v. Coquitlam (District), 1993 CanLII 45 (SCC), 4 S.C.R. 371. In that case the Supreme Court of Canada unanimously upheld the constitutionality of certain municipal by-laws imposing fees for gravel extraction. In so doing, the Court concluded that the appropriate test for the determination of what constitutes a valid regulatory charge, rather than taxation, was whether the variable fees could "be supported as ancillary or adhesive to a valid provincial regula­tory scheme?".

26. The responding parties assert that the payments or fees must fail on this basis. They submit there was no meaningful attempt by the government, or the Secretariat, to assess the appropriate amount of money that should be collected by way of fees. They assert that the appro­priate amount would be one necessary to enable the Secretariat to conduct its business, yet the amount of the levy does not even approximately reflect the actual costs incurred by the Secretariat.

27. There is no doubt that the income already generated for the Secretariat by the regula­tion, by those employer and employee bargaining agencies that have been remitting the required funds, far exceeds its current costs and obligations. However, this fact is not determinative of the constitutional issue before us. First, there will no doubt be start-up costs of any organization like this agency, costs which are extremely difficult, if not impossible, to predict accurately before the organization has become established. Second, even though the amounts collected far exceed the costs incurred, there was nevertheless an attempt by the government to estimate the appropriate level of payments. The government made this attempt by asking the trades and the employers directly affected by the agency to themselves estimate what the appropriate fee level ought to be, and what the appropriate method of collection of those fees ought to be. Whether or not the esti­mate so reached by the participant labour organizations was wildly excessive or completely accu­rate, we are satisfied that the government made a reasonable attempt to estimate levels of pay­ments that would reflect the needs of the new agency. It did so in a manner difficult to criticize: it asked the parties directly affected and working in the industry to utilize their joint and individual expertise to advise the government as to the appropriate level of payment. And then it followed their joint recommendation.

28. Apart from the specific level of the fees, we are satisfied that the fee concept can be fully supported as ancillary to or adhesive to the provincial regulatory scheme in question. The Secretariat is a creature of this new legislation and regulation, and as such needs a funding base in order to accomplish its valid provincial objectives. We see nothing unconstitutional in the conclu­sion of the government that the fees ought to be borne by the communities directly affected by the Secretariat's activities.

29. For all these reasons, we are satisfied that the fees in question do not constitute taxa­tion, direct or indirect. Accordingly, we need not deal with the alternative arguments of the responding parties that they constitute indirect taxation. We do however need deal with the argu­ment that the fees in some manner violate section 2(d) of the Charter.

30. Section 2(d) of the Charter provides:

31. Everyone has the following fundamental freedoms:

(d) freedom of association.

31. The responding parties argue that either or both of the forced membership in and the forced funding of the Secretariat constitute violations of section 2(d) of the Charter. With respect to the first submission, that forced membership in the Secretariat contravenes section 2(d), we do not propose to deal with it further, as it does not appear on the facts that any of the responding parties are actually members, nor are any of their submissions meaningfully addressed to this point. Despite reciting this ground in the materials, it appears as if the real Charter issue is over the forced payments.

32. With respect to this argument, we adopt as correct the statement contained in the Factum of the Secretariat at paragraphs 50 and 51. In Lavigne v OPSEU, 1991 CanLII 68 (SCC), [1991] 2 S.C.R. 211, the leading case in this area, the Supreme Court of Canada was unanimously of the view that no infringement of the freedom of association had occurred when a portion of the dues collected by a union pursuant to the payment of dues under the Rand Formula was utilized for "political" or "id­eological" purposes. The Court was not however unanimous on the reasoning for arriving at this conclusion.

33. Wilson J. wrote on behalf of three judges, and concluded that there was no infringe­ment because section 2(d) does not protect the "right not to associate" with others. McLaughlin J., writing only on her own behalf, assumed that section 2(d) had a negative aspect, but nevertheless found no infringement because the payment of dues could not reasonably be regarded as associat­ing the individual with the views or values of the union. Put differently, compelled payments did not, in McLaughlin J. 's view, constitute forced association. Thus, four judges in effect found that section 2(d) does not protect "a right not to associate", insofar as compelled payments are con­cerned.

34. We are therefore of the view that the decision of the majority of the Court in Lavigne is determinative and binding upon us, and requires a finding that the payments in issue here do not infringe section 2(d) of the Charter.

35. Because of our conclusion in this respect, it is unnecessary to consider the effect of sec­tion 1 of the Charter.

36. For all these reasons, we are satisfied that the legislation and regulation are constitu­tionally within the authority of the province, and accordingly, the constitutional challenges are hereby dismissed.

37. Our decision ought not to be taken as any comment upon how the Board will exercise its discretion under section 91 in these two applications. That is a matter not yet considered by the Board, and it raises novel and important issues. At this stage, as requested by the parties, we sim­ply remit all remaining matters to them. These applications will be relisted at the request of any of the parties.