International Brotherhood of Electrical Workers, Local 353 v. Standard Underground High Voltage Ltd.

[1997] OLRB REP. SEPTEMBER/OCTOBER 936

1380-97-G; 1643-97-G International Brotherhood of Electrical Workers, Local 353, Applicant v. Standard Underground High Voltage Ltd., Responding Party; Interna­tional Brotherhood of Electrical Workers, Local 353, Applicant v. Power Cable Installa­tions (Toronto) Limited, Responding Party

BEFORE: Lee Shouldice, Vice-Chair.

APPEARANCES: Elizabeth Mitchell, Michael J. Oram and Steve Knott for the applicant; S. Margot Blight and John Hayes for the responding parties.

DECISION OF THE BOARD; October 16, 1997

I. These proceedings consist of two construction industry grievances which have been referred to the Board for arbitration pursuant to section 133 of the Labour Relations Act, 1995 (hereinafter referred to as "the Act"). These proceedings both came on for hearing before this panel of the Board on September 12, 1997. At that time, counsel agreed that certain preliminary matters raised by the responding parties (hereinafter referred to individually as "Standard Underground" or "Power Cable", or collectively as "the employers", as the case may be) would be dealt with, without the need for oral evidence. On consent, 15 exhibits were placed before me, and certain other facts which were not in dispute were provided to me by counsel. On the basis of that evidence, four separate preliminary arguments raised by the employers were argued.

2. The applicant (hereinafter referred to as "the union") and the employers are bound to the Principal Agreement between the International Brotherhood of Electrical Workers and the IBEW Construction Council of Ontario and the Electrical Trade Bargaining Agency of the Electrical Contrac­tors Association of Ontario which expires on April 30, 1998, and predecessor agreements (hereinafter referred to as "the Principal Agreement"). The union alleges that the employers have failed to pay an "interest charge" contained in the Local 353 Appendix of the Principal Agreement. The clause in that Appendix which creates the obligation is Article 1001(b), which provision reads as follows:

Payments for the Welfare Fund, Vacation Pay Fund, RRSP Fund, Pension Fund, IBEW-CCO Fund, SUB Fund, Other Funds, Union Dues, Training Trust Fund, Industry Stabilization Fund and Association Dues are to be made monthly by the twentieth (20th) day of the following month to the Trust Administrator subject to an interest charge of $0.08 for each hundred dollars outstanding for each day from the due date to the fund or funds involved. Each Employer shall remit all payments and reports as may be required by the Agreement by the twentieth (20th) day of the month following the month for which they were due. In the event that an Employer fails to remit the required payment and reports by the thirtieth (30th) day of the month they were due appropriate action may be taken retroactively to the twenty-first (21st) day of the month.

There is no dispute amongst the parties that the amounts due from the employers to the union under the Principal Agreement, save and except for this "interest charge", have been paid by the employers. However, the employers have not paid accrued "interest charges" of $9,622 (for Standard Underground) and $1825.74 (for Power Cable), which amounts were agreed to only for the purposes of these preliminary motions. The union's grievances relate to these sums, which it claims under the above-noted clause.

3. The parties argued four separate preliminary objections to proceeding with these grievance arbitrations. The employers submit that the grievances are untimely, and therefore that the Board is without jurisdiction to entertain them. Alternatively, it is argued that the interest rate provided under the collective agreement is unenforceable having regard to section 4 of the Interest Act, R.S.C. 1985, c. I-18. In the further alternative, it is submitted that the above-referenced clause in the Principal Agreement is unenforceable as it constitutes a penalty clause. Finally, and again in the alternative, it is submitted that, with regard to Standard Underground only, the amounts due prior to July 26, 1995 are no longer due because of Memoranda of Agreement previously executed between that entity and the union. The employers withdrew a preliminary objection that the Board was without jurisdiction to hear that portion of the grievances that arose under the former collective agreements.

4. Having regard to the conclusion I have reached respecting the timeliness of the grievances, it is unnecessary to deal with the other preliminary objections argued by the parties.

5. For the purposes of this preliminary objection, counsel referred to a number of exhibits filed with the Board. The key exhibits consist of a number of "form letters" to the employers from the Toronto Electrical Industry Benefit Administration Services Limited (hereinafter referred to as "T.E.I.B.A.S."). There is no dispute that this entity is the administrator of the trust funds paid by employers bound to the Principal Agreement. The form letters date back as far as August, 1994, and (not surprisingly) generally take the same form. The body of the letter states that the trust fund requires that both payment and a contribution report is to be in the hands of the administrator by the 20th day of the month following the month in which the hours were worked. It notes that "on the current collective agreement, delinquent contributions received after the due date will be assessed a delinquent charge of $0.08 per hundred dollars per day of delinquency". The letter further notes that the employer's remittances for one or more certain months were received after the date due, and that a delinquency charge of some amount had been assessed. The letter requests payment of the sum by separate cheque, and ends with the following underscored sentence:

"If the funds are not received as soon as possible the Trustees intend to take the appropriate steps to collect the funds by means of action at the Ontario Labour Relations Board."

The letter is signed by Mr. Steve Knott, Executive Administrator of T.E.I.B.A.S., and is carbon-copied to Mr. Joe Fashion, who is Business Manager/Financial Secretary of the applicant.

6. Letters in this same general form (but with different sums and dates) were sent to the employers between August, 1994 and May, 1997. Each was copied to the union through Mr. Fashion. Some of the letters were sent more than once, endorsed as "Friendly Reminders" or, on subsequent occasions, as "Second Reminders". No running total of the amount owed by the employers to any particular date was ever provided to the employers - each of the letters was, to that extent, a "stand alone" document.

7. By way of letter dated June 12, 1997, Mr. Fashion, on Local 353 letterhead, wrote to the responding party Standard Underground (a similar letter was sent to Power Cable on August 8, 1997). The body of the letter reads, in part, as follows:

We have been advised by the Trustees of the Health and Welfare Trust Fund, that your company is delinquent for penalties owing due to remittances being received late or outstanding.

This is a violation of Section 21, clause 1001(b) (enclosed) of the Principal Agreement between the

IBEW - CCO and the Electrical Contractors Association - ETBA

The Trustees have directed us to recover these outstanding and accruing amounts.

We hereby file a grievance pursuant to section 13 of the said Agreement.

If this matter is not resolved immediately, we will refer this grievance to the Ontario Labour Relations Board....

Mr. Fashion followed up this letter on June 18, 1997 with further correspondence identifying the interest charge of $0.08 per hundred dollars outstanding.

8. Article 13 of the Principal Agreement outlines the Grievance and Arbitration Procedure applicable to the parties to the agreement. The critical provision is Article 1302, which reads as follows:

1302 EITHER PARTY

If either party to this Agreement alleges there has been a misinterpretation, violation or non-application of this Agreement such Party may within five (5) working days of the time they became aware, or reasonably should have been aware of the incident giving rise to the grievance, submit such grievance in writing to the designated representative of the other Party. If the grievance is not settled within two (2) working days at this stage, it may be submitted to the Local Joint Conference Board. Failing settlement at this stage, either Party may refer the grievance to the Electrical Trade Joint Board as in Clause 1300, Step 4.

9. Counsel provided a chart which sets out, for each of the employers, the various amounts claimed by the union, and which identifies the contribution amount, the work month, the remittance due date, the remittance received date and the number of days each remittance payment was late. As noted above, the parties have agreed that the chart is accurate only for the purpose of these preliminary motions.

10. Counsel for the employers submits that the vast majority of the interest charge claims made by the union are untimely, having regard to Article 1302, as qualified by Article 1001. In her submission, Article 1001 has the effect of extending by 10 days the time that the union has to grieve a violation of that provision of the Principal Agreement. Accordingly, for violations of the Principal Agreement obligations contained in Article 1001, Local 353 could grieve up to 15 days after learning of the breach (or after the time that it reasonably should have known of the breach). In counsel's submission, this clause drives one to two conclusions. First, that for remittances due pursuant to Clause 1001, the deadline to file a grievance is effectively 15 days from the date of the breach. Second, if the amounts are paid at any time before the 30th day of the month they were due, the amounts due as an "interest charge" cannot be the subject of a grievance. Any way one considers the various amounts said by the union to be due and owing, it was submitted that the vast majority of those claims are untimely and therefore incapable of remedy.

11. Counsel for the union asserts that the initial T.E.I.B.A.S. letters forwarded to the employers are, in fact, grievance letters. It was noted that at least some of the letters appear to be dated the same date that the employers submitted their late remittances, and therefore appear to have been forwarded to the employers in a timely fashion. Counsel submitted that T.E.I.B.A.S. was an agent for the union and therefore that I could quite easily conclude that the union had grieved the violations of the Principal Agreement within the timeframe reflected by Article 1302 of the Principal Agreement. The only delay was with respect to the actual referral of the grievance to arbitration. With regard to the argument that Article 1001(b) provides some type of grace period, counsel was of the view that the liability for violations of the Principal Agreement occurred on the first day that the remittance is late, and that no grace period regarding the interest charge was created by the wording of the Agreement.

12. Dealing first with the question of the appropriate interpretation of Article 1001(b), I agree with the essence of the interpretation of that clause argued by counsel for the employers. I can only conclude from the plain wording of the provision that the parties desired to provide a 10 day "grace period" to those companies who pay remittances within the 10 days immediately after they are due. If payments are made within the ten day period, the union will not grieve the violation of the requirement that they be paid within the first 20 days of the month. If payments are made beyond the ten day window, the union reserves the right to claim for damages (including the interest charge) to the 21st day. On the wording of the provision, no other interpretation can really be adopted that makes any sense.

13. Accordingly, a number of the amounts claimed by the union on Exhibits I and 2 (those which are identified as having a "remittance date" within 10 days of the "remittance due date") are not properly claimed by the union as they are violations of the Principal Agreement which are not subject to an award of damages. What, though, of the other amounts? Has there been a delay in the filing of these grievances such that they are now untimely?

14. In my view, it is evident that the union has not properly grieved the violations of the Principal Agreement alleged against either Standard Underground or Power Cable. Viewed objectively, the T.E.I.B.A.S. letters are not grievances filed by the union under the grievance procedure provisions of the Principal Agreement. First, the letters are not forwarded to the employers by a party to the Principal Agreement but rather by the Trust Administrator. In conjunction with that observation, there is nothing in the letters to suggest that T.E.I.B.A.S. was sending the letters to the employers as an agent for the union. On their face, the letters appear to be sent on behalf of T.E.I.B.A.S. itself.

15. Most importantly, though, a plain reading of the letters makes it clear that those documents are merely a request by the trust fund that the employers pay money to the fund which the Principal Agreement says they must pay because of their tardy remittance of funds to the trust. True grievances are not recycled two or three times over as "friendly reminders" or "second notices". In that function, the T.E.I.B.A.S. letters are in substance what are commonly referred to as "dunning letters". Accordingly, I do not accept the characterization made by counsel for the union that the T.E.I.B.A.S. letters are grievances for the purpose of the Principal Agreement. The first real grievance filed with respect of these alleged violations of the Principal Agreement is, for Standard Underground, the June 12, 1997 letter from Mr. Fashion, and for Power Cable, the August 8, 1997 letter.

16. It was asserted by counsel for the employers, and not disputed by opposing counsel, that the violations alleged by the employers of the Principal Agreement were in the nature of continuing violations of the Principal Agreement. It is evident that such a characterization of the breaches of the Principal Agreement is, in fact, an accurate one. In the circumstances, then, the vast majority of the amounts claimed by the union in the grievance letters are claimed well beyond the time frame reflected by Article 1302 of the Principal Agreement, as qualified by Article 1002(b) of the Local 353 Appendix. By virtue of the fact that copies of the T.E.I.B.A.S. letters were sent to the union through Mr. Fashion, it can hardly be suggested that the union did not receive almost instant notice of the amounts due by the employers.

17. In the event that I were to find that the grievances were delivered beyond the time frame provided in the Provincial Agreement, both counsel addressed the question of whether I ought to exercise my discretion to extend the time limits provided for grieving these violations of the Principal Agreement in accordance with my authority under section 48(16) of the Act, which reads as follows:

Except where a collective agreement states that this subsection does not apply, an arbitrator or arbitration board may extend the time for the taking of any step in the grievance procedure under a collective agreement, despite the expiration of the time, where the arbitrator or arbitration board is satisfied that there are reasonable grounds for the extension and that the opposite party will not be substantially prejudiced by the extension.

Counsel provided me with the following authorities: York Gears Ltd. (1968), 1968 CanLII 1214 (ON LA), 19 L.A.C. 252 (Weatherill); Automatic Screw Machine Products Ltd. (1972), 1972 CanLII 1978 (ON LA), 23 L.A.C. 396 (Johnston); Port Colborne General Hospital (1986), 1986 CanLII 6715 (ON LA), 23 L.A.C. (3d) 323 (Burkett); California Marble & Tile Ltd. (1995), 1995 CanLII 18372 (BC LA), 49 L.A.C. (4th) 174 (Glass); Plastina Investments Limited (Board File No. 2647-93-G, unreported decision dated November 30, 1993); Fernview Construction Limited (Board File No. 3228-90-G, unreported decision dated April 15, 1991); Ontario Hydro [1987] O.L.R.B. Rep. Apr. 574; Torbridge Construction Ltd. (Board File No. 1626-96-G, unreported decision dated February 14, 1997) and Calorific Construction Limited [1988] O.L.R.B. Rep. Feb. 115. I have reviewed each of these decisions.

18. I will not reproduce here the argument of counsel, except to the extent necessary to explain the result I have reached, and the reasons for that result. It is evident from section 48(16) of the Act that as a prerequisite for exercising the discretion to extend time limits contained in the Principal Agreement, I must conclude both that there exist reasonable grounds for such an extension, and that the employers will not be substantially prejudiced by such an extension. In my view, the party requesting the extension - the union in these proceedings - must establish that "reasonable grounds" for the extension exist. Here, the union has not established to my satisfaction that reasonable grounds exist for such an extension.

19. Counsel for the union focused upon the clarity of the T.E.I.B.A.S. letters, and the fact that they were comprehensive and contained all of the information that the employers needed to know, as a basis for concluding that "reasonable grounds" exist for the extension of the agreed- upon time limits. Furthermore, counsel relied upon a fact conceded by Standard Underground - that Standard Underground was in financial difficulty from 1994 through 1996 because it had not been paid promptly by a large creditor. A series of meetings had occurred between Standard Underground and the union in order to obtain the remittances due under the collective agreement. The union, aware of this financial difficulty, forbore on its strict right to grieve and to refer the grievances to arbitration.

20. I am not persuaded that any of these facts establish "reasonable grounds" for extending the time limits contained in the Principal Agreement. I start my consideration of this factor by observing (as was noted by the Board at paragraphs 27 through 33 of the Torbridge Construction Ltd. decision, cited above), that the nature of the construction industry requires that parties conduct themselves in a manner that reflects considerably greater expedition than might otherwise be applied in an industrial context. As was noted by the Board (admittedly in another context, but with applicability to the instant proceeding) in Robert Dumeah [1994] O.L.R.B. Rep. June 655, at para. 61:

…..Employers in the construction industry must know quickly if challenge is to be made about the operation of their business. Unions must know quickly if a member is going to assert his referral to or discharge from an employer was improperly managed or instigated by the union. Eight months is too long to wait. Work in the industry is too fluid and occasional to impose on parties an industrial standard of "delay". In construction, both employer and union need to know where they stand, and to move on. To sanction disruption months after the event would be significantly disruptive to their relationship and unduly expensive and obstructive.

I have considered the submission that the union has established "reasonable grounds" for the requested extension of time limits in that context.

21. The clarity of the T.E.I.B.A.S. letters does not establish, in whole or in part, a reasonable ground for the extension of the time limits found in the Principal Agreement. The letters do point out, quite clearly, the amount owed, and the time frame for which the amounts are due under the Principal Agreement. However, the clarity of this information cannot establish a legitimate reason for not grieving the violation of the Principal Agreement in a timely manner. It may well suggest that there is little prejudice to the employer, from one perspective. But it cannot, in my view, establish a legitimate reason for extending the time limits contained in the Principal Agreement.

22. Does the difficult financial situation of Standard Underground during the years 1994 to 1996 suggest a reasonable ground for extending the time limits contained in the Principal Agreement, based on the premise that the union forbore upon its strict legal rights to grieve these violations of the Principal Agreement due to the financial status of Standard Underground? I have very carefully considered this argument. I am of the view that it does not establish reasonable grounds for the extension of the time limits contained in the Principal Agreement.

23. It is evident from exhibits 6, 7, and 8 (and their companion exhibits 11, 12 and 13) that the union filed at least three separate grievances relating to the failure by Standard Underground to pay amounts due to the Trust Administrator pursuant to Clause 1000 and 1001 of the Local 353 Appendix during 1994 and 1995. Memoranda of Agreement were entered into by the parties on each of those occasions, which memoranda were reduced to a Board order. The total amounts of money due to the union pursuant to these Board orders exceeds $43,000. In light of those grievances, which were brought, referred to the Board, and settled during Standard Underground's troubled financial times, it is difficult to appreciate why the union would forebear on its other claims in that time period. There is no legitimate reason why the union could not have grieved these violations, referred them to arbitration at the same time as the other violations of the agreement, and, if it desired to provide Standard Underground with some breathing space, reach an agreement on that at the same time.

24. In fact, this type of situation is faced by the Board on a regular basis, particularly during poor economic times. Trade unions often grieve violations of their collective agreement, refer those grievances to the Board, and obtain Board orders (on consent or otherwise) requiring the responding party employer to pay a certain sum as damages for violation of the collective agreement. Quite often, there is no hope that the union will ever see the money ordered to be paid. On other occasions, it is likely that the union can recover at least some of the funds, through an accommodation of some nature with the responding party.

25. There is no reason why the union here could not have done the same thing with Standard Underground. To do so would have been consistent with the expectation that construction industry grievances be pursued with some expedition. In the circumstances, I am of the view that the failure of the union to pursue its strict legal rights because of Standard Underground's financial position does not establish "reasonable grounds" for extending the time limits contained in the Principal Agreement.

26. For these reasons, therefore, I am of the view that these grievances must be dismissed in their entirety. In that regard, I note that counsel for the employers conceded during the course of argument that the two most recent "interest charges" for Power Cable were timely. I cannot agree. The chart provided by the parties indicates that the remittances in question were due on May 20 and June 20, 1997, and were paid on June 25, 1997. These amounts were not grieved until August 8, 1997 - well beyond the time frame contained in the Principal Agreement.