CITATION: Labourers’ International Union of North America et al. v. Fortis Construction Group Inc. et al., 2021 ONSC 3774
DIVISIONAL COURT FILE NO.: 395/20
DATE: 20210712
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
R. Smith, Lederer and Kristjanson JJ.
BETWEEN:
Labourers' International Union of North America, Local 1059 and The Formwork Council of Ontario
Applicants
– and –
Fortis Construction Group Inc., STC Construction Group Inc., Carpenters' District Council of Ontario, United Brotherhood of Carpenters and Joiners of America and Ontario Labour Relations Board
Respondents
Lorne A. Richmond, for the Applicants
Erich R. Schafer, for Fortis Construction Group Inc. and STC Construction Group Inc.
Douglas J. Wray and Erin Carr, for Carpenters' District Council of Ontario, United Brotherhood of Carpenters and Joiners of America
Aaron Hart and Lindsay Lawrence, for the Ontario Labour Relations Board
HEARD at Toronto (by videoconference):
May 11, 2021
R. Smith J.:
Overview
[1] The Applicants (collectively referred to as the “Formworkers” or “Labourers’ Union”) have brought an application seeking an order quashing the decision of the Ontario Labour Relations Board (“the Board”) dated October 22, 2019 and its reconsideration decision dated February 24, 2020.
[2] The Formworkers filed a successor application with the Board pursuant to the related employer (Section 1(4)) and sale of business (Section 69) provisions of the Labour Relations Act, 1995, SO 1995, c 1, Sch A, (“LRA”), asking the Board to declare that Fortis was bound to its collective agreement with the Formwork Council of Ontario. The Board denied the Formworkers’ application. The Board decided to avoid jurisdictional conflict between the two unions. To do so it awarded the successor bargaining rights to the Carpenters’ District Council of Ontario and The United Brotherhood of Carpenters and Joiners of America (the “Carpenters”). As a result, the Carpenters were named as the bargaining agent for the Fortis employees performing concrete forming construction or formwork, in the industrial, commercial and institutional ("ICI") sector of the construction industry in Ontario.
[3] Fortis is a construction company that was created in 2016 by the merger of STC Construction Group Inc. (“STC”) and De Angelis Contracting Group Inc. (“DAC”). The Formworkers held the bargaining rights for formwork with STC and the Carpenters held the bargaining rights for formwork with DAC for many years before the merger.
[4] Fortis voluntarily recognized the bargaining rights formerly held by the Carpenters but did not recognize the Formworkers’ bargaining rights. Both the Carpenters and the Formworkers can perform formwork for the industrial, commercial and institutional (“ICI”) sector of the construction industry in Ontario.
[5] The Formworkers acknowledge that there is an overlap for some of the bargaining rights previously held by them and those held by the Carpenters in the area of formwork. However, the Formworkers submit that they held bargaining rights for other construction employees engaged in concrete forming, including labourers, cement finishers, ironworkers and operating engineers. whose bargaining rights were not determined or were extinguished by the Board’s decision without adequate reasons.
[6] The Carpenters and Fortis submit that the Formworkers asked the Board for a declaration that Fortis was bound by the Formworkers’ collective agreement for all of the formwork performed by it. The Formworkers did not ask for alternative relief, in the event the Board awarded the bargaining rights for performing formwork for Fortis to the Carpenters. Stated another way, the Formworkers did not ask the Board to preserve its bargaining rights involved with formwork that did not conflict with the Carpenters’ collective agreement.
Background
[7] The Respondent, Fortis Construction Group Inc., is the result of a commercial merger or amalgamation in approximately July 2016 of two previously at-arm’s-length construction companies, STC and DAC.
[8] DAC was a general contractor working primarily in the Southwestern Ontario area in the ICI sector. It was owned and operated by Maximillian DeAngelis. In 2001, DAC signed a voluntary recognition agreement with the Carpenters’ Union whereby DAC agreed to be bound by the Carpenters’ Provincial collective agreement covering all carpenters and carpenter apprentices employed by DAC in the ICI sector of the construction industry everywhere in Ontario.
[9] Since 2001, DAC has always applied the terms of the Carpenters’ agreement to its projects. This included projects that involved concrete formwork. With respect to concrete formwork, DAC performed the work directly with its own employees who were members of the Carpenters’ Union or through sub-contractors who were also bound to the Carpenters’ collective agreement.
[10] Since it became bound to the Carpenters’ agreement in 2001 and up until it ceased performing construction work sometime after July 2016 when Fortis was created, DAC employed over 20 members of the Carpenters’ Union on its projects, many of them on a repeat basis.
[11] STC was another general contractor in Southwestern Ontario (Windsor, Chatham). It was owned and operated by Scott Woodall. In 2009, STC signed a voluntary recognition agreement with the Labourers’ Union, whereby STC agreed to be bound by the Formwork Council of Ontario collective agreement (the “Formwork agreement”). The Formwork agreement covers all construction employees engaged in concrete formwork, including carpenters, but does not cover any other construction work.
[12] On April 7, 2017, Fortis signed a voluntary recognition agreement with the Carpenters’ Union in which it agreed to be bound by the Carpenters’ ICI collective agreement. Since then, Fortis has continued to apply the Carpenters’ collective agreement to its projects, including to any and all formwork arising on those projects (which numbered 24 projects at the time Mr. DeAngelis prepared his Will-Say Statement, some of the projects were quite large in scope). Approximately 20 carpenters who formerly regularly worked for DAC began working for and are now regularly employed by Fortis. In both cases, they have always worked under the terms of the Carpenters’ collective agreement.
[13] Since 2007, STC had been bound to the Formwork agreement, which as noted above applies to all construction employees engaged in concrete forming construction, including construction labourers, cement finishers, iron workers, operating engineers and carpenters. STC never directly employed any members of the Labourers’ Union to perform formwork, but always performed such work by sub-contract to employers bound to the Formwork agreement, as required by that agreement. Thus, members of the Labourers’ Union performed all of STC’s formwork.
[14] Once Fortis was formed in July 2016, DAC and STC ceased bidding on new work. However, DAC and STC completed the projects they each had underway in their own name in the manner they had done previously, in DAC’s case by applying the terms of the Carpenters’ Provincial ICI agreement to work falling within the jurisdiction of that agreement, and in STC’s case by applying the Formwork agreement to its formwork projects.
[15] On April 7, 2017, Fortis signed a voluntary recognition agreement with the Carpenters wherein it agreed to be bound by the Carpenters’ Provincial ICI agreement. Since then, Fortis has applied the Carpenters’ Provincial ICI agreement to its projects, including to any and all formwork arising within these projects.
[16] The evidence before the Board was uncontested and included a number of “Will-Say” Statements. In Mr. DeAngelis’ “Reply Will-Say Statement”, he stated:
The real reason Fortis continues to fight this case is that signing the Formwork agreement or the Labourers’ ICI agreement would inevitably lead to expensive, time-consuming, and ultimately pointless jurisdictional disputes.
[17] Shawn Ramey worked for DAC for many years, starting as an apprentice carpenter and eventually progressing to the level of working foreman. He listed approximately 40 ICI projects which were completed by DAC where he performed and/or managed the completion of all aspects of formwork by members of the Carpenters’ Union. He stated that he performed or supervised the layout, placement of forms, bracing of forms, suspended slab false work, releasing false slab work and all the cleaning and oiling of the forms, and on occasion he participated in the tying and installation of rebar.
[18] He further stated that Fortis acted as a general contractor performing midsize projects exclusively in the industrial, commercial and institutional sector of the construction industry. Carpenters are allowed to install formwork as part of their ICI Provincial agreement.
[19] STC always performed any formwork portion of its projects through a sub-contracting network to a formwork contractor already bound to the Formwork agreement. As a result, STC did not have any employees who were involved in performing formwork. In contrast DAC, and after the merger Fortis, employed approximately 20 members of the Carpenters’ Union who performed work pursuant to its ICI Provincial agreement, which included the formwork on its projects.
Standard of Review
[20] The parties agree that the applicable standard of review is reasonableness in accordance with the Supreme Court of Canada’s decision in Canada (Minister of citizenship and immigration) v. Vavilov, 2019 SCC 65.
[21] When conducting a reasonableness review, the court must begin its inquiry by examining the reasons of the administrative decision maker with “respectful attention”, seeking to understand the reasoning process followed by the decision maker (Vavilov, at para. 84). The guiding principles for deciding whether a decision is reasonable, as set out in Ontario Power Generation v. The Society of United Professionals, 2020 ONSC 7824 at para. 22 include the following:
a. Reasonableness is concerned with justification, transparency and intelligibility. A decision is unreasonable if it is internally incoherent or if it is untenable having regard to the relevant factual and legal constraints.
b. The party challenging the decision has the burden of showing that it is unreasonable. A court should not set aside a decision based on minor flaws or peripheral shortcomings. To justify a finding of unreasonableness, the flaws or shortcomings must be sufficiently central or significant to the merits of the decision.
c. The role of the court is to review the decision and not to decide the issue afresh. The focus of the reasonableness inquiry is therefore on the decision making process and the outcome.
d. It is not the role of a reviewing court to re-weigh the evidence and make factual findings. Absent exceptional circumstances, a reviewing court should not interfere with a tribunal’s factual findings.
Analysis
[22] The Formworkers brought a Related/Successor Application by filing a Form A-24 in which they asked the Board for: “A declaration that Fortis… is party to and bound by the terms of the current collective agreement between the Formwork Council of Ontario… and has been since July 7, 2016.” They also sought a declaration that a sale had taken place, and they raised the issue of “intermingling”. In paragraph 4 of schedule A to their application, they also sought “such further and other relief as may be appropriate”.
[23] The Formworkers did not seek alternative relief in the event its application was unsuccessful, namely that the Board consider preserving the bargaining rights they previously had with STC, save and except for the Carpenters and carpenter apprentices employed by Fortis performing concrete formwork under the Carpenters’ ICI collective agreement.
[24] The Formworkers raised the argument of its pre-existing bargaining rights indirectly in its request for reconsideration by submitting that the Board’s decision denying its original application was “incomplete”.
[25] At paragraphs 21 and 22 the Board recognized the Formworkers’ submission that there was not a “perfect and complete overlap between the two collective agreements in this case”.
[26] At paragraph 16 the Board outlined the Carpenters’ response:
- The opposing parties submitted that if the Board declared that Fortis is bound to the Formwork agreement, it will mean that it is bound to two separate collective agreements that cover almost all the work Fortis has undertaken since its inception and all the work it intends to so undertake. The opposing parties submit that the extensive overlap between the Carpenters’ ICI agreement and the Formwork agreement in respect of the trades work involved in ICI sector formwork means that continuous and substantial jurisdictional conflict is inevitable. In the submission of these opposing parties, the best approach of the board and all of the circumstances is to decline to make the declaration sought by the applicants and dismiss the related successor application”.
[27] Based on the facts before it and the submissions of the parties, the Board held firstly that the case could be determined entirely under Section 69(6) of the LRA. In paragraph 29 of its Decision, the Board reproduced Section 69(6)(c) which is as follows:
69(6) Despite subsections (2) and (3), where a business was sold to a person who carries on one or more other businesses and a trade union or council of trade unions is the bargaining agent of the employees in any of the businesses and the person intermingles the employees of one of the businesses with those of another of the businesses, the Board may, upon the application of any person, trade union or council of trade unions concerned,
(c) declare which trade union, trade unions or council of trade unions, if any, shall be the bargaining agent or agents for the employees in the unit or units….
[28] At paragraph 30 the Board stated:
- The Board is satisfied that the use of the term “intermingles” in section 69(6) does not literally require the intermingling of specific and individual employees in fact before the options presented to the Board in the balance of that section can be considered by the Board. The Board has long held that the concept of intermingling in section 69 of the Act includes where there has been the intermingling of businesses with the result that there is a single, integrated enterprise that has continued the work performed by the predecessor businesses (see, for example, Central Neighbourhood House, [2008] O.L.R.D. No. 382; O.P.S.E.U. v. St. Mary’s of the Lake Hospital, [1995] O.L.R.B. Rep. 1303, quoted in Central Neighbourhood House, supra; and O.P.S.E.U. v. Ottawa Hospital [2005] O.L.R.B. Rep. August 543).
[29] The Board continued at paragraph 31 as follows:
- …But what is obvious to the Board on the undisputed facts is that, before Fortis came into existence, there were carpenters who had previously been regularly employed by DAC under the terms of the Carpenters’ ICI Agreement, and that those same carpenters (or at least, some of them) are now regularly employed by Fortis under the terms of the Carpenters’ ICI Agreement. In the Board’s view, given that Fortis is the integrated single business that carries on the work formerly performed by both STC and DAC, and that former DAC employees are now employed by Fortis and engaged in the same work they performed previously, there has been an intermingling as that term is meant under section 69(6) of the Act. The Board does not accept that there must necessarily be intermingling of employees from the former STC into Fortis for section 69(6)(c) of the Act to be applicable.
[30] The Board noted that since 2001 DAC had employed members of the Carpenters’ Union under the Carpenters’ agreement and the new company, Fortis, continued to employ these same persons. The Board contrasted this with STC, who never employed members of the Labourers’ Union to perform formwork; it always sub-contracted this work. In other words, STC had no direct formwork employees to pass through to Fortis.
[31] The Board found that STC and Fortis were under “common control and direction pursuant to section 1(4) of the LRA and also that there had been a “sale of a business” as defined under section 69 of the LRA. These decisions are reasonable and in fact, in its application the Formworkers sought a finding that a sale had occurred when STC merged with DAC to create Fortis.
[32] The Board decided that it could decide the application on the basis of section 69(6)(c) of the LRA and declined to exercise its jurisdiction under section 1(4) of the Act.
[33] The Formworkers implicitly conceded that jurisdictional conflict would be inevitable if the Board held that Fortis was bound by both the Formworkers’ and the Carpenters’ collective agreements regarding formwork, when it argued that the Carpenters and Fortis had improperly engineered the precise circumstances. The Board found nothing suspicious or improper with Fortis entering into a voluntary agreement with the Carpenters as DAC was accustomed to being bound to the Carpenters’ agreement. The Board’s finding in this regard is reasonable and there are no exceptional circumstances that would justify a reviewing court to interfere with the Board’s factual finding in this regard.
[34] Section 69(6) of the LRA states that where a business is sold to a person carrying on one or more other businesses and a trade union is the bargaining agent of the employees in any of the businesses and the person intermingles the employees of one of the businesses with another of the businesses the Board may upon application, under subsection (c) declare which trade union, if any, shall be the bargaining agent for the employees in the unit.
[35] The Board found that the term ‘intermingles” occurs when there has been an intermingling of the businesses with the result that there is a single integrated enterprise that can continue the work performed by the predecessor businesses. In paragraph 30 of its decision, the Board cited a number of its previous decisions in support of this finding. As a result, The Board’s decision that intermingling occurred when STC and DAC merged to form Fortis was reasonable as it was based on several previous Board decisions. It follows that the Board’s decision that it could decide the application on the basis of section 69(6)(c) of the LRA was also reasonable.
[36] The Board’s decision not to hold a runoff vote under section 69(6)(c) was also reasonable. This is so because there were approximately 20 employees of DAC who were members of the Carpenters, who became employees of Fortis. STC in contrast had no direct formwork employees who were members of the Formworkers. The Board’s decision not to hold a runoff vote in these lop-sided circumstances was also reasonable as the outcome of the vote was a forgone conclusion.
[37] The Board’s decision to follow the principles set out in Clifford Masonry Limited , 2015 46525 (ON LRB) and decline to order that Fortis was bound by the Formworkers’ collective agreement with STC under section 1(4), where to do so would inevitably lead to jurisdictional conflict, was also reasonable.
[38] The Board was aware of the submission that the overlap between the Formworkers and the Carpenters performing formwork was not perfect, for example crane operators would not be members of the Carpenters Union. However, it decided that the overlap was so substantial that it would inevitably lead to jurisdictional conflict if it held that Fortis was also bound by the collective agreement with the Formworkers. The Board is a specialized tribunal that is familiar with the construction industry and it exercised its discretion to declare that the Carpenters would be the sole bargaining agent for the employees of Fortis involved in performing formwork in the ICI sector and denied the Formworkers’ application. In these circumstances, the Board’s decision was reasonable and is entitled to deference.
[39] The Formworkers also argued that the Formwork Agreement was an "all construction employee" bargaining unit for employees performing formwork in all sectors of the construction industry, whereas the Carpenters' ICI Agreement covers work of just the designated trade of carpentry in just the ICI sector. The Labourers Union argued that the Carpenters are subject to a Ministerial Designation, meaning that they cannot represent labourers, cement finishers, rodmen, operating engineers, or any trades other than carpenters in the ICI sector, even when performing formwork. As such, they argue that the decision essentially rolls back existing bargaining unit collective rights. In failing to deal with this issue, the Labourers Union argued that the Board’s decision was “incomplete.” In its reconsideration decision, the Board rejected this argument, holding:
Whether the applicant's position in this specific regard has merit or not (and the Board states here it is not commenting on that in any fashion), it is beside the point. The applicant sought declarations that it had bargaining rights as against Fortis, and its application seeking those declarations was dismissed in the Merits Decision. In the result, the applicant holds no bargaining rights as against Fortis. This is also why it is incorrect to say, as does the applicant in the RFR, that the Merits Decision is "incomplete".
[40] The Labourers’ Union is an all construction employee bargaining unit for all employees performing formwork in all sectors of the construction industry, which includes both the residential and the ICI sectors. The Carpenters are only permitted to engage in formwork in the ICI sector. However, the uncontested “will-say” evidence before the Board was that DAC and Fortis only engaged in construction in the ICI sector. If Fortis was engaged in residential construction as well as ICI construction, then this may have been a relevant factor for the Board to consider. However, this was not the case.
[41] The Board did not rollback the Formworkers bargaining rights because Fortis is not engaged in any construction other than in the ICI sector, where the Carpenters are allowed to perform formwork.
[42] The Formworkers argued that they went into the hearing with bargaining rights and came out without any and Board did not offer any explanation about what happened to their bargaining rights. This is not an accurate statement because the Formworkers did not go into the hearing with any bargaining rights with Fortis, rather they went into the hearing with the bargaining rights for formwork with STC, which had ceased to exist because of the merger. They asked the Board to grant them successor bargaining rights for all the employees involved in performing formwork for Fortis, including labourers, rodmen, cement finishers and operating engineers.
[43] The Carpenters went into the Board hearing with the bargaining rights for formwork performed by DAC in the ICI sector and with the bargaining rights for formwork performed by Fortis in the ICI sector pursuant to its voluntary agreement. The Carpenters performed all of the formwork for Fortis in its ICI construction projects which included some labour component, some cement work, the installation of iron rods and the carpentry work. In summary, the Carpenters performed all of the formwork functions for Fortis in its ICI construction projects, other than for the operating engineers.
[44] The Board was faced with a situation where two unions sought a declaration that Fortis was bound by their collective agreements. The Board was aware that all of Fortis’s construction projects were in the ICI sector, where both the Formworkers and the Carpenters were allowed to perform formwork. The Board accepted the Carpenters submission that continuous and substantial jurisdictional conflict would be inevitable if it declared that Fortis was bound by two collective agreements related to formwork performed on its ICI construction projects.
[45] Both the Formworkers and the Carpenters had been performing formwork for the predecessor companies and as a result, if both collective agreements were binding on Fortis, it is reasonable for the Board to find that this would lead to jurisdictional conflict when performing formwork on Fortis’ ICI construction projects. The Board did not fail to address the Formworkers’ previously held bargaining rights, but rather decided to award all of the bargaining rights for formwork performed by Fortis in the ICI sector to the Carpenters. By dismissing their application, the Board declined to order that Fortis was bound by the Formwork Agreement, thereby deciding that the Formworkers did not have any bargaining rights with Fortis. The Board’s decision to award the bargaining rights for formwork to one of the unions under S. 69(6)(c), in order to avoid jurisdictional conflict, was reasonable.
Disposition
[46] For the above reasons, the application for judicial review is dismissed. As agreed between the parties, the Applicant shall pay $5000.00 to the Carpenters and $5000.00 in costs to Fortis. No costs are payable to or by the Ontario Labour Relations Board.
R. Smith J.
I agree _______________________________
Lederer J.
I agree _______________________________
Kristjanson J.
Released: July 12, 2021
CITATION: Labourers’ International Union of North America et al. v. Fortis Construction Group Inc. et al., 2021 ONSC 3774
DIVISIONAL COURT FILE NO.: 395/20
DATE: 20210712
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
R. Smith, Lederer and Khristiansen JJ.
BETWEEN:
Labourers' International Union of North America, Local 1059 and The Formwork Council of Ontario
Applicants
– and –
Fortis Construction Group Inc., STC Construction Group Inc., Carpenters' District Council of Ontario, United Brotherhood of Carpenters and Joiners of America and Ontario Labour Relations Board
Respondents
REASONS FOR JUDGMENT
R. Smith J.
Released: July 12, 2021