Red N' Black Drywall Inc. v. Carpenters' District Council of Ontario, 2024 ONSC 1400
CITATION: Red N' Black Drywall Inc. v. Carpenters' District Council of Ontario, 2024 ONSC 1400
DIVISIONAL COURT FILE NO.: 350/23
DATE: 20240307
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Leitch, Myers, and Leiper, JJ.
BETWEEN:
RED N' BLACK DRYWALL INC. and RED N' BLACK INC.
Applicants
– and –
CARPENTERS' DISTRICT COUNCIL OF ONTARIO, UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA and ONTARIO LABOUR RELATIONS BOARD
Respondents
COUNSEL:
Herbert H. Law, for the Applicants
Douglas J. Wray and Samir Silvestri, for the Carpenters' District Council of Ontario and the United Brotherhood of Carpenters and Joiners of America
Andrea Bowker, for the Ontario Labour Relations Board
HEARD in Toronto, March 6, 2024
FL Myers, J
Background
[1] The applicants seek judicial review of the decision of the Ontario Labour Relations Board dated March 6, 2023 finding that pursuant to s. 69 of the Labour Relations Act, 1995, SO 1995, c.1, the applicants are bound by the applicable collective agreements with the respondent unions for carpenters and carpenters’ apprentices in the Province of Ontario in both the Industrial, Commercial, and Institutional sector and the residential sector of the construction industry.
[2] The applicants also seek judicial review of the board’s decision dated May 15, 2023 dismissing the applicants’ request for reconsideration of the initial decision.
[3] The board found that there was a sale of the business of Blackfield to one of its principals, Mr. Oztabak in early 2008. The board found that this sale was part of a plan by Mr. Oztabak and the other principal of Blackfield, Mr. Karaaslan, “to ensure that a non-union company was established to be able to operate free and clear from Blackfield's union obligations.” The board also found that in 2010, Mr. Oztabak transferred the business to the applicant companies that he owns.
[4] The board held that both transactions were sales within the meaning of s.69 of the statute and, as a result, the successor businesses were bound by the collective agreements pursuant to s. 69 (2).
[5] The applicants submit that the board unreasonably concluded that Mr. Oztabak ceased to be a key person in Blackfield after the initial transaction closed in March, 2008.
[6] The applicants also submit that it was unreasonable for the board to fail to dismiss the application in light of the lengthy delay from 2010 until the unions commenced the application in 2019.
[7] For the reasons that follow, the application is dismissed.
The Facts
[8] Mr. Oztabak and Mr. Karaaslan were the two principals of Blackfield Drywall.
[9] In 2007, Blackfield voluntarily recognized the unions as bargaining agent for its employees.
[10] In March, 2008, in an effort to insulate their business assets against a grievance filed by the unions, Mr. Oztabak sold his shares in Blackfield to Mr Karaaslan and, in return, Mr. Oztabak took title to Blackfield’s business premises on Torbram Road.
[11] When the sale closed, Mr. Oztabak resigned as an officer and director of Blackfield. Secretly, the principals planned to rejoin as business partners in a non-unionized company down the road.
[12] The applicants say there was no sale of the business because Mr. Oztabak continued as a key person in the business from the closing of the transaction until October 17, 2008. That date is important because on October 17, 2008, the union was decertified after a vote by bargaining unit employees for that purpose. If the business was already transferred to Mr. Oztabak before October 17, 2008, then the unions’ successorship rights against Mr. Oztabak and his later companies were already in place before the union was decertified in relation to Blackfield.
[13] In the proceedings before the board, the applicants asserted conflicting positions about the role of Mr. Oztabak after the closing of the sale. In the applicants’ formal response to the s. 69 application, the applicants pleaded that after the sale in March, 2008,
…Oztabak did in fact stop working in partnership with Karaaslan, severed all business relationships with Karaaslan, …and Blackfield, left the drywall industry, consistent with what Karaaslan had indicated to the applicant.
[14] The applicants admitted that in carrying out their plan to have the owners continue a non-unionized business from the same premises, they told the unions that Mr. Oztabak was leaving the business altogether. In their pleadings before the board, the applicants’ initial position was that what they had told the unions was truthful.
[15] The applicants’ evidence before the board showed that the principals of Blackfield had not been truthful with the unions and that the applicants’ pleading before the board was also not true.
[16] Despite their formal plea and admission, the evidence of both Messrs. Karaaslan and Oztabak before the board was that after the sale to Mr. Oztabak closed, he continued to work “alongside” the business. The applicants submitted to the board that there was no sale of the business before decertification in October, 2008 because Mr. Oztabak continued to be a key person operating the business throughout.
[17] The board rejected this argument. It held:
I accept Mr. Oztabak's testimony (which contradicts Red N Black's response) that he continued to work in the drywall industry immediately after his resignation in March 2008. I accept that he took some time away in Turkey at some point in 2008-2009, but that trip does not affect my section 69 analysis. However, while I accept that Mr. Oztabak continued to perform some work alongside Blackfield after his resignation to complete jobs, after hearing the testimony and considering the evidence, I do not find that he continued to work with Blackfield as a key person or employee as defined by the Act, but rather on his own, as a sole proprietor/independent contractor.
I arrive at this conclusion because there was no reasonable justification offered for how Mr. Oztabak could have worked as a key man with Blackfield without being compensated by Blackfield during that time, and without any records of when he purportedly did that work. The documentary records do not support that Blackfield and Mr. Oztabak had any formal business relationship and I do not accept that Mr. Oztabak would have worked for free or a substantial discount during that time. Mr. Oztabak testified that he may have been paid by cheque and those cheques have been lost to the delay of time, but I do not believe this as the Board was provided with Blackfield's bank accounts during this time, and there were no apparent debits or credits in those accounts that would suggest a cheque was paid to Mr. Oztabak for work performed. Rather, the logical inference is that he received compensation directly for his drywall work as a drywall contractor. I do not accept that the passage of time has prejudiced Mr. Oztabak in this regard because there are records of him receiving payments from Blackfield's bank accounts prior to the relevant period. Given that Mr. Oztabak was clear that at this time he and Mr. Karaaslan were letting the Carpenters know that Mr. Oztabak was not operating as a key person with Blackfield, and had transferred assets to him to insulate those assets against the Carpenters' claim for damages, it makes complete sense why there would be a lack of any formal records relating Mr. Oztabak to Blackfield, and why he would have been operating independently from Blackfield.
The Issues
[18] The applicants submit that the board paid insufficient attention to emails that showed that Mr. Oztabak was involved in bidding and pricing jobs for Blackfield after March, 2008. They rely on case law that recognizes that the ability to price and schedule work are fundamental attributes of management of a contractor business in the construction trades.
[19] The applicants also submit that the passage of time should be deemed prejudicial to the applicants.
The Court’s Jurisdiction and Standard of Review
[20] The court has jurisdiction to hear this application pursuant to ss. 2 and 6 of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1. The parties agree that the court is required to consider whether the board’s decisions were reasonable within the meaning given to that term by the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.
[21] In the key passage from Vavilov, the SCC instructs,
[99] A reviewing court must develop an understanding of the decision maker's reasoning process in order to determine whether the decision as a whole is reasonable. To make this determination, the reviewing court asks whether the decision bears the hallmarks of reasonableness justification, transparency and intelligibility - and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision:
[22] This court has already held that Vavilov makes no change to the court’s commitment to afford the highest degree of deference in labour relations cases. Labourers’ International Union of North America, Local 183 v. GDI Services (Canada) LP, 2020 ONSC 1018, at paras. 27 and 28.
[23] In conducting a judicial review under Vavilov’s reasonableness standard and in applying the court’s approach to appropriate curial deference, the court generally will not review findings of fact made by the tribunal below. In an application for judicial review of this type, this court will not reweigh or reassess evidence that was before the initial decisionmaker.
Discussion
[24] In asking the court to consider whether the board gave proper weight to emails concerning Mr. Oztabak’s involvement and asserting that the board failed to refer to evidence supporting their position, the applicants are making arguments that are not open to them in this proceeding. They ask us to reweigh the evidence and to reconsider the board’s findings of fact.
[25] The board had over 1,000 pages of documentary evidence before it and it heard oral evidence. It had the parties’ pleadings and their respective counsels’ learned submissions. The board had Blackfield’s bank records showing that before the sale of the business, the employer paid Mr. Oztabak for his services. After the sale, after telling the union he was no longer involved, no payments were made from Blackfield’s bank account to Mr. Oztabak. The applicants pleaded that Mr. Oztabak did not work with Blackfield after the sale. The board had ample basis in the record on which to make a credibility finding against Mr. Oztabak and to find that he did not work as a key person in the business after the March, 2008 sale.
[26] On this record and on these facts, there is no basis for this court to consider a challenge to the finding of fact that Mr. Oztabak was not working as a key person for Blackfield after March, 2008 to October 17, 2008. That finding led the board to declare that Mr. Oztabak and his companies are successor employers and are bound by the applicable collective agreements.
[27] There is no law before us adopting the concept of a presumption of prejudice in this area of law. I leave for another day whether the question of presumed prejudice might be applicable in a s. 69 case. It is not germane here however because the board made an explicit finding on point. It noted:
Red N Black did not raise delay as a defense in its response, and specifically did not plead that it has operated openly, and the [unions] have effectively abandoned their bargaining rights.
[28] Without pleading or trying to prove that the unions abandoned their bargaining rights, the effect of (unpleaded) delay would then be limited to any procedural unfairness that might be caused by the passage of so much time between events and the hearing. The board held that, on the evidence before it, the applicants suffered no such prejudice. It wrote:
This case is distinguishable from the cases relied on by the responding party. In those cases, the primary reason that the Board dismissed the applications was because there was significant prejudice to the responding party in defending against the allegations because the necessary documentation and evidence had been lost to delay. That fact does not exist in this case, as Mr. Oztabak was able to present his evidence about the circumstances surrounding his split from Blackfield in a coherent and capable manner.
This decision does not turn on the responding party's difficulty in obtaining records.
Furthermore, in this case, Mr. Oztabak contributed directly to the delay. The evidence established that Mr. Oztabak and Mr. Karaaslan engaged in a scheme to deceive the Carpenters. They told the Carpenters that Mr. Oztabak was no longer with the company at a time when they were engaged in the litigation of a grievance and termination application regarding Blackfield.
[29] The finding of fact that the applicants suffered no prejudice by delay is not reviewable in this application for judicial review. Even if it were, this finding is supported by the record and is wholly justifiable.
[30] The board made the point that delay may yet be relevant to potential remedies if the unions pursue grievances following the board’s decision. One might expect issues concerning timing and retroactivity to be relevant, for example, if a claim were to be made for relief such as back pay. But that question is for the board for another day.
[31] The respondents submitted that this is one of the rare cases in which the court should exercise its discretionary authority to refuse to consider an application for judicial review in view of the admitted anti-union motivation and actions of the applicants and their owner. We do not rule out the potential for such an outcome. However, as the court is dismissing the proceeding on its merits, it is unnecessary for us to consider whether in these circumstances relief should not be granted on equitable grounds.
Conclusion
[32] The application is dismissed. The parties agreed that costs would be awarded to the successful party fixed in the amount fo $6,000 all-inclusive. The board seeks no costs and no costs are awarded against it.
“Myers J.”
I agree: “Leitch J.”
I agree: “Leiper J.”
CITATION: Red N' Black Drywall Inc. v. Carpenters' District Council of Ontario, 2024 ONSC 1400
DIVISIONAL COURT FILE NO.: DC-23-350-00JR
DATE: 20240307
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Leitch, Myers, and Leiper, JJ.
BETWEEN:
RED N' BLACK DRYWALL INC. and RED N' BLACK INC.
Applicants
– and –
CARPENTERS' DISTRICT COUNCIL OF ONTARIO, UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA and ONTARIO LABOUR RELATIONS BOARD
Respondents
REASONS FOR DECISION
FL Myers J.
Date of Release: March 7, 2024