Supreme Court of Canada

Adam v. Daniel Roy Ltée, [1983] 1 S.C.R. 683

Date: 1983-06-07

Pauline Adam Appellant;

and

Daniel Roy Limitée Respondent;

and

Judge Marc Brière, Mr. André Roy, Labour Commissioner Mis en cause.

File No.: 16821.

1983: March 16; 1983: June 7.

Present: Beetz, Estey, McIntyre, Chouinard and Wilson JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Labour law—Unlawful dismissal—Sale of undertaking—Order to new owner to reinstate employee—Whether complaint of dismissal for union activities constitutes a proceeding contemplated by s. 36 of the Labour Code—Labour Code, R.S.Q. 1964, c. 141, ss. 14, 15, 36 (now R.S.Q. 1977, c. C-27, ss. 15, 16, 45).

Appellant was dismissed on June 1, 1976. On the same day, her employer sold its undertaking to respondent, which took possession on June 2. Following her dismissal, appellant filed a complaint with the investigation commissioner, citing s. 14 of the Labour Code. The latter held that (1) there had been an unlawful dismissal for union activities, and (2) s. 36 was applicable. He therefore directed respondent to reinstate appellant in her employment with a compensating indemnity. This decision was affirmed by the Labour Court. Respondent then applied to the Superior Court by a motion in evocation. The Superior Court also found that s. 36 was applicable and refused to issue the writ of evocation. The Court of Appeal reversed this judgment: hence this appeal, which seeks to determine whether a complaint of dismissal for union activities, submitted pursuant to ss. 14 to 16 of the Labour Code, constitutes a proceeding contemplated by s. 36, so that a reinstatement order can be made against a subsequent purchaser of the undertaking.

Held: The appeal should be allowed.

The unlawful dismissal of a union representative during the negotiations leading up to the conclusion of an initial collective agreement is ipso facto an act presumed to be intended to interfere with the progress of negotiations and the speedy conclusion of an agreement.

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The complaint of unlawful dismissal and the order of reinstatement are intended to redress the balance and to encourage continued negotiations and the conclusion of a collective agreement. This complaint, resulting from an act by the employer, and the order are proceedings for the securing of a collective agreement, or at least relating thereto. Sections 14 to 16 of the Labour Code are intended to apply to just this. Section 36 of the Code therefore applies to the case at bar.

Syndicat national des travailleurs de la pulpe et du papier de La Tuque Inc. v. Commission des relations ouvrières de la province de Québec, [1958] Que. Q.B. 1; Centrale de chauffage Enr. v. Syndicat des employés des institutions religieuses de Chicoutimi Inc. et l’Hôpital de Chicoutimi, [1970] R.D.T. 344; United Last Co. v. Tribunal du Travail et Adamowicz, [1973] R.D.T. 423, referred to.

APPEAL from a judgment of the Quebec Court of Appeal, [1981] C.A. 409, which reversed a judgment of the Superior Court refusing to issue a writ of evocation. Appeal allowed.

Denis Provençal and Laurent Trudeau, for the appellant.

Richard Martel and André Durocher, for the respondent.

English version of the judgment of the Court delivered by

CHOUINARD J.—This case concerns s. 36 of the Quebec Labour Code, R.S.Q. 1964, c. 141 (now R.S.Q. 1977, c. C-27, s. 45). At the time s. 36 read:

36. The alienation or operation by another in whole or in part of an undertaking otherwise than by judicial sale shall not invalidate any certification granted under this code, any collective agreement or any proceeding for the securing of certification or for the making or carrying out of a collective agreement.

The new employer, notwithstanding the division, amalgamation or changed legal structure of the undertaking, shall be bound by the certification or collective agreement as if he were named therein and shall become ipso facto a party to any proceeding relating thereto, in the place and stead of the former employer.

More specifically, the question to be decided is whether a complaint of dismissal for union activi-

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ties, submitted pursuant to ss. 14 to 16 of the Labour Code (now ss. 15 to 17), constitutes a proceeding contemplated by s. 36, so that a reinstatement order can be made against a subsequent purchaser of the undertaking.

So far as I know there is no previous authority on this point.

Since November 1971 appellant had been the cashier and telephone operator for Robert L. Plante Ltée, which operated a store in the Canadian Tire chain in Sherbrooke. On June 1, 1976, Robert L. Plante Ltée sold the undertaking to respondent, which took possession on June 2. It was admitted that respondent is carrying on the same business as the seller. On the evening of June 1, appellant was told by an employee of Robert L. Plante Ltée that she had been dismissed and was not to report to work the following day.

On August 20, 1975 appellant had joined the union being formed, which was certified on February 19, 1976. Appellant subsequently became a member of the committee formed to bargain for the first collective agreement.

Following her dismissal, appellant filed a complaint citing s. 14 of the Labour Code, as it read at that time:

14. When an employee is dismissed, suspended or transferred by the employer or his agent, because of the exercise by such employee of a right granted to him by this code, the investigation commissioner may order the employer to reinstate such employee in his employ, within eight days of the service of the decision, with all his rights and privileges, and to pay him, as an indemnity, the equivalent of the salary and other advantages of which he was deprived by the dismissal, suspension or transfer.

If the employee has worked elsewhere during the above mentioned period, the salary which he so earned shall be deducted from such indemnity.

The investigation commissioner responsible for hearing the complaint found that there had been an unlawful dismissal for union activity. He found that s. 36 was applicable, and accordingly, under s. 14, he directed respondent to reinstate appellant in

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her employment [TRANSLATION] “with all her rights and privileges, and to pay her, as an indemnity, the equivalent of the salary and other advantages of which she was deprived by the dismissal, suspension or transfer on June 1, 1976”.

This decision was affirmed on appeal by the Labour Court.

Respondent then applied to the Superior Court by a motion in evocation. Only one of the two grounds put forward there concerns this Court in the appeal at bar. This ground was stated by the Superior Court judge as follows:

[TRANSLATION]… in stating that section 36 of the Labour Code applied to a dismissal, and thus creating employer-employee relations between applicant and respondent, the lower courts committed an error of law on the facts on which the exercise of their jurisdiction depended.

Indicating the background to the problem raised by this argument, the judge subsequently wrote:

[TRANSLATION] The commissioner and the Court held that respondent’s dismissal was unlawful; this decision is legal and is not in dispute. Subsequently, having first determined that applicant had been duly served, they held that applicant, who was not in fact and in law the employer of respondent on the date of dismissal, was now bound by the decision and had to accept its consequences under section 36. The question is whether the commissioner and the Labour Court erred in applying the law, thus retaining their jurisdiction, or whether they exceeded it by erroneously applying section 36 to the cases mentioned in section 14, creating in other words a new right.

The dividing line may be fine at times, but we see no need to make an analysis of this kind in the case at bar as we conclude that there was no error either in the application or interpretation of section 36.

As the last passage indicates, the judge found that s. 36 was applicable and refused to issue the writ of evocation.

In its unanimous judgment, [1981] C.A. 409, the Court of Appeal reversed the judgment of the Superior Court and authorized respondent to exercise the remedy contained in art. 846 C.C.P. On section 36 and the only point at issue in this appeal, the following is the relevant passage from

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the reasons of Paré J.A., speaking for the Court: [at pp. 410-11]:

[TRANSLATION] The trial judge expressed the view that under this section the new owner of the business could be held liable pursuant to sections 14, 15 and 16 L.C., although the wrongful act was prior to its purchase and committed by the former owner. He based his reasoning on the fair, large and liberal interpretation that must be given to any statute, under the provisions of section 41 of the Interpretation Act, R.S.Q. 1964, c. 1.

In the view of the trial judge, the failure to treat the present case as one covered by the provisions of section 36 would be contrary to the very purpose of the Labour Code and would allow an employer to do indirectly what the law prohibits.

With respect for this view, I cannot agree. In my opinion, section 36 is clear and can be readily understood, so that there is no need for interpretation. In the case at bar, no one disputes that the certification referred to in paragraph 4 of the motion remains valid; presumably no one would dispute the validity of a proceeding to give effect to the collective agreement, if one existed. There is also no doubt that appellant automatically became a party to any proceeding relating to certification or a collective agreement. However, the issue is not certification or a collective agreement: the proceeding begun under section 14 is not related to either the collective agreement or to certification, but to the general principles which the Labour Code attaches to the right of association. Accordingly, including the case at bar is not interpreting section 36 but adding to it a case which the legislator, deliberately or otherwise, failed to include.

The reasons for judgment at the trial level may be very praise-worthy, but I feel that the Court cannot usurp the function of the legislator by imposing on an individual the very heavy burden of answering for the fault of another. It would require a clear provision, enabling me to include offences under sections 11 to 13 L.C. within the provision of section 36, for me to condemn an innocent third party to compensate an injured employee in place of the real offender.

With respect, I share the view of the trial judge, and of the Labour Court and the investigation commissioner, that s. 36 applies.

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Section 36 was adopted in 1961 by 9-10 Eliz. II, c. 73, as s. 10a of the Labour Relations Act, R.S.Q. 1941, c. 162A, which the Labour Code replaced. Its primary purpose was to alter the situation created by the decision of the Court of Appeal in Brown, Syndicat national des travailleurs de la pulpe et du papier de La Tuque Inc. v. Commission des relations ouvrières de la Province de Québec, [1958] Que. Q.B. 1.

The union had been certified to represent the employees of Brown Corporation at the La Tuque mill, and a collective agreement had been concluded for a period of three years. Shortly after signing this agreement, Brown Corporation sold its mill to Canadian International Paper Co.

The union applied to the Labour Relations Board to have its certification amended, substituting for Brown Corporation the name of Canadian International Paper Co., which under the contract of sale had assumed responsibility for the collective agreement.

The Board initially allowed the union’s request, but subsequently, at the request of a rival association, it revised its decision and cancelled the union’s certification. Although it did not say so, the Board appears to have based its decision on the principle of relativity of contracts contained in art. 1023 C.C.:

1023. Contracts have effect only between the contracting parties; they cannot affect third persons, except in the cases provided in the articles of the fifth section of this chapter.

The certification had lapsed as a result of the sale of the mill.

By a majority of four to three, the Court of Appeal affirmed the judgment of the Superior Court, which quashed the writ of prohibition issued against this decision of the Board.

In Centrale de chauffage Enr. v. Syndicat des employés des institutions religieuses de Chicoutimi Inc. et l’Hôpital de Chicoutimi, [1970] R.D.T. 344, Donat Quimper A.C.J. of the Labour

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Court explained, at pp. 347-48, the reasons justifying adoption of this article and the intent of the legislator:

[TRANSLATION] In the years that followed adoption of the Labour Relations Act in 1944, it became apparent that certain transfers of ownership and work transfers had the effect of impeding the normal exercise of the right of association. In the case of a sale, unless there was an agreement to the contrary the buyer had no obligation either to the employees or to their association. The certification or collective agreement binding on the former owner ceased to apply.

Similarly, the practice of certain employers of giving work which was usually done in their own establishments to third parties to do could interfere with an application for certification if the transaction was accompanied by layoffs and, in some cases, deprive the employees transferred to the service of the subcontractor of the benefits of an existing or future agreement. Here again, the certification or agreement was effective only with regard to the principal employer.

These are the two (2) situations which the legislator sought to remedy by enacting the first paragraph of section 10a. By that provision, he sought to protect the right of representation of the association and to maintain working conditions, whatever the fortunes of the business, apart from a judicial sale. He did this by, first, linking the certification and the collective agreement no longer to the person of the employer but to the business. It followed that henceforth the certification and collective agreement were part of the business. In the case of a sale, the buyer became bound by both the certification and the agreement. He succeeded to the rights and duties of the seller toward his former employees and the association.

The application of these new provisions encountered problems and is still the subject of controversy over twenty years after their adoption. See in this regard Brière, Gagnon and Saint-Germain, La transmission d’entreprise en droit du travail, 1982, at p. IX of the Preface and at p. 165. See also Cutler, Code du travail du Québec, 4th ed., 1983, at p. 209.

The controversy has to date centred mainly on the concept of an undertaking and on the meaning of the phrase “alienation or operation by another in whole or in part of an undertaking”, and “divi-

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sion”, “amalgamation” and “changed legal structure” of the undertaking.

In the case at bar, it is another aspect of this provision which is at issue, namely whether the proceedings contemplated include the complaint made following an unlawful dismissal for union activities, and an order of reinstatement under ss. 14 to 16 of the Code.

It is accordingly important to look at the place occupied by these sections in the process leading up to formation of the union, the obtaining of the certification and the conclusion of a collective agreement.

Regarding the meaning and scope of these sections, Gagnon J.A. wrote for the Court of Appeal in United Last Co. v. Tribunal du Travail et Adamowicz, [1973] R.D.T. 423, at pp. 433‑35:

[TRANSLATION] It should be borne in mind that sections 14, 15 and 16 of the Labour Code apply to all employees who are “dismissed” because of their exercising a right conferred on them by the Code. It is clear that they are not limited to those who are protected by a collective agreement and who may accordingly benefit under that agreement and the law from a certain measure of security of employment, like special procedures for presenting their grievances. The remedy created by these sections is complete in itself.

Apart from the fact that this interpretation is the only one made possible by the wording of the provisions, we know from experience, and the legislator knew, that disputes of this kind often arise during union organizing campaigns, and thus before a collective agreement has been negotiated and signed. It is only being realistic to recognize, without any partiality, that this is a particularly crucial stage in the life of a union, one in which even an enlightened and socially motivated employer cannot easily remain aloof. The legislator was concerned, especially at this stage, to protect the exercise of the right of association, to guarantee that legitimate union activities can be carried on, and at the same time to avoid disrupting a nascent bargaining unit which at a later stage may be subject to certification. To do this, he enacted provisions which are a clear departure from the ordinary law.

In general, apart from certain special statutes, a non-unionized employee must look to the Civil Code for a guarantee of his security of employment. Of course, he may be dismissed for cause, without notice and without

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compensation. In any other case, however, and if his contract of employment does not provide otherwise, his employer may terminate a contract of service by prior notice, the time of which may be quite short. If the prescribed notice is given the contract ceases, and the worker has no contractual remedy in connection with his dismissal.

This is where sections 14, 15 and 16 L.C. come in. If it is established to the satisfaction of the investigation commissioner that an employee is exercising a right which devolves on him under the Labour Code, the presumption of section 16 applies. From then on, the Act imposes a heavy burden on the employer. Thus, he may not take refuge behind the Civil Code and justify his employee’s dismissal by saying, for example, that the latter was hired for an undetermined period, that he was paid by the week, and that he received a week’s notice. He will have to establish a good and sufficient reason for the dismissal. It can thus be seen that these provisions go beyond the boundaries of the individual contract of employment and give an employee dismissed for union activities security of employment which does not derive from the Civil Code, and which even makes certain provisions of that Code inapplicable.

As a consequence of ss. 14 to 16, an employee engaged in legitimate union activities preceding a collective agreement is entitled to security of employment and not to be dismissed without good and sufficient reason, just as an employee is generally so entitled while a collective agreement is in effect. If in the case at bar a collective agreement had been in effect and the employer had wrongfully dismissed an employee just before the business was taken over by the new purchaser, the employee would have been protected and his grievance could have been upheld against respondent. Sections 14 to 16 compensate for the absence of an agreement and provide the same protection during the period leading up to certification and the initial collective agreement.

In the submission of respondent the proceedings for the securing of certification or for the making or carrying out of a collective agreement, or proceedings relating thereto, mentioned in s. 36, are solely the various motions and notices that are to be exchanged between the parties and the other documents which they must file, which are described in the Labour Code and listed there.

Its counsel wrote in his submission:

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[TRANSLATION] In our view the words “proceedings relating to certification or the collective agreement” refer to the series of written documents which the parties are to exchange or submit to the Minister in order to progress through the stages between filing an application for certification and signature of the collective agreement and its eventual implementation through the grievance procedure.

In my view this is too narrow an understanding of what is meant by s. 36.

In the above-cited passage from Centrale de chauffage Enr., Quimper A.C.J. wrote that the new purchaser [TRANSLATION] “succeeds to the rights and duties of the seller toward the former employees and the association”.

In an oft-cited letter which he wrote to the Canadian Manufacturers Association in 1961, while s. 10a was being considered by the legislature, Mr. Louis-Philippe Pigeon, as he then was, wrote inter alia:

[TRANSLATION] Certification, like the collective agreement, will henceforth be considered as associated not with the person of the employer but with the business. Accordingly, anyone who comes within that framework is bound thereby.

He goes on to say:

[TRANSLATION] The Civil Code notion that an employee has no right to his employment except what an employer is willing to grant him must be regarded as completely obsolete. An amendment was made to the Code Napoléon in France over seventy years ago recognizing that a worker has a right to his employment (Law of December 27, 1890). It is high time for our legislature to take a first step in that direction.

These passages from Mr. Pigeon’s letter are cited, inter alia, by Mr. Roger Chartier in an article titled “Évolution de la législation québecoise du travail”, (1961) 16 R.I. 381, at p. 389.

In his reasons for judgment in the case at bar, Judge Brière of the Labour Court wrote:

[TRANSLATION] There is no doubt that a liberal interpretation must be given to the provisions of the Labour Code which seek to protect employees in the exercise of their rights of association and bargaining; this is true of sections 14 et seq. and of section 36. In my opinion the complaint of an employee unlawfully dismissed for union activities aimed at securing certifica-

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tion for a union and at negotiating a collective agreement is a proceeding “relating” to such certification or negotiation covered by section 36. It would be strange, to say the least if a new employer were required to continue the bargaining for a collective agreement undertaken between his predecessor and representatives of the union certified in the undertaking, but not required to reinstate in their employment members of the union bargaining committee which his predecessor had unlawfully dismissed because of their exercise of their admitted right of negotiation.

For his part, the Superior Court judge wrote:

[TRANSLATION] Applicant, giving a strict interpretation to the words “any proceeding relating thereto”, maintained that the new employer is bound only by the certification or the collective agreement, and that it does not become a party to the proceedings relating thereto. The unlawful dismissal and the proceedings relating thereto, in its view, are not part of the certification procedure.

On the contrary, we consider that the accessory follows the principal. When an association of employees undertakes proceedings to secure certification, the legislator specifies what an employer must or must not do in the circumstances. It is clear that no employee association could ever be formed and obtain certification if the employer deliberately dismissed his employees for union activities and the next day sold his business to a new employer, who then along with subsequent purchasers took similar action where necessary. This would be doing indirectly what the law prohibits directly by section 36, and undermining the intent of the Labour Code at the outset.

In my opinion, the unlawful dismissal of a union representative, who is a member of the bargaining committee, during the negotiations leading up to the conclusion of an initial collective agreement is obviously an act presumed to be intended to interfere with the progress of negotiations and the speedy conclusion of an agreement.

The complaint for unlawful dismissal and the order of reinstatement, which are its counterpart, are intended to redress the balance and to encourage continued negotiations and the conclusion of a collective agreement.

This complaint resulting from an act by the employer and the order are, in my view, proceedings for the securing of a collective agreement, or

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at least relating thereto. Sections 14 to 16 of the Labour Code are intended to apply to just this. They seek to ensure the harmonious exercise of the rights conferred on employees by the Labour Code, including the forming of an association, obtaining of certification and conclusion of a collective agreement. Finding that the dismissal is unlawful and caused only by the employee’s participation in activities leading up to the formation of a union, obtaining of certification and conclusion of an initial collective agreement amounts to a finding that such dismissal relates to the certification and the agreement. In the Petit Robert “se rapporter à” [relate] means “be related to”, “have a logical connection with”.

Respondent further submitted that [TRANSLATION] “the protection given by section 36 is given to the employee association only. Only an employee association can file an application for certification, be certified, oblige an employer to negotiate a collective agreement and sign an agreement”.

It is true that it is the association which must file an application for certification, be certified and do the other acts mentioned. The fact remains that the certification and agreement also confer rights on the employees themselves, and I do not see anything in the wording of s. 36 to justify the statement that “the protection […]is given to the employee association only”.

With regard to the argument that making an order of reinstatement against respondent amounts to imposing on the latter an obligation to answer for the fault of another, with respect I do not think it can be accepted. The question is not so much of determining whether the employer committed a fault, and whether the subsequent purchaser can be held liable for that fault. This is not an action for damages, but primarily an application for reinstatement, even if the latter is accompanied by an indemnity, which is only fair, for the salary lost during the unlawful dismissal. Section 36 seeks to encourage the stability of employment and prevent the disruption of labour relations, and to protect the rights of the union and the rights of the employees in the event of a change in the manage-

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ment or organization of the undertaking in one or another of the manners mentioned. “The new employer […] shall be bound by the certification or collective agreement as if he were named therein.” The new employer is a party to any proceeding relating to the certification or the collective agreement “in the place and stead of the former employer”. During the stage preceding the conclusion of a collective agreement, ss. 14 to 16 ensure that the union rights of employees may be freely exercised and that their employment will be secure. It is simply a matter of determining whether the proceedings taken under these sections are included in the proceedings contemplated by s. 36 and are binding on the new purchaser, which I feel has been sufficiently demonstrated.

For these reasons, I would allow the appeal, reverse the judgment of the Court of Appeal and restore the judgment of the Superior Court dismissing the motion for a writ of evocation, with costs in all courts.

Appeal allowed with costs.

Solicitors for the appellant: Trudeau & Provençal, Montreal.

Solicitors for the respondent: Martineau, Walker, Montreal.