Ivanhoe inc. v. UFCW, Local 500, [2001] 2 S.C.R. 565, 2001 SCC 47

Ivanhoe inc., Service d’entretien Empro inc. and La Compagnie d’entretien d’édifice Arcade Ltée Appellants

v.

United Food and Commercial Workers, Local 500, Labour Court, Réal Bibeault (in his capacity as labour commissioner), Labour Commissioner General and Judge Bernard Prud’homme (in his capacity as judge of the Labour Court) Respondents

and

Distinction Service d’entretien inc. (in continuance of suit for Prestige Maintenance inc.), 2621-3249 Québec inc. (in continuance of suit for Service d’entretien Laurier) and Moderne Service d’entretien d’immeubles inc. Mis en cause

and between

Distinction Service d’entretien inc. (in continuance of suit for Prestige Maintenance inc.) Appellant

v.

United Food and Commercial Workers, Local 500, Réal Bibeault (in his capacity as labour commissioner), Labour Commissioner General, Judge Bernard Prud’homme (in his capacity as judge of the Labour Court) and Labour Court Respondents

and

Ivanhoe inc., Service d’entretien Empro inc., Compagnie d’entretien d’édifice Arcade ltée, 2621-3249 Québec inc. (in continuance of suit for Service d’entretien Laurier) and Moderne Service d’entretien d’immeubles inc. Mis en cause

and between

Ivanhoe inc. Appellant

v.

United Food and Commercial Workers, Local 500, Labour Court, Jean Boily (in his capacity as labour commissioner), Labour Commissioner General and Judge Bernard Prud’homme (in his capacity as judge of the Labour Court) Respondents

and between

United Food and Commercial Workers, Local 500 Appellant

v.

Ivanhoe inc., Service d’entretien Empro inc., Compagnie d’entretien d’édifice Arcade ltée, Distinction Service d’entretien inc. (in continuance of suit for Prestige Maintenance inc.) and 2621-3249 Québec Inc. (in continuance of suit for Service d’entretien Laurier) Respondents

and

Réal Bibeault (in his capacity as labour commissioner), Judge Bernard Prud’homme (in his capacity as judge of the Labour Court) and Moderne Service d’entretien d’immeubles inc. Mis en cause

Indexed as: Ivanhoe inc. v. UFCW, Local 500

Neutral citation: 2001 SCC 47.

File No.: 27121.

2000: October 30; 2001: July 13.

Present: McLachlin C.J. and L’Heureux‑Dubé, Gonthier, Iacobucci, Major, Bastarache and Arbour JJ.

on appeal from the quebec court of appeal

Labour law -- Transfer of operation of part of undertaking -- Subcontracting of janitorial services -- Definition of undertaking -- Legal relationship between successive employers -- Degree of autonomy subcontractors given -- Theory of retrocession -- Contract for janitorial services awarded to new subcontractors -- Decision of labour commissioner finding transfer of operation of part of undertaking and transferring certification but not collective agreement to new subcontractors -- Whether commissioner adopted functional definition of undertaking and rejected requirement for legal relationship between former and new employer – Whether commissioner may transfer certification and refuse to transfer collective agreement -- Labour Code, R.S.Q., c. C-27, s. 45.

Labour law -- Certification -- Transfer of operation of part of undertaking -- Subcontracting of janitorial services -- Petition for cancellation of certification -- Interest required -- Whether former employer has interest required for presenting petition for cancellation of certification despite having no employees -- If so, whether certification granted in respect of former employer may be cancelled during term of transfer of operation -- Labour Code, R.S.Q., c. C-27, s. 41.

Administrative law -- Judicial review -- Standard of review -- Labour Court -- Standard of review applicable to decisions of Labour Court in relation to whether undertaking alienated or operated by another -- Labour Code, R.S.Q., c. C-27, ss. 45, 46.

Administrative law -- Judicial review -- Standard of review -- Labour Court -- Standard of review applicable to decisions of Labour Court in relation to cancellation of union’s certification -- Labour Code, R.S.Q., c. C-27, ss. 41, 139.

Ivanhoe is a property management company. It handled janitorial services at its buildings itself until 1989, when it contracted those services to Moderne. All of Ivanhoe’s janitorial employees were then transferred to Moderne. The labour commissioner granted a motion under s. 45 of the Labour Code for recognition of the transfer of the certification and collective agreement to Moderne. In 1991, when its contract with Moderne was about to expire, Ivanhoe invited bids for a new janitorial contract. Moderne did not bid, but it signed a new collective agreement with its janitorial employees. Ivanhoe decided to engage four contractors, and when Moderne’s contract expired it dismissed the entire janitorial staff responsible for Ivanhoe’s buildings. There is no legal relationship between Moderne and the four contractors, which employed their own staff and used their own equipment. The work performed by the contractors’ employees was the same as the work that had been done for Moderne and previously for Ivanhoe.

The union applied again under s. 45 to have the certification and the collective agreement signed with Moderne transferred to the contractors. Ivanhoe applied under s. 41 of the Code to have the union’s certification cancelled with respect to itself. The labour commissioner allowed the motion under s. 45 in part and found that the certification that originally covered Ivanhoe, but not the collective agreement signed by Moderne and the union, had to be transferred to the new contractors. A second commissioner dismissed the petition for cancellation of the certification. The Labour Court affirmed the commissioners’ decisions. It found that operation of part of an undertaking had been transferred -- the right to operate the janitorial services -- and that s. 45 had to be applied since the tests in Bibeault had been met. The requirement that there be a legal relationship between successive employers had also been met since when the Moderne contract expired, Ivanhoe resumed its legal authority over the part of the undertaking which had been operated by another, and transferred it afresh to the contractors. The Labour Court dismissed the union’s appeal regarding the transfer of the collective agreement with Moderne because that agreement had lapsed when the contract expired and could not be transferred to the new contractors. It also refused to transfer the last collective agreement signed by Ivanhoe with the union that had expired in 1989. With respect to the petition for cancellation of the certification, the Labour Court concluded that a company which contracts out work cannot rid itself permanently of the certification during a period when an undertaking is temporarily operated by another. The Superior Court dismissed the applications for judicial review brought by the union, Ivanhoe and three of the contractors. The Court of Appeal affirmed that decision.

Held (Bastarache J. dissenting in part): The appeals should be dismissed.

Per McLachlin C.J. and L’Heureux-Dubé, Gonthier, Iacobucci, Major and Arbour JJ.: Under the pragmatic and functional approach adopted by this Court, the standard of review to be applied to decisions relating to s. 45 of the Labour Code must be patent unreasonableness. Although Bibeault held, in 1988, that the applicable standard was correctness, there have been major changes since that time. First, the labour commissioners have developed their own expertise in this regard; most importantly, s. 46 of the Code itself has been amended. By amending that section, the legislature made an unequivocal statement that its intent was to give the commissioner exclusive jurisdiction to determine whether an undertaking had been alienated or was being operated by another. As well, the standard of review applicable to decisions relating to the application of s. 41 of the Code is patent unreasonableness. The relevant factors in determining the standard of review, and particularly the full privative clauses set out in the Labour Code, confirm this.

In Bibeault, this Court concluded that there must be a consensual legal transfer of the undertaking from one employer to another and adopted the organic definition of an undertaking. That decision was based on a very particular fact situation and was intended to put an end to the debate that had divided the Labour Court on these two questions. The conclusions in Bibeault regarding the definition of an undertaking and the legal relationship that must exist between the former employer and the new employer must be understood in that context. After the decision in Bibeault, the Labour Court has developed interpretive policies regarding the two issues that are accepted and followed by virtually all of its members. The existence of a settled consensus in a specialized administrative tribunal acting within its jurisdiction should be a factor in favour of a very high degree of deference on the part of the superior courts. In a situation like this, judicial deference makes it possible both to respect the decision-making autonomy of administrative tribunals and to ensure consistency and predictability of the law. This ideal balance should only be disturbed by the superior courts where there are clearly absurd or irrational results.

The labour commissioner and the Labour Court had the authority, by virtue of the Labour Code and the decisions of this Court, to assess the respective importance of the various components of the undertaking and to conclude in this case that the transfer of a right to operate, combined with the transfer of functions, was sufficient to result in s. 45 being applied, under the organic definition of an undertaking. The only requirement that those decisions impose in respect of identifying an undertaking or part of an undertaking for the purpose of applying s. 45 is that an organic rather than a functional definition of an undertaking be adopted, although in some cases similarity of functions may still be decisive, where the undertaking has no other special characteristics. The tests that are to be applied in defining the concept of an undertaking, in the context of the transfer of certification, therefore vary with the specific circumstances of each case and the administrative tribunals charged with applying s. 45 enjoy wide discretion in determining and weighing the factors they apply in defining an undertaking and are at liberty to develop specific tests to respond to the situation in a given industry. With regard to subcontracting of janitorial services, after Bibeault, the Labour Court developed tests to be used in order to make consistent determinations as to whether the operation of part of an undertaking had been transferred. Where part of the operation is transferred, it is simply not necessary that the portion of the activities transferred be essential to the purpose of the undertaking as a whole. The only requirement laid down by Bibeault is actually that the elements that characterize the essence of the part of the undertaking be transferred. On the question of the degree of autonomy that must be granted to the transferee in order for it to be concluded that an undertaking has been transferred, where the main characteristic of the part of the undertaking operated by another consists, as it does in this case, of the specific right to operate on the premises of the main undertaking, the part transferred cannot enjoy wholly autonomous existence. In such a situation, it is sufficient that the transferee be legally independent and be responsible for the work performed by its employees, even if the transferor continues to exercise administrative or legal control under a contract. Otherwise, there could be no transfer of the operation of part of an undertaking’s support services. In this case, that was the approach adopted by the Labour Court. That approach is a reasonable interpretation of s. 45 which does not conflict with Bibeault.

Nor does transferring the certification to the four new contractors when the contract with Moderne expired conflict with the requirement that there be a legal relationship between successive employers, which was laid down in Bibeault -- a case in which the certification was not, as it was in this case, originally granted in respect of the party which had contracted out the work. To give effect to the purpose of s. 45 in cases involving the temporary transfer of the operation of an undertaking, the Labour Court developed the theory of retrocession, according to which a certification originally granted in respect of the transferor remains with it, but is temporarily inactive during the period of operation by another and is then transferred to the successive subcontractors. An essentially temporary transfer of the operation of an undertaking therefore does not operate to permanently terminate the certification. Under that theory, when its contract with Moderne expired, Ivanhoe took back responsibility for its undertaking and was once again bound by the certification, which was then transferred to the new contractors. The fact that there was no formal juridical act of alienation when the transfer of operation to Moderne expired is not an insurmountable barrier to transfer of the certification, since the transfer of operation of an undertaking which results in s. 45 applying can take different legal forms. In the instant case, the undertaking was transferred by way of a retrocession agreed upon by the parties in advance at the time the term of the transfer was negotiated. The interpretation by the Labour Court of the requirement that there be a legal relationship between successive employers and of its application to situations in which an original certification has been granted in respect of the transferor is a reasonable exercise of its jurisdiction. The fiction of the potential employer that the Labour Court has developed allows s. 45 to be applied without it being necessary for the party that contracted out the work to actually take back the operation of the undertaking that had been transferred.

Although, generally speaking, transfer of both the collective agreement and the certification will follow from a decision finding that an undertaking has been alienated or is being operated by another, the decision of the labour commissioner and of the Labour Court to transfer only the certification to the new contractors is not patently unreasonable. By enacting s. 46 of the Labour Code, the legislature gave the responsibility for settling difficulties arising out of the application of s. 45 to labour commissioners and the Labour Court. Those authorities must settle these issues, which are central to their specialized jurisdiction, on a daily basis. The solution adopted in this case allows the new employers, which are bound by the certification, to enter into negotiations with the association of employees without being bound by an agreement signed by one of their competitors, or by an agreement that has become obsolete. The fact that there are other solutions that could have been adopted, some of which would have enabled the employees to keep their jobs, is insufficient to justify judicial review. The recognition by the legislature and the courts that there are many potential solutions to a dispute is the very essence of the patent unreasonableness standard of review, which would be meaningless if it was found that there is only one acceptable solution. Since the principles that are applied do not result in absurdity, judicial review will be appropriate only where the results are clearly irrational.

Ivanhoe was entitled to submit its petition for cancellation of the certification under s. 41 of the Labour Code despite the fact that it had no employees. Recognizing that Ivanhoe has the necessary interest to present the petition does not mean that Ivanhoe is being regarded as a “present employer”. The mere fact that an employer’s name appears on the certificate of certification is sufficient in itself to give the employer the interest that is needed to present a petition for cancellation. The Labour Court, acting within its jurisdiction, has laid down rational tests for determining the employer in respect of which, in the event of a temporary transfer of the operation of an undertaking resulting in the application of s. 45, the representativeness of the union should be verified for the purpose of determining whether the certification should be cancelled. The employer that contracted out the work will be free to seek cancellation if it takes back control of its undertaking; for the term of the transfer, however, the transferee to which the certification actually applies must present the petition if it believes that the association no longer represents the majority of the employees in the bargaining unit. Since it is reasonable to conclude that an employer cannot rid itself of a certification by arranging for a temporary transfer of the operation of an undertaking, it may be equally appropriate to deny it cancellation of the certification during the period covered by the transfer, on the ground that the fact that it has no employees results precisely from the temporary transfer of the undertaking. Such an approach permits consistent application of ss. 41 and 45 of the Code to temporary transfer situations. That approach, which was adopted by the labour commissioner and the Labour Court in this case, is not patently unreasonable. Lastly, on the question of the time period prescribed for presenting the petition for cancellation, the labour commissioner implicitly accepted that the calculation of the time period must be based on the last collective agreement signed by Ivanhoe rather than on the agreements that its transferees might have made. In so doing, the commissioner and the Labour Court made a decision that was entirely within their jurisdiction to make. That approach to calculating the time period is consistent with the principles laid down by the Labour Court, which provide that collective agreements negotiated by subcontractors cannot be binding on the party that contracted out the work. However, although Ivanhoe presented its petition at the proper time, the commissioner had the authority to deny it on the merits because the certification was in effect in respect of another employer, Ivanhoe’s transferee, on a temporary basis.

Per Bastarache J. (dissenting in part): A legal relation between successive employers is required in order to trigger successorship provisions. On the law as it has been modified by Ajax, there need not be a strict mutual, intentional, or consensual transfer. The legal relation between successive employers can be based on a mere historical connection. Here, the legal relation required in order to establish a sufficient organizational nexus is not satisfied and the successorship provision should not be triggered. There is no history of any corporate connection or evidence of any kind of relationship between the party who would be, for the purpose of s. 45 of the Labour Code, the “new employer” and the party who would be the “former employer”. The present case is rather a situation in which one contractor loses his contract to another with whom he has no connection.

Bibeault’s definition of “undertaking” for the purpose of s. 45 of the Labour Code, unchanged by Ajax, cannot consist merely of work, tasks or functions performed by the employees under the former employer. Something more must be sold or operated by another in order for the successorship provision to be triggered. To allow mere functions to constitute an undertaking in situations where there is nothing else to be passed amounts to a return to a purely functional definition of undertaking which was prohibited in Bibeault. The factual distinction between the present case and Bibeault is not material to Bibeault’s prohibition of the functional definition of an undertaking. An agreement to ignore Bibeault or to undermine the organic definition in Bibeault should not acquire the force of law simply because the Labour Court has agreed to do it and has more or less consistently taken that approach. It is patently unreasonable to use an approach to the definition of an undertaking that is inconsistent with Bibeault.

The concept of “potential employer” or retrocession -- where upon the termination of Moderne’s contract, the undertaking would have returned to Ivanhoe in order to be re-transferred to the four new contractors -- is a patently unreasonable interpretation of s. 45 and is in no way supported by the text of that provision. The provision itself gives no indication that it is meant to apply to more than the last two actual employers in a line of successive employers. This is particularly true in this case where no employees are being transferred and Ivanhoe, the potential employer, to which the undertaking would be returned, has no employees to receive the benefit of the transferred certification. Moreover, retrocession is an entirely fictional operation. While the law admits of instances of “legal fiction”, it is not acceptable in the context of labour legislation. Ivanhoe ceased being the employer of the janitorial staff when it transferred all of those employees to Moderne. When the contract between Ivanhoe and Moderne came to an end, these employees were dismissed by the latter and Ivanhoe did not become their employer again. Ivanhoe did not re-enter the business of performing these janitorial services and the new companies performing the work did not include any Moderne or former-Ivanhoe employees. It is patently unreasonable to keep the certification alive through an artificial interpretation of s. 45. Although Ivanhoe retained the power to consign the undertaking at the end of the contract and could, without the concept of retrocession, have used short-term or temporary contracts to evade collective agreements, this is how s. 45 is written. There is no ambiguity and its scope is well defined.

The forced or artificial nature of this interpretation of s. 45 can be seen with respect to two other issues. First, if the retrocession argument was sound, the collective agreement would have been included with the certification. In order for the operation of the successorship provision to be meaningful, one must follow the other. Yet, every decision-maker in this case has held that the collective agreement entered into by Moderne and the union could not be transferred back to Ivanhoe in order to be re-transferred to the four new employers along with the certification. To allow the certification but not the collective agreement to pass indicates that this is not a situation in which the successorship provision should apply at all. Second, commitment to the retrocession interpretation of s. 45 creates difficulty in the application of s. 41 of the Labour Code, which allows for the cancellation of the certification of a union that no longer comprises the absolute majority of the employees in the bargaining unit for which it was certified. The need to avoid defeating the initial purpose of the retrocession interpretation of s. 45 leads to an illogical position with respect to s. 41 in which the giver of work is treated both as the present employer -- i.e., potential employer -- for the purposes of making the request to cancel the certification and as the former employer in the decision to determine union support in relation to the temporary employer.

Cases Cited

By Arbour J.

Followed: Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, 1990 CanLII 22 (SCC), [1990] 3 S.C.R. 644; Ajax (Town) v. CAW, Local 222, [2000] 1 S.C.R. 538, 2000 SCC 23, aff’g (1998), 1998 CanLII 7179 (ON CA), 41 O.R. (3d) 426; National Bank of Canada v. Retail Clerks’ International Union, 1984 CanLII 2 (SCC), [1984] 1 S.C.R. 269; Sept-Îles (City) v. Quebec (Labour Court), [2001] 2 S.C.R. 670, 2001 SCC 48; Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 CanLII 778 (SCC), [1998] 1 S.C.R. 982; considered: Pasiechnyk v. Saskatchewan (Workers’ Compensation Board), 1997 CanLII 316 (SCC), [1997] 2 S.C.R. 890; General Motors Products of Canada Ltd. v. Kravitz, 1979 CanLII 22 (SCC), [1979] 1 S.C.R. 790; Montreal Tramways Co. v. Léveillé, 1933 CanLII 41 (SCC), [1933] S.C.R. 456; Dobson (Litigation Guardian of) v. Dobson, 1999 CanLII 698 (SCC), [1999] 2 S.C.R. 753; distinguished: U.E.S., Local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048; Entreprises Rolland Bergeron inc. v. Geoffroy, 1987 CanLII 1050 (QC CA), [1987] R.J.Q. 2331; referred to: Université McGill v. St-Georges, [1999] R.J.D.T. 9; Syndicat des employées et employés professionnels et de bureau, section locale 57 v. Commission scolaire Laurenval, [1999] R.J.D.T. 1; Syndicat des cols bleus de Ville de St-Hubert v. Ville de St-Hubert, 1998 CanLII 12582 (QC CA), [1999] R.J.D.T. 76, leave to appeal refused, [1999] 3 S.C.R. xii; Syndicat des employés de la Communauté régionale de l’Outaouais v. Collines-de-l’Outaouais (Municipalité régionale de comté des), [1999] R.J.D.T. 97; Union des employées et employés de la restauration, métallurgistes unis d’Amérique, section locale 8470 v. Ultramar Canada inc., [1999] R.J.D.T. 110; Maison L’Intégrale inc. v. Tribunal du travail, 1996 CanLII 6405 (QC CA), [1996] R.J.Q. 859, leave to appeal refused, [1996] 3 S.C.R. xi; Canadian Union of Public Employees Local 963 v. New Brunswick Liquor Corp., 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227; Fraser v. Public Service Staff Relations Board, 1985 CanLII 14 (SCC), [1985] 2 S.C.R. 455; Canada (Attorney General) v. Public Service Alliance of Canada, 1993 CanLII 125 (SCC), [1993] 1 S.C.R. 941; Toronto (City) Board of Education v. O.S.S.T.F., District 15, 1997 CanLII 378 (SCC), [1997] 1 S.C.R. 487; Centre communautaire juridique de l’Estrie v. Sherbrooke (City), 1996 CanLII 168 (SCC), [1996] 3 S.C.R. 84; Syndicat national des employés de l’aluminium d’Arvida inc. v. J.-R. Théberge ltée, [1965] R.D.T. 449; Centrale de Chauffage enr. v. Syndicat des employés des Institutions religieuses de Chicoutimi inc., [1970] R.D.T. 344; Barnes Security Service Ltd. v. Association internationale des machinistes et des travailleurs de l’aéroastronautique, section locale 2235, [1972] T.T. 1; Syndicat des salariés de service d’entretien v. Montcalm Carpets Specialists Ltd., [1981] T.T. 273; Entrepôts Schenker ltée v. Travailleurs canadiens de l’alimentation et d’autres industries, section locale P-766, [1981] T.T. 420; Mode Amazone v. Comité conjoint de Montréal de l’Union internationale des ouvriers du vêtement pour dames, 1983 CanLII 3364 (QC TT), [1983] T.T. 227; Jack Schwartz Service Station v. Teamsters Local Union 900, [1975] T.T. 125; Vitriers-travailleurs du verre, section locale 1135 de la Fraternité internationale des peintres et métiers connexes v. Vetroform inc., 1989 CanLII 6889 (QC TT), [1990] T.T. 514; Syndicat des travailleurs de l’énergie et de la chimie, section locale 115 v. Fornet inc., [1991] T.T. 413, motion for evocation allowed, 1992 CanLII 12645 (QC CS), [1992] R.J.Q. 445; Syndicat des employés du Cégep du Vieux-Montréal v. Clair et Net ltée, [1992] T.T. 85; Syndicat des employés du Cégep du Vieux-Montréal v. Service d’entretien d’immeubles Staff 2000 inc., 1993 CanLII 14246 (QC TT), D.T.E. 93T-665; Gatineau (Ville de) v. Syndicat des cols bleus de Gatineau, 1992 CanLII 12622 (QC TT), [1992] T.T. 599; Syndicat des employés des commissions scolaires de la régionale Chauveau v. Groupe Admari inc., [1991] T.T. 351; Université McGill v. Union des employées et employés de service, section locale 800, 1994 CanLII 16136 (QC TT), D.T.E. 95T-296; Entreprises Chando-net enr. v. Union des employées et employés de service, section locale 800, 1992 CanLII 12656 (QC TT), [1992] T.T. 620, motion for evocation dismissed, Sup. Ct. Quebec, No. 200-05-002218-928, December 23, 1992; Luc Construction inc. v. Syndicat des employés de Ville de Brossard, 1992 CanLII 12377 (QC TT), [1992] T.T. 589; Coopérants (Les), Société mutuelle d’assurance-vie v. Syndicat des employés de coopératives d’assurance-vie, 1987 CanLII 6426 (QC TT), D.T.E. 87T-300; Collège d’enseignement général et professionnel de Limoilou v. Syndicat du personnel de soutien du Collège de Limoilou, L.C. , No. 200-28-000041-90, October 11, 1990; Syndicat des travailleurs du Holiday Inn Ste-Foy v. Prime Hospitality inc., 1990 CanLII 10757 (QC TT), [1991] T.T. 40; Conciergerie C.D.J. (Québec) inc. v. Fraternité canadienne des cheminots, employés des transports et autres ouvriers, section locale 277, 1992 CanLII 12404 (QC TT), D.T.E. 92T‑1043; Syndicat des employés de la Ville de Brossard v. Services d’entretien Fany inc., 1995 CanLII 15569 (QC TT), [1995] T.T. 423; Commission scolaire Laurenval v. Lalonde, 1997 CanLII 9138 (QC CS), [1997] R.J.Q. 983; Rosemère (Ville de) v. St-Arnaud, D.T.E. 97T-1039; Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles), 1993 CanLII 106 (SCC), [1993] 2 S.C.R. 756; Tremblay v. Quebec (Commission des affaires sociales), 1992 CanLII 1135 (SCC), [1992] 1 S.C.R. 952; Adam v. Daniel Roy Ltée, 1983 CanLII 147 (SCC), [1983] 1 S.C.R. 683; Union des employés de service, service locale 298 v. Syndicat national des employés de la Commission scolaire régionale de Baie-des-Chaleurs, [1973] T.T. 332; Distribution Réal Chagnon inc. v. Prud’homme, J.E. 90-1027; Syndicat des employés de coopératives d’assurance-vie v. Les Coopérants, 1991 CanLII 3709 (QC CA), [1991] R.J.Q. 1248; Emballages industriels Vulcan ltée v. Syndicat des travailleurs de l’énergie et de la chimie, section locale 106, 1990 CanLII 10604 (QC TT), [1991] T.T. 29; Syndicat des salariées et salariés cléricaux et techniques de l’amiante v. LAB, société en commandite, 1993 CanLII 14597 (QC TT), D.T.E. 94T-13, motion for evocation dismissed, Sup. Ct. Quebec, No. 200-05-003286-932, February 23, 1994; Groupe des ex-salariés de Transbéton v. Groupe des ex-salariés de Transmix, 1999 CanLII 31853 (QC TT), [1999] R.J.D.T. 513; Syndicat des travailleurs de S.O.S. v. Syndicat international des travailleurs et travailleuses unis de l’alimentation et du commerce, section locale 502, 1992 CanLII 12400 (QC TT), [1992] T.T. 109; Union internationale des travailleurs unis de l’alimentation et du commerce, section locale 301 W v. Brasserie Molson-O’Keefe, 1991 CanLII 11389 (QC TT), D.T.E. 91T-914; Syndicat national des employés de l’alimentation en gros de Québec inc. v. Épiciers unis Métro-Richelieu inc., 1984 CanLII 3370 (QC TT), D.T.E. 85T-114; Syndicat des employées et employés professionnels et de bureau, section locale 57 v. Centre financier aux entreprises du Sud-Ouest de Montréal, 1999 CanLII 31841 (QC TT), D.T.E. 2000T-113; Metro Capital Group ltée v. Hamelin, 2000 CanLII 46609 (QC CS), [2000] R.J.D.T. 491; Syndicat national des employés de l’alimentation en gros de Québec inc. v. Épiciers unis Métro-Richelieu inc., 1987 CanLII 6418 (QC SAT), [1987] T.A. 333; Syndicat des employés de la Commission scolaire des Deux-Rives v. Commission scolaire de la Jonquière, 1990 CanLII 10721 (QC TT), [1990] T.T. 419; Syndicat des professionnels et des techniciens de la santé du Québec v. Syndicat des employés du C.L.S.C. de la Guadeloupe, 1986 CanLII 4427 (QC TT), D.T.E. 86T-759; Syndicat des employés du Carrefour des jeunes de Montréal v. Union des employés de service, section locale 298, 1990 CanLII 10664 (QC TT), [1990] T.T. 398; Centrale des unions indépendantes de l’industrie de l’automobile v. Fraternité canadienne des cheminots, employés du transport et autres ouvriers, section locale 300, 1982 CanLII 3511 (QC TT), [1982] T.T. 340; Rothmans, Benson & Hedges inc. v. Travailleurs unis de l’alimentation et du commerce, section locale 501, 1987 CanLII 6434 (QC TT), D.T.E. 87T-976; Syndicat québécois des employées et employés de service, section locale 298 v. Syndicat des employées et employés des services sociaux du Centre jeunesse Laval, [2001] R.J.D.T. 134.

By Bastarache J. (dissenting in part)

Ajax (Town) v. CAW, Local 222, [2000] 1 S.C.R. 538, 2000 SCC 23; Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, 1990 CanLII 22 (SCC), [1990] 3 S.C.R. 644; U.E.S., Local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048; Mode Amazone v. Comité conjoint de Montréal de l’Union internationale des ouvriers du vêtement pour dames, 1983 CanLII 3364 (QC TT), [1983] T.T. 227; Syndicat des employées et employés professionnels et de bureau, section locale 57 v. Commission scolaire Laurenval, [1999] R.J.D.T. 1; Université McGill v. St-Georges, [1999] R.J.D.T. 9; Entreprises Rolland Bergeron inc. v. Geoffroy, 1987 CanLII 1050 (QC CA), [1987] R.J.Q. 2331.

Statutes and Regulations Cited

Civil Code of Québec, S.Q. 1991, c. 64, ss. 617, 1218 to 1255, 1242, 1279, 1440, 1442, 1444 to 1450, 1814, 2447.

Labour Code, R.S.Q., c. C-27, ss. 22c), d), 41 [am. 1983, c. 22, s. 23], 45, 46 [repl. 1990, c. 69, s. 2], 52.2, 58 [am. 1983, c. 22, s. 28], 59, 139 [repl. 1982, c. 16, s. 5; am. 1983, c. 22, s. 93; am. 1985, c. 12, s. 93, am. 1990, c. 4, s. 232], 139.1 [am. 1982, c. 16, s. 6], 140 [repl. idem, s. 7].

Authors Cited

Barré, Alain. “La sous-traitance et l’article 45 du Code du travail après l’affaire C.S.R.O.” (1991), 32 C. de D. 179.

Beaudoin, Jean-Louis, et Pierre-Gabriel Jobin. Les obligations, 5^e éd. Cowansville, Qué.: Yvon Blais, 1998.

Brière, Germain. Donations, substitutions et fiducie. Montréal: Wilson & Lafleur, 1988.

Deleury, Édith, et Dominique Goubau. Le droit des personnes physiques, 2^e éd. Cowansville, Qué.: Yvon Blais, 1997.

Edwards, Jeffrey. La garantie de qualité du vendeur en droit québécois. Montréal: Wilson & Lafleur, 1998.

Gagnon, Robert P. Le droit du travail du Québec: pratiques et théories, 4^e éd. Cowansville, Qué.: Yvon Blais, 1999.

Jobin, Pierre-Gabriel. La vente dans le Code civil du Québec. Cowansville, Qué.: Yvon Blais, 1993.

APPEALS from judgments of the Quebec Court of Appeal, 1998 CanLII 12581 (QC CA), [1999] R.J.Q. 32, [1999] R.J.D.T. 30, [1998] Q.J. No. 3663 (QL), affirming a judgment of the Superior Court, 1994 CanLII 16212 (QC CS), D.T.E. 94T-1219, dismissing motions for evocation against judgments of the Labour Court, 1993 CanLII 14274 (QC TT), [1993] T.T. 493 and [1993] T.T. 600, upholding decisions of the labour commissioners, D.T.E. 92T-1305. Appeals dismissed, Bastarache J. dissenting in part.

Serge Benoît and Monique Lagacé, for the appellants/respondents/mis en cause Ivanhoe inc., Service d’entretien Empro inc. and la Compagnie d’entretien d’édifice Arcade ltée.

Jean-Marc Brodeur, for the appellant/respondent/mis en cause Distinction Service d’entretien inc.

Robert Laurin, for the respondent/appellant United Food and Commercial Workers, Local 500.

Benoît Belleau, for the respondent Labour Court.

English version of the judgment of McLachlin C.J. and L’Heureux-Dubé, Gonthier, Iacobucci, Major and Arbour JJ. delivered by

Arbour J. —

I. Introduction

1 These appeals were heard together with Sept‑Îles (City) v. Quebec (Labour Court), [2001] 2 S.C.R. 670, 2001 SCC 48, in which reasons are pronounced with this decision. The central issue is whether the Quebec Labour Court has adopted an interpretive policy with respect to the application of s. 45 of the Labour Code, R.S.Q., c. C‑27, regarding the operation by another of an undertaking, that is in conflict with the decisions of this Court, and more specifically with U.E.S., Local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048. For the reasons that follow, I find that the approach taken by that court is not inconsistent with the decisions of this Court and constitutes a reasonable interpretation of the provisions which that specialized agency is instructed to apply. Accordingly, the decisions of the administrative tribunals in this case should not be varied and the appeals should be dismissed.

2 The jurisdiction of commissioners and of the Labour Court in interpreting and applying s. 45 of the Labour Code is the crux of these appeals. This provision having been a subject of considerable debate in Quebec labour law, I shall reproduce it before proceeding:

45. 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.

II. The Facts

3 Ivanhoe inc. is a property management, development and investment company primarily engaged in managing shopping centres. It handled its own interior and exterior building maintenance until 1989. On May 23, 1974, the United Food and Commercial Workers union, local 500 (the “union”) was certified to represent the janitorial staff at Ivanhoe’s shopping centres in Quebec. The parties signed a number of collective agreements, including the last one which was to be in effect from May 23, 1986 to May 22, 1989. On March 6, 1989, Ivanhoe decided to contract out the janitorial services at its shopping centres to Moderne Service d’entretien d’immeubles inc. (“Moderne”), under a contract that was to run until August 31, 1991. The 68 full-time and 18 part‑time janitorial employees were transferred to Moderne.

4 The union applied under s. 45 of the Labour Code for recognition of the transfer of the certification and collective agreement to Moderne. The motion was not opposed and labour commissioner Gareau granted it in a decision dated May 22, 1991, and corrected on July 11, 1991. The union negotiated a collective agreement with Moderne that was in effect from May 22, 1989 to May 22, 1991. On July 5, 1991, when its contract with Moderne was about to expire, Ivanhoe invited bids for a new contract. Moderne did not bid, but on August 29, 1991, two days before its contract expired, it signed a collective agreement effective until May 22, 1994.

5 As a result of the bids that it received, Ivanhoe decided to engage four companies (the “contractors”): Service d’entretien Empro inc., Compagnie d’entretien d’édifices Arcade ltée, Prestige Maintenance inc. (now represented in continuance of suit by Distinction Service d’entretien inc.) and Service d’entretien Laurier enr. (now represented by 2621‑3249 Québec inc.). All of these companies specialize in janitorial services, and they are in competition with one another. Each of them signed a contract with Ivanhoe that took effect on September 1, 1991 and ended on August 31, 1993. For each of the companies, Ivanhoe was only one of a number of customers.

6 On August 31, 1991, Moderne’s contract expired and it dismissed the entire janitorial staff responsible for Ivanhoe’s buildings. None of those employees was hired by the contractors who took over building maintenance the following day. It is admitted that there is no legal relationship between Moderne and the contractors, which employed their own staff and used their own equipment. The work performed by the contractors’ employees was the same as the work that had been done for Moderne and previously for Ivanhoe.

7 On September 25, 1991, the union applied under s. 45 to have the certification and the collective agreement signed with Moderne transferred to the contractors. On January 14, 1992, Ivanhoe applied under s. 41 of the Labour Code to have the union’s certification cancelled with regard to itself.

III. Previous Decisions

A. Commissioner Bibeault (s. 45), D.T.E. 92T-1305

8 The commissioner found that the certification that originally covered Ivanhoe had to be transferred to the new contractors. In his view, subcontracting janitorial services could amount to operation by another of part of an undertaking, with the result that s. 45 of the Labour Code would apply. When the contract with Moderne expired, Ivanhoe once again became the potential employer and could transfer its certification to the contractors. On the other hand, the collective agreement that had been signed with Moderne lapsed when the contract expired, and it could not be transferred to the new contractors. When the first transfer of the operation of the undertaking terminated, the previous situation was restored, and the fresh transfer was made by Ivanhoe, rather than Moderne.

B. Commissioner Boily (s. 41), September 24, 1992

9 Commissioner Boily held that, as a result of the decision of commissioner Gareau finding that Ivanhoe’s rights and obligations had been transferred to Moderne, the certification was still in effect at Moderne when the petition for cancellation was made. The petition was therefore moot and the commissioner dismissed it.

C. Labour Court (s. 45), 1993 CanLII 14274 (QC TT), [1993] T.T. 493

10 Judge Prud’homme found that when Ivanhoe contracted out the janitorial services at its buildings it amounted, in this case, to operation by another of part of an undertaking. In view of the fact that the essential element of the agreement between Ivanhoe and its contractors was that it conferred a right to operate or a responsibility to perform janitorial services, s. 45 had to be applied, since the tests in Bibeault, supra, regarding the definition of an undertaking had been met. In Judge Prud’homme’s view, the requirement that there be a legal relationship between successive employers had also been met in this case, since when the Moderne contract expired, Ivanhoe resumed its legal authority over the part of the undertaking which had been operated by another, and transferred it to the new contractors. However, the union’s appeal regarding the transfer of the collective agreement was dismissed, since the principles on which the commissioner had relied were settled law and the union had presented no valid reason for them to be revised. In addition, Judge Prud’homme was of the opinion that there was no basis in law for the union’s alternative argument, that the last agreement signed by Ivanhoe should be transferred to the contractors.

D. Labour Court (s. 41), [1993] T.T. 600

11 Judge Prud’homme held that even though Ivanhoe no longer had any employees, it was entitled to apply for cancellation. However, granting cancellation in this case would be contrary to the underlying principles of the Labour Code, since during periods when an undertaking was temporarily operated by another, the company which had contracted out the work would be able to rid itself permanently of the certification and thus be able to take over the operation of its undertaking again, or transfer the operation afresh, with no certification. In Judge Prud’homme’s view, it would also be difficult to determine whether the union still had a majority of the employees in the bargaining unit, since there would be no employees to count. A petition for cancellation presented by an employer that had created this situation, by transferring the operation of the undertaking to another, would have to be dismissed. The possibility of a certification being binding indefinitely on an employer with no employees does not create a problem, since in that situation the certification would have no effect. The dismissal of Ivanhoe’s petition was therefore affirmed.

E. Superior Court, 1994 CanLII 16212 (QC CS), D.T.E. 94T-1219

12 Lévesque J. stated that the standard of review that applies to judicial review of decisions of labour commissioners and of the Labour Court was reasonableness. In his view, only the subsequent transfer of the operation to the contractors was in issue in this case, since the parties had agreed to the initial transfer of the operation to Moderne. Bibeault, supra, had to be distinguished, since in that case, the party which had contracted out the work had never operated the undertaking itself, unlike Ivanhoe, and most importantly because the standard of review that applied at that time was correctness. In this case, the commissioner and the Labour Court had not committed an unreasonable error in finding that the janitorial activities had been the subject of a second transfer of the operation of an undertaking, with the result that s. 45 applied. Nor was the refusal to transfer the collective agreement unreasonable. Lastly, the dismissal of Ivanhoe’s petition for cancellation was a reasonable exercise of the jurisdiction of the commissioner and the Labour Court, and there were no grounds for the Superior Court to intervene.

F. Court of Appeal, 1998 CanLII 12581 (QC CA), [1999] R.J.Q. 32

13 LeBel J.A, now of this Court, Brossard J.A. and Zerbisias J. (ad hoc) heard five other cases together with this case, all of them relating to judicial review of decisions of the labour commissioner and the Labour Court concerning s. 45 of the Labour Code (Université McGill v. St‑Georges, [1999] R.J.D.T. 9; Syndicat des employées et employés professionnels et de bureau, section locale 57 v. Commission scolaire Laurenval, [1999] R.J.D.T. 1; Syndicat des cols bleus de Ville de St‑Hubert v. Ville de St-Hubert, 1998 CanLII 12582 (QC CA), [1999] R.J.D.T. 76, leave to appeal refused, [1999] 3 S.C.R. xii; Syndicat des employés de la Communauté régionale de l’Outaouais v. Collines‑de‑l’Outaouais (Municipalité régionale de comté des), [1999] R.J.D.T. 97; and Union des employées et employés de la restauration, métallurgistes unis d’Amérique, section locale 8470 v. Ultramar Canada inc., [1999] R.J.D.T. 110). The six decisions were rendered on the same day and when read together they give a better understanding of the position taken by each of the judges who wrote reasons in the case before us.

14 More specifically, in McGill and Laurenval, supra, subcontracting of janitorial services was in issue. Zerbisias J. wrote dissenting reasons in those cases, stating that it was unreasonable to apply s. 45 to simple subcontracting of work cases. In her view, applying s. 45 to the transfer of a right to operate or of a responsibility amounted to reverting to the functional definition of an undertaking, which was rejected by this Court in Bibeault, supra. In the opinion of LeBel J.A., on the other hand, the Labour Court’s decisions did not conflict with Bibeault and were not unreasonable. Brossard J.A., like Zerbisias J., took the view that the Labour Court’s approach conflicted with Bibeault in adopting a functional definition of an undertaking and in not taking into account the question of the centrality of the transferred part of the undertaking. However, he found that the Labour Court’s decisions, while in error, were not patently unreasonable.

15 In St‑Hubert, supra, the Court of Appeal found that s. 45 did not apply to a subcontract for municipal snow removal. In the view of Zerbisias J., to find otherwise would have been contrary to Bibeault, supra, and therefore patently unreasonable. LeBel and Brossard JJ.A., on the other hand, based their decision on the fact that the union had not demonstrated diligence in pursuing its remedies under s. 45. In the last of these cases, Ultramar, supra, LeBel J.A. was of the view that the applicable standard of review was correctness, since the case had begun before the legislative amendments that changed the standard. He affirmed the evocation of the Labour Court’s decision applying s. 45 to a series of complex transactions involving the lease and sublease of a lot used to operate a service station. In the opinion of Brossard J.A., Zerbisias J. concurring, the Labour Court’s decision was in any event patently unreasonable, and it was therefore unnecessary to consider the effects of the change in the standard of review.

16 In the case before us, the Court of Appeal unanimously dismissed the appeals and affirmed the decisions of the labour commissioners and the Labour Court. However, here again, the three judges gave different reasons for the result, each of them taking the same approach as in the other decisions rendered on that date.

(a) Opinion of LeBel J.A.

17 In a remarkably thorough opinion, LeBel J.A. provided a complete analysis of the situation. He stated, first, that the standard of review must be unreasonableness or clearly irrational error. He then gave a detailed background to the decision in Bibeault, supra, and analysed the interpretive policy adopted by the Labour Court following that case. He also examined the position taken by the Superior Court with respect to the consensus in the Labour Court, and compared the Labour Court’s decisions with decisions in the other Canadian provinces. Regarding the decision concerning the transfer of certification, LeBel J.A. found that the principles applied by the labour commissioner and the Labour Court in this case did not conflict with Bibeault, since that case had never ruled out the possibility that operation by another of part of an undertaking might result in s. 45 applying to janitorial services. Furthermore, the Labour Court had applied the definition of an undertaking adopted by this Court. In the view of LeBel J.A., the Labour Court’s decision that the undertaking reverted to Ivanhoe when the contract with Moderne expired, and that operation of the undertaking was then transferred afresh to the contractors, was not unreasonable or inconsistent with the decisions of this Court.

18 In the view of LeBel J.A., the refusal to transfer the collective agreement was justified, given that the purpose of s. 45 is to protect collective rather than individual rights and that the certification and the agreement were two separate legal matters. He noted that the Labour Court does not take a blanket approach, and usually declines to impose an agreement on a subcontractor that was negotiated by its predecessor. In doing this, it is acting within the authority conferred on it by the Labour Code. Furthermore, the agreement signed with Ivanhoe had expired and it was therefore not unreasonable to decline to transfer it. Lastly, in the view of LeBel J.A., the petition for cancellation was brought outside the relevant time period and was therefore not properly before the Labour Court. On the other hand, the decision by the commissioner and the Labour Court to deny the petition was not unreasonable, since Ivanhoe did not have a sufficient interest to present a petition for cancellation, because the certification was in effect with respect to another employer.

(b) Opinion of Brossard J.A.

19 Brossard J.A. concurred in the opinion of LeBel J.A. concerning the application of Bibeault, supra, to the facts of this case and concerning the outcome of the appeals. In his view, the decisions of the commissioners and the Labour Court in this case were not patently unreasonable. However, he did not agree with his colleague’s opinion regarding the interpretation of s. 45 and of the Bibeault case. He also refused to express general approval for the jurisprudence of the Labour Court cited by LeBel J.A. For example, Brossard J.A. said that he did not approve of the complete rejection of the requirement that the part of the undertaking operated by another be essential to the main undertaking, although he believed that the weight given to that factor might vary with the facts of the case. On the question of the principles to be applied, he referred to his opinion in Ultramar, supra.

(c) Opinion of Zerbisias J. (ad hoc)

20 Zerbisias J. also believed that the appeals should be dismissed, but made it clear that her opinion should not be read as approval of the Labour Court jurisprudence cited by LeBel J.A. On that point, she preferred to refer to her opinions in the cases that the Court of Appeal had heard together with the case now before us. She stated that the question of whether s. 45 could apply to the transfer of the operation of the part of Ivanhoe’s undertaking that involved janitorial services was not in issue in this case, since at the time of the transfer to Moderne, Ivanhoe had not opposed the application of s. 45. In the view of Zerbisias J., only the legal relationship issue arose in this case. Lastly, like Brossard J.A., she observed that the centrality of the transferred part of the undertaking was, in her view, one of the factors to be considered in determining whether s. 45 applied.

V. Analysis

A. Applicable Standard of Review

24 The parties conceded that the applicable standard of review in this case is patent unreasonableness. Bastarache J., in Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 CanLII 778 (SCC), [1998] 1 S.C.R. 982, at paras. 23-38, clarified the tests to be applied in determining the proper standard of review. He stated, at para. 27, that the pragmatic and functional approach developed in Bibeault, supra, must apply and that, accordingly, the analysis must seek to determine legislative intent regarding the jurisdiction of the administrative tribunal in question. Several factors must be examined in order to determine that intent. The presence of a full privative clause is a strong indication of the intent to leave determination of the issue to the tribunal. On that point, Bastarache J. said, at para. 30:

The absence of a privative clause does not imply a high standard of scrutiny, where other factors bespeak a low standard. However, the presence of a “full” privative clause is compelling evidence that the court ought to show deference to the tribunal’s decision, unless other factors strongly indicate the contrary as regards the particular determination in question.

This Court defined the concept of a full privative clause in Pasiechnyk v. Saskatchewan (Workers’ Compensation Board), 1997 CanLII 316 (SCC), [1997] 2 S.C.R. 890, at para. 17:

A “full” or “true” privative clause is one that declares that decisions of the tribunal are final and conclusive from which no appeal lies and all forms of judicial review are excluded.

Where such a clause is present, the courts must therefore show deference to administrative decisions. The other factors to be considered are the expertise of the administrative tribunal, the purpose of the enabling legislation and of the specific provision in issue, as well as the factual or legal nature of the problem in the case at bar.

25 In this case, a rapid review of these factors clearly shows that the parties rightly agreed that the applicable standard is patent unreasonableness, the highest degree of judicial deference. The following provisions are found in the Labour Code:

139. Except on a question of jurisdiction and except when the Court is sitting in penal matters, no extraordinary recourse contemplated in articles 834 to 846 of the Code of Civil Procedure (chapter C‑25) shall be exercised and no injunction granted against an arbitrator, the Conseil des services essentiels, a certification agent, a labour commissioner or the Court acting in their official capacities.

139.1. Except on a question of jurisdiction, article 33 of the Code of Civil Procedure (chapter C‑25) does not apply to any person, body or agency mentioned in section 139 acting in their official capacities.

140. A judge of the Court of Appeal may annul summarily, upon petition, any writ, order or injunction issued or granted contrary to sections 139 and 139.1.

The Code therefore contains general full privative clauses, clearly indicating the legislative intent to leave the final disposition of all cases relating to the Code to the administrative decision-makers. With regard to the application of s. 45, the legislature has clearly expressed its intent by including an additional privative clause, set out in s. 46, which provides that the labour commissioner may “rule on any matter relating to the application of section 45” and that for such purpose he or she may “determine the applicability of that section”. In other words, the legislature has clearly indicated that it intended to give the labour commissioner exclusive jurisdiction to determine whether the conditions for s. 45 to apply are present, and accordingly, to dispose of any questions relating to whether an undertaking has been alienated or is being operated by another.

26 Furthermore, although determining whether the conditions that must be met in order to conclude that an undertaking has been alienated or is being operated by another are present may involve both civil law and labour law, because the labour commissioners are continually applying the provisions of the Labour Code to transfers of undertakings, they have developed special expertise in this regard which is adapted to the specific context of labour relations and which is not shared by the courts. In addition, it is clear that the purpose of the Code is to establish a scheme that will “promote collective bargaining as a better means of guaranteeing industrial peace and of establishing equitable relations between employer and employees” (Bibeault, supra, at p. 1103). The legislature believed that to attain that objective, a specialized tribunal that would allow for the speedy and final resolution of disputes was needed.

27 Having regard to all of these factors, it is not surprising that the Quebec Court of Appeal concluded, in Maison L’Intégrale inc. v. Tribunal du travail, 1996 CanLII 6405 (QC CA), [1996] R.J.Q. 859, leave to appeal refused, [1996] 3 S.C.R. xi, that the standard of review to be applied in reviewing decisions relating to s. 45 must be patent unreasonableness. What prompted both the Court of Appeal and this Court, in this instance, to consider the issue more closely was that in Bibeault, supra, at pp. 1091‑98, Beetz J. concluded that the applicable standard must be correctness. Beetz J. examined the purpose of s. 45 and the expertise of the labour commissioner, which he found not to extend to such civil law issues as the alienation or operation by another of an undertaking, but most importantly the wording of s. 46 as it read at that time, and concluded that the issue to be determined did not fall within the commissioner’s specific jurisdiction. However, there have been major changes since Bibeault was decided by this Court.

28 First, as I mentioned earlier, the labour commissioners have developed their own expertise in this regard; most importantly, s. 46 itself has been amended. As the Quebec Court of Appeal stated in Maison L’Intégrale, supra, at pp. 867‑69, after Bibeault was decided, the legislature wanted to make an unequivocal statement that its intent was to give the commissioner exclusive jurisdiction to determine whether an undertaking had been alienated or was being operated by another. Whereas when Bibeault was decided, s. 46 read:

46. An [sic] labour commissioner may make any order deemed necessary to record the transfer of rights and obligations provided for in section 45 and settle any difficulty arising out of the application thereof. [Emphasis added.]

Since 1990, the section provides:

46. It shall be the duty of the labour commissioner, upon the motion of an interested party, to rule on any matter relating to the application of section 45.

For such purpose, the labour commissioner may determine the applicability of that section and issue any order deemed necessary to effect the transfer of rights or obligations contemplated therein. He may also settle any difficulty arising out of the application of that section. [Emphasis added.]

29 In his analysis of the applicable standard of review, Beetz J. stresses the language used in s. 46. He stated, at p. 1091:

The first point to be mentioned is that the application of s. 45 does not result from the commissioner’s determination that the requirements of that section have been met. Section 45 applies automatically. The transfer of rights and obligations occurs as of right on the day of the alienation, operation by another or change in legal structure of the undertaking. No other conclusion can be drawn from the wording of s. 46, which I cite again:

Under this section, the commissioner’s role is limited to “recording” the transfer of rights and obligations guaranteed in s. 45. [Emphasis added.]

That is what persuaded the Court to conclude that not only was s. 46 not an additional privative clause, but it gave the commissioner the authority only to resolve administrative difficulties that might arise from the application of s. 45, which applied by operation of law and not at the discretion of the commissioner so that its application could not be affected by the general privative clauses in the Labour Code. It is immediately apparent that the new version of s. 46 is quite different and that the wording of that section, which was drafted after Bibeault, is intended to give the commissioner the express authority to determine the applicability of s. 45, and thus the authority to decide whether an undertaking has been alienated or is being operated by another.

30 The legislature has therefore extended the commissioner’s authority and a commissioner is now always acting within his or her exclusive jurisdiction when he or she determines whether an undertaking has been alienated or is being operated by another. In these circumstances, only patently unreasonable errors will result in intervention by the courts, and the only issue that arises in the case before us is therefore whether the commissioner, and the Labour Court after him, committed an error of that nature when they concluded that the certification had to be transferred and the collective agreement did not.

31 With respect to the application of s. 41 of the Labour Code, plainly, and again as admitted by the parties, by virtue of the general privative clauses in the Code and the other factors set out above, the applicable standard of review can only be patent unreasonableness.

32 It is important to bear in mind that judicial deference, which is fundamental in administrative law, is of particularly central importance in labour law, as this Court has pointed out on many occasions in the past (Canadian Union of Public Employees Local 963 v. New Brunswick Liquor Corp., 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227, at pp. 235‑36; Fraser v. Public Service Staff Relations Board, 1985 CanLII 14 (SCC), [1985] 2 S.C.R. 455, at pp. 464‑65; Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, 1990 CanLII 22 (SCC), [1990] 3 S.C.R. 644, at pp. 669‑70; Canada (Attorney General) v. Public Service Alliance of Canada, 1993 CanLII 125 (SCC), [1993] 1 S.C.R. 941 (hereinafter “PSAC”), at pp. 960‑61). Cory J., writing for the majority in Toronto (City) Board of Education v. O.S.S.T.F., District 15, 1997 CanLII 378 (SCC), [1997] 1 S.C.R. 487, stated at para. 35:

[PSAC] emphasized the essential importance of curial deference in the context of labour relations where the decision of the tribunal, like the Board of Arbitration in the instant appeal, is protected by a broad privative clause. There are a great many reasons why curial deference must be observed in such decisions. The field of labour relations is sensitive and volatile. It is essential that there be a means of providing speedy decisions by experts in the field who are sensitive to the situation, and which can be considered by both sides to be final and binding.

33 At p. 50 of the judgment appealed from, LeBel J.A. stated that the applicable standard of review was reasonableness. However, it is clear from his decision that the analysis is in fact based on the standard of patent unreasonableness: LeBel J.A. referred to the concept of clearly irrational error, an expression adopted on several occasions by this Court to define the content of the patent unreasonableness standard of review (see PSAC, supra, at pp. 963-64; Ajax (Town) v. CAW, Local 222, [2000] 1 S.C.R. 538, 2000 SCC 23, at para. 2; Centre communautaire juridique de l’Estrie v. Sherbrooke (City), 1996 CanLII 168 (SCC), [1996] 3 S.C.R. 84, at para. 11; Toronto (City) Board of Education, supra, at para. 46). He also cited with approval the decision of the Court of Appeal in Maison L’Intégrale, supra, which established that the applicable standard was patent unreasonableness (at pp. 46-47) and referred, in his examination of the content of the standard of review (at pp. 47-50), to a number of decisions of this Court relating to the standard of patent unreasonableness.

34 The principle of judicial deference and the application of the standard of patent unreasonableness mean that the Superior Court could have intervened in this case only if the decision of the Labour Court was, in the words of Cory J., again writing for the majority in PSAC, supra, at pp. 963‑64, “clearly irrational, that is to say evidently not in accordance with reason”. In order to make that determination, it is essential to fully appreciate the broader context in which the impugned decisions were rendered, and particularly the internal administrative conflicts that led to the decision in Bibeault, supra, and the reaction of the Quebec labour law authorities after that case was decided by this Court.

B. Background to Bibeault

35 The conclusions reached in Bibeault, supra, can be understood only if we bear in mind not just the specific fact situation in that case, but also the ongoing debate within the Labour Court which made it necessary for this Court to intervene. At pp. 50-53 of the judgment appealed from, LeBel J.A. did a detailed review of the approach taken by the Labour Court before Bibeault. He noted that the precursor to s. 45 of the Labour Code, s. 10a of the Labour Relations Act, R.S.Q. 1941, c. 162A, was enacted in 1961 to correct the injustices caused by the strict application of the civil law principle of privity of contract, now codified in art. 1440 of the Civil Code of Québec, S.Q. 1991, c. 64 (hereinafter “C.C.Q.”). He then pointed out, at p. 51:

[translation] The enactment of this legislation did not resolve the problems associated with the transfer of an undertaking. In fact, it raised acute problems of interpretation relating to the most fundamental concepts of the law, including the concept of operation by another, especially with respect to issues of operation by another of part of an undertaking. Quebec labour law authorities had to intervene frequently, but were unable to establish a uniform, consistent interpretive policy.

36 As explained by LeBel J.A., when the Labour Relations Board considered a case involving operation by another of part of an undertaking in Syndicat national des employés de l’aluminium d’Arvida inc. v. J.-R. Théberge ltée, [1965] R.D.T. 449, it initially decided to adopt a so‑called functional definition of an undertaking. The concept of an undertaking therefore had to be defined in terms of the work being done. This definition of an undertaking was then adopted by the Labour Court in two leading decisions, Centrale de Chauffage enr. v. Syndicat des employés des Institutions religieuses de Chicoutimi inc., [1970] R.D.T. 344, and Barnes Security Service Ltd. v. Association internationale des machinistes et des travailleurs de l’aéroastronautique, section locale 2235, [1972] T.T. 1. During the early 1980s, the court became divided on this issue, with some judges adopting instead a so‑called organic definition of an undertaking and viewing it as a set of various kinds of components — physical, human, intellectual and legal — which were used to carry on an activity (syndicat des salariés de service d’entretien v. Montcalm Carpets Specialists Ltd., [1981] T.T. 273; Entrepôts Schenker ltée v. Travailleurs canadiens de l’alimentation et d’autres industries, section locale P‑766, [1981] T.T. 420; Mode Amazone v. Comité conjoint de Montréal de l’Union internationale des ouvriers du vêtement pour dames, 1983 CanLII 3364 (QC TT), [1983] T.T. 227).

37 In Barnes, supra, the Labour Court also adopted the requirement that there be a legal relationship between the transferor and the transferee of the operation if it were to be concluded that the certification and the collective agreement had to be transferred. The subsequent decisions of the Labour Court followed this principle, declining to transfer the certification originally respecting one transferee to the next transferee when the first transfer of the operation expired. A few years later, in Jack Schwartz Service Station v. Teamsters Local Union 900, [1975] T.T. 125, the Labour Court changed its approach. In that case, the Labour Court decided that where there was a new employer, and the two undertakings were substantially the same, this was sufficient to conclude that the certification had to be transferred, even where there was no legal relationship. This principle was not unanimously accepted by all the judges of the Labour Court, which was once again significantly divided, with some of its decisions continuing to uphold the requirement that there be a meeting of minds in order for it to be concluded that a transfer resulting in the certification surviving had occurred (see Montcalm Carpets Specialists, supra).

38 LeBel J.A. described the situation that prevailed at the Labour Court just before this Court intervened in Bibeault (at p. 52), as follows:

[translation] The organic and functional definitions of an undertaking clashed at the Labour Court, as did various theories relating to the succession or substantial continuity of undertakings or the need for a contractual relationship; this was the case until Bibeault, in which the Labour Court, in a collegial decision, tried in vain to establish a common interpretive approach. In fact, the Labour Court issued six different opinions that were so divergent that one author entitled its conclusions “Un consensus à rechercher” [still seeking consensus] (Robert P. Gagnon, “L’article 45 du Code du travail après le jugement C.S.R. Outaouais”, in Marc Brière, Robert P. Gagnon and Catherine Saint‑Germain, La transmission d’entreprise en droit du travail, Cowansville: Y. Blais, 1982, p. 165).

39 It is therefore clear that at the time Bibeault, supra, was decided, the Labour Court found itself so deadlocked that no solution could apparently be reached unless the higher courts stepped in. At that point, the Labour Court had been unable to develop a coherent policy for interpreting s. 45 that would have provided a clear definition of what constitutes an undertaking and of what type of transfer is required in order for s. 45 to apply. The decision in Bibeault answered these questions and broke the deadlock, so that the Labour Court could once again function properly. That case was also based on a very particular fact situation, which had brought the disagreements within the Labour Court clearly into focus.

40 Bibeault, supra, was in fact a dispute between two labour unions. Beetz J. summarized the facts of the case at pp. 1056-58. The CSN had been granted certification in relation to two subcontractors that were responsible for janitorial services for the Commission scolaire régionale de l’Outaouais (hereinafter “CSRO”), in respect of which no certification had ever been granted, and which had never performed the janitorial services itself. In 1980, the CSRO decided to contract the janitorial services out to a new subcontractor. Shortly thereafter, the FTQ filed a petition for certification covering the new subcontractor’s employees, and at the same time the CSN sought to have the transfer of its certifications recognized. The subcontractors had never entered into any agreement between themselves, and were related only by the fact that they were operating competing undertakings of the same type. After noting the ongoing debate within the Labour Court, at pp. 1059‑65, Beetz J. stated at p. 1065:

In an attempt to resolve these contradictions in the case at bar, the Labour Court adopted the suggestion of the parties that the full bench of eleven judges should sit. As we shall see, despite the existence of a clear majority on the conclusions, this attempt had only limited success in terms of stating principles and clarifying concepts.

41 Indeed, although seven of the eleven judges agreed to affirm the conclusion of the commissioner, which was that the CSN certifications had to be transferred to the new subcontractor, they did not agree on the reasons justifying that decision (Bibeault, at pp. 1066‑76). With regard to the need for there to be a legal relationship between the two employers, five judges took the view that this was not at all a condition for the application of s. 45, one judge thought that while a relationship was necessary, it was not mandatory that it be contractual or legal, and that in the case in question it was provided by the CSRO, and another judge was of the view that the requisite legal relationship could be indirect and that the fact that the work was contracted out by the same party was sufficient in the case in question to meet that requirement. The four dissenting judges took the view that a legal relationship was essential and that it had to take the form of a consensual act to transfer the undertaking, and that this requirement had evidently not been met in the instant case.

42 On the question of the definition of the concept of an undertaking, the differences of opinion were even more significant. Four of the majority judges adopted a functional definition of an undertaking, while another took an intermediate position, adopting a pragmatic approach based on the certification, the work to be done and the place where it was to be done. Another of the majority judges said he agreed both with the functional approach and the intermediate position adopted by his colleague, while Judge Brière, also a member of the majority, adopted a different definition of an undertaking based on functions and the identity of the persons who performed them (that is, for the purpose of the application of s. 45, the employees). Finally, three of the dissenting judges adopted an organic definition of an undertaking, while one of them opted for a different approach, defining the undertaking by reference to the janitorial operations in specific schools, but finding that the fact that there had never been a certification in respect of the Commission scolaire itself was an insurmountable obstacle to the application of s. 45 in that case.

43 When presented with this decision of the Labour Court, the Superior Court granted the writ of evocation sought by the FTQ in a decision summarized by Beetz J. in Bibeault, at pp. 1076-79. The Superior Court held that the applicable standard of review had to be correctness, and stated its general agreement with the reasons of the dissenting judges. The Court of Appeal affirmed that decision.

44 It was against this backdrop that Beetz J. sought to dispose definitively of the two issues dividing the Labour Court and the parties. He made it plain that in order for s. 45 to apply, there must be a consensual legal transfer of the undertaking from one employer to another. He stated, at p. 1122:

Section 45 is based on the following premise: a specific undertaking is transferred from one employer to another. The wording of this section does not support the conclusion that rights and obligations have been transferred from one employer to another solely because each of them hires employees engaged in similar activities.

Beetz J. began by establishing, at pp. 1098‑1102, that collective bargaining had to take place in a three‑part framework consisting of an employer, an undertaking and an association of employees. When an undertaking was alienated or operated by another, the essential components of this framework therefore had to survive if it was to be concluded that s. 45 applied. One of the natural consequences of this requirement is that s. 45 can have no effect unless there is a voluntary transfer of rights between the former employer and the new employer (at pp. 1110‑20). In Bibeault, there had been no transfers among the various subcontractors, and the CSRO itself could not have transferred the operation within the meaning s. 45, since no certification had ever been issued in respect of it and it therefore had never been a part of the three-part framework that had to exist with respect to successive employers. On reading the specific facts of Bibeault, we see that the question of the legal relationship between employers was really the point on which that case turned, since a finding that there was no consensual transfer of an undertaking necessarily, according to Beetz J., made s. 45 inapplicable and disposed of the issue between the parties. In fact, in his summary of the position taken by the judges of the Labour Court, Beetz J. stated, at p. 1067:

They also were not in agreement on what is probably the chief point in dispute: for s. 45 to apply, must there be a legal relation between the old and the new employer, resulting from an agreement between them to transfer the undertaking, such that the first employer transfers a right or rights to the second? [Emphasis added.]

45 However, in Bibeault, the Court also had to decide what definition of an undertaking should be adopted for the purposes of s. 45, first, because the Labour Court was even more divided on that issue than on the legal relationship question, and, second, because according to Beetz J., it was partly the adoption of a functional definition of an undertaking that allowed the judges of the majority to exclude any necessity for a legal relationship between successive employers (p. 1110). The question of how to define an undertaking was therefore central to Bibeault, not because the Court thought that the janitorial undertaking in question could never have been the subject of a transfer that would result in s. 45 applying in other circumstances, but rather because that definition related to the central issue to be determined: the need for a consensual transfer between successive employers.

46 Beetz J. unequivocally rejected the functional approach preferred by several of the Labour Court judges (p. 1104). He opted instead for the organic definition of an undertaking that had been adopted by some of the dissenting judges. Thus, he unreservedly adopted the definition stated by one of them, Judge Lesage, later Chief Judge of the Labour Court, in a decision he rendered some time after Bibeault. Beetz J. said, at pp. 1105‑6:

Instead of being reduced to a list of duties or functions, the undertaking covers all the means available to an employer to attain his objective. I adopt the definition of an undertaking proposed by Judge Lesage in a subsequent case, Mode Amazone v. Comité conjoint de Montréal de l'Union internationale des ouvriers du vêtement pour dames, 1983 CanLII 3364 (QC TT), [1983] T.T. 227, at p. 231:

[translation] The undertaking consists in an organization of resources that together suffice for the pursuit, in whole or in part, of specific activities. These resources may, according to the circumstances, be limited to legal, technical, physical, or abstract elements. Most often, particularly where there is no operation of the undertaking by a subcontractor, the undertaking may be said to be constituted when, because a sufficient number of those components that permit the specific activities to be conducted or carried out are present, one can conclude that the very foundations of the undertaking exist: in other words, when the undertaking may be described as a going concern. In Barnes Security, Judge René Beaudry, as he then was, expressed exactly the same idea when he stated that the undertaking consists of “everything used to implement the employer’s ideas”.

[E]ach case is unique in terms of adding a number of components to determine the foundations of the undertaking, in whole or in part. It is not always necessary for the movable and immovable property to be transferred, for specialized technical resources to be transferred, for inventory and know‑how to be included in the transaction. There must however be adequate resources, directed towards a certain activity by the first employer, which are used by the second in an identifiable way for the same purposes in terms of the work required from employees, even if the commercial or industrial objective is different.

Precisely because of the need to identify in the second employer's operations the same use of operating resources transferred by the first employer (otherwise there would simply have been a transfer of physical assets which can be used for any purpose), it was found to be desirable to simplify matters and to say that, once the same activities were carried on by a second employer, it followed that the latter must have acquired sufficient operating resources from the first to ensure continuity of the undertaking. Some have gone even further and, seeking simple guidelines and accessible formulas, have purported to see passages in certain judgments as affirming a so‑called occupational theory of the undertaking. This is an indirect way of getting around the problem of the legal relation, by reducing or indeed eliminating the practical necessity for a legal relation in the continuity of the undertaking.

47 Hence, it is in a very specific context, in terms both of the fact situation and of the case law which existed, that this Court held, in Bibeault, that s. 45 cannot apply where work has been contracted to a series of subcontractors by the same party, in respect of which no certification has ever been granted. The conclusions stated by Beetz J. regarding the definition of an undertaking and the legal relationship that must exist between the former employer and the new employer must be understood in that context, and this makes it easier to understand the influence of the decision in Bibeault on the case at bar.

C. The Present Situation and the Impugned Decisions

48 Bibeault put an end to the debate that had divided the Labour Court. In the judgment here appealed from, LeBel J.A. conducted a thorough examination of the cases decided by the Labour Court after Bibeault. He explained that the Labour Court has developed an interpretive policy to be used for deciding difficult cases involving the transfer of operation of part of an undertaking, especially in service sectors like janitorial work (at pp. 58-62), and also to be used to resolve cases in which work had been contracted to a series of different subcontractors by the same party, in respect of which there had originally been a certification granted (pp. 68-73). LeBel J.A. summarized the present situation as follows (at p. 58):

[translation] Since the decision of the Supreme Court of Canada in Bibeault, the Labour Court has succeeded in defining a consistent interpretation of sections 45 and 46 L.C., particularly in terms of how they apply in the janitorial services sector, except in the case of one of its members, Judge Brière. . . .

49 After Bibeault was decided by this Court, the Labour Court sought to apply the organic definition of an undertaking to cases where operation of part of an undertaking had been transferred, for which express provision is made in s. 45 of the Labour Code. As LeBel J.A. explained, the Labour Court developed a practically unanimous approach in this regard, which requires, most importantly, that the definition of an undertaking be adapted to various kinds of workplaces and types of undertaking. This means that the essential elements from which it may be determined that an undertaking or part of an undertaking has been transferred will vary depending on the undertaking in question. In all cases, sufficient elements must be present in the new employer’s business so that the transferor’s undertaking, or part of that undertaking, may be identified as being present in the new employer’s business, under the organic definition of an undertaking.

50 Taking as a starting point the comments made by Judge Lesage in Mode Amazone, supra, which were cited with approval by Beetz J. (Bibeault, at pp. 1105-6), suggesting that an organic definition of an undertaking did not preclude the application of s. 45 to transfers by subcontract, the court developed tests that may be used to determine in what circumstances subcontracting will result in transfer of the certification under s. 45.

51 In a series of decisions concerning transfer of the operation of all or part of an undertaking engaged in service activities, the court held that one of the elements of an undertaking that must be present in the transferee’s business, in order to conclude that s. 45 applies, in addition to similarity of functions, which is still relevant, is the right to operate, that is, the right to perform specific duties at a specific location for a specific purpose (Vitriers-travailleurs du verre, section locale 1135 de la Fraternité internationale des peintres et métiers connexes v. Vetroform inc., 1989 CanLII 6889 (QC TT), [1990] T.T. 514; Syndicat des travailleurs de l’énergie et de la chimie, section locale 115 v. Fornet inc., [1991] T.T. 413; Syndicat des employés du Cégep du Vieux‑Montréal v. Clair et Net ltée, [1992] T.T. 85; Syndicat des employés du Cégep du Vieux‑Montréal v. Service d’entretien d’immeubles Staff 2000 inc., 1993 CanLII 14246 (QC TT), D.T.E. 93T‑665 (L.C.); Gatineau (Ville de) v. Syndicat des cols bleus de Gatineau, 1992 CanLII 12622 (QC TT), [1992] T.T. 599; Syndicat des employés des commissions scolaires de la régionale Chauveau v. Groupe Admari inc., [1991] T.T. 351; Université McGill v. Union des employées et employés de service, section locale 800, 1994 CanLII 16136 (QC TT), D.T.E. 95T‑296 (L.C.); Entreprises Chando‑net enr. v. Union des employées et employés de service, section locale 800, 1992 CanLII 12656 (QC TT), [1992] T.T. 620).

52 As part of its examination of the concept of transfer of the operation of part of an undertaking, the Labour Court also developed a definition of the concept of part of an undertaking, as discussed by LeBel J.A. (pp. 60-62). The Labour Court held that a component of an undertaking that was capable of sufficient autonomy so that it could carry on its intended activities outside the main undertaking, even though it did so in association with it, was a part of the undertaking the transfer of the operation of which could result in the application of s. 45. Although it need not necessarily be viable in a completely independent manner, the part of the undertaking operated by another must itself comprise an organized economic entity with a certain management authority that is independent of the directives of the main undertaking. It is not necessary that the transfer of operation relate to a so-called essential part of the undertaking; it need only concern a component that is one of the elements which make it possible for the main undertaking to achieve its objectives. The activities of the part of the undertaking operated by another must also be part of the usual, as opposed to exceptional, activities of the transferor undertaking.

53 With respect to the consensus reached by the Labour Court regarding subcontracting and the definition of an undertaking or part of an undertaking, LeBel J.A. said (at p. 61):

[translation] For more than 30 years the Labour Court and, before it, the Quebec Labour Relations Board, have recognized that an employer’s janitorial services comprise an element of the undertaking that can be operated by another within the meaning of section 45 L.C. Furthermore, Judge Lesage of the Labour Court pointed out that the contrary interpretation would limit the collective rights of the employees hired to perform the peripheral activities of an undertaking. Their certifications and their rights under collective agreements would not be as solidly protected as those of employees hired to perform activities described as central (Luc Construction inc. v. Syndicat des employés de Ville de Brossard, 1992 CanLII 12377 (QC TT), [1992] T.T. 589, 596; Ville de Gatineau v. Syndicat des cols bleus de Gatineau, 1992 CanLII 12622 (QC TT), [1992] T.T. 599, 607).

He went on to say (at p. 62):

[translation] This interpretation of section 45 L.C. regarding the definition of an undertaking in the analysis of the idea of operation by another of part of the undertaking now amounts to a genuine interpretation by the Labour Court. Only one judge, Judge Brière, differs; however, he concedes that his colleagues’ position does not involve patently unreasonable error. . . .

Lastly, regarding the position of Judge Brière, LeBel J.A. explained (at p. 62):

[translation] That position is rejected by the Labour Court as a whole and cannot be regarded as a tendency that divides the Court as it was during the period preceding Bibeault.

54 On the question of the need for a legal relationship between successive employers, LeBel J.A. said, at pp. 67-73, that the Labour Court had followed Bibeault, but had soon found that not every situation could be resolved by applying the principles laid down in that case. It was often the case that an employer to which a certification applied would subcontract the operation of part of its undertaking on a temporary basis. When the transfer expired, the employer could take back the operation of the part of the undertaking in question, or transfer it afresh to another subcontractor, as more often happened. The Labour Court had to determine whether this practice could terminate the certification when the first transfer expired, or when the second transfer to another employer took place. It was in this context that the Labour Court developed the theory of retrocession. In Coopérants (Les), Société mutuelle d’assurance‑vie v. Syndicat des employés de coopératives d’assurance‑vie, 1987 CanLII 6426 (QC TT), D.T.E. 87T‑300 (L.C.), Judge Lesage stated that when the operation of part of an undertaking was transferred, the transferor employer was potentially still in charge of the undertaking and was bound by a temporarily unusable certification. When the transfer terminated, the previous situation was restored and the transferor once again became bound by the original certification, which it could transmit again if it chose to make a new transfer of operation (see Collège d’enseignement général et professionnel de Limoilou v. Syndicat du personnel de soutien du Collège de Limoilou, L.C., No. 200‑28‑000041‑90, October 11, 1990). It was also held in the leading case of Syndicat des travailleurs du Holiday Inn Ste‑Foy v. Prime Hospitality inc., 1990 CanLII 10757 (QC TT), [1991] T.T. 40, signed by Chief Judge Morin, that the certification must be transferred to all of the successive subcontractors where the original employer was covered by that certification and transferred the operation afresh when each subcontract expired. That principle was subsequently applied consistently by the Labour Court, inter alia in Conciergerie C.D.J. (Québec) inc. v. Fraternité canadienne des cheminots, employés des transports et autres ouvriers, section locale 277, 1992 CanLII 12404 (QC TT), D.T.E. 92T‑1043, and Syndicat des employés de la Ville de Brossard v. Services d’entretien Fany inc., 1995 CanLII 15569 (QC TT), [1995] T.T. 423.

55 Once again, Judge Brière took a different position from his colleagues’, holding that retrocession could apply only if the transferee executed a true instrument of transfer to the original transferor when the transfer of operation expired. However, with respect to Judge Brière’s position as compared to his colleagues’, LeBel J.A. said (at p. 72):

[translation] That position is still isolated within the Labour Court, which we note takes the position that the transferor employer, being still the potential employer during the period of the transfer, once again becomes the employer within the meaning of the Labour Code when the transfer terminates.

56 Thus, as was the case for transfers of the operation of part of an undertaking in the service sector, we see that there is a consensus in the Labour Court regarding the legal relationship that is needed in order for the certification to be passed on to the successive subcontractors of the employer to which it originally applied.

57 In fact, the only decision-making authority in Quebec that seems to be genuinely divided at present on the issues that concern us is the Superior Court. As LeBel J.A. explained in the judgment a quo (at pp. 62-64), some members of that Court regard the consensus reached by the Labour Court as a repudiation of Bibeault and are therefore inclined to evoke the decisions of the Labour Court (for example, For‑Net inc. v. Tribunal du travail, 1992 CanLII 12645 (QC CS), [1992] R.J.Q. 445; Commission scolaire Laurenval v. Lalonde, 1997 CanLII 9138 (QC CS), [1997] R.J.Q. 983). On the other hand, some judges of the Superior Court believe that the approach taken by the Labour Court is within its exclusive jurisdiction and that there is nothing about that approach that would justify intervention by the superior courts (see Rosemère (Ville de) v. St‑Arnaud, D.T.E. 97T‑1039; Entreprises Chando‑net enr. v. Morin, Sup. Ct. Quebec, No. 200‑05‑002218‑928, December 23, 1992).

58 Hence it is plain that the situation in the Labour Court at present is completely different from the situation in that court immediately before Bibeault. Not only has the standard of review changed, but, after the decision in Bibeault, the Labour Court has developed interpretive policies regarding the two issues that divided it at the time that are accepted and followed by virtually all of its members. What we find is not ongoing debate and paralysis, but the effective functioning of the administrative bodies responsible for applying s. 45 of the Labour Code.

59 This Court has stressed the importance of the consensus positions adopted by administrative tribunals. Consensus allows for a degree of consistency and predictability in the law that fosters the equitable resolution of administrative disputes. In Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles), 1993 CanLII 106 (SCC), [1993] 2 S.C.R. 756, L’Heureux‑Dubé J., for the Court, stated, at p. 784:

While the analysis of the standard of review applicable in the case at bar has made clear the significance of the decision‑making autonomy of an administrative tribunal, the requirement of consistency is also an important objective. As our legal system abhors whatever is arbitrary, it must be based on a degree of consistency, equality and predictability in the application of the law.

Also, in Tremblay v. Quebec (Commission des affaires sociales), 1992 CanLII 1135 (SCC), [1992] 1 S.C.R. 952, Gonthier J. wrote on behalf of the Court, at p. 968:

[T]he objective of consistency responds to litigants’ need for stability but also to the dictates of justice. As the Commission’s decisions are not subject to appeal, it is the Commission itself which has the duty of preventing inconsistent decision‑making.

60 Accordingly, while lack of unanimity is not a sufficient basis for the courts to intervene despite the high standard of patent unreasonableness, it seems clear that, in applying that standard of review, the existence of a settled consensus in a specialized administrative tribunal acting within its jurisdiction should be a factor in favour of a very high degree of deference on the part of the superior courts. In a situation like this, judicial deference makes it possible both to respect the decision‑making autonomy of administrative tribunals and to ensure consistency and predictability of the law. This ideal balance should only be disturbed by the superior courts where there are clearly absurd or irrational results.

(a) Application of Section 45 in the Case at Bar

61 An analysis of the applicable principles and of the findings in Bibeault regarding the definition of an undertaking and the requirement that there be a legal relationship between the former employer and the new employer leads to the conclusion that the decisions of commissioner Bibeault and Judge Prud’homme transferring the certification were neither patently unreasonable nor in conflict with the decisions of this Court.

(i) Definition of an Undertaking

62 As I noted earlier, the main issue in Bibeault involved the legal relationship rather than the definition of an undertaking, although the Court also thought it necessary to dispose of the latter point. It is important to note at the outset that if Beetz J. had thought that it was impossible for s. 45 to apply to a janitorial services subcontract situation, it would have been pointless to analyse what was the crux of the matter in Bibeault: the legal relationship. As Judge Lesage, then Associate Chief Judge, pointed out in Luc Construction inc. v. Syndicat des employés de Ville de Brossard, 1992 CanLII 12377 (QC TT), [1992] T.T. 589, at p. 596:

[translation] I do not hesitate to say that at every stage in the seven years of the proceedings in this case relating to the C.S.R.O., all of the lawyers and judges consistently took it for granted that if the school board had performed its own janitorial services and there had been a certification granted in respect of it in that regard, section 45 would have applied to all of its successive subcontractors starting from when it ceased to perform the work itself.

In the judgment a quo, LeBel J.A. expressed that idea as follows (at p. 54):

[translation] Although the Supreme Court found in Bibeault that the element of continuity of the undertaking had not been established because of the absence of a voluntary transfer, it did not decide that section 45 L.C. could not apply to activities like janitorial services. Nor did it rule out the possibility of a transfer of operation of part of an undertaking. On the contrary, in discussing the problem of continuity, it seems to have taken for granted that the operation of part of an undertaking may be transferred, including in this sector. If it had thought that the transfer of operation of part of an undertaking, especially a janitorial services undertaking, were excluded from the application of section 45 L.C., that conclusion would have meant that it did not even have to consider the problem of continuity.

63 Indeed, a reading of Bibeault shows that when the issue was examined from the standpoint of the transfer of an undertaking between subcontractors, the only possible transfer in that case, since no certification had originally been granted in respect of the CSRO, this Court expressly recognized that the application of s. 45 to the transfer of part of a janitorial services undertaking was possible. Beetz J. stated, at p. 1121:

In the case at bar, only an alienation or agreement to operate made by Netco or MBD in favour of Services Ménagers Roy of that part of their undertaking concerned with janitorial services in the C.S.R.O. schools would have caused a transfer of rights and obligations to be effected under s. 45 between Netco and MBD on the one hand and Services Ménagers Roy on the other. [Emphasis added.]

Beetz J. clearly explained that the fact that no certification had ever been granted in respect of the CSRO was, in his view, the main obstacle to the application of s. 45. He stated at pp. 1117‑19:

For the purposes of interpreting s. 45, the requirement of a relationship of control between the employer and the undertaking seems to me to lead inevitably to two conclusions. First, the undertaking which is alienated or operated by another must be that of the employer in respect of whom the certification is issued or with whom the collective agreement is concluded. Second, the alienation or agreement must occur between the previous and the new employer.

The C.S.R.O. is not, and has never been, an employer as defined by s. 1 of the Labour Code:

1. . . .

(k) “employer” ‑‑ anyone, including Her Majesty, who has work done by an employee;

The mere right to engage in an activity is not a basis for concluding that an undertaking exists, while that right has neither taken concrete form through the allocation of personnel nor been formally recognized in the certificate of certification.

The only janitorial service undertaking that can be in question here is that of the subcontractors, that is, of the “employers”, and the conclusion of the majority of the Court to the contrary, in view of the wording of s. 45, has rightly occasioned surprise (R. P. Gagnon, “L’article 45 du Code du travail après le jugement C.S.R. Outaouais”, loc. cit., at p. 156). As there was no link between the schoolboard and the janitorial service undertaking, it follows that the C.S.R.O. could neither alienate nor confer a right to operate it, nor, as Judge Morin maintained, be the source of a legal relation between the subcontractors in question. [Emphasis added.]

64 In addition, the reasons of Beetz J. contain numerous passages indicating more generally that this Court did not intend, in that decision, to exclude subcontracting from the application of s. 45. For example, at pp. 1059‑60, Beetz J. reproduced a passage from Adam v. Daniel Roy Ltée, 1983 CanLII 147 (SCC), [1983] 1 S.C.R. 683, at pp. 688‑89, in which Chouinard J., for the Court, outlined the history of s. 45. On the question of the reasons that prompted the enactment of the precursor to s. 45, s. 10a of the Labour Relations Act, Chouinard J. stated:

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 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. [Emphasis added.]

Furthermore, when he adopted the definition of an undertaking developed by Judge Lesage in Mode Amazone, supra, Beetz J. also cited with approval, at p. 1105, the statement that [translation] “[m]ost often, particularly where there is no operation of the undertaking by a subcontractor, the undertaking may be said to be constituted . . . because a sufficient number of those components that permit the specific activities to be conducted or carried out are present” (emphasis added). It is therefore clear that the decisions of this Court do not rule out applying s. 45 to cases of subcontracting in general, any more than to cases of subcontracting of janitorial services, since the Court indicated, on the contrary, that s. 45 may apply in the appropriate circumstances.

65 Whether all or part of the operation is transferred, the definition of an undertaking for the purposes of s. 45 cannot be restricted to a list of functions, but rather must be consistent with the organic approach adopted by Beetz J. in Bibeault, supra. On the other hand, it is also not possible to completely ignore similarity of functions in the analysis to determine whether the operation has been transferred. In that regard, Beetz J. wrote, at p. 1101:

Each undertaking consists of a series of different components which together constitute an operational entity. It goes without saying that one of these components is the work done in the undertaking; but the specific identity of the undertaking is also determined by its particular physical, intellectual, human, technical and legal components. [Emphasis added.]

He went on to say, at p. 1107:

I repeat that similarity of functions is necessary to determine whether the essential elements of the undertaking continue to exist, but it is a mistake to make this the absolute criterion for applying s. 45. In general this criterion does not allow a distinction to be made between two rival undertakings. Similarity of functions as such could only indicate continuity in an undertaking to the extent that the undertaking in question has no other special characteristic.

Instead of an unwarranted focus on a single factor, the test of continuity in an undertaking requires identification of the essential elements of the undertaking, which must be found to exist to a sufficient degree in the new employer’s operations. Each component must be weighed according to its respective importance. If the clientele of a certain undertaking is by nature fluid, the fact that the new purchaser has kept none of his predecessor’s customers will not be significant. On the other hand, an undertaking whose primary characteristic is exclusive equipment will be transferred to a new employer only in so far as the latter has acquired inter alia the equipment in question. [Emphasis added.]

66 The principle set out in Bibeault that the weight to be given to the different factors to be considered, based on the organic definition of an undertaking, varies depending on the specific circumstances in an undertaking or an economic sector, has been adopted and applied in the subsequent decisions of this Court. In Lester, supra, the Court considered a provision that was, for our purposes, similar to s. 45, and that was in force in Newfoundland: s. 89(1) of the Labour Relations Act, 1977, S.N. 1977, c. 64. McLachlin J., as she then was, for the majority, noted that the criteria for identifying an undertaking and concluding that it has been transferred may vary depending on the industry in question; at p. 677, she said:

No single factor is determinative, since factors which are sufficient to support a successorship finding in one type of industry may be insufficient in another. . . .

McLachlin J. reviewed the responses of labour boards to the construction industry, and noted, at p. 678, that application of traditional factors to the construction industry may “render it easy for a contractor to erode the protection which successorship provisions are meant to provide for bargaining rights”. She then explained, also at p. 678:

In response to this type of tactic, labour boards began to apply different tests when examining successorship in the construction context.

67 In Lester, McLachlin J. took the view that even the specific tests applied by boards in the construction industry had not been followed. It was for this reason, and not because it is impossible to apply different tests in a specific industry or to conclude that a transfer has occurred solely on the grounds of a limited number of factors, that McLachlin J. found, at p. 693, that it was patently unreasonable in that case to apply s. 89(1) of the Labour Relations Act, 1977. This Court has therefore recognized that administrative tribunals charged with applying provisions like s. 45 of the Labour Code enjoy wide discretion in determining and weighing the factors that apply in defining an undertaking, and are at liberty to develop specific tests to respond to the situation in a given industry.

68 This principle was also affirmed quite recently in Ajax, supra. In that case, the Town of Ajax had transferred the operation of its transit system to a private company, Charterways Transportation Ltd. The respondent union was certified with Charterways to represent the employees in question. The Town of Ajax, in respect of which no certification had ever been issued for the transit system, unilaterally decided to terminate Charterways’ contract and take over the operation of its transit system itself. Charterways was forced to lay off the employees in question, a significant number of whom were hired by the Town to perform the same duties. McLachlin C.J., for the majority of this Court, affirmed the decision of Goudge J.A., for the Ontario Court of Appeal (Ajax (Town) v. National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (CAW‑Canada), Local 222 (1998), 1998 CanLII 7179 (ON CA), 41 O.R. (3d) 426), holding that the decision of the Ontario Labour Relations Board that the certification had been transferred was not patently unreasonable. The applicable legislation, s. 64 of the Labour Relations Act, R.S.O. 1990, c. L.2, as amended by S.O. 1992, c. 21, s. 29, was, once again, similar to s. 45 of the Labour Code for our purposes.

69 The decision of the Court of Appeal contains the following passage, at p. 433:

The Board found that the scope of the business engaged in by Charterways for Ajax consisted primarily of the provision of this skilled work force to the Town and that therefore this work force could be considered the most valuable asset of that business. The importance to the Town of the continuity and stability of this work force is reflected in the terms of the contract between the parties and in the results of the hiring done by the Town when it took back the operation of the transit system.

In essence, the Board found that what was transferred was not just the work formerly done by the Charterways employees nor the employees themselves. There was the added value that came with the continuity, experience and stability of this work force. Hence, there was a reasonable basis for the finding that what was transferred to Ajax was a significant part of the business which Charterways conducted for Ajax. This finding was not patently unreasonable.

Once again, we see that this Court recognizes that the tests that are to be applied in defining the concept of an undertaking, in the context of the transfer of certification, vary with the specific circumstances of each case. The transfer of a limited number of components, such as the employees and their functions, may be sufficient, pursuant to an organic definition of an undertaking, where those components are significant in comparison with the others.

70 It is therefore clear that neither Bibeault, supra, nor the subsequent decisions of this Court establish a rigid test for identifying an undertaking or part of an undertaking for the purpose of applying s. 45 of the Labour Code or similar provisions. The only requirement that those decisions impose is that an organic rather than a functional definition of an undertaking be adopted, although in some cases similarity of functions may still be decisive, where the undertaking has no other special characteristics (Bibeault, at p. 1107).

71 With regard to subcontracting of janitorial services, after Bibeault, the Labour Court developed tests to be used in order to make consistent determinations as to whether the operation of part of an undertaking has been transferred. The specific criterion of the transfer of a right to operate, combined with the similarity of the functions that form part of the usual activities of the undertaking, may be used to identify the cases in which the certification must be transferred. This criterion does not conflict with the definition of an undertaking adopted in Bibeault. On the contrary, Beetz J. specifically anticipated this possibility. At pp. 1115‑16, in examining the definition of operation by another in civil law, he said:

The intent to give up the right of ownership or the right to operate an undertaking is thus essential to the existence of an alienation or operation by another. This intent may be either immediate or conditional: it suffices that the holder of the rights in the undertaking consents to the acquisition of the ownership of the undertaking or to its operation by another.

In 1970, in Centrale de Chauffage, supra, Associate Chief Judge Quimper gave a definition of the words “operation by another” which has become classic (at p. 239):

[translation] The words operation by another . . . cannot be interpreted in the limited sense of the granting of a privilege, benefit or favour. Rather it must be given a broad meaning capable of embracing every kind of subcontract, otherwise it would be meaningless.

For there to be operation by another, therefore, two conditions must exist:

(1) the transfer of operations to a third party must originate within the framework of the undertaking; [Emphasis added by Beetz J.]

(2) the work transferred must be covered by a collective agreement or certification.

Some two years later, Judge Beaudry also concluded in Barnes Security Service Ltd. v. Association internationale des machinistes et des travailleurs de l'aéroastronautique, local 2235, [1972] T.T. 1, at p. 12, that a legal relation must exist:

[translation] In interpreting the words “operation by another” there does not appear to be any conflict between the English and French meanings. Neither assumes the idea of a sale, assignment or transfer of movable or immovable property or of rights. On the contrary, these expressions indicate the involvement of a third party in the management, administration or performance of the operations of the undertaking, in whole or in part, by gratuitous or onerous contract. [Emphasis added.]

In my view, these passages make it clear that the analysis done by Beetz J. envisages the possibility that operation by another of an undertaking may be thought of as the transfer of a right to operate. Beetz J. certainly did not rule out this concept; rather, he said that s. 45 could have been applied in Bibeault if there had actually been a mutual agreement between the successive employers concerning transfer of a right to operate the undertaking in question.

72 As Bastarache J. says at para. 143, a janitorial services undertaking may in fact consist of one or more elements, apart from the functions, which could be transferred. In my view, however, the labour commissioner and the Labour Court had the authority, by virtue of the Labour Code and the decisions of this Court, to assess the respective importance of the various components of the undertaking and to conclude, in the circumstances with which we are concerned, that the transfer of a right to operate, combined with the transfer of functions, was sufficient to result in s. 45 being applied, under the organic definition of an undertaking.

1. The Centrality of the Part of the Undertaking Operated by Another in Relation to the Purpose of the Main Undertaking

73 At p. 63 of the judgment a quo, LeBel J.A. noted that some Superior Court judges have interpreted Bibeault to require that the part of the undertaking operated by another be essential to the purposes of the undertaking in order for it to be possible for the certification to be transferred. On this point, LeBel J.A. stated (at p. 60):

[translation] Having adopted a flexible concept both of the idea of an undertaking and, most importantly, of the concept of operation by another of part of an undertaking, the Labour Court logically rejected the theory of the purpose of the undertaking, according to which section 45 L.C. does not apply to operation by another of an activity like janitorial services since it is allegedly not an integral or essential part of the transferor’s undertaking. Since according to this approach it is not connected with the purpose of the undertaking and is not directly involved in generating profits or in the actual operation of the undertaking, section 45 L.C. would not apply to it.

74 LeBel J.A. was of the view that this requirement was not adopted in Bibeault (p. 54). On the contrary, that case presupposes that a transfer of the operation of a part of an undertaking involving janitorial services is possible in the education sector, even though that activity is not directly related to the purpose of the undertaking.

75 I do not believe that this Court has ever stated that the only instance in which a certification will be transferred is where the operation of an essential part of an undertaking is transferred. In Bibeault, supra, at p. 1107, Beetz J. did refer to continuity or preservation of “the essential elements” of the undertaking, and it was in that context that he said that the importance of the various elements will vary with the circumstances, so that, for example, the fluidity of the clientele could make this element lose all significance. When Beetz J. referred to the essential elements of the undertaking, clearly he meant the various elements that may be used to characterize an undertaking, such as its activities, employees, equipment or know-how. At that time there was simply no need to determine whether, where part of the operation was transferred, the portion of the activities transferred had to be essential to the purpose of the undertaking as a whole. The only requirement laid down by Bibeault is actually that the elements that characterize the essence of the part of the undertaking in question be transferred. That case does not limit transfer of the operation of part of an undertaking to cases in which the central parts of the undertaking are transferred.

76 In Lester, supra, McLachlin J. said, at p. 676, concerning the requirements that apply with respect to the transfer of part of an undertaking in Canadian law, that “[r]ather, a discernable part of the business must be disposed of” (emphasis added). That case therefore also does not adopt a test of necessity in relation to the purpose of the undertaking as a whole.

77 In the case at bar, Judge Prud’homme concluded, at pp. 500-501, that janitorial services are an essential part of the undertaking in that, while they are not the most important part, they contribute with the other activities to the purpose of the undertaking and are permanently, rather than exceptionally, associated with the undertaking. That approach in no way conflicts with Bibeault, supra, nor is it inconsistent with the subsequent decisions of this Court.

2. The autonomy of the Part of the Undertaking Operated by Another in Relation to the Main Undertaking

78 Where the main characteristic of the part of the undertaking operated by another consists, as it does in this case, of the specific right to operate on the premises of the main undertaking, it clearly cannot enjoy wholly autonomous existence. In Lester, supra, McLachlin J. briefly considered the issue of the degree of autonomy the transferee must receive in order to conclude that a transfer of an undertaking has in fact taken place. At pp. 676‑77, she explained the generally accepted position in Canadian law:

As Adams, in his text, Canadian Labour Law (1985), at p. 414, states in concluding a review of the law from various jurisdictions: “In virtually all cases where a sale of part of a business has been found, a separate and identifiable part of the predecessor’s operations has been transferred”. Adams continues at p. 415:

What is clear from all these cases is that what must be transferred is a portion of the business capable of being defined and identified as a functioning entity that is viable in itself or sufficiently distinguishable to be severable from the whole.

Because a business is not merely a collection of assets, the vital consideration “is whether the transferee has acquired from the transferrer a functional economic vehicle”: Metropolitan Parking Inc., supra, at p. 209.

79 In interpreting an enactment that refers to transfer of the operation of part of an undertaking, the Labour Court has developed a specific approach to the autonomy test. LeBel J.A. described the court’s reasoning as follows (at p. 60):

[translation] Where there is a transfer of operation of part of an undertaking, a close association remains, even though the work is now done under the direction of another employer. . . .

The test of the creation of a viable, functional or operational economic entity, which was used, for example, in the decision of the Ontario Labour Relations Board in Canadian Union of Public Employees and Metropolitan Parking Inc. (1980) 1979 CanLII 815 (ON LRB), 1 C.L.R.B.R. 197 and in Lester (W.W.) (1978) Ltd., is not understood in strictly economic terms. Rather, it is analysed on the basis of the cohesion of the components of the part of the undertaking, their constitution as an autonomous and organized economic entity generating activities or requiring the hiring of staff (Syndicat national des employés municipaux d’Iberville v. Ville d’Iberville, T.T. Montréal 1991 CanLII 11398 (QC TT), 500-28-000011-916, May 6, 1991 (D.T.E. 91T‑712), p. 21 of the judgment). In the case of support services benefiting the entire undertaking, the view of the Labour Court is that the Labour Code does not require that the transferred part of the undertaking be capable of being sold or be completely economically viable as an autonomous unit (Id., p. 7 of the judgment; Syndicat des employés des commissions scolaires de la régionale Chauveau (C.S.N.) v. Groupe Admari inc., [1991] T.T. 351, 357-58).

80 In the view of the Labour Court, therefore, [translation] “it is of the essence of operation by another of part of the undertaking that its activities continue to be carried on within the fold of the central undertaking that provides it with its identity”, as Judge Lesage, then Associate Chief Judge, said in Luc Construction, supra, at pp. 592‑93. However, the Labour Court will still take the autonomy test into account. LeBel J.A. wrote (at p. 62):

[translation] In the view of the Labour Court, however, the concept of operation by another of an undertaking requires that a sufficient degree of autonomy be given to the transferee, which must be legally independent and be responsible for the work performed by its employees, even if it is subject to administrative or legal control under the contract by which the operation was transferred.

81 That is the approach that Judge Prud’homme adopted in this case, at pp. 500-501, in concluding that the operation of the part of Ivanhoe’s undertaking concerned with janitorial services had been transferred but was still integrated into the main undertaking, and was directly involved in its activities. Otherwise, there could be no transfer of the operation of part of an undertaking’s support activities. That approach is a reasonable interpretation of s. 45 which does not conflict with Bibeault, supra. Furthermore, the reasoning of the Labour Court is a reasonable adaptation of the tests developed by this Court in its analysis of the legislation in force in the other Canadian provinces to Quebec law. That interpretation falls within the specialized jurisdiction of the Labour Court and allows for the rational application of s. 45 in the respect of the transfer of the operation of the undertaking’s support activities.

(ii) Legal relationship

82 The determination that the certification had to be transferred to the four new contractors when the contract with Moderne expired does not conflict with the requirement that there be a legal relationship between successive employers, which was laid down in Bibeault, supra. With respect to the theory of retrocession developed by the Labour Court, LeBel J.A. wrote, at p. 69:

[translation] The approach taken by the Labour Court does not seem, first, to have been ruled out by Bibeault. As noted here, that case involved a situation in which certification had been granted only with respect to the subcontractor. In this case, the certification was first granted in respect of Ivanhoe itself (Alain Barré, “La sous-traitance de l’article 45 du Code du travail après l’affaire C.S.R.O.”, (1991) 32 C. de D. 179, 216). [Emphasis added.]

This is indeed a fundamental factual distinction as a result of which we may not treat this case as simply involving a direct application of the principles laid down in Bibeault.

83 As Professor Barré stated (“La sous‑traitance et l’article 45 du Code du travail après l’affaire C.S.R.O.” (1991), 32 C. de D. 179, at pp. 223‑24), the theory of retrocession, according to which a certification originally granted in respect of the transferor remains with it, but is temporarily inactive during the period of operation by another and is then transferred to the successive subcontractors, was developed by the Labour Court well before Bibeault, supra. Before the 1975 decision in Jack Schwartz, supra, the Labour Court required that there be a legal relationship between successive employers. When the certification was originally granted in respect of a subcontractor, the Labour Court was of the view that this requirement prevented s. 45 from applying when there was a transfer to a new subcontractor. On the other hand, where the certification was initially granted in respect of the transferor of the operation, the court was of the view that it had to be transferred to all successive subcontractors by virtue of the theory of retrocession (see Union des employés de service, section locale 298 v. Syndicat national des employés de la Commission scolaire régionale de Baie‑des‑Chaleurs, [1973] T.T. 332). Subsequently, the members of the Labour Court who had adopted the approach developed in Jack Schwartz holding that a legal relationship is not necessary ceased to distinguish between the two situations, since certification could then be transferred in both cases.

84 Bibeault did not address cases in which the certification was originally granted in respect of the party which had contracted out the work. On the contrary, the entire analysis was based on identifying the undertaking that has been subject to a transfer of operation resulting in the application of s. 45. At p. 1117, Beetz J. said that for the purposes of s. 45, “the undertaking which is alienated or operated by another must be that of the employer in respect of whom the certification is issued or with whom the collective agreement is concluded” and at p. 1118, he stated:

Whatever the merits in terms of purely economic analysis of the argument that the janitorial services undertaking is that of the C.S.R.O. because it is “the party that in reality gives out the work”, this argument finds no place in the context of collective bargaining. Collective bargaining, and indeed labour law, is concerned with labour relations, that is, with the relations between the employer and the employees. The C.S.R.O. is not, and has never been, an employer as defined by s. 1 of the Labour Code. . . . [Emphasis added.]

He went on to say, at p. 1119:

The only janitorial service undertaking that can be in question here is that of the subcontractors, that is, of the “employers” . . . As there was no link between the schoolboard and the janitorial service undertaking, it follows that the C.S.R.O. could neither alienate nor confer a right to operate it, nor, as Judge Morin maintained, be the source of a legal relation between the subcontractors in question. [Emphasis added.]

85 Thus, in Bibeault, the only undertaking that could be operated by another or alienated, for the purposes of s. 45, was the part of the subcontractors’ undertaking which was concerned with the janitorial services for the CSRO’s schools and which was never operated by the CSRO as an employer for the purposes of the Labour Code, since there had never been a certification granted in respect of the CSRO. Because the subcontractors had not transferred that part of their undertaking to another employer, the certification had simply ceased to exist when the contract between them and the CSRO expired. Beetz J., at p. 1124, quoting from p. 278 of Montcalm Carpets Specialists, supra, said:

The certification inexorably follows the fate of an undertaking whose viability depends on a contract, when no part of the undertaking survives in the operations of a new employer following termination of the contract:

[translation] The fate and the existence of a certification, like the fate and existence of an agreement, are linked to those of the undertaking covered by the certification and agreement: the fate of the appellant’s certification and agreement here was linked to that of the undertaking of the mis en cause at the owner’s premises, and this is what appellant understood and intended when the certification was in effect. The undertaking only existed for a limited time: obviously everything associated with it was also ephemeral. When this undertaking ceased or disappeared, and there was nothing to act as a bridge between it and some other undertaking which might, through the actions of the mis en cause, come after it, the appellant’s certification and agreement on the premises of the mis en cause became invalid. [First emphasis added; second emphasis in original.]

He went on to say, at p. 1126 :

I have already noted the ephemeral nature of the certification associated with an undertaking, or part thereof, whose existence is limited by a contract. The certification becomes inapplicable once the contract expires and no essential part of the undertaking is passed on to a new employer. [Emphasis added.]

86 In Bibeault, the CSRO itself did not own a janitorial services undertaking within the meaning of s. 45. The legal relationships which successively existed between it and the various subcontractors could therefore not lead to the transfer of a certification that had never applied to the CSRO. Nor did the CSRO have the legal authority to transfer the undertaking belonging to its subcontractors to new employers. Beetz J. wrote, at p. 1113:

Alienation and operation by another are defined in terms of the relation between the holder of a right and the person who acquires the use of it. It is apparent that only someone who enjoys a right of ownership can alienate his undertaking. [Emphasis added.]

87 Hence, in Bibeault, the certification could not have applied to the new subcontractor, since the former subcontractors had not transferred the operation of their undertaking to it. The CSRO itself was simply incapable of transferring the operation of the undertaking within the meaning of s. 45, since it had never owned it. The requirement that there be a legal relationship between the former employer and the new employer must therefore be analysed having regard to the principle that the undertaking which is alienated or operated by another is the one that belongs to the employer in respect of which the certification was granted. As Professor Barré, supra, stated, at p. 218, the situation is completely different where the certification applies to the party that contracted out the work:

[translation] While the transfer that is to occur between “the former employer and the new employer” must relate to “the undertaking . . . of the employer in respect of which the certification was granted”, there is no doubt that the Supreme Court in no way contemplated, where a change of subcontractors occurs, the situation where the certification was granted in respect of the party that contracted out the work, since the former employer is in no way capable in that situation of transferring any right whatsoever in the undertaking belonging to the party that contracted out the work. [Emphasis added.]

88 Thus we see that the situation in this case is clearly different from the situation in respect of which Beetz J. had to rule in Bibeault. In this case it is the transfer of the operation of the undertaking belonging to Ivanhoe, the transferor, and not the undertaking belonging to its subcontractor, Moderne, that must be identified. That being the case, the legal relationships between Ivanhoe and its successive subcontractors become extremely relevant. In addition, the former employer, Moderne, is not the one that has the authority in this case, when its contract expires, to transfer the operation of the undertaking which is relevant for the purposes of s. 45, that is, the undertaking belonging to Ivanhoe. To give effect to the purpose of s. 45 in a situation of this nature, which evidently has never been considered by this Court in the past, the Labour Court developed the theory of retrocession. That concept is easily explained once the legal nature of operation by another is understood. On this point, Professor Barré, supra, wrote, at p. 218:

[translation] When the operation of an undertaking is transferred, the employer transfers to another, on a temporary basis, a right to operate a part -- or even the whole -- of its undertaking. Can it be argued in such a case that the certification completely ceases to have effect with respect to the transferor employer? [Emphasis added.]

The writer concludes, at pp. 218‑23, that it is actually impossible for the transfer of operation of an undertaking, the essential characteristic of which is that it is temporary, to operate, in and of itself, to permanently terminate the certification. In the judgment a quo, LeBel J.A. said (at p. 72) :

[translation] A temporary transfer of operation implies both the transfer of rights and obligations to the transferee and the retrocession of those rights when the transfer terminates. [Emphasis added.]

89 Ivanhoe used a consensual juridical act to transfer the right to operate part of its undertaking to Moderne for a fixed period of time. Moderne therefore agreed at the outset that Ivanhoe would take back the right to operate its undertaking when the transfer expired. Since Ivanhoe had never permanently divested itself of its undertaking, it could not have divested itself of the certification associated with that undertaking. When it took back its rights, when the contract expired, the certification was reactivated in respect of it and was then transferred to the new contractors.

90 In the case at bar, Ivanhoe decided not to take back the operation of its janitorial undertaking when the first transfer expired. In Bibeault, Beetz J. concluded that the mere fact that the CSRO could have decided to perform the janitorial services itself was insufficient to conclude that there was a legal relationship among its various subcontractors. At p. 1118, he wrote:

The mere right to engage in an activity is not a basis for concluding that an undertaking exists, while that right has neither taken concrete form through the allocation of personnel nor been formally recognized in the certificate of certification. [Emphasis added.]

In the instant case, however, the undertaking that was originally transferred pursuant to s. 45 was indeed Ivanhoe’s undertaking, and the activity in question was duly set out in the certificate of certification. Unlike the CSRO, Ivanhoe was the owner of an undertaking within the meaning of s. 45. In those circumstances, it was reasonable for the Labour Court to find that Ivanhoe’s legal capacity to take back the operation of its undertaking, which had been the subject of the certification in the first place, when a transfer expired was sufficient to give it the legal authority to transfer the operation of that undertaking to the new contractors, with the result that s. 45 applied.

91 We know that in addition to requiring a legal relationship between successive employers, Bibeault defined, at p. 1115, alienation or operation by another as the voluntary transfer of a right. That requirement had to be qualified by both the Quebec Court of Appeal and the Labour Court, in order to respond to the situations that subsequently arose. For example, in Collines‑de‑l’Outaouais, supra, in which judgment was rendered on the same day as the decision a quo, both Zerbisias J. (ad hoc), at p. 107, and LeBel J.A., at p. 110, concluded that the legal relationship required in order for s. 45 to apply may be imposed by the legislature when it provides for the succession of one municipal organization to another. In general, however, a mutual agreement between the successive employers will be necessary, as was held in Bibeault and the subsequent decisions of the Labour Court. In this case, the retrocession of the undertaking is the result precisely of such mutual agreement. The temporary nature of the transfer to Moderne does not admit of any other conclusion.

92 Hence, the interpretation by the Labour Court of the requirement that there be a legal relationship between successive employers and of its application to situations in which a certification has been granted in respect of the transferor is a reasonable exercise of its specialized jurisdiction. The approach taken by the Labour Court does not conflict with Bibeault and clearly falls within its jurisdiction, since its aim is to give effect to the purpose of s. 45, while taking into account the reality of the business practices it is addressing. The theory of retrocession makes it possible to ensure that employers cannot permanently rid themselves of the certifications that apply to them by engaging in mere temporary transfers of operation, which would be contrary to the purposes of s. 45. In the judgment a quo, LeBel J.A. wrote (at p. 72):

[translation] In addition, at the level of the policy in relation to the application of labour legislation, rejection of the principle of retrocession and successive transfers would have potentially serious consequences for the stability of certifications and the objective of continuity promoted by the application of the Labour Code. It would, in effect, enable employers to rid themselves of certifications and collective agreements by engaging in successive transfers of operation of undertakings (see Conciergerie C.D.J. (Québec) inc. v. Fraternité canadienne des cheminots, employés de transports et autres ouvriers, section locale 277, T.T. Québec 200-28-000007-92, June 2, 1992 (1992 CanLII 12404 (QC TT), D.T.E. 92T-1043), p. 28 of the judgment; see Syndicat des travailleurs du Holiday Inn Ste-Foy (C.S.N.) v. Prime Hospitality Inc., 1990 CanLII 10757 (QC TT), [1991] T.T. 40, 46).

93 It was in fact for these reasons that Judge Prud’homme concluded at pp. 501-2 that Bibeault did not hold that a transferor to which a certification applied may rid itself of that certification by successively transferring the operation of its undertaking to two subcontractors. According to Judge Prud’homme, that approach would result in [translation] “precarious certification” and the “indefensible gutting of section 45” which could not have been the intention of this Court.

94 Furthermore, the cases decided by this Court since Bibeault have confirmed that the question of whether an undertaking has been transferred must be analysed using flexible tests that are, for the most part, to be assessed by the administrative tribunals responsible for the matter. In Ajax, supra, McLachlin C.J. wrote, at para. 2:

In my view, the historical and functional connection between Charterways and the Town of Ajax constitutes evidence upon which the Board would rationally have based its conclusion of successorship. I would agree with Goudge J.A. that the conclusion of the Board was not “clearly irrational”.

Goudge J.A., whose reasons were affirmed in their entirety by the majority of this Court, stated, at p. 432:

The conclusion that these facts constitute a sale as defined by s. 64 is not “clearly irrational”. It does not give the section a patently unreasonable interpretation. The statutory definition is inclusive: “‘sells’ includes leases, transfers and any other manner of disposition”. Because of the remedial purpose of s. 64, namely the preservation of bargaining rights, this definition is to be given a broad and liberal interpretation. Moreover, it is not required that the transfer take any particular legal form nor take place by way of legal transaction. In W. W. Lester, supra, at pp. 674‑75, McLachlin J. put it this way:

In keeping with the purpose of successorship provisions – to protect the permanence of bargaining rights – labour boards have interpreted “disposition” broadly to include almost any mode of transfer and have not relied on technical legal forms of business transactions. As explained by the Ontario Board in United Steelworkers of America v. Thorco Manufacturing Ltd. (1965), 65 C.L.L.C. ¶16,052, an expansive definition accords with the purpose of the section -- to preserve bargaining rights regardless of the legal form of the transaction which puts bargaining rights in jeopardy. [Emphasis added.]

Thus, even where there is no formal juridical act of transfer, this Court has found that it was not patently unreasonable to conclude that the certification had to be transferred. The specific business relationship that existed between the successive employers was sufficient to allow the Board to find that part of the undertaking had been transferred.

95 In addition, as McLachlin J. pointed out in Lester, supra, at p. 675, it was decided in National Bank of Canada v. Retail Clerks’ International Union, 1984 CanLII 2 (SCC), [1984] 1 S.C.R. 269, that a provision similar to s. 45 of the Labour Code, s. 144 of the Canada Labour Code, R.S.C. 1970, c. L‑1, which defined “sell” to include “the lease, transfer and other disposition of the business”, could also apply to a case involving the merger of two branches of the same bank where a unionized branch had been closed and its operations transferred to a non‑unionized branch. Even though the provision in question did not refer to merger or changes within an undertaking, this Court found that the expressions “transfer” and “other disposition” could cover the situation in question.

96 In the circumstances, it seems clear that the Labour Court could reasonably find in this case that when the contract with Moderne expired, Ivanhoe took back responsibility for its undertaking and was once again bound by the certification. The fact that there was no formal juridical act of alienation when the transfer of operation to Moderne expired is not an insurmountable barrier to transfer of the certification, since the transfer of operation of an undertaking which results in s. 45 applying can take different legal forms. In the instant case, the undertaking was transferred by way of a retrocession agreed upon by the parties in advance at the time the term of the transfer was negotiated.

97 Furthermore, Professor Barré, supra, at pp. 223‑29, believes that the theory of retrocession does not conflict with Bibeault and is a logical approach that makes it possible to maintain stable collective labour relations. Retrocession has also been approved by R. P. Gagnon, who wrote, in Le droit du travail du Québec: pratiques et théories (4th ed. 1999), at p. 338:

[translation] Alienation and, frequently, operation by another of an undertaking may eventually lead to retrocession of the undertaking. Where a certification has been granted with respect to the transferor employer and is transferred by section 45 to a new employer, the end of the transfer will result in the transferred activities again falling under the certification that originally applied to them. A subsequent alienation or transfer to another operator will result in section 45 again applying between the transferor and that operator. [Emphasis added.]

98 To give effect to the purpose of s. 45 in cases involving the temporary transfer of the operation of an undertaking, the Labour Court developed the concept of potential employer, which is tied to the concept of retrocession. That notion explains why it is not necessary, in order for a new transfer to result in s. 45 being applied, for the party that contracted out the work to actually take back the operation of the part of the undertaking that had been transferred. The mere fact that the transferor has the legal authority to operate the undertaking, combined with the existence of a certification that applied to it in the first place, is sufficient. This is an approach that enables s. 45 to be adapted to the concrete situations to which it applies. Indeed, this type of reasoning is not new in Quebec civil law. Numerous legal fictions have been expressly created by law, for example in the civil law institutions of substitution (see arts. 1218‑55 C.C.Q. and G. Brière, Donations, substitutions et fiducie (1988), at pp. 221‑64) and stipulation for another (see arts. 1444‑50 C.C.Q., and J.‑L. Baudouin and P.‑G. Jobin, Les obligations (5th ed. 1998), at pp. 386‑93).

99 Other legal fictions have been wholly or partly created by the courts. For example, in General Motors Products of Canada Ltd. v. Kravitz, 1979 CanLII 22 (SCC), [1979] 1 S.C.R. 790, this Court took the view that the seller’s warranty of quality was an accessory to the property and was transferred with it on successive sales. Accordingly, the subsequent buyers could invoke the contractual warranty of quality against the manufacturer, even though they did not contract directly with it (see P.‑G. Jobin, La vente dans le Code civil du Québec (1993), at pp. 138‑43; J. Edwards, La garantie de qualité du vendeur en droit québécois (1998), at pp. 71‑83). Otherwise, that warranty could only have had effect between the contracting parties, by virtue of the principle of privity of contracts which holds that a contract does not affect third persons (art. 1440 C.C.Q.). As a result of the principle established in Kravitz and now codified in art. 1442 C.C.Q., the contractual warranty of quality is able to properly perform its function of protecting the buyer of property.

100 In the law of persons, this Court held, in Montreal Tramways Co. v. Léveillé, 1933 CanLII 41 (SCC), [1933] S.C.R. 456, that a child born alive and viable could maintain an action in its own name for damages against the person who caused the injury sustained by it in its pre‑natal state, even though in the civil law legal personality cannot exist until birth (see also Dobson (Litigation Guardian of) v. Dobson, 1999 CanLII 698 (SCC), [1999] 2 S.C.R. 753, at paras. 13-18). In that case, this Court recognized the existence of the civil law principle that when a child is born alive and viable, its legal personality is retroactive to the date of conception, through a legal fiction that operates only for the benefit of the child and can never be used against it (see É. Deleury and D. Goubau, Le droit des personnes physiques (2nd ed. 1997), at pp. 11‑17). This principle is expressly recognized by the legislature in certain fields, such as successions (art. 617 C.C.Q.), substitution (art. 1242 C.C.Q.), trusts (art. 1279 C.C.Q.), gifts (art. 1814 C.C.Q.) and insurance of persons (art. 2447 C.C.Q.). In Montreal Tramways, supra, this Court recognized that even where the rule had not been generally codified, legal personality can be retroactive to the date of conception whenever this is required in the interests of a child born alive and viable.

101 From this brief overview of some of the legal fictions that are found in civil law, we may observe that when the Labour Court developed the theory of retrocession it was not only following a pragmatic and functional approach that enabled effect to be given to the purpose of s. 45, but also adopting a civil law approach in order to determine the effects of successive transfers of operation of an undertaking. The Labour Court therefore respected the broader context in which it must function, basing its approach on the specific legal system in force in Quebec, from which the concepts of alienation and operation by another used in s. 45 are derived, as Beetz J. clearly explained in Bibeault, supra, at pp. 1097 and 1112‑13.

(b) The Transfer of the Collective Agreement

102 Generally speaking, transfer of both the collective agreement and the certification will follow from a decision finding that an undertaking has been alienated or is being operated by another. The purpose of s. 45 is to protect not only collective bargaining rights but also, where circumstances permit, the individual rights of employees to have their working conditions safeguarded. In Adam, supra, at pp. 694‑95, Chouinard J. for the Court, described the goals contemplated by s. 45 (then s. 36):

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”.

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 management or organization of the undertaking. . . . [Emphasis added.]

The most common way of protecting employees’ rights will be to transfer the collective agreement guaranteeing their working conditions and job security to the new employer.

103 In this case, however, both the labour commissioner and the Labour Court declined to transfer the collective agreement signed with Moderne to the new employers. As we saw, the Labour Court took the view that the undertaking transferred to the contractors was Ivanhoe’s rather than its subcontractor’s. It therefore held that the agreement signed with Moderne became invalid when its contract expired, and could not be transferred to the new contractors. Furthermore, according to clause 25.01 of the last agreement signed with Ivanhoe, that agreement expired on May 22, 1989. Thus, at the time the operation of the undertaking was again transferred by Ivanhoe to the contractors, on September 1, 1991, that agreement was no longer in force. The Labour Court therefore declined to find that it had to be transferred.

104 In addition, both the Labour Code and the original collective agreement signed with Ivanhoe contain provisions that apparently inhibit, rather than facilitate, the determination of the fate of the collective agreement in the case of a temporary transfer of operation of an undertaking. Clause 25.02 of the collective agreement provided that it would remain in force during renewal negotiations, until one of the parties exercised the right to strike or to a lock-out. Section 59 of the Labour Code on the other hand is a legal mechanism to safeguard working conditions on the expiration of a collective agreement for a fixed period the length of which was determined, before 1994, by reference to the acquisition of the right to lock out, and since 1994, by reference to the exercise of the right to strike or to a lock-out. However, references to the length of renewal negotiations and to the acquisition or exercise of the right to lock out or to strike may apply only to an employer that is in fact responsible for operating the undertaking at the time the collective agreement expires and that is capable of negotiating a new agreement with the association of employees. Thus, while those provisions may apply to a subcontractor that is responsible for operating the undertaking at the time the collective agreement expires, they are apparently not intended to govern the situation with respect to the party that temporarily contracted out the right to operate its undertaking, and they therefore leave open the question of which collective agreement may or shall apply to it when the transfer expires.

105 Therefore, the dilemma faced by the Labour Court in this case is apparent. On the one hand, transferring the collective agreement signed with Moderne shortly before its contract expired would allow a contractor to impose working conditions on one of its competitors, even where no undertaking has been transferred between them. On the other hand, transferring the agreement originally signed by Ivanhoe would result in the application of obsolete working conditions set out in an agreement negotiated several years earlier which was supposed to run for only three years. The mechanisms meant to safeguard working conditions could be applied only if the reality of the events that had occurred and of the actual situation in the undertaking were ignored, and would also result in safeguarding obsolete conditions that neither the legislature nor the parties had intended to extend for such a long period. Finally, where there is no collective agreement the employees are left without any protection, not only for their working conditions, but for their employment with the undertaking, and this is a barrier to achieving the purposes of s. 45.

106 Being aware of the special problems that may be caused by transferring certifications and collective agreements as a result of the alienation or operation by another of an undertaking, the legislature gave the specialized labour law decision-making authorities very broad power to develop appropriate solutions for each case. In addition to giving the labour commissioner exclusive jurisdiction to determine the applicability of s. 45, s. 46 of the Labour Code also grants the commissioner the power to “settle any difficulty arising out of the application of that section”. That power, which already existed before the 1990 amendments to s. 46, was described as follows by Gagnon, supra, at p. 346:

[translation] Section 46 confers almost limitless discretion on labour commissioners and the Labour Court in selecting the solutions to be applied to difficulties arising out of the application of section 45, in order to ensure industrial peace while respecting the employees’ right of association, and within the framework of coherent collective labour relations. That power may extend as far as redefining or cancelling certifications and amending or harmonizing collective agreements, for example by merging and rearranging seniority lists. [Emphasis added.]

107 In Distribution Réal Chagnon inc. v. Prud’homme, J.E. 90‑1027, the Quebec Court of Appeal recognized that under s. 46, the labour commissioner had the power to integrate the former employees of the transferred undertaking into the seniority list maintained by the new employer. In Syndicat des employés de coopératives d’assurance‑vie v. Les Coopérants, 1991 CanLII 3709 (QC CA), [1991] R.J.Q. 1248, the Court of Appeal also held that under s. 46, the Labour Court could merge bargaining units and amend the certifications accordingly. In that case, however, the Labour Court’s decision had to be evoked because that issue was not before it, no appeal from the commissioner’s decision having been filed in that regard.

108 For a number of years, the Labour Court has used the powers conferred on it by s. 46 to settle the difficulties arising out of the application of s. 45 in a realistic and appropriate manner. For example, a collective agreement was amended to recognize the years of service of an employee of a non‑unionized undertaking that had merged with a unionized undertaking, so that the employee could apply, under the agreement, for the job he had already held for 20 years (Emballages industriels Vulcan ltée v. Syndicat des travailleurs de l’énergie et de la chimie, section locale 106, 1990 CanLII 10604 (QC TT), [1991] T.T. 29). Seniority lists under multiple collective agreements have also been integrated by applying methods adapted to each specific fact situation (see Syndicat des salariées et salariés cléricaux et techniques de l’amiante v. LAB, société en commandite, 1993 CanLII 14597 (QC TT), D.T.E. 94T‑13 (L.C.), motion for evocation dismissed, Sup. Ct. Quebec, No. 200‑05‑003286‑932, February 23, 1994; Groupe des ex‑salariés de Transbéton v. Groupe des ex‑salariés de Transmix, 1999 CanLII 31853 (QC TT), [1999] R.J.D.T. 513 (L.C.); Syndicat des travailleurs de S.O.S. v. Syndicat international des travailleurs et travailleuses unis de l’alimentation et du commerce, section locale 502, 1992 CanLII 12400 (QC TT), [1992] T.T. 109), and tests have been developed to determine which employees would keep their jobs in the new undertaking resulting from the merger of several establishments (Union internationale des travailleurs unis de l’alimentation et du commerce, section locale 301 W v. Brasserie Molson‑O’Keefe, 1991 CanLII 11389 (QC TT), D.T.E. 91T‑914 (L.C.)).

109 The labour commissioners and the Labour Court have also had to decide, in cases where more than one collective agreement was applicable, which ones should be continued or cancelled (Syndicat national des employés de l’alimentation en gros de Québec inc. v. Épiciers unis Métro‑Richelieu inc., 1984 CanLII 3370 (QC TT), D.T.E. 85T‑114 (L.C.); Syndicat des employées et employés professionnels et de bureau, section locale 57 v. Centre financier aux entreprises du Sud‑Ouest de Montréal, 1999 CanLII 31841 (QC TT), D.T.E. 2000T‑113 (L.C.)). In addition, both the Superior Court (Metro Capital Group ltée v. Hamelin, 2000 CanLII 46609 (QC CS), [2000] R.J.D.T. 491, at pp. 495‑96, on appeal, C.A. Montréal, No. 500‑09‑009625‑005) and the Tribunal d’arbitrage (Syndicat national des employés de l’alimentation en gros de Québec inc. v. Épiciers unis Métro‑Richelieu inc., 1987 CanLII 6418 (QC SAT), [1987] T.A. 333, at pp. 338‑39) have recognized the exclusive jurisdiction of the commissioner to amend collective agreements in order to settle difficulties arising out of the application of s. 45.

110 Furthermore, the Labour Court has frequently had to merge a number of certifications under s. 46, whether or not they were held by different unions. In such cases, the Labour Court had to choose which certification would be preserved or specify the terms and conditions for a vote to enable the employees in question to express their wishes in that regard (see Syndicat des employés de la Commission scolaire des Deux‑Rives v. Commission scolaire de la Jonquière, 1990 CanLII 10721 (QC TT), [1990] T.T. 419; Syndicat des professionnels et des techniciens de la santé du Québec v. Syndicat des employés du C.L.S.C. de la Guadeloupe, 1986 CanLII 4427 (QC TT), D.T.E. 86T‑759 (L.C.); Syndicat des employés du Carrefour des jeunes de Montréal v. Union des employés de service, section locale 298, 1990 CanLII 10664 (QC TT), [1990] T.T. 398; Centrale des unions indépendantes de l’industrie de l’automobile v. Fraternité canadienne des cheminots, employés du transport et autres ouvriers, section locale 300, 1982 CanLII 3511 (QC TT), [1982] T.T. 340; Rothmans, Benson & Hedges inc. v. Travailleurs unis de l’alimentation et du commerce, section locale 501, 1987 CanLII 6434 (QC TT), D.T.E. 87T‑976 (L.C.); Syndicat québécois des employées et employés de service, section locale 298 v. Syndicat des employées et employés des services sociaux du Centre jeunesse Laval, [2001] R.J.D.T. 134.

111 As these examples illustrate, the need to amend or to refuse to transfer collective agreements has arisen in various contexts, for example when the new employer was already bound by a collective agreement and a seniority list; that need does not arise solely as a result of the application of the theory of retrocession, which is only one of the situations in which it may be necessary to exercise the discretion conferred by s. 46. As a result and with respect, I am unable to concur in the opinion of my colleague Bastarache J., at para. 159, that the decision of the specialized decision-makers refusing to transfer the collective agreements in this case demonstrates that the retrocession argument is tenuous or that this is not in fact a “true” successorship situation.

112 Thus, in a situation like the one in this case, where there are multiple collective agreements, including one signed with a subcontractor and another which had probably expired, that might govern the labour relations within the undertaking and where, on the other hand, there are employees who might lose any union protection if no agreement, even an amended one, were to apply to them, the labour commissioner may choose from a range of solutions, and may also create solutions, in order to settle the complex difficulties that arise in the manner the commissioner considers most appropriate in the circumstances.

113 For example, the collective agreement signed with Moderne could have been transferred to the new employers with a new expiry date established as the date of the transfer, so that the jobs and working conditions could have been safeguarded for the bargaining period only. Similarly, the expiry date of the agreement signed with Ivanhoe could have been amended to safeguard the jobs during the negotiations for the purpose of concluding a new agreement. Had he considered it appropriate, the commissioner could also have made a ruling providing for the transfer of only the part of either of the collective agreements relating to job security for a limited period, so that the parties could agree on a new collective agreement while the employees could not have been dismissed with impunity. Lastly, it was also possible to decide as the commissioner did in this case, that none of the agreements would be transferred. That solution could also have been adopted in Sept‑Îles, supra, where concerns were raised relating to the application of municipal collective agreements to subcontractors.

114 In any event, the appropriate solution is a matter to be decided by the specialized tribunals, on which the legislature has conferred broad discretion to settle difficulties arising out of the application of s. 45. Determining what arrangements will best preserve balance in collective labour relations is within the special expertise of those decision-making bodies. As LeBel J.A. said in the judgment a quo (at p. 75):

[translation] The union then submits that the labour commissioner and the Labour Court had no judicial discretion and had authority only to record the transfer of the certification and of the collective agreement. That position overlooks the nature of the collective agreement as an act of the transferee. It may also underestimate the impact of the 1990 amendments, which extended the powers of the labour commissioner to rule on both the applicability and the application of section 45 L.C., and to prescribe the measures that may seem appropriate to prevent consequences that might appear incompatible with proper arrangements for collective labour relations in situations where the operation of an undertaking is transferred. [Emphasis added.]

115 In the case at bar, the decision of the labour commissioner and of the Labour Court is not patently unreasonable. It allows the new employers, which are bound by the certification, to enter into negotiations with the association of employees without being bound by an agreement signed by one of their competitors, or by an agreement that has become obsolete. The solution adopted undoubtedly had its disadvantages, the most important of which was the layoff of the 80 full-time and 30 part‑time janitorial employees who had been working in Ivanhoe’s buildings, but it still cannot be said that the Labour Court did not have the necessary jurisdiction to decline to rule that an agreement had to be transferred, with or without amendment.

116 The fact that there are other solutions that the commissioner could have adopted in this case, some of which would have enabled the employees to keep their jobs, is insufficient to justify judicial review. On the contrary, the recognition by the legislature and the courts that there are many potential solutions to a dispute is the very essence of the patent unreasonableness standard of review, which would be meaningless if it was found that there is only one acceptable solution. As L’Heureux‑Dubé J., for this Court, wrote in Domtar, supra, at p. 771:

An initial conclusion that, for purposes of judicial review, the legislature admits several possible and rational constructions of the same legislative provision thus becomes of primary importance. This conclusion, while constituting the necessary starting‑point of a discussion of the powers of supervision and control of courts of law, is ultimately the guiding principle for analyzing the appropriateness of judicial review. [Emphasis added.]

117 The Quebec legislature has chosen to give the responsibility for settling difficulties arising out of the application of s. 45 of the Labour Code to labour commissioners and the Labour Court. Those authorities must settle these issues, which are central to their specialized jurisdiction, on a daily basis. Since the principles that are applied do not result in absurdity, judicial review will be appropriate only where the results are clearly irrational. In this case, both the Superior Court and the Court of Appeal properly declined to intervene to alter the solution adopted by the labour commissioner and the Labour Court.

D. The Petition for Cancellation of Certification

118 Following the transfer to the four new contractors of the operation of the part of its undertaking that involved janitorial services, Ivanhoe sought the cancellation of the certification that applied to it. At the time that petition was made, the first two paragraphs of s. 41 of the Labour Code, which permits the cancellation of a certification in certain circumstances, read as follows :

41. A labour commissioner may, at the time fixed in paragraph c or d of section 22 or, if such is the case, in section 111.3, cancel the certification of an association that

(a) has ceased to exist, or

(b) no longer comprises the absolute majority of the employees of the bargaining unit for which it was certified.

Notwithstanding the third paragraph of section 32, an employer may, within the delay provided for in the preceding paragraph, request the labour commissioner to examine whether the association still exists or whether it still represents the absolute majority of the employees belonging to the bargaining unit for which it was certified.

119 Since it had had no employees for several years at that point, Ivanhoe argued that the association could no longer have represented the majority of the employees in the bargaining unit. However, the Labour Court took the view that a party that has contracted out the operation of its undertaking on a temporary basis cannot have the certification that applied to it cancelled during the period covered by the transfer of operation. Otherwise, the petition for cancellation of certification would allow the application of s. 45 to successive transfers of the undertaking to be avoided, since when the transfer expired, the party which had contracted out the work would no longer be subject to a certification that might benefit its employees if it took back the operation of its undertaking, or that might be transferred to another employer if it opted to transfer the operation of the undertaking afresh.

120 In Entreprises Rolland Bergeron inc. v. Geoffroy, 1987 CanLII 1050 (QC CA), [1987] R.J.Q. 2331, the Quebec Court of Appeal held that it was unreasonable to rule that an employer did not have a sufficient interest to present a petition for cancellation of certification on the sole ground that it no longer had any employees and accordingly was no longer an employer within the meaning of the Labour Code. The fact that the employer’s name appears on the certificate of certification, as Ivanhoe’s does in this case, is therefore sufficient to allow it to present a petition for cancellation. Judge Prud’homme accepted that principle in the instant case, at pp. 603-4, and expressly recognized that Ivanhoe was entitled to submit its petition despite the fact that it had no employees. However, the mere declaration that a party has the necessary interest to present a petition does not mean that the petition must be granted on the merits. Although the Court of Appeal has clearly held that having no employees cannot disentitle an employer from presenting a petition, it has never said that it must necessarily result in cancellation of the certification.

121 Bergeron, supra, involved a preliminary objection, which the commissioner allowed, asserting that because the employer had no employees it was not entitled to