Court File and Parties

COURT FILE NO.: 1900-16 DATE: 20170529 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

FCI Concrete Forming Inc. and FCI Concrete Holdings Inc. Plaintiffs – and – Buttcon Limited, Carpenters’ District Council of Ontario, United Brotherhood of Carpenters & Joiners of America, Local 494, Tomi Hulkkonen and Tony Iannuzzi Defendants

COUNSEL: D. Cowling and A. Van Klink, for the Plaintiffs D. Shields, for the Defendants, Carpenters’ District Council of Ontario, United Brotherhood of Carpenters & Joiners of America, Local 494, Tomi Hulkkonen and Tony Iannuzzi

HEARD: March 8, 2017

Raikes J.

[1] The defendants, Carpenters’ District Council of Ontario, United Brotherhood of Carpenters & Joiners of America, Local 494, Tomi Hulkkonen and Tony Iannuzzi (hereafter “the Union defendants”), move to stay or dismiss the plaintiffs’ action under r. 21.01(3)(a) on the basis that the Ontario Labour Relations Board (“OLRB”) has exclusive jurisdiction over the claim.

[2] The plaintiffs are creditors of Southern Ontario Concrete Forming Ltd. (hereafter “SOCF”). SOCF is a joint venture corporation controlled equally by the plaintiffs and Alliance Forming Ltd. (hereafter “Alliance”).

[3] SOCF is a bankrupt. The plaintiffs obtained an order dated July 27, 2016 pursuant to s. 38 of the Bankruptcy and Insolvency Act permitting SOCF’s trustee in bankruptcy to assign SOCF’s claim against the defendants to the plaintiffs which it did on July 28, 2016.

[4] The statement of claim was issued July 29, 2016. In this action, the plaintiffs seek damages from each of the defendants for the tort of conspiracy to injure, as well as damages from only the Union defendants for the torts of unlawful interference with economic relations and inducing breach of contract.

[5] The Union defendants argue that boiled down to its essence, the plaintiffs’ claim is the Union defendants conspired to improperly use the grievance procedure to coerce SOCF to sign a collective agreement which amounts to an unfair labour practice contrary to s. 76 of the Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A (“LRA”). The OLRB has exclusive jurisdiction over unfair labour practices.

[6] The plaintiffs characterize the claim differently. They say that at its core, this action is a claim for damages in tort that arises from the actions of the defendants to prevent payment to SOCF for work it performed under a contract with Buttcon Limited (hereafter “Buttcon”).

Background

[7] Based on the submissions of counsel and the material filed on this motion, the following facts appear to be undisputed:

1. Buttcon was the general contractor on a construction project for the University of Windsor at the former Windsor Star Building in Windsor, Ontario (hereafter “the project”);
2. SOCF did concrete forming and finishing work;
3. Buttcon and SOCF entered into a contract evidenced by a purchase order dated October 15, 2013;
4. Pursuant to that purchase order, SOCF was to provide labour and materials to complete the concrete forming and finishing for the project;
5. Buttcon was a signatory to the provincial collective agreement between the Carpenters’ Employer Bargaining Agency and the Carpenters District Council of Ontario (hereafter “the collective agreement”);
6. The collective agreement was in place before the purchase order was made and continued in place throughout the time that SOCF did work on the project;
7. Pursuant to the collective agreement, all carpentry work on the project, including the concrete forming work by SOCF, had to be done by carpenters who were members of Local 494;
8. It was a term of the purchase order that SOCF be a signatory to the collective agreement;
9. SOCF was not a signatory to the collective agreement but FCI Concrete Forming Inc. and Alliance were signatories;
10. The concrete forming work by SOCF was subcontracted to FCI Concrete Forming Inc. and Alliance whose employees were members of Local 494;
11. Work under the purchase order started in November, 2013;
12. The Union defendants served a grievance on Buttcon on December 19, 2014;
13. The grievance alleged that Buttcon violated the collective agreement by contracting with SOCF which was not a signatory to the collective agreement;
14. Following receipt of the grievance, Buttcon stopped paying SOCF.

[8] The plaintiffs allege that as a consequence of the cessation of payments owing by Buttcon, SOCF was unable to pay its creditors and went bankrupt.

Allegations in Statement of Claim

[9] The plaintiffs make, inter alia, the following allegations in their statement of claim:

1. SOCF caused the work required by the purchase order to be done as well as extras for which it was entitled to be paid;
2. Buttcon paid SOCF $1,588,222.23 but still owed $1,566,054.10;
3. The defendants knew from the start of the work that SOCF was not a signatory to the collective agreement and made no objection until the grievance was filed;
4. It was always intended and understood by SOCF and Buttcon that SOCF would subcontract the concrete forming work to FCI Concrete Forming Inc. and Alliance;
5. The defendants were not concerned that SOCF was not a signatory to the collective agreement because the subcontractors were signatories and all the work was being done by union members;
6. All of the carpentry work under the purchase order was done by members of Local 494;
7. SOCF was bound by the collective agreement because of its corporate relationship to the plaintiffs and Alliance, and the defendants knew that it was bound;
8. The Board made an order on January 11, 2016 declaring that SOCF was bound by the collective agreement from its inception;
9. From November 2013 to October 2014, Buttcon made payments to SOCF without any objection or concern that SOCF was not a signatory to the collective agreement;
10. On April 30, 2014, an employee of Facca Incorporated (hereafter “Facca”) filed an application to decertify the union as the exclusive bargaining agent for the employees of Facca;
11. Facca is a related corporation to the plaintiffs and SOCF;
12. The Union defendants opposed the decertification application;
13. The Union defendants served the grievance against Buttcon after the decertification application was filed;
14. The defendants knew the grievance had no merit and was untimely;
15. By doing nothing for 11 months, the Union defendants had waived or were estopped from asserting any claim or right arising from SOCF not being a signatory to the collective agreement;
16. The grievance had no practical purpose because SOCF had no employees;
17. There were no damages to the Union because the work was done entirely by union members;
18. The grievance was not filed for any real or genuine concern about SOCF not being a party to the collective agreement or to seek resolution from Buttcon;
19. Instead, the grievance was filed, “with the intention of inducing and causing Buttcon to stop payments to SOCF under the Purchase Order and to cause economic injury to SOCF so as to compel it to execute the Collective Agreement in order to obtain further payment from Buttcon. The signing of the Collective Agreement would then aid the Union Defendants in their efforts to again immediately become the exclusive bargaining agent of the Facca employees by operation of subsection 1(4) of the Act in the event the decertification application was successful”;
20. Buttcon and the Union defendants, “acting in concert”, took no steps to resolve or prosecute the grievance after it was filed;
21. The defendants left the grievance outstanding to cause economic injury to SOCF;
22. The Union defendants wanted to cause economic injury to SOCF to “aid the Union Defendants in their efforts to remain in place as the exclusive bargaining agents for the Facca employees”;
23. Buttcon wanted to cause economic injury to SOCF to avoid having to pay SOCF;
24. Buttcon used SOCF’s failure to sign the collective agreement as an excuse not to pay;
25. The filing of the grievance was an abuse of process because it was filed for the reasons indicated above;
26. SOCF offered to sign an agreement recognizing Local 494 as the exclusive bargaining agent for any carpenters employed by SOCF;
27. The Union defendants refused to accept that proposal because it was not signed by the principal of Facca on behalf of SOCF;
28. SOCF then executed a Voluntary Recognition Agreement (VRA) to recognize Local 494 as the exclusive bargaining agent for carpenters but the agreement contained a proviso that in doing so, the agreement could not be used by the Union in other proceedings involving other related companies; and
29. The Union refused to accept and sign the VRA.

[10] The plaintiffs assert the following causes of action:

a. Civil conspiracy; b. Abuse of process; and c. Inducing breach of contract.

Analysis

[11] There are two categories of civil conspiracy: lawful means conspiracy (sometimes referred to as simple motive conspiracy) and unlawful means conspiracy: Canada Cement LaFarge Ltd. v. British Columbia Lightweight Aggregate Ltd., [1983] 1 S.C.R. 452 at pp. 471-2.

[12] “Lawful means conspiracy” occurs when two or more persons act in concert with the “predominant purpose” of causing injury to the plaintiff. The defendants’ conduct can be lawful or unlawful. The focus is on the predominant purpose of their conduct: Canada Cement Lafarge, at p. 471 and p. 466 citing the House of Lords in Lonrho Ltd. v. Shell Petroleum Co. Ltd., [1982] A.C. 173 at pp. 189 and 464.

[13] An “unlawful means conspiracy” does not require that the predominant purpose of the defendants’ conduct be to cause injury to the plaintiff; rather, there is a constructive intent which derives from the fact that the defendants should have known that injury to the plaintiff would ensue: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460 at para. 24.

[14] In oral argument, plaintiffs’ counsel took the position that the conspiracy claim pleaded in the statement of claim falls into the first category: lawful means conspiracy. I observe that:

a. At para. 37, the plaintiffs plead that the defendants left the grievance outstanding and unresolved for the predominant purpose of causing economic injury to SOCF. The pleading then immediately states: “The Union Defendants sought to cause economic injury to SOCF to aid the Union Defendants in their efforts to remain in place as the exclusive bargaining agent for the Facca employees”; b. At para. 41, the plaintiffs allege that the filing of the grievance was “an abuse of process”. The grievance was not filed to resolve the matters grieved but to cause economic injury to SOCF “in an effort to compel it to execute the Collective Agreement and assist the Union Defendants in their efforts to remain as the exclusive bargaining agent for the Facca employees”.

[15] Counsel for the plaintiffs argued variously that:

a. Filing the grievance was not an unlawful act; b. Filing this grievance was an abuse of process; c. The failure to file the grievance in a timely manner and to diligently pursue it belies its legitimacy – this was a stratagem employed to coerce SOCF to sign the collective agreement which would have benefits for the Union vis-à-vis the Facca employees; and d. The unlawfulness of the grievance may be relied upon to justify punitive damages.

[16] Counsel for the Union defendants asserts that the conduct complained of by the plaintiffs is prohibited by s. 76 of the LRA, and a remedy may be obtained by the plaintiffs under s. 96(4) of the LRA. Accordingly, the claim is unquestionably a matter which falls within the exclusive jurisdiction of the OLRB pursuant to s. 114(1).

[17] S. 76 of the LRA states:

“No person, trade union or employers’ organization shall seek by intimidation or coercion to compel any person to become or refrain from becoming or to continue to be or to cease to be a member of a trade union or of an employers’ organization or to refrain from exercising any other rights under this Act or from performing any obligations under this Act.”

[18] S. 96(4) of the LRA states:

“Where a labour relations officer is unable to effect a settlement of the matter complained of or where the Board in its discretion considers it advisable to dispense with an inquiry by a labour relations officer, the Board may inquire into the complaint of a contravention of this Act and where the Board is satisfied that an employer, employers’ organization, trade union, council of trade unions, person or employee has acted contrary to this Act it shall determine what, if anything, the employer, employers’ organization, trade union, council of trade unions, person or employee shall do or refrain from doing with respect thereto and such determination, without limiting the generality of the foregoing may include, despite the provisions of any collective agreement, any one or more of,

(a) An order directing the employer, employers’ organization, trade union, council of trade unions, employee or other person to cease doing the act or acts complained of;

(b) An order directing the employer, employers’ organization, trade union, council of trade unions, employee or other person to rectify the act or acts complained of.”

The obligation to rectify may include payment of damages or compensation to the wronged party.

[19] S. 114(1) states:

“The Board has exclusive jurisdiction to exercise the powers conferred upon it by or under this Act and to determine all questions of fact or law that arise in any matter before it, and the action or decision of the Board thereon is final and conclusive for all purposes, but nevertheless the Board may at any time, if it considers it advisable to do so, reconsider any decision, order, direction, declaration or ruling made by it and vary or revoke such decision, order, direction, declaration or ruling.”

[20] The Union defendants argue that the “essential character” of the claims asserted against them are matters which fall within the exclusive jurisdiction of the Board. This is a labour relations dispute regardless how the plaintiffs try to mask it otherwise by common law claims.

[21] The Union defendants contend that in addition to lack of jurisdiction by this court, the claim asserted by the plaintiffs is devoid of any merit because,

1. The financial harm suffered by SOCF predated the grievance letter;
2. Local 494 had good reason to bring the grievance; and
3. The plaintiffs’ action is brought to retaliate for an OLRB finding that the plaintiffs’ principal, Mr. Gardinio, violated the LRA in other dealings with the Union defendants.

[22] I note that the motion before me is brought under r. 21.01(3)(a). It is not a r. 20 summary judgment motion. The merits of the Union defendants’ action are not before me; rather, the focus of the motion is whether the OLRB has exclusive jurisdiction over this claim.

[23] The plaintiffs’ position is that the essential character of this dispute is a claim for damages in tort. SOCF lacked standing in the grievance filed between the Union and Buttcon. The underlying motive of the Union defendants does not detract from or change the allegation that the predominant purpose of the conduct of the Union defendants was to cause economic harm to SOCF. This court has jurisdiction over tort claims.

[24] Plaintiffs’ counsel also argued that it is doubtful whether the claim falls within s. 76 of the LRA and whether the Board would exercise its discretion to hear the claim if made pursuant to s. 96 as there is no labour relations purpose to be served by doing so. SOCF is bankrupt and there is no ongoing labour relationship.

[25] Counsel agree that the applicable test is “the essential character” of the dispute which is determined based on the facts surrounding the dispute, not how the parties have framed the legal issues: Weber v. Ontario Hydro, [1995] 2 S.C.R. 929 at paras. 48, 56-59. In Weber, the Supreme Court of Canada rejected the concurrent jurisdiction model. Instead, the court held that claims which arise from the interpretation, application or violation of collective agreements lie within the exclusive purview of the Board and are entitled to deference by the courts.

[26] In Gendron v. Supply & Services Union of P.S.A.C., Local 50057, 1990 CarswellMan 205 at para. 56, the Supreme Court of Canada confirmed that the exclusive jurisdiction extended to statutory decision making structures under the employment-related legislation over which the Board has jurisdiction.

[27] The courts have recognised, however, that not every dispute in a workplace falls under a collective agreement. It does not follow that every dispute between the employer and employee is determinable within the context of collective agreement or the legislation that governs the labour relationship: Piko v. Hudson’s Bay Co., [1998] O.J. No. 4714 (ON CA) at paras. 9 and 11. See also McNeil v. Brewers Retail Inc., 2008 ONCA 405 at para. 39.

[28] The courts continue to have jurisdiction in civil matters which are not governed by a collective agreement or the provisions of the LRA: see Piko, at paras. 3, 17-18; Fording Coal Ltd. v. United Steelworkers of America, Local 7884, 1999 BCCA 38 at paras. 21, 24, 27 and 30. For example, issues that arise in the context of picketing continue to be matters over which the courts have jurisdiction.

[29] The plaintiffs argue in the alternative that Weber does not stand for the proposition that labour arbitrators always have exclusive jurisdiction in every manner of labour dispute. Rather, the Courts and other tribunals may possess overlapping, concurrent or exclusive jurisdiction. In the case of overlapping or concurrent jurisdiction, the court should apply the “better fit test” taken in Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Quebec (Attorney General), 2004 SCC 39, [2004] 2 S.C.R. 185 at paras. 11, 14 and 15; see also Society of Energy Professionals v. Ontario Power Generation (Group and Policy Grievance), [2013] OLAA No. 432 at paras. 5-11, 19-21, 27, 28, 31, 42 and 46.

[30] Both the Quebec and Society of Energy Engineers cases are distinguishable from the case here. In each of those cases, there were multiple statutory tribunals which had expertise and potential jurisdiction over the subject-matter of the dispute. A common sense approach was taken to ascertain which tribunal was best able to determine the core issues in dispute. Each of the tribunals had subject-matter jurisdiction by statute.

[31] In the case before, there is no dispute that if the essential character of the dispute is a tort claim, jurisdiction rests with the courts. On the other hand, if the essential character of the dispute is the interpretation, application or administration of a collective agreement or the statutory processes over which the Board has jurisdiction, the jurisdiction rests exclusively with the Board. It is an either/or scenario which depends for its outcome on the application of the essential character test.

[32] In my view, the essential character of the dispute in this case is a labour relations dispute governed by the provisions of the provincial collective agreement or the provisions of the LRA. In coming to that view, I find the following:

a. Central to the plaintiffs’ claim is the filing and non-prosecution of a bogus grievance by the Union defendants to secure an improper labour relations objective: to coerce SOCF to sign the collective agreement and thereby gain a labour relations advantage for the Union involving another employee group; b. On its face, that conduct would, if true, appear to contravene s. 76 of the LRA which may give rise to remedies under s. 96; c. The Board has an extensive jurisdiction to fashion the appropriate remedy including an award of damages; d. The alleged “abuse of process” is an abuse of the right to grieve, a matter clearly within the jurisdiction of the Board; e. If, as the plaintiffs contend, SOCF was already bound by the collective agreement, it follows that it had the right to oppose the grievance or to at least seek standing from the Board as an affected party to do so; f. The pleading sends a mixed message as to the predominant purpose for which the Union defendants acted. On the one hand, it alleges that the predominant purpose was to cause economic harm to SOCF; however, it also repeatedly makes clear that harming SOCF was ultimately merely means to an end: to force SOCF to sign the collective agreement. I conclude from the pleading itself that the overarching purpose of the Union defendants’ actions was to force SOCF to sign the collective agreement so that the Union remained the bargaining agent for the Facca employees; and g. I cannot presume that the Board will decline jurisdiction or decline to hold a hearing. In the latter case, such refusal would not give jurisdiction to this court in any event.

[33] Although framed as a tort action, the allegations against the Union defendants amount to assertions of misuse of the grievance process to gain a labour relations advantage to which it was not entitled by means prohibited by the LRA. To gain that advantage, it had to cause economic harm to SOCF. S. 76 of the LRA prohibits conduct by a union or other person that coerces anyone to continue to be a member of a union or from exercising a right under the Act to be free of the union. The alleged Union defendants’ conduct appears to fit within the scope of this provision.

[34] The plaintiffs argue that the effect of declining jurisdiction is the claims against the alleged conspirators must proceed in separate jurisdictions with the prospect of inconsistent results. That is a regrettable possibility which does not justify side-stepping the jurisdiction of the Board.

[35] In any event, I am advised by counsel that there is a separate action to which these plaintiffs are parties as against Buttcon for damages for breach of contract. That action was also authorised by the Trustee under s. 38 and there are additional creditors who have joined in that action.

[36] I find that the claim asserted falls within the exclusive jurisdiction of the Labour Relations Board and, as such, this court has no jurisdiction. Therefore, I order that this action be stayed indefinitely. The plaintiffs may, subject to the terms of the s. 38 order, pursue their remedies under the LRA.

[37] If the parties cannot agree on costs of the motion, they may make written submissions within 30 days not to exceed 5 pages.

Original signed by R. Raikes Justice R. M. Raikes Released: May 29, 2017