Court File and Parties

Court File No.: 494/24 Date: 2024-11-22 Superior Court of Justice - Ontario

Re: MAXUM DRYWALL INC., Applicant -and- ONTARIO COUNCIL OF THE INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES, LOCAL 1891, Respondent

Before: FL Myers J

Counsel: Sabrina Waraich and Jawad Janmohamed, for the Applicant Robert Gibson, and Lorraine Chuen, for the Respondent

Heard: November 22, 2024

Endorsement

[1] In contested litigation, there is no procedural step more mundane than the requirement for parties to produce relevant documents to each other.

[2] Production of one’s documents to an opponent in litigation is an imposition. It can violate one’s privacy. It reflects an exercise of governmental power of compulsion against a private person who has done no wrong but simply finds herself named as a party to litigation.

[3] But the obligation to produce relevant documents is so fundamentally necessary to an organized system of fair justice that it is commonly accepted as a basic minimum requirement. As Moldaver JA (as he then was) wrote in Goodman v. Rossi:

The rules of court which require full and complete disclosure of all information relevant to the issues being litigated have, as their primary purpose, the fair, just and expeditious resolution of disputes on their merits. This is a worthy purpose and one which justifies an intrusion into the privacy interests of the litigants.

[4] The issue in that case was whether limits ought to be imposed on the use of documents produced by a party under the compulsion of litigation procedures. In this case, the employer seeks to avoid production of some documents altogether.

The Grievance Arbitration

[5] The respondent union has delivered a grievance under the applicable collective agreements. The union claims that the employer is violating the collective agreements by using non-unionized labour and failing to pay proper agreed-upon wage rates at each of its construction sites. Although the claim includes all of the employer’s work sites, the grievance identified just two particular sites.

[6] The grievance is being considered in an arbitration proceeding under the Provincial Collective Agreement between the Ontario Painting Contractors Associate, the Acoustical Association Ontario, the Interior Systems Contractors Association of Ontario, and the International Union of Painters and Allied Trades, and the Ontario Council of the International Union of Painters and Allied Trades.

[7] The agreed upon procedure for all arbitrations for this branch of the construction industry in Ontario includes the following term in Appendix “B” of the collective agreement:

26.04 Step #3 Should a grievance related to work performed on a jobsite(s) within the Province of Ontario remain unresolved following Step #2, the Union shall refer the grievance to one of the Arbitrators listed on Schedule "A" attached hereto for final and binding determination pursuant to the following protocol:

(h) The Arbitrator shall have all the powers of an Arbitrator under the Labour Relations Act, as amended, and under the Collective Agreement including but not limited to the power to require records and/or documents to be produced prior to and/or at a hearing, the power to issue summons to witness and thereby compel attendance. The Arbitrator shall also have the power to order an Employer to submit to a full audit by an independent auditor/accountant who will enter the Employer's premises and examine all financial books, records and documents, etc, of the Employer. The decision of the Arbitrator is final and binding with respect to all matters remitted to the Arbitrator. The decision of the Arbitrator, inclusive of orders for payment of any monies in respect of damages, fees, costs and/or penalties of any sort, is deemed to be a decision of the Arbitrator pursuant to the Labour Relations Act, as amended, and is enforceable as such. [Emphasis added.]

[8] Under para. 26.04 (h) above, the union wants to conduct an audit of the employer to obtain financial information for use in the arbitration. To that end, it delivered a document request to the employer’s counsel. The union sought production of the following documents that the auditor whom it retained said she needs to complete an audit of the employer:

For the audit period of May 1, 2022 to May 31, 2024:

1. A company contact person;
2. Name and type of accounting software used;
3. Fiscal year end date;
4. Excel copy of the complete general ledger for the audit period, separated as of the fiscal year end dates;
5. Excel copy of the trial balance as at March 31, 2024, and as at each fiscal year end date that falls within the audit period;
6. Copies of T2 corporate tax returns for each fiscal year end that falls within the audit period;
7. All bank statements and bank reconciliations for the audit period, with copies of cancelled cheques;
8. A listing of all union members employed as hourly or piecework subcontractors during the audit period, noting the wage rates paid for all hourly employees;
9. A list of any corporations owned by union members where payments are made to the corporation rather than the individual;
10. Excel copy of the detailed payroll/subcontractor journals showing all amounts paid to hourly or piecework subcontractors, separated by month;
11. Time cards or any other documents used to track all hourly employees' regular and overtime hours worked;
12. Trade work sheets and/or invoices for all piecework subcontractors for the audit period;
13. Copies of Trust Fund remittance forms to other Unions or Locals for the audit period;
14. All sales contracts and subcontracts entered into during audit
15. A schedule of any payments made to Union piecework subcontractors or their corporations for expense reimbursements and/or work performed outside of the applicable collective agreement;
16. Job/project cost records for each month in the audit period, detailing labour charged to each job/project;
17. Provide monthly backup for each benefit remittance. Provide explanations for any payments made to union members that are excluded from the remittance; and,
18. Any other information that will help provide an audit trail from the source documents to the general ledger.

[9] The employer submitted that the documents sought were not relevant to the issues in the grievance. The union sought a full audit of the employer’s business and not just a limited audit of its work sites. The employer argued that the union ought to be confined to documents concerning the two work sites that are particularized in the grievance.

[10] The employer also expressed concern that the auditor appointed by the union was not “independent” as required in para. 26.04 (h) because she had performed these types of audits and other non-audit work for the union in the past. The employer therefore asked for production of documents by the auditor and union so that the employer could investigate the auditor’s independence prior to any decision being made about whether any documents ought to be provided to the auditor.

[11] In an award dated July 22, 2024, the arbitrator held in favour of the union. He ordered the employer to produce the documents sought to allow the union to obtain an audit of the employer under clause 26.04 (h) of the collective agreement. He also held that there was no basis for the employer to assert that the auditor was biased or not independent just because she had worked with the union previously.

The Application for Judicial Review and Today’s Cross-Motions

[12] The employer has commenced this application for judicial review to seek to quash the order that it produce documents to allow an audit to be performed for use at the arbitration of the grievance.

[13] Before me today, the employer asks to stay the order of the arbitrator pending the outcome of this judicial review proceeding. The union has brought its own motion asking the court to dismiss this application because it is premature.

[14] For the reasons that follow, I agree with the union that the application for judicial review is premature.

The Arbitrator’s Award does not Resolve the Grievance on its Merits

[15] While the award of the arbitrator is final in the sense that it cannot be appealed to any other arbitral body or court, it is plainly an interim award. It does not resolve the union’s grievance. Rather it deals with procedural steps to take place before the arbitration is heard.

[16] The parties agreed in the collective agreement that all awards by the arbitrator are “final and binding”. They are. They are final to the extent that they resolve the issues raised and they cannot be reviewed apart from an application for judicial review. But that does not answer the question of whether an application for judicial review in this court ought to be heard in relation to an arbitral award that does not resolve the entire proceeding on its merits. Ruling that an application is premature does no violence to the parties’ agreement that all awards by the arbitrator are final and binding.

Judicial Review Usually Awaits the Final Outcome Below

[17] Judicial review proceedings are not available for interim awards generally except in very narrow “exceptional circumstances”. The reasons for this are well understood. Fragmentation of administrative proceedings causes delay in those proceedings. In this case the arbitration will be delayed by as much as a year.

[18] Allowing fragmentation also encourages a proliferation of unnecessary court proceedings. It encourages a multiplicity of court proceedings that may be brought to obtain delay and to run up parties’ costs.

[19] The issues are better defined for judicial review once all proceedings have been completed. Here, for example, once the matter concludes, a reviewing court will be able to see whether any use was made of the audit and the underling documents at the arbitration.

[20] Perhaps of greatest significance, as I set out below dealing with the employer’s claim of “irreparable harm”, the production of documents and audit ordered cause no significant harm to the employer at all.

Analysis

[21] The employer relies on the decision in Canada (Minister of Public Safety and Emergency Preparedness) v. Kahlon, 2005 FC 1000, in which the court reviewed a procedural decision by an immigration tribunal to enforce a summons to witness against a third-party. The court held that the decision on the summons was final as it resolved the third-party’s rights in their entirety. The court was also concerned that should the summons be upheld, the loss of the witness’s personal privacy rights in her immigration file could not be undone at the main hearing on the merits.

[22] Here, the employer is a business and bound by a province-wide collective agreement. What is at issue is financial information concerning the business. There is no personal autobiographical information at play. Moreover, unlike the third-party witness in Kahlon, the employer’s rights remain to be decided at the arbitration hearing. The motion before the arbitrator did not determine the employer’s rights on the merits. Any inconvenience it suffers producing documents and undergoing an audit is contemplated by the express terms of the collective agreement and the necessity of production of documents to do justice between the parties.

[23] In the arbitration decision, the arbitrator dealt with the fact that in this industry, audits are necessary to level the playing field. Projects can be short-lived. Labour can be transient. The union’s ability to ferret out particulars of breaches of payment terms is limited. All financial information is in the hands of employers.

[24] Despite the employer submitting that the scope of an audit under para. 26.04 (h) should be limited to the particulars of a given grievance, the wording of the paragraph and the relevant case law say otherwise. Rather, as the arbitrator noted expressly, information beyond the particulars provided can be required to prevent employers from hiding information and playing “catch me if you can”. In addition, information beyond the specific payroll accounts of particularized projects can be required as checks and balances by comparison to what was disclosed.

[25] The arbitrator found that there was sufficient disclosure particularized to support an order for a “full audit” on “all” the employer’s books and records as contemplated by the collective agreement.

[26] Exceptional circumstances under which a court will hear a judicial review proceeding in relation to an interim order are so narrow that they do not include claims that the arbitrator or tribunal being reviewed may be biased, lacks jurisdiction, or violated the applicant’s constitutional rights. Generally, as long as the remaining arbitral or tribunal process allows the issues to be raised and an effective remedy to be granted, the court will await the final outcome of the proceeding before embarking on a judicial review of an interim decision. It is not a sufficiently exceptional circumstance that a litigant may have to undergo a process that would be avoided if he or she succeeds on the merits. The court will not weigh-in even where an abuse of process is claimed. See: David v. Law Society of Ontario, 2021 ONSC 4606 at para. 14. Mekdes Kahissay v. Intact Insurance, 2023 ONSC 3650, at paras. 9 and 10.

[27] Some of the factors that the court assesses generally in considering the existence of exceptional circumstances are listed in Toronto Transit Commission v. Amalgamated Transit Union Loc. 113, 2020 ONSC 2642.

[28] In this case, the employer has provided evidence of a project manager in the business who swears that the corporation will suffer irreparable harm by the disclosure of its private and confidential information. The witness says so broadly, baldly, and without any reference to any particular harm that could come from the auditor seeing its records. It is not at all clear how a project manager is in a position to give evidence about the nature of the corporation’s privacy interest in its financial records and the harm it could suffer on disclosure of various records to an auditor under the collective agreement.

[29] I agree with Mr. Gibson that there are many options as to what might happen at the main hearing on the merits. There are many outcomes where the union never sees any of the employer’s disputed information. For example, if the auditor finds no breaches at all, then the grievance will be dismissed and this issue will be moot.

[30] The employer has agreed and has already provided the auditor with its records about the two listed projects. If the auditor finds breaches in those projects only, then, once again, there is no issue about the scope of the audit beyond the particulars already provided and to which the employer seeks to limit its disclosures.

[31] The employer has not sought an order for the auditor or the union to keep the employer’s records confidential. Mr. Gibson submits that such orders are routine and are ones to which his client would be expected to consent. The employer also made no submissions on the scope of the implied undertaking of confidentiality in arbitration proceedings. That is, if confidentiality is a concern, there are other ways to minimize possible risks.

[32] If the auditor finds issues in projects beyond the two particularized by the union in its grievance, then the employer’s issue about the scope of production and the independence of the auditor will be live. In addition to confidentiality duties already mentioned, the employer will then have every right to question the auditor and dispute her findings at the hearing.

[33] The employer submits that it has been precluded from questioning the auditor’s independence by the refusal of disclosure of documents concerning prior dealings between her and the union.

[34] In my view, all the arbitrator said was that once the employer acknowledged that the auditor was a CPA practising in an independent accounting firm, it really had no evidence on which to question her independence or to allege bias. The arbitrator has the power to issue summonses to witnesses and to order production of documents for use at the hearing. Nothing precludes a party from asking relevant questions at the hearing and seeking production if it can lay a sufficient foundation for relevancy and proportionality for the hearing.

[35] I am quite dubious about the alleged independence issue given that industry experience is critical for any expert or expert witness. In addition, with the employer voluntarily producing its records for the two listed projects to the auditor already and not asking for a confidentiality order or asserting the implied undertaking of confidentiality, it cannot be all that concerned that she would violate her duties and misuse the information. That leads me to fear that fragmentation of proceedings and obtaining a year-long delay in the arbitration on the merits may be more significant in this application than may be apparent on the face of the materials.

[36] Moreover, the arbitrator’s decision follows well-trodden law on the very paragraph of the very collective agreement in issue. The arbitrator lays out clearly the basis for his decision. To the extent that the merits are relevant under the factors listed in TTC, this is not a strong case for judicial review under Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. It is certainly not a case that is so clearly wrong that would admit interlocutory review without exceptional circumstances.

[37] This is not a close call. An order for production of documents to allow a full audit on all financial records as provided in the collective agreement is not exceptional or a real hardship.

[38] The application is therefor dismissed.

[39] The parties agreed that on this outcome, the employer would pay the union costs fixed at $5,000. So ordered.

[40] As I have dismissed the application, the employer’s motion for a stay pending the hearing is dismissed as moot. Had I found exceptional circumstances existed, I likely would have granted the stay as sought. The issues of irreparable harm and exceptional circumstances are related if not flip sides of the same facts.

FL Myers J Date: November 22, 2024