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Court throws out injunction motion against construction industry unions

September 23, 2014

Courts send masonry contractors to the Ontario Labour Relations Board

In Limen Group Ltd. v. Blair, the Superior Court of Justice and the Ontario Court of Appeal have thrown out a lawsuit brought by masonry contractors who entered into contracts with individual bricklayers and then tried to take down the province-wide construction industry bargaining scheme when they were stopped.

Background

Ontario’s construction industry is governed by a special statutory regime. The Ontario Labour Relations Board has exclusive jurisdiction to administer that regime, and does so using designated vice-chairs who have particular expertise in construction industry labour relations. Nevertheless, parties sometimes attempt to try their luck with the courts. Usually, the court will send the case back to the Board, as it did in this case.

The appellants (“Limen”) were masonry contractors in a sector of the construction industry in which collective bargaining takes place on a province-wide basis. Since 2004, masonry contractors (including Limen) have been bound by two collective agreements that, together, apply across Ontario and set out the terms and conditions of employment for the bricklayers they employ. These collective agreements, and the Labour Relations Act itself, prohibited employers from entering into contracts with individual employees. Nonetheless, Limen apparently entered into contracts with individual employees for a number of years, seeking advantage over other contractors.

In April 2014, the trade unions and employer bargaining agencies that are parties to the collective agreements agreed to amend the agreements to include enforcement mechanisms to ensure that the prohibitions against contractors bargaining directly with individual employees would be respected. Limen was not happy that the new enforcement mechanisms would require it to comply with the collective agreements and the Act.

Limen commenced an action in the Superior Court seeking damages for, among other things, conspiracy and inducing breach of contract. Limen’s action was based on the claim that the entire bargaining structure underlying the collective agreements was unlawful. Therefore, it said, the collective agreements themselves, including the amendments, were unlawful and could not apply to Limen or its contracts with individual employees. Limen also sought an injunction to prevent the amendments from coming into effect.

The trade unions, Brick and Allied Workers’ Craft Union of Canada and the Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftworkers, brought a motion to have Limen’s action dismissed or stayed. They argued that the validity of the bargaining structure and the collective agreements was a matter within the exclusive jurisdiction of the Board.

The Ontario Superior Court of Justice agreed.  It stayed Limen’s action and denied its request for an injunction.

Limen appealed to the Ontario Court of Appeal on two narrow grounds. It did not take issue with the Superior Court’s determination that the issues raised in the action fell within the specialized expertise and jurisdiction of the Board. But it maintained that the Superior Court should have assumed jurisdiction anyway because, in its view, the Ontario Labour Relations Board might not be able to order an employer organization to pay monetary damages. Therefore, if it succeeded in proceedings before the Board, it would be deprived of its “ultimate remedy”.

Second, Limen maintained that, even if the Superior Court did not err in staying the action, it should have granted an injunction to prevent the amendments from coming into effect pending the determination of some yet-to-be-commenced application that it might file.

The Court of Appeal’s decision

The Court of Appeal dismissed Limen’s appeal. It held that the Superior Court had applied the correct test and reached the correct result.

The essential character of the parties’ dispute clearly falls within the Board’s exclusive jurisdiction – indeed, the anchor of the appellants’ action is the illegality of the Memorandum of Agreement and the two collective agreements.  The appellants’ complaint that the Act contemplates one seamless provincial collective agreement and that the OBBC owes no duties or obligations to the appellants does not alter the essential character of the dispute.

Moreover, the appellants have avenues available within the labour relations regime to challenge the validity of the Memorandum of Agreement and the collective agreements.  In particular, we are not persuaded that there is a legislative gap that would effectively prevent the appellants from obtaining a Board order, making any order obtained against MEICO on the legality of the Memorandum of Agreement and collective agreements, applicable to OBBC.  There is no deprivation of the ultimate remedy sought by the appellants.

The Court of Appeal also agreed that an injunction was not appropriate.

Lawyers

Lorne Richmond, Charles Sinclair

Practice Areas

Civil Litigation, Labour Law