The Sarnia Working Agreement Six Decades Later: EllisDon Corporation v Ontario Sheet Metal Workers’

In EllisDon Corporation v Ontario Sheet Metal Workers’ and Roofers’ Conference and International Brotherhood of Electrical Workers, Local 586, 2014 ONCA 801, the Ontario Court of Appeal (“ONCA”) pronounced on the consequences of an agreement between the litigants known as the Sarnia Working Agreement (“SWA”).

Facts

The SWA, signed in 1958, contains a provision which obliges EllisDon Corporation (“EllisDon”) to employ in Sarnia only sheet metal and electrical contractors and sub-contractors whose employees are members of the appellant unions. Similar agreements were also signed by EllisDon and other general contractors, including the Toronto Working Agreement (“TWA”).

An amendment to section 151(2) of the Ontario Labour Relations Act, 1995, SO 1995, c 1 [Labour Act], extended the reach of both agreements to all other affiliated union locals across the province, so long as they had bargaining rights in any geographic area. In the late 1990s, EllisDon and other general contractors led a successful lobbying effort which limited the geographic scope of the TWA to the Greater Toronto Area. The SWA, to which only EllisDon was bound by, remained in effect province-wide. Therefore, EllisDon conducted separate discussions with the unions which were parties to the SWA.

EllisDon alleged that during these discussions, a representative of the building trades union told one of their representatives that “although he could not publicly promise to restrict the application of the SWA to the Sarnia area, the unions would not actively promote or rely on the agreement.” Relying on this representation, EllisDon abandoned its effort to obtain a legislative restriction on the geographic scope of the SWA. When EllisDon subcontracted work to employers that were not in contractual relations with the appellant unions, the unions alleged a breach of the agreement.

Issues

There were two main issues before the ONCA. The first was whether the Divisional Court was correct in overturning the Ontario Labour Relations Board’s (the “Board”) finding that the SWA was admissible either as a business record or as an ancient document. EllisDon disputed its admissibility on the basis that it consisted of 3 pages which appeared to be photocopies. Two of the pages were of poor quality, and the third page appeared to be photocopied at a different time than the other two. The original copies could not be found and none of the witnesses had any personal knowledge of the documents. It was clear, however, that one of the pages was signed by an employee of EllisDon who had the authority to sign on EllisDon’s behalf in 1958.

The second issue before the ONCA was whether the Divisional Court was correct in permanently estopping the unions from relying on the agreement because EllisDon detrimentally relied on the representation that the SWA would not be enforced outside of Sarnia. The Board had granted a two year estoppel to allow EllisDon to go back and lobby for the changes they desired.

Analysis

The ONCA restored the Board’s decision on both issues. With respect to the admissibility of the SWA, the majority of the Divisional Court held that the Board erred in admitting the SWA pursuant to the business record and ancient document rules. They also rejected the argument that the SWA could be admitted using the Board’s discretion under sections 48(12)(f) and 111(2)(e) of the Labour Act. In their view, because the Board did not expressly rely on its discretion to admit the SWA, it would not be appropriate for them, even considering principles of deference, to supplant the Board’s reasoning with its own. They would have remitted the issue back to the Board, but chose not to because they felt that the Board’s final conclusion could not stand in any event.

At the Court of Appeal, a unanimous bench agreed with the unions that even if the Board’s analysis of the business record and ancient document exceptions was technically incorrect, the SWA was admissible under the Board’s discretionary power. The ONCA found that the majority opinion of the Divisional Court took too formalistic a view of the Board’s decision on the admissibility of the SWA. They agreed with the minority opinion which felt that the Board’s analysis was truly aimed at determining the SWA’s authenticity and reliability, and concluded that it was consistent with the principle of deference to invoke the Board’s statutory discretion.

What may have had the most influence on the ONCA judges was their observation that the threshold for admissibility pursuant to the Board’s discretion is far lower than that of the business record and ancient document tests. If the Board admitted the SWA in accordance with those higher standards, is it not reasonable to infer that they would have admitted it pursuant to a lower standard?

With respect to the issue of whether the unions should be estopped from relying on the SWA outside of Sarnia, the Divisional Court granted EllisDon a permanent estoppel. They reasoned that a unique political climate existed in 1999-2000. Labour reform was already on the agenda of the political party in power, and EllisDon was in an alliance of contractors that was pushing for reform. That time has passed, and EllisDon no longer has the same allies or political climate to lobby the government as it did then. In cases outside of the labour context, the majority noted that a permanent estoppel is appropriate in situations where a party cannot be put back into its previous position.

The ONCA disagreed and restored the Board’s decision on the ground that the Divisional Court did not show adequate deference. It was not the role of the Court to prognosticate on the political conditions of the time and to overturn the Board’s decision which had carefully considered all of the relevant factors. In their view, the Board’s decision fell within the range of possible acceptable outcomes.

Conclusion

It seems likely that this decision will be appealed to the Supreme Court of Canada. If leave is granted, it will be interesting to see how the Supreme Court deals with the admissibility issue. Will the Supreme Court allow a document to be admitted pursuant to a statutory power that was not explicitly relied upon at first instance? With respect to whether a two year estoppel falls within a range of possible outcomes we know, from experience and from the differing opinions at each level of court in this case, that what falls within a range of reasonable outcomes can vary from decision-maker to decision-maker.