Companion Decisions Regarding Related Employers Released by the Ontario Court of Appeal; Confirm that the Ontario Labour Relations Board Is Owed Deference

On November 16, 2022, the Ontario Court of Appeal released its reasons in Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1 (Turkiewicz) and Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975 (Enercare).

These companion decisions consider the Ontario Divisional Court’s application of the reasonableness standard in judicially reviewing decisions of the Ontario Labour Relations Board (OLRB) made pursuant to the related employer provision (s. 1(4)) of the Labour Relations Act (LRA).

The Court of Appeal held that both decisions ran afoul of the proper application of the reasonableness standard, as articulated in Canada (Minister of Citizenship and Immigration) v. Vavilov (Vavilov). Specifically, it found that the Divisional Court had, in both cases, failed to demonstrate the appropriate deference for the specialized expertise of the OLRB.

This Case in Point will first provide a brief summary of Turkiewicz and will then move on to review Enercare before concluding with key takeaways.

Turkiewicz

Background

Turkiewicz was the director of Brickpol Masonry Corporation (Brickpol) which was party to multiple collective agreements with various unions (Unions). Brickpol was later dissolved following Turkiewicz’s involvement in a car accident that left him unable to work and ultimately, bankrupt. A number of years later, Turkiewicz registered Tomasz Turkiewicz Custom Masonry Homes (TTCMH) as a sole proprietorship and performed non-union bricklaying and masonry work.

The Unions filed two applications relating to the work being done by TTCMH. The OLRB delivered three decisions in response:

In the first, the OLRB found Brickpol and TTCMH to be a single employer within the meaning of s. 1(4) of the LRA.
In the second, the OLRB held that TTCMH was performing work that fell within the jurisdiction of the Unions, but failed to engage union members.
In the third, the OLRB assessed damages for the grievance in the second decision at approximately $32,500.

Turkiewicz subsequently brought three judicial review applications to the Divisional Court–one for each of the OLRB decisions.

At the Divisional Court, the OLRB decisions were quashed. Among other things, the Court found that because the OLRB failed to consider whether a valid labour relations purpose would be served in making its related employer declaration, its first decision was unreasonable, and because the second and third decisions relied on the first, they too were held to be unreasonable. It declined to remit the matter back to the OLRB, finding no purpose would be served by doing so.

At the Court of Appeal

The Unions appealed the decision of the Divisional Court. Ultimately, the Court of Appeal allowed the appeal, set aside the decision of the Divisional Court with costs to the Unions and restored the decisions of the OLRB.

The Court of Appeal began its analysis by confirming that the standard of reasonableness will be applied on appeal. It highlighted the directives as set out in Vavilov for the proper application of the reasonableness standard: for example, the principle that the reviewing court should respect administrative decision makers and their specialized expertise, and should not ask how they themselves would have resolved an issue.

The Court of Appeal explained that the Divisional Court erred in concluding that the OLRB failed to consider whether a labour relations purpose warranted a related employer declaration in this particular circumstance:

[91] It was not open to the Divisional Court to substitute its own view of what constitutes a labour relations purpose – the analysis of which centred on Mr. Turkiewicz’s motives. Section 1(4) gives the OLRB the discretion to make a related employer declaration when the statutory preconditions are met. The exercise of that discretion warrants deference. Decades-old OLRB jurisprudence supports the conclusion that the erosion of a union’s bargaining rights constitutes a labour relations purpose warranting a related employer declaration. Vavilov tells us to consider the First Decision in light of that history.

Additionally, the Court of Appeal stated that the Divisional Court erred in asserting that the OLRB did not expressly address s. 126(3) of the LRA (single employer declarations) or the jurisprudence related to “key individuals” in the construction industry context. The Court of Appeal disagreed, stating that s. 126(3) “requires the OLRB to take into account the length of the hiatus, which it did…The Divisional Court erred by imposing an additional factor on the OLRB that is not grounded in the LRA or the jurisprudence.”

Further, the Court of Appeal held that there was no basis for the Divisional Court to determine that the OLRB’s damages award was unreasonable. It stated that the OLRB’s calculation of damages was consistent with Blouin Drywall, the leading Canadian authority on calculating damages in these matters.

Finally, the Court of Appeal concluded that the Divisional Court erred in failing to remit the matters back to the OLRB. It noted that there were no exceptional circumstances in this case to justify a departure from the general principle that an extraordinary threshold must be reached in order for a court to refuse to remit a matter to the tribunal.

Enercare

Background

Enercare sells, rents, installs, and services residential water heaters and heating, ventilation and air conditioning systems.

Unifor is the exclusive bargaining agent for all Enercare employees. Enercare provides services through a combination of unionized employees and independent contractors. The collective agreement expressly permits such contracting out.

Ganeh Energy Services Ltd. (Ganeh) and Beaver Energy Services Ltd. (Beaver) are two of the 90 independent contractors used by Enercare.

Unifor brought applications to the OLRB for declarations that Enercare, Ganeh, Beaver and a third independent contractor, Perras Mechanical Services Ltd. (Perras), were related employers within the meaning of s. 1(4) of the LRA. The OLRB declared that Enercare, Ganeh, and Beaver were related employers, but Perras was not.

The Divisional Court quashed the decision of the OLRB on the basis it “failed to take into account the parties’ bargaining history, the collective agreement, and the relevant LOUs addressing Enercare’s longstanding contracting out practices.” The Divisional Court stated that this led the OLRB to “analyze other issues without regard for the proper context in which those issues arose.” Unlike in Turkiewicz, the Divisional Court remitted the matter to the OLRB for a fresh determination.

At the Court of Appeal

The Court of Appeal set aside the decision of the Divisional Court, and restored the decision of the OLRB. It agreed with Unifor’s characterization of the Divisional Court’s approach as “overly interventionist,” and rejected the Divisional Court’s findings on a number of grounds, some of which are highlighted below.

As in Turkiewicz, the Court of Appeal in Enercare held that the Divisional Court decision did not follow the Vavilov framework for conducting a reasonableness review of an administrative decision. In particular, the Court of Appeal took issue with the Divisional Court’s conclusion that the OLRB did not fully consider the labour relations context of the parties, e.g. their collective agreements and LOUs. As noted at paragraphs 75 and 76 of the Court of Appeal decision, the OLRB explained its reasons for why it declined to consider the parties’ collective agreements and settlements in interpreting s. 1(4), which the Court of Appeal determined was coherent, logical and rational.

The Court of Appeal further noted that the Divisional Court erred in finding the OLRB decision unreasonable because the OLRB conflated Enercare’s contracting out generally with its contracting out specifically to Ganeh and Beaver. The Court of Appeal held that in doing so, the Divisional Court ignored the OLRB’s factual findings and overlooked its analysis on whether a labour relations purpose would be served by making a related employer declaration.

Finally, the Court of Appeal concluded that the Divisional Court erred in making determinations regarding Ganeh and Beaver’s economic dependence on Enercare. It reiterated that a reviewing court is prohibited from making factual findings of its own and emphasized that deference is owed to the OLRB, which has extensive expertise and experience in making related employer declarations. Rather than review the reasonableness of the OLRB’s determination of common control or direction, the Divisional Court effectively decided these issues de novo, which, the Court of Appeal held, ran afoul the Vavilov principles.

Takeaways

In these decisions, the Ontario Court of Appeal has confirmed that, in analyzing decisions of administrative tribunals (such as the OLRB), reviewing courts must adhere to the Vavilov directives, demonstrate the requisite respect for the specialized expertise of the tribunal and afford the tribunal appropriate deference.

Courts are only permitted to intervene in administrative matters in exceptional circumstances where it is truly necessary to safeguard the legality, rationality and fairness of the administrative process.

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Case In Point