AD HOC 315:

DECISION OF THE COUNCIL

I. NATURE OF APPLICATION

This decision concerns an application by the Railway pursuant to Sections 28, 31, 34 and 38 of the Industrial Relations Act (the “Act”) for, inter alia, a declaration that a collective agreement was entered into between the Railway and the Council on behalf of its seven constituent trade unions on or about September 28, 1990. That application is opposed by both the UTU and Local 170 (collectively “the Unions”). Local 170 has filed its own application pursuant to Sections 34, 36, 38, 57 and 122(8) of the Act, which is also before the Panel.

At the centre of both applications is a dispute over the effect of certain recommendations contained in a report dated September 24, 1990 by Vincent L. Ready who had been appointed as an Industrial Inquiry commission pursuant to Section 122 of the Act. A majority of the unionized employees working for the Railway accepted those recommendations in a vote conducted by the Council. The Railway argues that the result is a binding collective agreement. The Unions (whose members overwhelmingly rejected the recommendations), dispute this outcome. They rely primarily on Article VII of the Council’s Constitution which protects individual constituent unions from “adverse changes to existing agreements”.

II. THE LEGAL FRAMEWORK

The history of labour relations on the Railway, and the resulting legal framework for collective bargaining, have been discussed in a number of prior decisions by both the Industrial Relations Council and the predecessor Labour Relations Board. Some of those decisions will be examined below. For present purposes, it is sufficient to note that the Council was imposed in 1976 pursuant to what is now Section 57 of the Industrial Relations Act. The Certification issued by the Board grants bargaining rights to “the Council of Trade-Unions on the British Columbia Railway established in accordance with the terms of the constitution which is attached hereto” for a unit composed of “all unionized employees on the British Columbia Railway”.

The Council is presently composed of seven constituent trade unions as set out below. It should be noted that the description of the work carried out by each union is in no way intended to be exhaustive:

The Canadian Union of Transportation Employees, Local 6 (“CUTE 611”), which is the largest union and represents approximately 650 employees who carry out track maintenance work.

The General Truck Drivers and Helpers Union, Local No. 31 (the “Teamsters”), which represents approximately 150 employees who work in the Railway’s intermodal and truck haul divisions, and also do some clerical work.

The National Automobile, Aerospace and Agriculture Implement Workers Union of Canada (CAW-Canada), Local 102 (the “CAW”), which represents approximately 230 carmen, or the employees who do repair work on freight cars.

Local 170 which represents approximately 215 shop craft employees who do maintenance work on locomotives.

The Transportation Communications Union, Lodge 1828, System Board 496 (the “TCU”) , which represents approximately 29 employees who are responsible for rail traffic control and crew calling functions.

The Canadian Union of Transportation Employees, Local 1 (“CUTE 111”), which represents approximately 150 enginemen.

The UTU, whose 340 members are trainmen who work alongside the enginemen on the main railroads, and also switch traffic in the yards.

As indicated by the express terms of the Certificate granted to the council, its rights are subject to the terms of the Constitution imposed by the Labour Relations Board in 1978 (as subsequently amended); so is the relationship between the constituent unions. For purposes of the collective bargaining relationship between the Railway and the Council, Article XIV(B) provides that the Constitution and By-laws shall prevail over the constitutions and by-laws of any of the constituent unions.

Article II of the Constitution confirms the purpose of the Council to act “as bargaining agent on behalf of the constituent unions” and to “promote cooperation” among them in collective bargaining. Article V directs that the Executive Board of the Council shall consist of one member selected by each constituent union, whose terms of office shall coincide with the term of a collective agreement, up to and including renewal. A quorum consists of a majority of the Executive Board and, unless otherwise specified, all decisions require a simple majority vote. Except as otherwise permitted, the members of the Bargaining Committee established under Article VI shall be the same members as the Executive Board.

Article VII, the provision at issue in these proceedings, sets out certain restrictions on the Bargaining Committee’s ability to conclude a collective agreement binding on the constituent unions. It provides:

ARTICLE VII: REPRESENTATION BY THE BARGAINING COMMITTEE

The Bargaining Committee shall not agree to proposals made by the British Columbia Railway which would result in adverse changes to existing agreements affecting members of constituent unions except with the written agreement of the affected union or unions.

The ratification of a new collective agreement is addressed in Article VIII. Where the Bargaining Committee reaches a memorandum with the Railway which is subject to ratification, the members of the constituent unions shall vote by secret ballot. Where a majority of all ballots cast are in favour of ratifying the proposed collective agreement, the Bargaining Committee “shall reach and execute the collective agreement on behalf of the Council.” In this regard, the authority of the Bargaining Committee in Article X should be noted:

ARTICLE X: EXECUTION OF COLLECTIVE AGREEMENT

The Bargaining Committee shall have exclusive authority, subject to the provisions of this Constitution and By-Laws, to negotiate, reach and conclude collective agreements on behalf of the Council. A collective agreement reached and executed by the Bargaining Committee on behalf of the Council shall bind the Council, all constituent unions in the Council, and all employees in the bargaining unit for which the Council is certified.

The Labour Relations Board, now the Industrial Relations Council, has significant authority with respect to the Constitution. Any proposed amendments shall be approved by it in writing in order to ensure that they are consistent with the policies and principles of the governing statute. Further, under Article XIV(D), where a dispute arises over “the interpretation or application of the Constitution or By-Laws, such dispute, if unresolved, shall be decided by the Labour Relations Board”.

Collective bargaining on the Railway has historically been carried out at two levels. The first is individual or “trade” negotiations on issues affecting the constituent unions separately. Once this level has been concluded, the parties move to “main table” negotiations which deal with monetary items and other matters of common concern. Each constituent union has the right to bring five trade issues to the main table. The product of this process is seven separate collective agreements naming each of the constituent unions. It is important to note, however, that the agreements are between the Railway and the Council “on behalf of” the particular union.

III. FACTUAL BACKGROUND

In accordance with their usual practice, the Railway and the Council entered into collective agreements which had a term from July 1, 1987 to June 30, 1990. The Railway served notice to bargain on or about March 7, 1990. The resulting negotiations did not follow the normal course; among other developments, there were two “rounds” of trade negotiations. There were also a significant number of proposals on the table, the majority of which where put forward by the constituent unions.

Two major areas in dispute which are relevant to these proceedings should be highlighted. First, all of the unions (led primarily by Local 170) were pursuing significant restrictions on the contracting out of work. Second, the Railway was advancing three related proposals to address manning and efficiency concerns. These proposals related exclusively to provisions of the UTU collective agreement and dealt with cabooseless trains, conductor pilots and reduced crews. The Railway saw these proposals as being consistent with developments in the North American railway industry and necessary for its competitive survival. Although the Railway was fully aware of the difficulties which it would face in pursuing these proposals, it was not prepared to capitulate.

Negotiations for renewal collective agreements proceeded without success. The Council served strike notice on August 14, 1990, which was to take effect on September 4 at 0001 hours. The intervening assistance of a mediator and the Deputy Minister of Labour brought little or no progress; the strike commenced as scheduled.

The effect of the labour dispute was described at pages 5-6 of the subsequent Industrial Inquiry Commission report:

… To date more than 35,000 man days of work have been lost by BC Rail employees as a result of the strike; the loss of wages to these employees is approximately $300,000 per day. The Railway is losing direct freight revenue of approximately $800,000 per day and has expressed a concern of losing long term traffic to its competitors in the transportation industry.

Very serious harm from the Railway shutdown is being felt by the Province’s forest and mining industries which are heavily dependent on BC Rail to bring their products to market. Many of these forest and mining companies have found it extremely difficult and costly, if not impossible (e.g. Quintette Coal) to secure interim alternative means of transportation. Some operations continue to produce and store their product. Even that imposes on the companies the cost of inventory, financing and the possible loss of goodwill of customers who don’t receive immediate deliveries. But other operations, deprived of raw materials or unable to store their product, have had to consider closing down and laying off their employees. Thus this Railway strike is inflicting serious economic harm to many third party employers, their employees, and hence, by way of a multiplier effect, on the businesses and communities in which these other operations are located.

The parties to these proceedings are fully aware that a labour dispute on the Railway is a high profile matter which has significant impact on the interests and the economy of the Province. This also appears to have been the view of the government of the day. On September 17, 1990, the Minister of Labour appointed Ready as an Industrial Inquiry Commission pursuant to Section 122 of the Act. The terms of his appointment were as follows:

… to make inquiries into the collective bargaining dispute between the parties; and to attempt to effect settlement between the parties; and to make such recommendations to the Minister of Labour and Consumer Services as the Commissioner considers appropriate within a time to be specified subsequently by the Minister of Labour and Consumer Services.

Ready met initially with both parties on September 18, 1990. He then met with them separately and attempted to mediate the dispute. It became evident that the parties were “extremely polarized in their positions and attitudes and were unwilling to compromise on their respective positions, particularly on the major matters” (at page 2 of Industrial Inquiry Commission report).

On September 22, 1990, Ready again met with the parties jointly and requested that they provide him with their settlement position on all of the outstanding issues. Both sides did little more than present “explanations and solidifications of their long-standing positions”. The Railway continued to be adamant that its manning proposals related to the UTU collective agreement had to be addressed. When this issue was raised, Clyde Mulhall, the UTU’s representative and Chairman of the Council, strongly objected. It was his view that Ready should not deal with the Railway’s proposals in his IIC recommendations as they were contrary to Article VII of the Constitution and would be vetoed. Mulhall’s views were supported by Local 170’s representative, Ray Callard. The latter indicated something to the effect that the Council could not send any recommendations out for a vote if the UTU exercised its Article VII rights. The Railway did not offer any contrary interpretation of the Constitution, and Ready indicated he would have to consider the point.

The Industrial Inquiry Commission report was issued to the parties on September 24, 1990. It is a considered and lengthy document (some 30 pages plus a six-page summary). Ready reached the conclusion that he should provide the parties with recommendations as to how the various matters in dispute should be resolved. He therefore presented specific terns for inclusion in their collective agreements.

Among other things, Ready proposed a term from July 1, 1990 to December 31, 1992. He recommended a settlement payment of $600.00 to all active employees, with a 7.5% wage increase to be effective from October 1, 1990, and a further 7.5% wage increase to be effective from October 1, 1991. On the subject of contracting out, Ready drafted a compromise provision which represented an improvement to the existing collective agreements of all constituent unions. Most of the changes sought by the Railway were rejected; however, recommendations adverse to the UTU were made with respect to cabooses, conductor pilots and reduced crews. These were summarized by Ready as follows:

8. Cabooseless Trains, Conductor Pilots and Reduced Crews (The United Transportation Union Collective Agreement)

The Railway’s proposal on these three issues are referred to the Railway and the UTU for discussion and resolution keeping in mind the fact that the Railway has stated that it is prepared to share any productivity savings with the UTU and is prepared to discuss certain lucrative early retirement incentives. If agreement is not reached by March 31, 1991, Vince Ready will render a final and binding decision on any or all of the three issues.

The following was said at page 28 with respect to Article VII of the Constitution:

The Council argued that the Railway’s proposals on these three issues should be rejected since any recommendations I might make would circumvent the Council’s constitution and by-laws which provide an individual Union’s veto over any “cuts” or new conditions which, in the opinion of the affected Union, is not in the best interest of its membership. I have considered that argument but I have concluded that the provisions of the Council’s constitution on this matter apply only to the direct negotiations process and not to a third party arrangement. By virtue of my appointment under Section 122 of the Industrial Relations Act, I am commissioned to bring all matters in the dispute to conclusion or to recommend a mechanism to resolve all the differences between the parties.

Ready concluded his report with the statement that “… these recommendations are to be submitted to a secret ballot ratification vote … of all constituent Unions with the results being made known … within 72 hours of today’s date” (emphasis added). if accepted, it was said that the recommendations “will form the basis for new collective agreements” subject to Ready remaining seized should any difficulties arise. If the recommendations were rejected, then the report would be submitted to the Minister of Labour.

The Railway’s reaction to the Industrial Inquiry Commission report was mixed. It had concerns over some of the recommendations (particularly, the size of the two wage increases), but viewed favourably the decision to address the UTU manning issues. The Railway was not overly surprised that Ready had dealt with contracting out, although the terms which he drafted differed significantly from the parties’ respective proposals.

Aside from learning that the Council would be meeting on September 25, 1990, the Railway heard little regarding the reaction of the constituent unions to the IIC recommendations. On the morning of the 25th, the Railway received a copy of a bulletin which had been posted by the local UTU representative in Lillooet.

It is not uncommon for any of the constituent unions to post such documents throughout the system and, not surprisingly, copies were sent to the Railway’s head office. The bulletin was dated September 24, 1990 and read, in part:

Indications from the Council of Trade Unions are that all is not well at the Mediation Level of Negotiations. The Contracting-Out Language is not acceptable to any Union and also the Mediator seems to have violated the Constitution of the UTU.

The Council will meet with their Lawyer …

ABOUT ONE THIRD OF THE (sic) OUR WORK FORCE WILL BE LOST IF THIS MEDIATION WERE TO BE ACCEPTED.

Further information will be posted.

It appears that the Council met briefly on the afternoon of September 24 in order to review Ready’s recommendations. The report was given extensive consideration at a second meeting which took place the next day and was attended by various union representatives in addition to members of the Council.

Minutes of the September 25 meeting made by Rob Hurren, President of CAW and Secretary of the Council, were introduced into evidence. These minutes are useful in establishing the sequence of the various motions and resolutions which were passed during the meeting. They are not particularly reliable, however, as evidence of specific statements made by the participants. Witnesses described the meeting as “charged” and “volatile”, with there being “huge tension” in the room. Representatives of the different unions often spoke at the same time. Hurren himself admitted that he was only able on occasion to get “snippets” of the discussion. Further, rather than represent a verbatim recording, the notes represented his words as to what was said. We also observe that the minutes were not approved by Council members as occurs in the ordinary course.

Near the outset of the meeting, Mulhall expressed his view that the IIC recommendations contained “cuts” to the UTU’s collective agreement. A great deal of discussion centred around the right of a constituent union to veto the report and the implications of the Council sending the report out for a ratification vote. The advice of several labour lawyers was sought as well (the contents of this advice was not the subject of testimony, being protected by solicitor-client privilege).

There appears to have been a great deal of confusion and uncertainty in the discussion – no doubt because the circumstances before the Council were unique. There had not previously been an occasion on which a constituent union had been forced to exercise its veto power under Article VII of the Constitution. It is clear, however, that the UTU was purporting to exercise its right to veto adverse changes to its collective agreement; this was understood by most, if not all, of those in attendance. Any ambiguity arises only with respect to the exact procedure required for the exercise of Article VII rights. It is also clear that the UTU’s position and its opposition to the IIC report was actively supported by Callard on behalf of Local 170.

The September 25 meeting progressed to the point of a “straw vote” being held on whether to take Ready’s recommendations to a vote of the membership. Five of the unions indicated that this should be done, with the UTU and Local 170 dissenting. A formal motion to this effect was then put forward and seconded. It was carried with the UTU and Local 170 again opposed.

A series of failed notions then ensued. It was first proposed and seconded that the recommendations be voted for acceptance. This motion received only the support of CAW and the Teamsters. The next notion that the recommendations be voted for rejection failed to attract a seconder. A third motion that Ready’s report be voted with “no recommendation” was also defeated. Callard then proposed a motion to the effect that each union vote its own members and return the results on September 28 at 5:00 p.m. at the Teamsters union hall. This motion passed and the wording on the ballot was finalized.

The constituent unions voted their own memberships as contemplated. Some counted the ballots prior to the meeting on September 28, 1990; others brought the uncounted ballots to the Teamsters hall. When the individual totals were initially tallied, the result was 54% in favour of accepting the IIC recommendations. There was a motion to accept the count, after which Mulhall and Callard (together with others) left the meeting. There was then a recount of the CUTE 6 ballots which led to 56% of the total favouring acceptance.

Following the revised percentage being calculated (and after Mulhall and Callard had left), a telephone call was placed to the Railway. This call was made shortly before 6:00 p.m. by John (“Spike”) Edwards, the Teamsters representative on the Council. He advised the Railway in the presence of other Council members that the Commissioner’s recommendations had been ratified and were accepted by the Council as the basis for a new collective agreement between the parties. A few minutes later, Edwards placed a second call to the Railway to determine whether it accepted the recommendations. He was advised by Brian Foley, the then Vice-President of Human Resources, Engineering and Communications, that the Railway did accept the recommendations on the basis that they were also accepted by the Council. The two agreed that the recommendations would form the basis of new collective agreements.

The Railway began recalling employees to work that evening (i.e., Friday, September 28, 1990) and strike activity ceased. The North Vancouver yard was operational before midnight, some of the returning employees being members of the UTU. A northbound freight train departed at approximately 3:00 a.m. on the morning of Saturday, September 29, 1990. The shops were a bit slower to return, but a shift of Local 170 members was working before the weekend was over. The system was fully operational by the Monday morning. The Railway immediately issued Bulletin #17, one of a series of collective bargaining bulletins which it had been issuing during negotiations. This Bulletin was dated September 28, 1990 and read, in part:

The membership of the seven constituent unions in the Council of Trade Unions have voted to accept the recommendations of Industrial Inquiry Commissioner Vince Ready. The Railway has also accepted the recommendations.

Arrangements are now being finalized for an orderly return to work by the unionized employees.

Then, in a letter dated October 2, 1990, the solicitors for the UTU wrote to the Railway as follows:

On our clients’ behalf, we will file in the BC Supreme Court an application for a declaration that the Industrial Inquiry Commissioner’s report, including the ratification vote directed therein, has no legal effect on our clients.

It is UTU’s position that there is no new collective agreement between UTU and BC Rail Ltd.

Without any lawful authority, Mr. Ready ignores the Council’s constitution, directs a ratification vote and purports to impose interest arbitration. As a result, his report and the vote only have legal effect where there is agreement: those unions who accepted his report have a new collective agreement; those who did not, do not.

A similar letter was sent to the Railway on October 4, 1990 by counsel for Local 170:

We act for the U.A., Local 170. As you know, on our client’s behalf, we have filed a Petition in the B.C. Supreme Court concerning Mr. Ready’s Industrial Inquiry Commission report dated September 24, 1990.

We wish to make it clear that the specific relief sought by our clients is an Order that Mr. Ready’s report has no binding or legal effect on the U.A., Local 170 and that, as a result, there is no new Collective Agreement between the U.A., Local 170 and B.C. Rail Ltd.

The Railway accepted these letters as an attempt by the Unions to place it on notice that they had not concluded collective agreements. The Railway was surprised by this correspondence, and took the position that it had collective agreements through the Council with all seven constituent trade unions as the majority of the membership had voted in favour of the IIC recommendations. The Railway also believed that the Unions were wrong in their assertions, and proceeded to implement the new terms. This included the $600.00 settlement payment, as well as the wage increases. The Railway calculates these wage increases and other monetary improvements contained in the recommendations to total approximately $6.5 million for each of the first two years of the new collective agreement.

Judicial review petitions were filed on behalf of the Unions and were heard in British Columbia Supreme Court on October 9, 1990. In a judgement issued later that month, Mr. Justice Callaghan granted the relief sought; i.e., a declaration that the Industrial Inquiry Commission report, including the ratification vote directed therein, was of no legal effect on the Unions and their members employed by the Railway. The learned judge found that the Commission had committed an error of law and exceeded its jurisdiction by concluding that Article VII of the Constitution had no application in the circumstances.

The Railway applied to bring on an expedited appeal of the Supreme Court ruling. In the meantime, it continued (as it has continued to this date) to implement the new terms contained in the IIC report for all of the constituent unions. The appeal was heard on November 28, 1990. During the course of the hearing, the UTU sought leave to amend its petition to focus the issue more narrowly than had been addressed in the court below. In the circumstances, the Court of Appeal determined that the “solution” was to allow the appeal and dismiss the petition without prejudice to the Unions bringing on a fresh petition seeking only the narrower relief.

A new and joint petition by the Unions was heard before Madame Justice Sinclair Prowse on May 31, 1991. The Court found that the “ultimate issue to be determined between the parties is whether the collective agreements that were implemented in October 1990 are in full force and effect” (at page 24). It was concluded that the Industrial Relations Council has exclusive jurisdiction to deal with this issue, and that the Court should decline to exercise its jurisdiction (at least at that stage) of the proceedings. The judicial review petition was therefore dismissed.

The Unions then pursued the matter before the Court of Appeal. The “threshold issue” on appeal was characterized as being whether Ready had made “a decision or an order” in his IIC report, rather than “a recommendation” as permitted by Section 122 of the Act. In the event of the latter, it was conceded that the Court did not have jurisdiction to interfere. Writing for a unanimous bench, Madame Justice Proudfoot agreed with the Railway’s submission that Ready drafted a report with recommendations, including a mechanism (i.e., a vote) which, if used, could resolve the dispute. She did not agree that the words used in the report were “so coercive as to be an order which was mandatory and without alternative” (at page 19), and reasoned at page 20 as follows:

… There is no evidence here of an order or decision being made by the Commissioner. The Commissioner remained within his mandate as set out in his Notice of Appointment of September 17th, 1990. While, indeed, he may have used some strong language, the seriousness of the dispute and the tremendous economic impact called for forceful action from a person very experienced in resolving industrial disputes. No order or decision was made by the Commissioner which is reviewable by this Court. Certiorari is not available. There is nothing to quash. I would dismiss the appeal.

The Court of Appeal’s judgement was released on April 30, 1992. As some delay appeared likely before the matter was pursued further by the UTU, the Railway filed its present application with the Industrial Relations Council on May 21 of this year. Local 170’s application was filed during the course of the submission process.

IV. POSITIONS OF THE PARTIES

Against the background of several prior decisions involving the parties, the Railway advances a number of arguments to support its position that collective agreements binding on all of the constituent trade unions are in force and effect.

First, the Railway argues that it is entitled to rely on the Council’s exclusive authority as “bargaining agent”, as well as on the communication by a member of the Council that new collective agreements had been concluded. Second, the Railway argues that the Council fairly and properly interpreted its Constitution through its deliberations at the September 25, 1990 meeting where it implicitly concluded that Article VII was not applicable. Next, it is argued that no veto was exercised by either of the Unions during the September 25 meeting; alternatively, if a veto was exercised, there was a clear waiver or abandonment during the course of the Council’s meetings and proceedings resulting in a return to work. Finally, the Railway argues that the Unions have “blown hot and cold”, thereby waiving the position that collective agreements are not in force. With respect to this last argument, it is asserted that the Unions cannot “ride two horses” where extreme prejudice would result to the Railway from a finding that there is no collective agreement.

The UTU submits that the real and only issue in dispute is whether Ready was correct in concluding that Article VII did not apply to recommendations made by him as an Industrial Inquiry Commission. Counsel submits that the Constitution cannot be “circumvented” by any third party where adverse changes are opposed by the constituent union which would be affected. Local 170 joins in this position; it also submits that it is not bound by the IIC recommendations because it has not agreed in writing to accept them as required by Section 122(8) of the Act.

V. ANALYSIS

The foregoing summary of the parties’ positions does not do justice to the arguments advanced by their counsel. We will address those arguments, where required, in the course of our reasons below. Initially, however, it is useful to focus on some of the principles which are found in the previous decisions of the Labour Relations Board and the Industrial Relations Council.

(i) Prior Decisions

The Minister of Labour directed the Labour Relations Board in 1976 to consider whether a council of trade unions under Section 57 of the then Labour Code would be an appropriate bargaining agent in connection with employees of the Railway. The Board conducted a detailed examination into the history and state of labour relations between the parties: see British Columbia Railway Company, BCLRB No. 88/76, (1977) 1 Can LRBR 289. It is not necessary to review that decision at great length. The “dismal history” of work stoppages and government intervention found by the Board was confirmed by at least one witness in these proceedings as constituting a “chaotic” situation. The Board summarized its historical review in this manner:

When one steps back from these details of labour-management relations at the B.C. Rail, what is the picture which emerges? Fragmentation of the railroad work force among a number of bargaining units has produced continuing industrial relations turmoil. The only sensible response appears to be an enlargement of the effective bargaining unit one which permits the parties at the railroad to focus their attention on one, periodic set of negotiations to establish a basic economic settlement for all employees; which reduces the likelihood of a bargaining impasse if only because leapfrogging and whipsawing is eliminated; but, if negotiations do occasionally break down and a work stoppage occurs, then the basic settlement which is produced by the strike will resolve the entire round of contract negotiations. Further, notwithstanding the railroad history of craft certifications held by a number of trade unions, such a structure of coalition bargaining appears perfectly feasible, in light of the successful experience on the national railroads and the tentative steps taken in that direction on the B.C. Railway itself. On that basis, B.C. Rail asked the Board to exercise its powers under s.57 of the Code to re-draw the existing bargaining units, to define one new unit encompassing all unionized employees, and then to create a legally binding council of the incumbent units as the new bargaining agent for that larger unit.

(at page 304)

At the same time, employees would remain members of their respective unions, and there was to be ample room for direct union representation in the handling of grievances, administration of the contract, settlement of specialized contract items, and so on (see page 306). The newly constituted Council was given “the ultimate authority and responsibility for negotiating all of the collective agreements” which were due to expire in July of 1977. The Board concluded by inviting the unions to meet and prepare a proposed constitutional structure. It was considered important for them to be the primary authors of the document.

The next decision of note was authored by then Chairman Munroe in early 1980: see Council of Trade Unions on the British Columbia Railway, BCLRB No. L02/80. The issue was whether the Railway could raise a “trade” issue at the “main table” bargaining level. (Ironically, the issue was a manning dispute involving the UTU.) The following remarks of the Board are significant:

That provision (Section 57) empowers the Board, upon a reference from the Minister of Labour, to impose a multi-trade bargaining structure on trade-unions certified to a single employer. That power has been used only twice: on the Railway and in the B.C. construction industry. In the first instance, seven trade unions representing various crafts and job functions were forced into a joint council arrangement; in the second instance, seventeen trade-unions were put under the umbrella of a single bargaining council. In each instance, reasonable fears were expressed that the newly established joint council might be dominated by the larger trade-unions to the serious detriment of the smaller and less powerful; and that the joint council, in a moment of expediency, might agree to an employer demand which would strip away from one of the trade-unions a particular working condition which had been won several years before – perhaps in exchange for major concessions – and which the trade-union and its membership consider critical. In the absence of safeguards, those fears could become realities with a resulting erosion of confidence in the fairness of the joint council system. If that became serious enough, the system could effectively collapse to the detriment of all concerned.

It was because of those concerns that certain checks and balances were built into the Constitution of the Joint Council which, incidentally, was drafted by the Board following extensive consultation with the parties. What are those checks and balances? First of all, each of the constituent trade unions, regardless of size, is entitled to appoint one member to the Executive Board (which doubles as the Bargaining Committee); and each member of the Executive Board is entitled to one vote. Secondly, proposed collective agreements are not put out for a ratification vote of the composite employee work force unless a majority of the members of the Bargaining Committee resolve to take that step. Thirdly, there are the provisions of Article VI and VII which are reproduced above. Finally, the Constitution can be amended only with the approval of the Board.

(at pages 4-5)

Article VII was subsequently amended by the Board. The Railway makes much of the fact that it received no opportunity to address this change. In 1982, the Board refused a request by the Railway to remove Article VII from the Constitution (which by then existed in its current wording): see Council of Trade Unions on the British Columbia Railway, BCLRB No. Lll/82. The panel reasoned, in part:

Clearly, the major purpose of Section 57 is to secure and maintain industrial peace and promote conditions favourable to the settlement of disputes. In the Board’s view, to remove the provisions of Article VII of the Constitution at this time would lead to a further disruption between the constituent members of the Joint Council and could alter the delicate balance between the constituent members which the Joint Council has achieved. (at page 11)

In British Columbia Railway Company, BCLRB No. 226/84, the Board was similarly not prepared to consider a request by the Railway that Article VII be amended or deleted altogether (see page 16).

The final decision of note was issued by the Council in 1989: see B.C. Rail Ltd., IRC No. C179/89. The Railway applied to have two provisions of the Constitution amended, one of which was Article VII. The panel considered the Council’s history as set out in the foregoing decisions, and quoted at length from BCLRB No. Lll/82. The panel also heard considerable evidence involving the history of negotiations on the Railway as such related particularly to Article VII. It then made some “preliminary comments” concerning the Railway’s application:

… we accept the Council and CUTE’s argument that compelling evidence of a need for a change to Article VII is necessary. Within any structure that compels individual employers or trade unions to bargain collectively, a balance is reached over time. No doubt that balance would have been different had Article VII not been amended. (Much of Foley’s evidence concerned the balance achieved by the various trade unions within the Public Service Alliance of Canada). Furthermore, this is not a Section 36 review of the 1981 decision to amend the Constitution. Accordingly, before the existing balance within the Council of Trade Unions is altered, the Panel would have to be satisfied there are compelling reasons to do so.

(at page 14)

The panel in IRC No. C179/89 later made the following comments:

We are also satisfied that the veto to Article VII is consistent with the imposition of a Council of Trade Unions under Section 57 of the Act. The imposition of a Council is a unique provision. It has been imposed twice in this province. In both cases, it attempted to balance historical representation of craft unions with the broader policy considerations in the B.C. Labour Code and now the Act. While the overall bargaining authority remains vested in the Bargaining Committee of the Council, the right of each constituent trade union to continue to represent its members is retained through negotiation of individual collective agreements for each constituent trade union. The conclusion that individual trade union autonomy was reduced but not eliminated through the imposition of a Council was made by Vice-Chairman Allan Black in BCLRB No. Lll/82:

We do not deny that the imposition of the Joint Council has reduced individual trade union autonomy; however, it has not prevented a member trade union from representing its own membership. Employees retain membership in their union and that union is given direct representation on the Joint Council in the handling of grievances, trade issues, etc. Refinements to the Constitution of the Joint Council have been made after input from all of the constituent members. Moreover, Article VII of the Constitution provides as mentioned earlier, that any one of the constituent unions has the right to veto bargaining proposals that would adversely affect its existing agreement. Clearly, the trade unions are still capable of representing the particular interests of their respective memberships within the overall framework of the Joint Council.

(at page 8)

Article VII reserves the right to accede to an adverse change in a collective agreement to the trade union signatory to the contract. As the Council argued, protection of the rights accrued through collective bargaining is the most important if not the only vestige of real autonomy an individual trade union retains within the Council …

(at page 15)

The panel ultimately rejected the Railway’s application, concluding that there was “simply no evidentiary basis” to suggest that a change to Article VII was necessary.

There are three points which emerge from the foregoing decisions involving the parties, and are relevant to the present applications.

First, the Railway has on three previous occasions sought to have Article VII of the Council’s Constitution either deleted or amended. Its attempts have been unsuccessful. We must be cognizant that any interpretation we place on Article VII not undermine the force and reasoning of those prior decisions.

Second, one of the reasons that Article VII has not been deleted is the perception that it constitutes part of the “balance” or compromise between two competing objectives – both of which are consistent with the purposes of Section 57 (i.e., “to secure and maintain industrial peace and promote conditions favourable to settlement of disputes”). On one hand, the Council has successfully overcome the pattern of fragmented bargaining, leapfrogging and other unsatisfactory conditions which existed prior to 1976. The necessary element of stability has been introduced, while still allowing for the potential of lawful labour disputes involving all constituent unions in the event of impasse. On the other hand, Article VII ensures that this stability does not result in a sacrificing of individual interests at the behest of the majority. Constituent unions have lost the individual right to strike, but their agreement is required before adverse changes can be made to existing agreements.

The third point which emerges from prior decisions is that there will be a single round of collective bargaining (including both “trade” and “main table” negotiations) leading to collective agreements with all of the constituent unions. As stated in the passage from BCLRB No. 88/76 reproduced above:

… if negotiations do occasionally break down and a work stoppage occurs, then the basic settlement which is produced by the strike will resolve the entire round of contract negotiations.

(at page 304; emphasis added)

See also BCLRB No. 83/80, where the Board emphasized that none of the constituent unions have individual certifications; rather, there is a single Certification which authorizes the Council to engage in collective bargaining on behalf of the whole of the unionized workforce at the Railway.

Negotiations at the Railway have in practice produced separate collective agreements for each of the constituent unions. Nonetheless, it is the Council which is the certified bargaining agent under the statute and enters into the agreements (which all have a common expiry date) on behalf of the constituent unions. The Council has, in effect, delegated its exclusive bargaining authority in respect of trade issues, subject to those issues being brought to main table negotiations. No past round of bargaining has produced collective agreements with some, but not all, of the Council’s members. Indeed, such an outcome would be inconsistent with the fundamental premises of a council of trade unions under Section 57 of the Act (see, for example, Section 57(6)(e) which gives the Industrial Relations council jurisdiction to “settle the terms and conditions of a new collective agreement” for a council).

(ii) Interpretation of Article VII

We turn next to consider Article VII of the Council’s Constitution. The provision is repeated in full for ease of reference:

ARTICLE VII: REPRESENTATION BY THE BARGAINING COMMITTEE

The Labour Relations Board and now the Industrial Relations Council has express jurisdiction to determine any dispute over “the interpretation or application of the Constitution or By-laws” of the Council: see Article XIV(d). A straight-forward aspect of interpretation is the stipulation that the Council not agree to adverse changes “except with the written agreement of the affected union or unions” (emphasis added). At no point has either of the Unions given its written agreement to the recommendations contained in the Industrial Inquiry Commission report. The question of whether they “exercised a veto” at the September 25 meeting is both a mischaracterization of the question and largely academic. There is no need for a constituent union to exercise a veto in the sense of a positive act; rather, there is an obligation on the Council to obtain a constituent union’s written consent where proposals involve adverse changes.

The failure of a constituent union to raise a timely “veto” or objection may well be relevant in some situations (e.g., where a question of estoppel arises). We have already found here that the UTU, actively supported by Local 170, made clear to other Council members its opposition to the IIC report.

A second aspect of Article VII is the limitation that objectionable changes to an agreement be “adverse”. This is unquestionably true here in the case of the UTU, and no suggestion was made by the Railway to the contrary. The same cannot be said in respect of Local 170. It would not be affected at all by the IIC recommendations on manning. The proposal of concern to Local 170 was the recommendation on contracting out. However, the report represented improvements for all constituent unions to existing language in their collective agreements.

The more difficult question of interpretation is whether Article VII applies in the context of an Industrial Inquiry commission. The Railway supports Ready’s conclusion by arguing that the strike and subsequent Inquiry “moved the dispute to the public sector”, such that the “private” provisions of the Constitution did not apply. The Railway also argues that the recommendations respecting manning lost their character as “proposals made by the British Columbia Railway” because they were contained in the IIC report.

Unlike the more typical constitution of an individual trade union, the Council’s Constitution is inextricably linked to Section 57 of the statute and to the Certification order issued by the Board. The Constitution is a significant document. The Board’s comments in Construction Labour Relations Association, BCLRB No. 204/87, (1988), 17 CLRBR (NS) 118, which considered a similar constitutional provision and issue, are of some guidance:

We must initially point out that this “rule by majority” is subject to exceptions which address the reasonable fears that might arise in member unions if an unrestricted majority rule principle was established. First, as noted by the original panel, there is the requirement of a two-thirds majority vote on certain important decisions. Second, there is art. 6 of the Constitution which, on the original panel’s interpretation, protects members from “cuts” in terms and conditions which are not of a common concern to all members of the Bargaining Council.

Also, s. 57 of the Code does not purport to regulate the internal affairs of a council of trade unions. These affairs are generally regulated by the constitution of the bargaining council. Whether a majority rule principle governs is to be determined in part by examining that document. If that constitution is ambiguous, reference can be made to the history of Board proceedings and activities within the bargaining council concerning formulation of that constitution. This represents a general policy of deference to the parties by the Board in dealing with the internal affairs of a bargaining council. This deference is, of course, always subject to this Board’s power under s. 57(5) to make orders or give directions regarding the formation of councils and the provision for fair representation for member unions and, generally, the purposes contained in s.27 of the Code.

(at page 125-26; emphasis added)

Noted above as well is the express power or jurisdiction of the Industrial Relations Council to resolve disputes over the interpretation of the Council’s Constitution.

We have already found the fundamental purpose of Article VII to be the protection of individual unions from the majority. Consistent with this, nothing should turn on the source of “adverse changes”. The proper focus is how such changes are dealt with by the Bargaining Committee, and whether it purports to agree to proposals in the absence of written agreement by the affected union(s). See again the passage from page 4 of BCLRB No. L02/80 reproduced above (the comments were admittedly made against the backdrop of the original Article VII). Alternatively, the recommendations made by Ready respecting manning issues must properly be viewed as “proposals made by the British Columbia Railway”. These items were the key demands of the Railway and were only on the table at its initiative. At most, Ready’s recommendations amounted to a reformulation – but they remained the Railway’s proposals. To conclude otherwise would be to ignore reality and subvert the purpose of Article VII in a most obvious manner.

We therefore agree with, and adopt, this aspect of Mr. Justice Callaghan’s reasons:

Given the legislative backing behind Article VII of the constitution, the due regard to preserve minority rights within the Council, and the consistent upholding of those rights by the Labour Relations Board and the Industrial Relations Council, I conclude that the Commission was not entitled to avoid the operation of the Council’s constitution. Counsel for B.C. Rail suggested that as the proposal was put forward by the Commission rather than by B.C. Rail, the constitution had no application. I find no merit in that submission …

I find that the Commission erred in concluding that the provisions of the Council’s constitution apply only to the direct negotiations process and not to a third party arrangement. I find that was an error of law. The Commission exceeded its jurisdiction and consequently curial intervention must follow.

(at pages 23-24)

In fairness to the Industrial Inquiry commission, it did not have the benefit of the evidence and argument placed before the Supreme Court and this Panel. Our conclusion is limited, however, to the context of an Industrial Inquiry Commission. We expressly decline to address Local 170’s request for a declaration that Article VII “cannot be set aside or circumvented under any circumstances”. Any broader conclusion is best reached upon an examination of specific facts.

Accordingly, when the Council sent the IIC report to a ratification vote, and then purported to conclude new collective agreements with the Railway, it did so in violation of the terms of its Constitution. Those steps, in and of themselves, cannot “cure” or otherwise negate a violation of rights under Article VII as suggested by the Railway. That would simply allow the protection afforded in Article VII to be avoided with impunity, and perpetuate the submersion of individual concerns by the tide of the majority.

A constituent union which believes that the Council has acted contrary to the Constitution has ample avenues of redress. For example, application may be made to the Industrial Relations Council pursuant to either Section 38 of the Act or Article XIV(B) of the Constitution. Some breaches of the Constitution may well amount to conduct contrary to Section 7(1) of the Act: see BCLRB No. L02/80 at page 6. As we will emphasize below, however, any challenge to the Council’s authority must be made in a timely fashion. Further, the nature and extent of relief will depend upon an assessment of all the circumstances, including factors of delay and consequential detriment to other affected persons.

(iii) Waiver and Estoppel

A more difficult issue in this case is whether the Unions – and, more particularly, the UTU – have conducted themselves so as to now preclude an argument that no collective agreement is in force and affect. A number of judicial and other authorities were cited by the Railway to support submissions based on waiver and estoppel. None of these authorities were challenged by the Unions.

In recent years, the forms of equitable relief historically available at law have evolved substantially. The trend has been to abandon the traditional compartmentalization of remedies (e.g., acquiescence, waiver/election and estoppel), as well as the strict tests for their application. There has been a “blurring” of doctrines and an emphasis on general principles of equity. If anything, a more modern approach has advanced further in the courts than it has in the labour relations sphere.

The current law in British Columbia is exemplified by the Court of Appeal’s decision in Litwin Construction (1973) Ltd., (1988), 29 BCLR (2d) 88. The case arose from a collapsed MURB townhouse project put together by the plaintiff. When the recession commenced in the early 1980’s, many investors tried to avoid commitments to purchase units in the project. The plaintiff sued for damages as a result of the defendants refusing to complete the transactions. The defendants alleged they were entitled to treat the contract as unenforceable because the plaintiff had failed to comply with a provision of the Real Estate Act. The trial judge concluded that the defendants were estopped from relying on this defence. In coming to this conclusion, the trial judge did not apply the historical elements required to establish the various estoppel defences. Instead, the court held that the law of estoppel essentially comprises one simple question: “Has the party invoking the statute affirmed the contract unequivocally by his words or his conduct in circumstances making it unfair or unjust for him now to resile from that contract?”

On appeal in Litwin, counsel for the investors submitted that what the trial judge referred to as “that more flexible approach to estoppel” was not in accord with established authorities distinguishing estoppel and related concepts. In dismissing this argument, the Court of Appeal considered many of the older English cases dealing with the various forms of estoppel. It also considered the more modern English cases, authored primarily by Lord Denning. The Court of Appeal concluded that the modern trend in England is also towards a broad-principle approach to estoppel. It agreed that such a trend is the correct approach in British Columbia. Commencing at page 99, the Court concluded as follows:

We adopt, as did the trial judge, the question posed by Mr. Justice Lysyk in First City Dev. v. Bekei as an accurate formulation of the principle: has the party invoking the statute affirmed the contract unequivocally by his words or conduct in circumstances making it unfair or unjust for him now to resile from that contract?

We prefer the word “unfair or unjust” to “unconscionable” because in the context of “unconscionable transactions” the latter has developed a special meaning in relation to inequality of bargaining power. “Unfair or unjust” means “producing a result contrary to a sound sense of the equities, rights and conduct of the parties”.

Under this broad principle, the distinctions between estoppel, promissory estoppel, waiver, election, laches and acquiescence do not always affect the outcome, though they may in some cases. The underlying concept is that of unfairness or injustice and it is not essential to its application that there be knowledge, detriment, acquiescence or encouragement although their presence may serve to raise the unfairness or injustice to the level requiring the exercise of judgment. If the unfairness or injustice is very slight, then the principle would not be applied. if it is more than slight, then the principle may be applicable.

Thus, as to knowledge, Mr. Justice Oliver in Taylor Fashions (reported at 1981) 1 All ER 897 said “it would be unreasonable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment … .” (emphasis added).

This is now the proper test to be used in British Columbia with respect to the modern doctrine of estoppel. The purpose of the doctrine is to prevent inequitable detriment. On this point, the Court of Appeal in Litwin adopted the following passage from Grundt v. Great Boulder Proprietary Gold Mines Ltd. (1937) 59 C.L.R. 641 (Aus. H.C.):

In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.

(at page 674)

There is no requirement that the conduct relied upon by a party who seeks to raise an estoppel have been intentionally designed to induce reliance. Nor is it essential that there be any positive acts upon which the reliance may reasonably be said to have arisen; the conduct may, in fact, be a failure to act in circumstances so as to give rise to an inference upon which reliance is founded: see Bowen v. 0’Brian Financial Corp., (1991) , 62 BCLR (2d) 328 (BCCA). The requirement that there be “unequivocal conduct” is a question of fact. In Revell v. O’Brian Financial Corp. (unreported; December 13, 1991; BCCA) , one finds the following at page 14:

Whether the respondent’s conduct was sufficient for the purpose of this test to constitute an unequivocal affirmation is a question of fact. The test is similar to the test of whether conduct is sufficient to constitute waiver or estoppel. It is a question of fact in each case. … This Court will not reverse findings of facts or substitute its assessment for the findings of a trial judge, unless the trial judge has made some palpable or overriding error which affected his assessment of the facts.

Finally, in considering the notion of reliance based upon unequivocal conduct, the perspective from which the application of the doctrine must be viewed is that of the party who seeks to raise the estoppel: see Bowen, supra, at page 338.

The doctrine of estoppel has been examined in a number of labour board decisions: see, for example, Craftsman Floors (B.C.) Ltd. BCLRB No. 19/80, (1980] 2 Can LRBR 63; Board of School Trustees, School District No. 41 (Burnaby) , BCLRB No. 365/83, (1984), 4 CLRBR (NS) 141; and City of Vancouver, BCLRB No. 205/87, (1988), 17 CLRBR (NS) 234. The classic statement, of course, is that “you are not allowed to let someone go out on a limb so that you can saw him off”: see City of Toronto, (1967) , 18 LAC 273 (Arthurs), at page 280.

A more recent labour board decision is Ontario Hydro, (1990), 7 CLRBR (2d) (OLRB), where the facts were somewhat the reverse of those in the present case. Ontario Hydro and the Society which represented its professional and administrative employees (a non-certified entity) had entered into a “master agreement” which the Society sought to enforce as a collective agreement. Hydro argued that it had proceeded on an underlying assumption that the agreement between the parties would not be subject to the Ontario Labour Relations Act. The Board held:

The formulation of the doctrine of estoppel on which Hydro relies {as set out in Amalgamated Investment & Property Co. v. Texas Commerce International Bank Ltd., (1981) 3 All E.R. 577, (1981) 3 W.L.R. 565, (1982) Q.B. 84 at p. 122 (C.A.)) certainly seems to apply to the facts of this case. In the dealings between them up to and including the making of the 1983 master agreement, both Hydro and the Society proceeded on an underlying assumption that such an agreement would not be a collective agreement under the Labour Relations Act. It would be unfair and unjust to permit the Society now to go back on that assumption, because that would retroactively give the agreement a character which would have led Hydro to refuse to sign it had that characterization been applied at the time.

(at page 188)

The Ontario Labour Relations Board was satisfied that the features essential to the application of the doctrine of estoppel were made out (at page 189).

Article VII was first raised during the Industrial Inquiry commission process at the final meeting on September 22 attended by the Railway and all of the constituent unions. It will be recalled that the UTU (supported by Local 170) objected to Ready dealing with the Railway’s manning proposals, as any adverse recommendations would be contrary to the Constitution. Ready indicated he would consider the point. His answer was provided in the report delivered two days later; i.e., Article VII did not apply by virtue of his appointment under Section 122 of the Act. The Unions did nothing at that stage to convey to the Railway that they did not accept Ready’s rationale and/or would oppose the report based on their perceived rights under the Constitution.

There then followed a series of events, throughout which the Unions took no steps to convey their opposition to the Railway. Indeed, the proper and reasonable inference to be drawn from the Railway’s perspective (see Bowen, supra) is that the Unions had unequivocally accepted Ready’s view that Article VII was inapplicable. The events included:

(a) the Council meeting of September 25 at which the motion was passed for the constituent unions to vote separately on the IIC recommendations;

(b) the ratification vote process, in which the Unions participated;

(c) the meeting of September 28 at which all of the ballots were counted (including those cast by members of the Unions);

(d) the advice from Edwards to the Railway that a majority had voted in favour of ratification, such that they were prepared to conclude new collective agreements;

(e) the reliance of the Railway on that advice in its decision to accept the recommendations, notwithstanding significant wage increases (and other benefits) for all employees;

(f) the discontinuance of strike activity and the return to work by employees, some of the first being members of the UTU and later members of Local 170;

(g) the Railway’s Bulletin of September 28, which was posted and circulated throughout the system, and read in part that “the membership of the seven constituent unions in the Council of Trade Unions have voted to accept the recommendations of Industrial Inquiry Commissioner Vince Ready”; and

(h) the resumption of full operations on the Railway by October 1, 1990.

It is argued by the Unions that the UTU’s letter of October 2 and Local 170’s letter of October 4 constituted timely advice of their position that no collective agreements binding on them had been concluded. In many situations, such a time frame (a matter of days) might well be acceptable. The fact here is that the Railway was already out on the proverbial limb: it had committed to the recommendations and a high-profile labour dispute causing serious harm and disruption to the Province had been brought to an end.

Absolutely no explanation is offered for the failure of both Unions to advise the Railway of their position at an earlier date. It would have been a relatively simple measure to contact the Railway at any time following the September 25 meeting when the ratification vote process was set in motion. At the very latest, the Unions should not have discontinued their strike activity if they intended to assert that no collective agreements binding on them had been finalized. The Railway was fully entitled to conclude that new agreements were in force and effect with all constituent unions once members of both the UTU and Local 170 returned to work, along with the rest of the employees.

The suggestion by the Unions that the Railway should have “governed itself accordingly” following their letters simply ignores labour relations realities. The appropriate juncture for notice had already passed. It will be recalled that the alleged effect of the Unions’ position was that collective agreements had been reached with five of the constituent unions. The UTU’s letter of October 2 stated, in part:

… As a result, (Ready’s) report and the vote only have legal effect where there is agreement: those unions who accepted his report have a new collective agreement; those who did not, do not.

Had the Railway been given timely notice of the Unions’ position, it is highly improbable that it would have agreed to conclude collective agreements with five of the constituent unions, while continuing a labour dispute with two others. That is particularly so given the attendant risk of losing the “trade-off” in the IIC report. Part of the Railway’s reason for agreeing to substantial monetary increases was the belief that considerable efficiency could be achieved through Ready’s recommendations on manning.

More fundamentally, the position which the Unions purported to adopt was unsound at law. We have found above that negotiations on the Railway must produce a single set of new collective agreements with all of the constituent unions. It is an “all or nothing” situation. This underscores the importance, from a labour relations perspective, of clear notice being given to the Railway prior to a return to work. In reality, to support the Unions’ arguments here would mean that the Railway was faced with the prospect of going back on its agreement with the five unions and/or risking a renewed work stoppage in the event of impasse. The unions must now live with the consequences of their decision to remain silent at the time.

Additional support for our finding that the Unions should be seen to have taken unequivocal steps towards ratifying the IIC recommendations comes from a Newsletter issued by the UTU over Mulhall’s signature. It reads, in part:

I have thoroughly considered the circumstances which has (sic) put the UTU into the position which we find ourselves today. … In the Council prior to any strike action taken it was agreed by all that if we did not get contracting out that would satisfy the Council as a whole we would not be going back to work. But I am sorry to say when the pressure came to bear on the Council (READY’S REPORT) five unions excluding the UTU and Local 170 overwhelmingly agreed to accept Ready’s report and put it out for a vote knowing very well to do so would take the veto away from the Council which is an integral part of its makeup which insures that no crafts Collective Agreement will be gutted. In other words the Council gave no consideration to the UTU rights in regard to the cab, reduced crew issues and conductor pilots which the railway wanted. This also included the loss of a number of our jobs.

(emphasis added)

This Newsletter was issued subsequent to the UTU’s October 2 letter and came to the attention of the Railway’s management. Given the UTU’s view at that time, it can be seen as even more reasonable for the Railway to have earlier concluded that the Unions had agreed to be bound by Ready’s recommendations through participation in the ratification process.

The Unions argue that the Railway could have applied to the Industrial Relations Council for a determination in 1990; instead, the Railway is said to have adopted the “self-serving” position of asserting that collective agreements were in force and effect. The same might well be said of the Unions (although their position has been somewhat inconsistent as discussed below). On balance, it is our view that the Unions should have done more than simply give notice.

In addition to the events outlined above, the Railway was entitled to place prima facie reliance on the Council’s exclusive authority under the Constitution and statute to conclude new collective agreements. The Unions were challenging that authority and the basis of any challenge was within their knowledge. The normal rule is “one who asserts must prove”. Consistent with this, the Unions initially made application to court to have the IIC report set aside. Given the potential consequences – again, a finding that no collective agreement had been concluded with any of the constituent unions – it was incumbent upon the Unions to pursue their position and seek a ruling in a timely fashion.

Local 170 places considerable reliance on the Supreme Court of Canada’s decision in Orchard et al v. Tunney, (1957), 8 DLR (2d) 273. In that case, an executive board of a trade union, charged with administration of a union shop agreement with an employer, suspended and then expelled one of its members. This resulted in a loss of employment and other hardship. The suspension had been imposed without a semblance of authority, and was found to constitute an ultra vires act for which the members of the executive were individually responsible. The Court held:

The steps so taken by the {Executive Board} and the subsequent action were found by the Courts below to have been wilful and without justification or excuse. Acting in an ultra vires course they were not representing the Union; their acts were those of third persons; and they cannot be heard to say, nor was it argued, that what they did was done as legitimate measures in advancing the interests of their organization.

(at page 284)

Local 170 argues by analogy that the Council’s communication through Edwards that collective agreements had been concluded was an ultra vires act. It was therefore not binding on the Unions.

We entertain serious doubt as to whether Orchard v. Tunney properly has application to the present facts. Nonetheless, the difficulty with Local 170’s reliance on that case is that the employer was not affected by the trade union’s internal actions:

… The actions of the individual appellants did not result in the Crescent Creamery Co. breaking its contract of employment with Tunney. Since the bargaining agent authorized to act on his behalf had agreed that membership in the Union was to be a condition of his continued employment, the action of the employer in, first, suspending, and then dismissing him, with payment of a week’s wages in lieu of notice, did not involve any breach of contract on its behalf. However, in my opinion, similar principles are applicable in determining the question of liability.

The members of the Executive Board were in a particularly advantageous position if they wished to injure Tunney in this manner. The employer was bound by its agreement to employ only members of the Union and could not be expected to enquire into the regularity of the Proceedings resulting in Tunney’s alleged suspension or in his having thereafter ceased to be a member. …

(at page 289; emphasis added)

By analogy, the Railway was bound by the statute and Certification to recognize the Council as exclusive bargaining agent. It had received no indication from the Unions prior to October 2 from which it might reasonably be expected to inquire into the regularity of the ratification proceedings of the Council. Moreover, no equivalent issue of estoppel arose in the Orchard v. Tunney case.

A consideration in our conclusions thus far has been the fact that the Unions (and Local 170 in particular) had the benefit of legal advice from at least the September 25 meeting onwards. Callard explained that his union participated in the ratification vote process because rejection would avoid the potential of costly legal proceedings at a later date. This rationale is understandable but does not provide a complete answer. More specifically, it fails to explain why the Railway was not given earlier notice if Callard had already decided to challenge the legality of a vote in favour of acceptance.

A further difficulty with the Unions’ position is their continued acceptance of beneficial recommendations in the IIC report following their letters of October 2 and 4, 1990. To be consistent, it was not necessary for the membership to “work for free” as postulated by one of their counsel. An alternative would have been to request that the Railway place monies (e.g., the settlement payment) in a trust account. The approach which the Unions have taken since early October 1990 is answered by the B.C. Court of Appeal’s decision in Derrickson v. Madsen, (1987), 15 BCLR (2d) 125:

In my opinion, {the plaintiff} cannot receive payments pursuant to the 1980 arrangement and, at the same time, deny its existence and seek to enforce his claim for damages for breach of the 1983 agreement. As long ago as 1805 the Lord Chancellor in Birmingham v. Kirwan, (1805), 2 Sch. & Lef. 444 at 448, stated the pertinent principle succinctly in these words:

The general rule is, that a person cannot accept and reject the same instrument: and this is the foundation of the law of election, on which courts of equity, particularly, have grounded a variety of decisions, in cases both of deeds and of wills …

The law does not permit a party to exercise two inconsistent rights and, even though the party expressly states that he intends to reserve a right, he will, nevertheless, lose it if he takes an inconsistent course. …

(at page 131; emphasis added)

Nor should the practice of permitting inconsistent rights to be exercised over an extended period of time be condoned as a sound labour relations policy. One party to a collective agreement cannot take the benefit of its terms and at the same time deny its existence – at least not without the express concurrence of the other party. Thus, even if no estoppel existed by the time of the Unions’ letters, their inconsistent conduct over the intervening period of two years is fatal to the position which they now advance.

In this case, the underlying assessment which must be made is whether it would be “unfair or unjust” to now find that there are no collective agreements in force and effect between the Railway and the Unions. The test is whether the result would be “contrary to a sound sense of the equities, rights and conduct of the parties”: see Litwin Construction, supra, at page 99. We have no hesitation in concluding that the doctrine of estoppel should apply, particularly in the absence of any proposal from the Unions for minimizing the resulting detriment to the Railway.

The Unions (and, indeed, all of the constituent unions) have enjoyed the wage increases and other favourable recommendations contained in the IIC report. The cost to the Railway has been something in the order of $13 million. It has always been within the control of the Unions to seek a timely determination of their rights in the proper forum; i.e., before the Industrial Relations Council. Virtually at the expiry of the term, the UTU would have set aside those adverse changes in the collective agreement which it finds objectionable. In simplest terms, it wants a result providing “the best of both worlds”. Further, a ruling in favour of either of the Unions would dictate a finding that there have been no collective agreements in force and effect with any of the constituent unions. The consequential prejudice to the Railway and the deleterious effect on collective bargaining should be self-evident. We therefore hold that the Railway is entitled to rely on the equitable doctrine of estoppel in response to the Unions’ assertion that they are not at this time bound by the IIC recommendations.

(iv) section 122(8)

There remains Local 170’s argument that it is not bound by any new collective agreement with the Railway because it has never consented in writing to Ready’s IIC recommendations. Section 122(8) of the Act provides:

(8) Where, either before or after the report, the parties agree in writing to accept the report in respect of the matters referred to the industrial inquiry commission, the parties are bound by the report in respect of those matters.

The “parties” referred to in this sub-section must be interpreted to mean the Council of Trade Unions and the Railway. It will be recalled that the Council enters into collective agreements “on behalf of” the constituent unions. Local 170 is certainly bound by the collective agreement – as are individual employees – but that does not make it a party: see Section 64(a) of the Act. To conclude otherwise would effectively give each constituent union a veto power in the absence of any adverse changes to any collective agreement. This would be contrary to both Section 57 of the statute and the Council’s Constitution. In the same way that a constituent union can be bound by majority vote of the Council where proposals made by the Railway in collective bargaining do not result in adverse changes, it can be bound by recommendations made by an Industrial Inquiry Commission.

Alternatively, for reasons outlined above, Local 170 is now estopped from denying the existence of a binding collective agreement.

VI. CONCLUSION

In summary, we have found that the Council acted contrary to the protection afforded the UTU in Article VII of the Constitution when it purported to ratify recommendations made by the Industrial Inquiry Commission and conclude new collective agreements on that basis. The UTU did not give written agreement to adverse changes contained in the recommendations.

We have also found that both the UTU and Local 170 are now precluded, by reason of an estoppel, from denying the existence of new collective agreements incorporating the IIC recommendations. Their conduct would make it patently “unfair and unjust” to conclude otherwise at this late stage. The result is that there are binding collective agreements in force and effect between the Railway and the council, on behalf of all seven constituent unions.

We conclude with the following comments. The Labour Relations Board and the Industrial Relations Council have on three separate occasions declined to entertain applications by the Railway to delete or amend Article VII of the Constitution. We have been cautious in this decision to not undermine those prior judgments. Nonetheless, the provisions of the Constitution are not cast in stone. In IRC No. 179/89, the panel confirmed a jurisdiction to amend, but concluded that “the evidence does not suggest a change is necessary” (at page 16). Circumstances may well change. The parties are facing some difficult collective bargaining issues. Should the existing Constitution not allow the Council to “secure and maintain industrial peace and promote conditions favourable to settlement of disputes”, it may be necessary for the Industrial Relations Council to re-examine the matter. The earliest that any such inquiry might be conducted, however, is following settlement of the next round of negotiations.

INDUSTRIAL RELATIONS COUNCIL

(signed) JOHN B. HALL (signed) BARBARA J. JUNKER

CHAIRMAN, ADJUDICATION DIVISION MEMBER

(signed) GARY KOBAYASHI

MEMBER