Cloke-Kirby Construction Limited

3137-09-G Labourers’ International Union of North America, Local 506, Applicant v.
Cloke-Kirby Construction Limited, Responding Party.
BEFORE: David A. McKee, Vice-Chair.
DECISION OF THE BOARD: July 4, 2014
1.
This is a referral of a grievance to arbitration pursuant to section 133 of the
Labour Relations Act, 1995, S.O. 1995, c.1, as amended (the "Act"). The applicant,
Labourers' International Union of North America, Local 506 (the “Labourers”) asserts
that the responding party, Cloke-Kirby Construction Limited (“Cloke-Kirby”) violated
Article 2.05 of the Labourers’ Provincial Collective Agreement by subcontracting work
covered by the collective agreement to Rafat General Contractors Inc. (“Rafat”). The
work was essentially site preparation, excavation, site services and some ground level
formwork. The work was performed at the site of a newly constructed Sri Sathya Sai
Baba Centre of Scarborough (the “Temple”). Cloke-Kirby is bound to the Labourers’
Provincial Collective Agreement. Rafat is not.
2.
Cloke-Kirby initially responded to the application and defended it vigorously.
Its position was that it acted as a Construction Manager, as permitted under Article 2.07
of the Labourers’ Provincial Collective Agreement and that it was therefore not bound by
Article 2.05. There is much to be said in general for this argument. The contract that
Cloke-Kirby executed with the Temple provided that its fee would be 6.00% of the cost
of construction. That amount would hardly cover the overhead of most general
contractors of any size. The aim of the Temple was to seek out contractors from within
their own community, in part for feelings of cultural and religious solidarity, and in the
hopes that those who were doing some of the work would be motivated to make
contributions in kind. In addition some members of the Temple contributed their own
labour for some parts of the work.
3.
Cloke-Kirby decided at some point that it would not defend this grievance. It
advised the Board that it was considering whether to remain in business or not. It did not
appear again at the hearings and did not participate in the final examination of witnesses
and argument.
4.
As noted, the Labourers’ grievance focusses on the work performed by Rafat.
In this case, it is impossible to apply Article 2.07 to the facts of this case. The relevant
provisions of the collective agreement are as follows:
2.05 (a) For all work in the industrial, commercial and institutional
sector, which is covered by this Agreement, the Employer agree to
engage only contractors and/or subcontractors bound to this
Agreement.
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(b) For work forming part of an ICI general contract, but not
covered by 2.05 (a), the employer agrees to engage contractors and/or
subcontractors that are bound to an applicable agreement with the
OPDC or bound to an applicable agreement with the local Union in
whose geographic jurisdiction the work is being performed.
…
2.07 Without restricting in any way the application of the subcontracting provision contained in Article 2.05 of this Agreement, an
Employer who undertakes a contract with an owner to provide
construction management services shall be subject to said Article 2.05
unless:
(i) The owner selects contractor(s) not bound to this Agreement
to bid on work covered by this Agreement and solely and directly
solicits or obtains bid(s) for such work from such contractor(s)
without any involvement or participation by the Employer in the
selection of such contractor(s) (except as to the validity of the bids) or
the solicitation or obtaining of any bid(s) from any contractor(s)
regardless of whether it (they) is (are) bound or otherwise to this
Agreement;
(ii) The owner accepts bid(s) from contractor(s) not bound to this
Agreement; and
(iii) The owner contracts or sub-contracts directly with
contractor(s) not bound to this Agreement without contractual
obligation of the Employer for the work of such contractor(s), other
than for the negligent acts or omissions of the Employer.
2.08 Any failure to comply with Article 2.07 of this Agreement shall
render the Employer liable for damages equivalent to those for the
breach of the sub-contracting provision set forth in Article 2.05
above.
5.
The uncontested facts that I have are as follows:
6.
Mr. Sabaatnam Balachandran, a member of the Board of Directors of the
Temple and the contact person for the construction project, testified that there was no one
within the Temple community who had the necessary business knowledge and skills to
perform the work, and no one knew of a contractor who did. Accordingly Cloke-Kirby
assembled four contractors who offered prices on the work. It presented these four bids
on the work to the Temple and recommended that the Temple engage Rafat. The Temple
agreed. However, the contract was formalized when Cloke-Kirby issued several separate
“Subcontract purchase orders” to Rafat in its own name. When Rafat made a demand for
payment, Cloke-Kirby would pass it on to the Temple by way of a Cloke-Kirby invoice
that attached the copy of the Rafat claims and included that amount and its 6.00% fee in
the total invoice amount. Mr. Balachandran said that the Temple paid the amount to
Cloke-Kirby and expected Cloke-Kirby to pay the amounts demanded by Rafat.
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7.
This arrangement, while no doubt charitable in its intent, does not conform to
the requirements of Article 2.07. The recommendation of Rafat as subcontractor is
contrary to the obligation in Article 2.07(i) that Cloke-Kirby have no involvement in
selecting the subcontractor other than soliciting bids and approving them as to content or
validity. Cloke-Kirby contracted directly with Rafat, rather than the Temple, as would be
required to come within the ambit of Article 2.07(iii). Article 2.08 is unequivocal. A
failure to comply with Article 2.07 “shall render the Employer liable for damages
equivalent to those for the breach of the sub-contracting provision” in Article 2.05.
8.
The Board stresses that in this circumstance, the Board is making a finding of a
violation of the collective agreement in the absence of any argument from Cloke-Kirby.
It might well be seen as a triumph of form over substance. Cloke-Kirby’s intention was
hardly a profit-making venture. The execution of the contract and the payment of the
money could have been documented in a different manner to comply with
Article 2.07(iii). It is not so apparent, however, that the recommendation of a contractor
is not a substantive violation of the provisions of Article 2.07(i). Given the history of the
construction management clause, it may also be that the compliance with the technical
requirements of Article 2.07 is necessary to ensure compliance with the essential scheme
of construction management contracts.
9.
I have had no argument or evidence from Cloke-Kirby on this matter. On its
face, the contract with Rafat did not conform to the provisions of Article 2.07 and hence
amounts to a subcontract that is in violation of Article 2.05. In the absence of any
articulated opposition, there is no reason to come to any other conclusion.
10.
The Board therefore finds that Cloke-Kirby has violated the provisions of
Article 2.05 and that Article 2.08 prescribes that damages are payable under the usual
Blouin Drywall calculations. It may be, of course that Local 506, the only applicant
herein, may have suffered no damages for the performance of work such as site
preparation, and sewer and watermain construction, since normally it would be members
of Labourers’ International Union of North America, Local 183 who would perform such
work. The Labourers were unable to quantify their damages at the hearing, and
accordingly the matter was adjourned to a date to be fixed at a later time to quantify those
damages. The Board remains seized of this matter to do so.
11.
This application is adjourned sine die for a period not exceeding one year. If
within that time no party asks that it be relisted for hearing, the Board will conclude that
the applicant has abandoned it, without notice to the parties or a further decision.
“David A. McKee”
for the Board
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