Counsel:

I.  NATURE OF THE APPLICATION

¶ 1      This decision is about the five year effort of the Companies to rationalize their bargaining structure.  The Companies are in the harbour cruise business and operate three motor vessels:  the Britannia, the Constitution and the Harbour Princess.  The ILWU represents deck hands employed on the Britannia.  The Guild represents officers on the Constitution and Harbour Princess who perform deckhand duties, as well as officers on the Britannia.  The reason at the heart of the Companies' effort is that the remaining deckhand position which existed on the Britannia had approximately 15 minutes of meaningful non-exclusive work assigned to it consisting of tying and untying the vessel at the start and end of each voyage.  The same work was and is performed on the other vessels by Guild members as an incidental duty.  The balance of the duties once performed by the deckhands are now distributed amongst the Guild represented officers and contracted out "hospitality" personnel:  bartenders, servers and others.

¶ 2      There have already been a number of Board hearings and decisions respecting these matters.  In Decision BCLRB No. B301/98 the Board exercised its discretion under Section 35 of the Labour Relations Code, the successorship provision, and cancelled ILWU's certification in order to rationalize the bargaining structure.  In an application for reconsideration, ILWU alleged it had obtained new evidence which would cause the Board to reconsider its cancellation order.  The reconsideration panel in BCLRB No. B63/2000 remitted the issue of new evidence to me.  A hearing to address the new evidence began in June of 2000.  During that hearing other new evidence was introduced which resulted in the hearing being adjourned.

¶ 3      During the hiatus caused by the adjournment ILWU applied to have its certification varied to change the name of the employer from Harbour Ferries to Harbour Cruises and for a declaration that Harbour Cruises and Emral are a single employer pursuant to Section 38 of the Code.

¶ 4      In the fall of 2000 I granted the variance in BCLRB No. B376/2000.  In that decision I also found, based on the other new evidence introduced at the June 2000 hearing, that Graham Clarke, the owner and sole guiding mind of the Companies, had misled the Board in previous hearings as to the state of the Companies' business affairs.  I made no finding as to whether the misrepresentation was deliberate, negligent or innocent.  A case management meeting was held to establish the parameters of any further hearings and submissions were invited.

¶ 5      In submissions filed following the case management meeting, Clarke and the Companies maintained that any misrepresentation was not deliberate and that they wanted an opportunity to prove it.  The Companies did not dispute that Emral and Harbour Cruises are a common employer but took the position that the Board, in exercising its remedial discretion under Section 38 of the Code, should nonetheless cancel ILWU's certification in order to rationalize the bargaining structure.  ILWU argued that Clarke's misrepresentation was deliberate and that therefore the Companies' request to cancel ILWU's certification should be denied on equitable grounds. ILWU also contended that, in exercising the Board's remedial discretion contained in Section 38 of the Code, I should restore matters to where they stood in 1996 before any of the applications were made by any of the Companies, in keeping with the purpose of Section 38 to protect bargaining rights.

¶ 6      I found the issues of whether ILWU's certification ought to be cancelled and whether Clarke had deliberately misled the Board to be inextricably intertwined.  I consolidated these matters into one hearing which was conducted in March of 2001.  What follows is my decision arising from that hearing.

II.  BACKGROUND

¶ 7      The background to this matter is set out in considerable detail in the Board's decisions BCLRB Nos. B195/98, B301/98, and B376/2000.  Throughout the various proceedings before the Board the Companies, through the testimony of Clarke, made the history of this matter far more convoluted than it actually is.

¶ 8      Before 1982, Harbour Ferries ("Harbour Ferries No. 1") owned and operated the Britannia and the Constitution. The Canadian Brotherhood of Railway, Transport and General Workers ("CBRT") was certified to represent deckhands employed by Harbour Ferries and the Guild represented officers on both vessels.

¶ 9      In 1982, Harbour Ferries No. 1 changed its name to HF Management Ltd. ("HF Management").  HF Management continued to own the Britannia and Constitution and to employ the management personnel who managed the harbour cruise business. However, an inactive numbered company (a "shelf company") was renamed Harbour Ferries ("Harbour Ferries No. 2").  Harbour Ferries No. 2 continued to operate the Britannia and Constitution and to employ the officers and deckhands. Harbour Ferries No. 2 operated the harbour cruise business. It also operated ferry services using other motor vessels. The ferry services part of the business is not relevant to the matters before me.

¶ 10      On October 14, 1994, the CBRT certification was varied to show ILWU as the bargaining agent now representing deckhands employed by Harbour Ferries (Harbour Ferries No. 2). Despite being certified to represent deckhands employed by Harbour Ferries, there were no deckhands employed on the Constitution and employees represented by the Guild performed any deckhand work.

¶ 11      In 1995, Emrol Enterprises Ltd. ("Emrol") was incorporated to purchase the motor vessel Harbour Princess. The Guild was certified to represent the employees of Emrol. There were no deckhands employed by Emrol.   Employees represented by the Guild performed all deckhand duties.  The Harbour Princess was used by HF Management in the harbour cruise business.

¶ 12      In May of 1996, Harbour Ferries No. 2 changed its name to Harbour Cruises.  The rationale for this change was to reflect the true nature of its business in the hospitality industry in which Harbour Ferries had been operating.  HF Management continued to own the Britannia and Constitution and employ the management personnel.  Emrol continued to own the Harbour Princess and employ the Guild represented personnel.

¶ 13      In June of 1996, an applicant calling itself Harbour Ferries applied to the Board for an order cancelling ILWU's certification and collective agreement pursuant to Sections 139(1) and 142 of the Code (the "first application"). At that point, Harbour Ferries No. 2 had ceased to exist.  It had changed its name to Harbour Cruises and in fact, there was no entity named Harbour Ferries in existence.  While that discrepancy had no immediate significance in the first application, it gained significance in the next matter.  The first application was heard in November of 1996.  In September of 1996, another shelf company had its name changed to Harbour Ferries ("Harbour Ferries No. 3") for the sole purpose of protecting the Harbour Ferries name.  That shelf company had nothing to do with the harbour cruise business or ILWU.

¶ 14      In BCLRB No. B195/98, I applied the factors in Island Medical Laboratories Ltd., BCLRB No. B308/93 (Leave for Reconsideration of IRC No. C217/92 and BCLRB No. B49/93), (1993), 19 CLRBR (2d) 161 ("IML") and concluded that there was no merit to the first application.  I determined that Harbour Ferries could take steps to solve its own inter-union and inter-bargaining unit problem and that its reason for coming to the Board premised on a fear of arbitration was insufficient for me to order the cancellation of ILWU's certification and collective agreement.

¶ 15      Shortly after BCLRB No. B195/98 was issued, the remaining deck hands were laid off and the operation of harbour cruise business was transferred to Emral.  Emral and Emrol are the same corporate entity.  Emrol was a misspelling of Emral which was corrected at the time of the business transfer.  An applicant once again calling itself Harbour Ferries brought an application to the Board for a successorship declaration between itself and Emral and for a declaration cancelling ILWU's certification and collective agreement (the "second application").  Harbour Ferries contended that Harbour Cruises was simply a name under which it and Emral operated.  It said that the Harbour Cruises name reflected its business and that it was a name with which the public was familiar.  Based on that evidence, I determined in BCLRB No. B301/98 that there had been a successorship of the whole of Harbour Ferries' business to Emral and gave a number of directions and issued a number of orders.

¶ 16      At the time of this application, Harbour Ferries No. 3 was a shelf company that had nothing to do with the harbour cruise business.  Harbour Cruises was in fact the entity carrying on the harbour cruise business and was not merely a shelf company protecting the name which was being held out to the public.

¶ 17      The decision in BCLRB No. B301/98 turned in part on whether Harbour Ferries would ever operate again.  The imminent demise of Harbour Ferries was held out as the basis for meeting the Board's test for cancellation of a certification.  While I did not immediately cancel the certification, I did take into account that there had been a successorship of the whole of Harbour Ferries' business and that Harbour Ferries was soon going to cease to exist. Harbour Ferries No. 3 was in fact dissolved in June of 1998.

¶ 18      My decision in BCLRB No. B301/98 was the subject of an application for reconsideration.  One of the issues that attracted the Board's attention on reconsideration was ILWU's contention that Harbour Ferries would once again operate and that it was not in fact dissolved.  ILWU alleged that it had new evidence that Clarke had taken steps to resurrect Harbour Ferries as a corporate entity to do more than simply preserve the Harbour Ferries name.  The reconsideration panel held that this new evidence could be put before the Original Panel, myself, in a subsequent hearing.  That hearing took place in June of 2000.

¶ 19      At the June 2000 hearing, a number of previously unknown facts were disclosed.  It was disclosed that Harbour Ferries No. 3 was a renamed shelf company which had nothing to do with the harbour cruise business.  This shelf company had been renamed Harbour Ferries (Harbour Ferries No. 3) in September of 1996 for the sole purpose of preserving the name and it was Harbour Ferries No. 3 that was wound up in June of 1998 to establish that Harbour Ferries would no longer operate.  It was also disclosed that later in the summer of 1998 yet another shelf company was renamed Harbour Ferries ("Harbour Ferries No. 4").  It was the activities surrounding the renaming of yet another shelf company which caught ILWU's attention, causing it to raise the issue before the reconsideration panel.

¶ 20      In the June 2000 hearing Clarke confirmed in his testimony that Harbour Ferries No. 2, which had operated the harbour cruise business, had changed its name to Harbour Cruises in May of 1996.  Harbour Cruises operated the harbour cruise business from that date and was the operator when the applicant calling itself Harbour Ferries had made the initial application to the Board.  Clarke also testified that it was Harbour Cruises which then disposed of the operating arm of its business to Emral but continued to be the marketing wing of the business.

¶ 21      The June 2000 hearing was adjourned to a later date.  In the interim, ILWU applied to amend its as yet un-cancelled certification to show Harbour Cruises as the correct employer.  Submissions were received and considered by the Board on that application.  Clarke and the Companies opposed the ILWU's application primarily on the basis of estoppel.  In its submissions, ILWU accused Clarke of deliberately misrepresenting facts to the Board.

¶ 22      In the course of deciding the ILWU's application to vary its certification in BCLRB No. B376/2000, I set out what I believed to be the true state of the facts based on the evidence heard from Clarke in June of 2000.  I found, based on Clarke's June 2000 testimony, that what had occurred in June of 1998 in the transaction between Harbour Cruises and Emral Enterprises was a partial successorship, in other words, the transfer of part of the business from Harbour Cruises to Emral Enterprises Ltd.  In paragraph 31 of that decision I indicated that "[t]he operating aspect of the harbour cruise business passed to Emral Enterprises from Harbour Cruises but the goodwill, logo, name recognition, and the marketing aspect of the business remained with Harbour Cruises which is the business name under which Emral Enterprises now operates". That finding fatally undermines the foundation (that Harbour Ferries would never operate again) of the Board's decision in BCLRB No. B301/98 to cancel ILWU's certification.

¶ 23      During the course of the proceedings to amend the certification, Harbour Cruises and Emral conceded that they were all under common control and direction of Clarke.  They further conceded that it would be appropriate to have them declared a common employer.  As part of its application to amend its certification ILWU also brought an application to have all of the entities declared a common employer.

¶ 24      While the parties agreed that I should make a common employer declaration, they differed on the labour relations purpose for such a declaration.  Emral and Harbour Cruises took the position that the purpose of the declaration would be to rationalize the bargaining structure and eliminate ILWU's bargaining unit, certification and collective agreement.  ILWU argued that the labour relations purpose was the preservation of its certification and collective agreement, particularly in the face of what it claimed was deliberate misrepresentation to the Board of the facts by Clarke.

¶ 25      In the end, I granted the variance application in BCLRB No. B376/2000.  In that decision I found that the Board had been misled and that facts had been misrepresented in these proceedings.  I was not prepared to allow the Companies or Clarke to rely on the misrepresented facts in order to defeat ILWU's application to amend its certification.  Clarke took issue with the finding I made and contended that he ought to be given an opportunity to establish that there was no deliberate misrepresentation.

¶ 26      A further hearing was held in March of 2001 to address the impact of the common employer status.  Clarke and the Companies maintained that ILWU's certification should still be cancelled.  ILWU took the position that, given Clarke's misrepresentation of the facts in the previous Board proceedings, the Board should deny the remedy sought by the Companies and maintain the ILWU certification and bargaining unit.  Clarke was given an opportunity at that hearing to contest the allegation that he had deliberately misled the Board.

¶ 27      At the March 2001 hearing Clarke's accountant, Sam Lee, testified.  He described Clarke's financial arrangements and the relationship between the various corporate entities operated by Clarke.  From his evidence it became clear that Clarke treats all of the corporate entities in relation to the harbour cruise business as part of one business.  The finances are blended and monies are readily moved between the corporate entities to meet day-to-day liabilities with little regard to corporate barriers. Clarke's sole concern is that there be enough cash flow overall in the harbour cruise business to meet his day-to-day liabilities.

¶ 28      It also became clear that where corporations underwent name changes or transfers of business, that information was promptly provided to Revenue Canada, the banks and the Ministry responsible for corporate affairs in Victoria.  However, no such prompt notification was given to the Board or ILWU.  Lee established that Clarke took little interest in the details of how his business was operated and was more concerned with ensuring a sufficient cash flow.  It was at this time that the evidence also revealed that HF Management was inextricably involved with the operation of the harbour cruise business.  HF Management employs and pays the salaries of excluded personnel who manage Harbour Cruises and Emral.  When Harbour Ferries No. 2 changed its name to Harbour Cruises a similar change took place on the paycheques of its employees.

¶ 29      Clarke also testified.  He is involved in a variety of undertakings beyond the harbour cruise business. Among other things, he is the Chair of the Board of Directors and for a time was the Chief Executive Officer of the Vancouver Airport Authority.

¶ 30      Clarke described his relationship to the harbour cruise business as that of the Captain of the Star Ship Enterprise.  Whenever he wanted something done he simply gave the direction to "make it so" and left the details to others. Clarke explained that he was far too busy to take account of the details of how the various corporate entities in the harbour cruise business were interlaced.  It was only after BCLRB No. B376/2000 was issued on October 13, 2000, that Clarke met with his corporate solicitor and labour counsel, as well as his accountant, to inform himself of all the details of how his businesses operate.  It was only then that he learned that Harbour Cruises was not in fact the marketing arm of the business as he had previously testified in June of 2000.

¶ 31      As it turns out Harbour Cruises had disposed of the whole of its business including marketing, goodwill, logo and the operating aspects to Emral in 1998 through a complex series of share transactions between the corporate entities. As a result, Emral in fact operates the whole of the business and Harbour Cruises is the name under which it operates.  The corporate entity which bears the Harbour Cruises name is for all intents and purposes an empty shell.

¶ 32      Clarke also testified that as a result of laying off the deckhands and having the vestige of non-exclusive deckhand work performed by Guild officers, he had to hire an additional second mate at a wage rate higher than he would have paid the deckhands.  However, Clarke justified this additional expense on the basis of flexibility because he could assign the second mate work on any of the vessels which he operates in the harbour cruise business.

III.  ARGUMENT

¶ 33      The Companies say that they are now in a position to meet the Board's test for cancelling ILWU's certification. The Companies contend that it is unnecessary to deal with the implications of the common employer because the successorship from Harbour Cruises to Emral provides the full answer, as it did in BCLRB No. B301/98 between Harbour Ferries and Emral. The Companies maintain that nothing material changed from that decision other than the simple substitution of the Harbour Cruises name for Harbour Ferries.  In all other respects the outcome should remain the same.

¶ 34      The Companies maintain that Clarke did not deliberately mislead the Board or misrepresent facts to the Board in the previous hearings.  They say he was simply too busy to take the time to learn the details of his businesses and instead put forward what he believed to be the facts.  The Companies argue that no harm was done and, at the end of the day, the outcome which the Board reached in BCLRB No. B301/98 is the very outcome which the Board could now reach based on the facts as they have been clarified in the last two sets of hearings.

¶ 35      The Companies argue that in hindsight it might have been prudent to have applied for a common employer declaration and brought an application to consolidate bargaining units.  They say that in the end the ILWU's common employer application effectively opens the door for the Board to consider the Companies' request for consolidation as part of its remedial discretion.  The Companies say the only vestige of deckhand work which was being performed before the last deckhand was laid off in 1998 was the 15 or 20 minutes of tying and untying the vessel at each end of the trip.  That work is not exclusive and does not justify the continuation of ILWU's bargaining unit or certification.  The Companies argue the result should therefore be no different than what was reached in BCLRB No. B301/98.  The Companies say the only outstanding issue to be concluded is a proper severance arrangement with the ILWU for the laid-off deckhands.

¶ 36      ILWU argues that Clarke has been less than forthright with the Board.  ILWU points out that in June of 1998 Clarke signed all of the paperwork for the dissolution of Harbour Ferries No. 2 just two weeks before taking the witness stand at the Board and maintaining that Harbour Ferries No. 2 was the entity that operated the harbour cruise business and that it was transferring its business to Emral.  ILWU says he must have known that Harbour Ferries No. 2 was nothing more than an empty shelf company that was no longer connected to the harbour cruise business when he gave that testimony. Indeed, ILWU points out that Clarke had sworn an affidavit just two weeks previous attesting to the fact that Harbour Ferries had not carried on business for five years.  When questioned in cross examination as to why he would advance Harbour Ferries going out of business in June of 1998 as significant, Clarke replied it was for the purpose of convincing ILWU that Harbour Ferries would no longer carry on the harbour cruise business.  ILWU questions this rationale because it says it had no problem or concerns about Harbour Ferries at that time.  Those concerns did not arise until later in the summer when yet another shelf company was renamed Harbour Ferries (Harbour Ferries No. 3).  So, says ILWU, who was Clarke attempting to convince if not the Board?

¶ 37      Based on all of this, ILWU says that the only conclusion the Board can reach is that Clarke deliberately attempted to mislead the Board and therefore, the remedy sought by the Companies should be denied.  ILWU argues that the Board has the jurisdiction and discretion to do so both under the remedial authority of the common employer section of the Code and under the equitable jurisdiction expressly granted in Section 133(1)(c) of the Code.  ILWU argues that the Board should find that the Companies have employed a colourable device to deprive ILWU of its legitimate rights under the Code and that ILWU's certification, bargaining unit and collective agreement should be maintained.  Moreover, ILWU says the purpose of a common employer declaration under Section 38 of the Code is to protect its rights from erosion through corporate manipulation.

¶ 38      ILWU also argues that the business reason for laying off deckhands is suspect given that Clarke was forced by the Guild to hire an additional officer at a higher wage rate to perform the work formerly done by the deckhands.  ILWU says that the lay-off scheme has been designed solely for the purpose of eliminating its rights.  It says that on all of these grounds, the Companies' request should be dismissed.  In addition, ILWU argues that it should be made whole for all expenses incurred in exposing the true state of facts.

IV.  ANALYSIS AND DECISION

¶ 39      I begin by observing that the issue that once attracted the reconsideration panel's interest and which was remitted to me has been rendered academic by the factual disclosures since made by Clarke and other witnesses for the Companies.  It is therefore unnecessary for me to address that matter any further.  I therefore turn to the new issues that have been raised in the last two sets of hearings since the matter was remitted by the reconsideration panel and in ILWU's application for a common employer declaration.

¶ 40      Having considered the evidence, I am prepared to accept that Clarke did not testify with a view to deliberately misleading the Board in a premeditated way as to material facts relating to the operation of the harbour cruise business.  I accept that for Clarke, all of the corporate entities are nothing more than indistinguishable aspects of a single harbour cruise business.  While Clarke may well have been attempting to convince the Board in June of 1998 that Harbour Ferries would never operate the harbour cruise business again, that is a position which he consistently and steadfastly maintains to this date.

¶ 41      Accepting that Clarke did not set out to deliberately mislead the Board, his conduct in not informing himself and taking the witness stand purporting to testify to the truth of matters of which he knew nothing was careless to the point of reckless disregard for the consequences. Borrowing Clarke's own analogy, as with Jean-Luc Picard, the ultimate responsibility rests with Clarke as the owner and sole guiding force of all these corporate entities.  The buck does not stop with his accountant, his corporate solicitor or his labour lawyer.  Clarke is the one who took the witness stand and was under an obligation to ensure that his testimony was as accurate as possible.  While Clarke may be a very busy individual and in every sense a generalist who has an overview of the various enterprises in which he is engaged, that does not excuse him from testifying with a reckless disregard as to the accuracy of his sworn testimony.  I will address the impact of that carelessness below.

¶ 42      ILWU strongly urges the Board to conclude that the Companies should now be denied any relief and that the Board should decline to eliminate ILWU's bargaining unit and cancel its certification.  It maintains that Clarke deliberately misrepresented facts to the Board and therefore has used a colourable device to persuade the Board to grant his application.

¶ 43      The Companies argue that the material facts, as they have finally been verified through a careful examination of the corporate structure and the financial accounting systems and presented to the Panel in this last hearing, establish that the outcome in BCLRB No. B301/98 was correct.

¶ 44      I have reviewed the Code provisions and the jurisprudence upon which ILWU relies.  Section 133(1)(c) of the Code states:

¶ 45      I have concluded that Section 133(1)(c) is not available to me to deny the Companies a remedy to which they may be otherwise entitled.  Section 133(1)(c) is a statutory codification of the equitable clean hands doctrine and sets up a two part test.  Before a remedy may be denied to an applicant based on the applicant's misconduct, there must first be a finding of a contravention of the Code by the respondent.  Only then, despite the contravention but in light of the misconduct, is the Board entitled to deny the applicant a remedy.  Second, before the relief will be denied, the applicant's misconduct must have a direct relationship to the relief the applicant claims.  A helpful description of this second step in the test is found in the Board's decision in Sandman Inn (Vancouver) Ltd., BCLRB No. 83/75, [1976] 1 Can LRBR 202. In that case the Board set out the underlying rationale for denying an applicant relief on equitable principles.  That rationale was adopted from court decisions on the same point:

¶ 46      In the present case the Companies' application does not allege any breach of the Code by the ILWU nor have I found any such breach.  On the plain reading of that Section it is thus not open to me to deny the Companies a remedy if they are otherwise entitled to it, notwithstanding that Clarke's misconduct may have had a direct relationship to the relief sought by the Companies.

¶ 47      Next I consider whether I can deny the Companies' remedy on equitable grounds in the exercise of my discretion under the common employer provision of the Code.  Both Section 35 and Section 38 of the Code give the Board broad discretionary remedial powers designed to enable the Board to ensure the continued viability of collective bargaining in the face of corporate or business changes.  However, having considered the remarks of the court quoted above, I conclude that if there is discretion to deny a remedy on equitable grounds, it must be exercised on a proper basis.  If a remedy is to be denied, I conclude that it can only be denied on the basis of the second part of the test to which the Board would have regard under Section 133(1)(c).  That is, I would be prepared to deny the Companies the remedy they seek on equitable grounds if the right upon which they rely is rooted in Clarke's conduct.

¶ 48      The question is whether the right relied on by the Companies was itself brought about by Clarke's conduct before the Board.  I have concluded that it was not.  The right to seek a consolidation of bargaining units and the cancellation of one or more bargaining certificates flows from the changes in corporate and business structure which have taken place, not from Clarke's misstatement of the facts under oath before the Board.  Consequently, I find there is no equitable basis for denying the Companies the relief sought on the basis of Clarke's conduct before the Board.

¶ 49      The Companies have now argued that I ought to consider the case on the basis of successorship from Harbour Cruises to Emral and arrive at the very conclusion reached in BCLRB No. B301/98.  This I decline to do for several reasons.

¶ 50      First, despite my conclusion above, I find the relationship between Clarke's misstatement of the facts and resolving the case on the footing of successorship to be too close to approbating his conduct.

¶ 51      Second, the Companies conceded in argument that it is in any event unlikely that the Board's strict test for cancellation of ILWU's certification can be met on that footing in view of the continued existence of Harbour Cruises. I agree.  Harbour Cruises' continued existence stands in the way of my concluding that Harbour Cruises will never operate again, particularly given the number of corporate shifts and the ease with which they have been accomplished in the history of this business.

¶ 52      Finally, when this latest stage of these proceedings unfolded I held a case management conference in which dealing with the remedial aspect of the common employer declaration was identified as the remaining substantive issue. This was confirmed by letter to the parties and both the Board and ILWU proceeded on this basis.  It is simply too late in the day to reverse course and determine this case on some other basis which the Companies now see as being to their advantage.

¶ 53      This leaves the issue of cancelling ILWU's certification to be decided solely within the remedial framework of Section 38 - the common employer section.  The factual foundation for the determination which I must make is as it has been disclosed in the final two days of hearing. Any exercise of discretion on my part must be related to that factual foundation and is thus now unaffected by the earlier misstatements of fact made by Clarke.  I therefore conclude that if I am to properly exercise my discretion under Section 38, the earlier misstatements by Clarke can form no part of the basis for fashioning a Section 38 remedy.  Should the Companies be entitled under Section 38 to the remedy they have sought on the basis of the facts now known, I conclude it would be an improper exercise of discretion to deny that remedy based on the earlier misstatements of fact.

¶ 54      I now turn to the remedial aspect of the Section 38 application.  The Companies concede that they are a common employer, but they differ with ILWU on the labour relations purpose for such a declaration and its consequent remedial relief.  The Board's jurisprudence has identified three labour relations purposes embodied in Section 38 of the Code:  first, the protection of collective bargaining rights; second, the removal of obstacles to viable collective bargaining; and third, to ensure that the "whole" employer is at the bargaining table.

¶ 55      The Companies have argued that in the circumstances of this case the removal of obstacles to viable collective bargaining means that the Board should cancel ILWU's certification.  Absent such a cancellation, the Companies are left with two unions with jurisdiction over the same work which is not exclusive to either bargaining unit. This jurisdictional overlap is a breeding ground for jurisdictional disputes leading to industrial instability and a potential collective bargaining impasse which would be a direct result of the bargaining structure.  The Companies point to ILWU's bargaining demand to increase deckhand staffing on one vessel and to implement it on another where there had never been any deckhands.  They also say that ILWU has abandoned its grievance alleging that the deckhand layoff was improper.  The Companies say that with the benefit of hindsight, they should have made a Section 38/consolidation application in 1996 or at the very least, in 1998, after ILWU had placed its demands on the table.  The Companies say that given ILWU's demands, the potential for jurisdictional impasse and industrial instability is now crystallized.  Consequently, say the Companies, there is therefore no labour relations purpose in leaving that certification outstanding.

¶ 56      ILWU says the purpose of Section 38 is to protect collective bargaining rights in the face of corporate change. It says that given Clarke's conduct, the Companies should be forced to retain ILWU's bargaining unit and deal with ILWU. ILWU argues that it never abandoned its claim to jurisdiction over bargaining unit work nor its grievance that the deckhand layoff in May of 1998 was in breach of its collective agreement.  It says it now intends to arbitrate its grievance.

¶ 57      Under these circumstances the Board must consider and weigh two of the three labour relations purposes under Section 38 of the Code.  These are the preservation of ILWU's rights and the removal of obstacles to viable collective bargaining.  Each time the Board entertains a consolidation of bargaining unit application, or addresses the potential conflict of two unions representing the same bargaining unit after a successorship, the same two purposes must be considered.

¶ 58      The tension between these considerations was recognized and addressed in IML, supra, where the Board recognized that bargaining structures that facilitate jurisdictional disputes, leapfrogging and other forms of industrial instability are undesirable.  The Board also recognized that the threshold for achieving consolidation which may result in truncating a union's rights had been set very high in the past and a union's rights had been given proprietary deference.  However, in IML the Board said

¶ 59      As Chair Weiler noted in Woodward Stores, quoted in IML:

Similar principles must guide the Board in a Section 38 application when one of the parties advances the removal of obstacles to collective bargaining as the labour relations purpose for declaring two or more related businesses to be a common employer.  The Board has broad discretionary powers to ensure viable collective bargaining under the remedial portions of both the successor and common employer provisions.

¶ 60      This case is illustrative of the balance which the Board must be mindful of in deciding issues relating both to the preservation of a union's rights and the viability of collective bargaining.  The dispute here centers on approximately 15 minutes of non-exclusive work which has been traditionally performed by members of the ILWU on one of two vessels once operated by Harbour Ferries No. 2.  Despite being certified to represent deckhands on the second vessel, ILWU members have never worked on that second vessel and the duties which are in controversy have always been performed by members of the Guild.  These two vessels, as well as a third, are now being operated by Emral, which operates the whole of Clarke's harbour cruise business.  The third vessel has never been subject to an ILWU certification and all duties have been performed by members of the Guild.  ILWU has demanded a presence on the second vessel and, not content with a single deckhand position, seeks an addition to its current complement on the first.  The work which these deckhands would perform is work which Guild members have an equal right to perform and have performed on two of the three vessels.

¶ 61      I agree with the Companies that the potential for jurisdictional impasse and industrial instability has now crystallized.  To permit this situation to continue flies in the face of the purposes of the Code set out in Section 2 (1)(b) and (d).  It does not encourage the Companies and their unions to adapt to changes in the economy or promote workplace productivity.  Nor does it promote conditions favourable to the orderly, constructive and expeditious settlements of disputes.  On the contrary, leaving the ILWU certification and bargaining unit in place would promote jurisdictional gridlock and undermine the productivity of the business.  A consideration of all of these factors strongly favours granting the Companies the remedy they seek.

¶ 62      My conclusion reflects in large measure the result that was reached in BCLRB No. B301/98.  I am not prepared to second-guess Clarke's reasoning on the matter of flexibility arising from the presence of an additional Guild officer.  I therefore make the following declarations and orders:

¶ 63      ILWU also seeks compensation for the time and money expended in ferreting out the truth from Clarke and the Companies.  In effect, ILWU seeks an order to be made whole and for reimbursement of its costs.  ILWU relies on North American Construction Ltd., BCLRB No. B267/2000.

¶ 64      There is no express provision in the Code addressing the issue of costs.  Costs have been awarded under Section 133(1)(d) of the Code which provides:

¶ 65      Because an award of costs is subsumed in the general jurisdiction to fashion a monetary remedy for loss under Section 133(1)(d), such an award has been held to be substantive remedy predicated on finding of a breach of the Code, a collective agreement or the regulations.  Moreover, the application of this Section to awarding costs or compensation for abuse of process has been narrowed by the Board.  If such a remedy were to include costs as a matter of course, there would be an inequity between successful applicants who establish a breach of the Code and would be entitled to such costs, and respondents who successfully defend an application under the Code allegation but who then would not be entitled to costs.  Finally, the Board is reluctant to emphasize winners and losers in its processes. In most cases the parties continue to share a labour relationship long after a particular dispute is resolved and the Board, like labour boards in other jurisdictions that have the power to award costs, has concluded that a rote awarding of costs would be counter productive to the achievement of the purposes of the Code, among them to foster a positive collective bargaining relationship.

¶ 66      As a result, the Board has restricted the awarding of costs to cases of exceptional and compelling circumstances:  Allan Kelland, BCLRB No. 419/93 (Reconsideration of IRC No. C248/92 and BCLRB No. 101/93), (1994), 21 CLRBR (2d) 254.  Before costs can be awarded as a substantive compensatory remedy, there must be a breach of the Code, collective agreement or regulation by the party against whom costs are to be awarded and the conduct of that party must have been sufficiently egregious so as to make the case exceptional and compelling.

¶ 67      In North American, supra, the Board found that North American breached Section 6(1) of the Code when it misrepresented the extent of the bargaining unit constituency in a bid to defeat the union's organizing drive.  While legal costs were not directly caused by the breach of the Code, they were indirectly related to it because they were expended in uncovering the evidence which ultimately established the breach.  The Board found that to be a sufficient nexus to award costs:  para. 128.  Moreover, the Board held that the circumstances of that case were exceptional and compelling because the misconduct engaged in by North American was intended to frustrate or defeat the purposes of the Code: North American, para. 129.

¶ 68      In the present case, even if I characterize Clarke's conduct as sufficiently egregious to make this an exceptional and compelling case for costs, there is no breach of the Code by the Companies.  Consequently, I have concluded that there is no basis upon which I can compensate ILWU within the framework of Section 133(1)(d).

¶ 69      The issue of compensation for abuse of process was explored in some depth by the Board in Trilec Installations Ltd., BCLRB No. B236/97.  The applicant in Trilec argued that the Board could award costs for abuse of process under Section 133 of the Code and generally pursuant to an express or implied power to fashion a remedy where a party engages in an effort to mislead the Board or abuse its processes:  para. 13.

¶ 70      In Trilec the Board concluded that a remedy was not available to the applicant under Section 133 of the Code. The Board also went on to say that it generally did not have the "ability to order costs if either its directions are not followed or its processes are abused, outside of the specific circumstance where a breach of the Code, a collective agreement, or the regulations is established":  para. 25.  The Board in that case reasoned that the power granted by Section 126 of the Code to control its own processes provides adequate relief in cases of abuse of process.  Based on that reasoning, the Board in Trilec concluded that it lacked jurisdiction to order costs for abuse of process.

¶ 71      With the greatest of respect to the Trilec panel, I am not convinced that such a broad conclusion follows from its reasoning.  I agree with the Trilec panel that the Board has no inherent jurisdiction to award costs.  However, whether other Sections of the Code give the Board either expressly or implicitly the power to compensate or make a party whole as a result of an abuse of process or an effort to mislead was not explored by the Trilec panel.  I have considered both Sections 2 and 134 of the Code and have concluded that the Code both expressly and implicitly gives the Board sufficient authority to compensate a party in the proper circumstances where an opposing party has misled the Board or abused the Board's processes in a way that has caused damage to the other party.

¶ 72      As part of promoting a positive collective bargaining relationship, Section 2 of the Code tasks the Board with encouraging expeditious and efficient dispute resolution. It places emphasis on encouraging the parties to address their own workplace issues and to employ a mediative approach to dispute resolution.  The tools which the Board uses in pursuing these objectives are among others, creating appropriate bargaining structures that best work for the mutual benefit of both employers and employees, and, with regard to dispute resolution, the Board fashions processes which are expeditious, accessible and transparent.  That is also why the Board makes an effort to avoid labelling parties as winners and losers in order to encourage a long-term collective bargaining relationship.  While the power given the Board by Section 126 of the Code goes a long way in helping the Board pursue its statutory objectives and obligations, particularly with regard to dispute resolution, it is not a complete answer where one of the parties to a dispute causes damage to another through a reckless disregard of the purposes of the Code.

¶ 73      In Blu's Night Club, IRC No. C107/91, the Industrial Relations Council declined to award costs thrown away arising out of one party's request for an adjournment to make arrangements for a court reporter to attend the hearing and subsequently deciding to continue without a court reporter present.  In its decision, the Council noted that "the bulk of authority requires a link between that type of conduct, a statutory violation by one party, and a loss by another before compensation is ordered so that the nature of relief is unquestionably compensatory rather than punitive":  p. 8. However, the Council in Blu's left it open as to whether a breach of the Code was necessary in all cases before an award for costs may be made.

¶ 74      In M & M Insulation Ltd., M & M Roofing Ltd., IRC No. C154/87, the Council did award costs thrown away for an adjournment caused by a party's failure to appear for a hearing despite a direct order from the Board:  p. 12.  The Council described the party's conduct as showing an "exceptional and blatant disregard for the Board and its processes established by the Legislature of this Province through the Code and Act":  p. 12.  While M & M was found to have otherwise breached express statutory provisions, the connection between those breaches and its conduct for which costs were awarded is tenuous at best.

¶ 75      Having considered the purposes of the Code, and all of the Board's jurisprudence cited herein, I have concluded that implicit in the Code must be the power for the Board to make a party whole in appropriate circumstances if it has fallen victim to another party's conduct which undermines the purposes of the Code even though there has not been a breach of an express provision of the Code.

¶ 76      Alternatively and for the reasons expressed above, I find that Section 134 of the Code expressly provides the Board with sufficient flexibility to address the rare and exceptional circumstances where an abuse of the Board's processes has led to damages being suffered by another party. I turn to a helpful passage in Spry, Equitable Remedies (1990) cited in Dover Corporation Limited, IRC No. C101/92:

While this principle is applied by courts in injunction cases, the Code gives the Board sufficient flexibility to adopt a similar approach in appropriate cases.

¶ 77      First, Section 134 of the Code reads:

¶ 78      Second, just as awards of costs under Section 133(1)(d) may work an inequity against respondents, making an award of damages, which may include costs, a condition of granting an application may work an inequity against applicants.  Thus, a similar high threshold must be imposed to ensure that costs are not awarded indiscriminately.  The imposition of a requirement upon the applicant to pay the respondent's costs as a condition of the decision granting an application would only occur in exceptional and compelling cases.

¶ 79      Third, I also find that it is my task to take all of the circumstances into account, including these equitable principles, in order to put the parties where they ought to have been but for all of the confusion that has arisen out of the various versions of the facts as they have been disclosed to the Board.

¶ 80      Finally, the Board must continue to be mindful of not labelling parties which enjoy a longstanding collective bargaining relationship as winners and losers.  This case does not present such a problem.

¶ 81      In Ontario Paving Construction Limited, [1993] OLRB Rep. July, the Ontario Labour Relations Board ordered Ontario Paving to pay the other side's share of the Section 126(4) expenses incurred with respect to a hearing day as a term of an adjournment granted to Ontario Paving.  This Board has already made the link between granted adjournments and a requirement to compensate the other party for the costs of the day:  M & M, supra.  Consequently, the link between an order for compensation as a condition of a decision and the power in Section 134 to impose conditions has already been established. I find that compensating a party in circumstances such as those found in this case by imposing a condition under Section 134 of the Code is permissible extension of an already existing power.

¶ 82      ILWU has incurred considerable cost in both time and expense in getting the true facts before the Board.  It has been financially prejudiced by Clarke's conduct in that the misrepresented facts induced it to pursue inquiries that had nothing to do with the actual circumstances of the case. The Companies candidly admitted that in hindsight they ought to have brought a Section 38/consolidation application in the first place.  I find that had Clarke taken the trouble to properly inform himself of his own affairs in the first place, no hindsight would have been required to arrive at the point at which we now are.  I find it disheartening that the Companies promptly notified other agencies of government of their corporate name changes and reorganizations, not to mention their bankers who underwrote the business operations, and oddly enough, the Guild, while at the same time treated ILWU and the Board as little more than an inconvenience best ignored.

¶ 83      ILWU has gone through two sets of evidentiary hearings as well as a contested application to vary.  None of these should have been necessary.  In addition, ILWU was induced into pursuing a reconsideration application in part on the issue of "new evidence", which also should have been unnecessary.  ILWU's pursuit of the "new evidence" was reasonable in the circumstances which existed at the time given Clarke's evidence.  ILWU has been engaged in this matter by the Companies since 1996.  It has been prolonged in part as a result of Clarke's conduct from June of 1998 to the spring of 2001.  ILWU went through two sets of hearings as a result of the possibility of new evidence being adduced only to find that the very premise for that evidence never existed and had Clarke properly informed himself, none of this would have been necessary.

¶ 84      In light of all of these circumstances and despite my conclusion that Clarke did not deliberately set out to mislead the Board, I find his carelessness to have reached a sufficient level of egregiousness to make this an exceptional and compelling case for a make whole order as a condition of this decision.  It is the only way that the ILWU can be compensated for the financial prejudice it has suffered in the fruitless pursuits which it was induced to undertake by Clarke's conduct.  Therefore, pursuant to Section 134(1)(a) of the Code, I impose the condition that the Companies reimburse ILWU for its reasonable legal costs, disbursements and related expenses incurred in:  the hearing in June of 2000; the application to amend its certification; the hearings in March of 2001; and that portion of the hearing before the reconsideration panel related to the issue of the so called new evidence.

V.  CONCLUSION

¶ 85      For all of these reasons, Emral and Harbour Cruises are declared to be a common employer, and the certification and collective agreement of ILWU is cancelled subject to the orders and conditions set out in this decision. The Board will make its mediation services available to the parties to resolve the outstanding severance issue.  The Board will remain seized of the implementation of this decision.

V.A. PYLYPCHUK, VICE-CHAIR

QL Update:  20010801
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