Refusal to Admit Members can be Oppressive Conduct

In PCL Industrial Constructors Inc. v. CLR Construction Labour Relations Assn. of Saskatchewan, the Saskatchewan Court of Appeal unanimously affirmed a trial court decision finding that the bargaining representative of employers in the construction sector acted oppressively in refusing to admit two employers on the basis that they had both unionized and non-unionized workforces, whereas its other members had only purely unionized workforces.

1. Facts

The plaintiffs, PCL and Lockerbie, were each companies involved in the construction industry in Saskatchewan. The defendant, CLR Construction Labour Relations Association of Saskatchewan Inc., a non-profit corporation incorporated under the Saskatchewan Non-profit Corporations Act, was the representative organization of unionized employers designated by the Saskatchewan Minister of Labour under the Construction Industry Labour Relations Act as the exclusive representative of all unionized employers in the relevant construction trades in Saskatchewan.

Each plaintiff was a unionized employer but had been denied membership in CLR because it was not exclusively unionized, but had a mix of unionized and non-unionized workforces. CLR took the position that its members should be only purely unionized employers. As a result of being denied admission as members of CLR, each plaintiff brought an action to compel its admission as a member. CLR counterclaimed against the plaintiffs for payment of their share of certain fees.

2. Rulings

(a) Trial

Justice Baynton of the Saskatchewan Court of Queen's Bench held the Construction Industry Labour Relations Act required CLR to permit any unionized employer to join CLR as a member. This resulted from CLR's designation as the sole representative of unionized employers subject to the Act. Unionized employers were no longer able to bargain on their own behalf, but only collectively on a province-wide basis through the designated employer association, CLR. Justice Baynton further held that refusing the plaintiffs membership in CLR was unfair and prejudicial and unfairly disregarded their legitimate interests and statutory rights under the Act.

The plaintiffs were granted standing to bring an oppression action on the basis that each was a person who, in the discretion of the court, is a proper person to claim relief under the oppression remedy. Baynton, J. stated that the court has the same broad discretion under the Non-profit Corporations Act as it has in the context of a business corporation. The oppression remedy applicable to a non-profit corporation should be interpreted by the courts in the same broad and remedial manner where financial interests are at stake or where membership or participation is essential to the financial interests of the oppressed parties. In many cases, oppression by a non-profit corporation will visit relatively insignificant financial consequences on the oppressed party. Where, however, the non-profit corporation is an integral component of a statutory scheme that regulates commercial operations, significant financial consequences will almost invariably follow oppressive conduct on the part of the non-profit corporation.

Accordingly, the court ordered the amendment of the constitution of the CLR and its membership application forms and procedures to ensure that every unionized employer subject to the Construction Industry Labour Relations Act was qualified and entitled to join the CLR as a member. Directors can have no discretion to refuse membership to a unionized employer.

Finally, Justice Baynton found that CLR could not justifiably charge fees to the plaintiffs in respect of the period of time when they had been denied membership in CLR.

(b) Appeal

CLR appealed the trial judge's ruling to the Saskatchewan Court of Appeal. However, the Court of Appeal affirmed the conclusions and largely the analysis of the trial judge and, accordingly, dismissed the appeal, stating that repetition of the trial judge's analysis would be pointless.

3. Key Observations

The facts of PLC Industrial Constructors are unusual, in that there was overarching provincial legislation which was found to effectively dictate the membership of the non-profit corporation. Therefore, it was appropriate for the courts to invoke the oppression remedy to force the corporation to widen its membership criteria to no longer exclude the plaintiff employers. Only in rare circumstances will a non-member be able to invoke the oppression remedy under corporate legislation to force their way in as members of a non-profit corporation.

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