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September 16, 2004

Purpose not specific enough, Ontario Superior Court says

LIUNA trust fund ruled invalid



The Ontario Superior Court of Justice has ruled that a trust fund created by the Labourers’ International Union of North America (LIUNA) to pay costs related to organizing activities in the Central and Eastern Canada region is invalid.

In a written judgement on the matter, Justice Carolyn Horkins concluded that the trust fund is invalid because the purpose of it is not specific enough.

She said the trust also allows trustees to take contributions and use them for a very imprecise and indefinite purpose.

Justice Horkins said a trustee can not make a responsible determination about whether or not a cost is properly incurred when the boundaries for such a determination are neither definite nor precise.

“In summary, I find that the purpose of the trust agreement is invalid for want of a certain, precise or definite purpose,” she said.

The fund was set up in August 2003 to pay all legal and related costs incurred in organizing campaigns and related proceedings conducted by LIUNA unions.

However, executive members of Local 183 of the Universal Workers’ Union, took exception to the fund and challenged the validity of it before the courts.

Local 183, which is the largest construction local in North America representing more than 30,000 members, argued that the purpose of the trust agreement was not specific and asked for a declaration that both the agreement and trust were invalid.

In her summation, Justice Horkins said LIUNA (the Washington-based parent union of Local 183) has a practice of setting up trusts to pool and control the spending of members’ dues and, over the years, various trusts have been established for a variety of purposes.

The creation of organizing funds for all local unions and district councils was approved at a LIUNA convention in September 2001.

In Ontario, the Ontario Provincial District Council of LIUNA struck a committee to establish an organizing trust fund for the Central and Eastern Canada Region.

The committee recommended that effective Jan. 1, 2003, all LIUNA construction collective agreements which contained a 10-cent-an-hour worked remittance would require five cents of it to be forwarded to the organizing trust fund.

The committee’s recommendation was approved at a meeting on April 24, 2003.

Following a favourable vote on the draft trust agreement and funding, an

Acceptance of Trust document was sent to all local union business managers.

However, on June 17, 2003, Local 183 filed a notice of application, challenging the validity of the trust.

Despite the objection, LIUNA continued to take steps that led to the finalization of the trust agreement on Aug. 27, 2003.

The trust agreement says the money may be used to pay all legal and related costs incurred in organizing campaigns and related proceedings, pay all legal and other costs associated with promoting the organization, and for paying the cost of the administration of the fund.

Justice Horkins said related costs are not defined.

“Do the costs have to be related to the legal costs or simply related to the organizing campaign?” she asks in her ruling. “In either case what does this mean? I do not find this to be a definite or precise term.”

She said the trust allows trustees to take the contributions and use them for a very imprecise and indefinite purpose.

For example, an application made to a labour relations board dealing with bad-faith bargaining would necessarily involve legal and related costs, occurring after the union is certified and obviously after the union is organized.

“The trust funds could be used to pay for legal fees on the basis that it is a related proceeding,” Justice Horkins states. “There is no requirement that it be directly related to an organizing campaign.

The language of the trust does not require a direct nexus. This is an example of the lack of specificity.”

In a statement issued after the ruling, Local 183 said it challenged the validity of the fund because it had concerns from the very beginning of the plan.

“We were concerned with the scope of the fund which appeared to us to be more of a cash grab than a seriously focused organizing fund,” said Local 183 spokesman Keith Cooper.

He said the other serious problem stemmed from LIUNA’s refusal to allow the membership to vote on or have input into the fund.

“Local 183 was told by the international that whether our members supported it or not didn’t matter,” he said. “They wanted the money anyway.”

Joseph Mancinelli, LIUNA’s vicepresident and regional manager for Central and Eastern Canada, could not be reached for comment.

LIUNA and Local 183 have had their ups and downs over the years.

Recently, LIUNA was given permission by the Ontario Labour Relations Board to proceed with an internal hearing that will deal with various charges of misconduct and interference levied against Local 183.

Affiliates of LIUNA have charged that Local 183 interfered in their jurisdictions.

The charges and complaints relate to the conduct of Local 183 and allege that the local has organized outside its territorial jurisdiction and has interfered with organizing drives of sister local unions.

LIUNA represents 65,000 construction workers throughout Canada and approximately 850,000 members through North America.

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