2013 NBCA 33, 2013 NBCA 33

COURT OF APPEAL OF NEW BRUNSWICK 131-12-CA LOCAL 772 OF THE UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES OF THE PLUMBING AND PIPEFITTING INDUSTRY OF THE UNITED STATES AND CANADA (Plaintiff) APPELLANT LA

SECTION LOCALE 772 DE L’ASSOCIATION UNIE DES COMPAGNONS ET APPRENTIS DE L’INDUSTRIE DE LA PLOMBERIE ET DE LA TUYAUTERIE DES ÉTATS-UNIS ET DU CANADA (Demanderesse) APPELANTE - and - - et - THE UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES OF THE PLUMBING AND PIPEFITTING INDUSTRY OF THE UNITED STATES AND CANADA, AND THE UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES OF THE PLUMBING AND PIPEFITTING INDUSTRY OF THE UNITED STATES AND CANADA, LOCAL 325 (Defendants) RESPONDENTS L’ASSOCIATION UNIE DES COMPAGNONS ET APPRENTIS DE L’INDUSTRIE DE LA PLOMBERIE ET DE LA TUYAUTERIE DES ÉTATS-UNIS ET DU CANADA et L’ASSOCIATION UNIE DES COMPAGNONS ET APPRENTIS DE L’INDUSTRIE DE LA PLOMBERIE ET DE LA TUYAUTERIE DES ÉTATS-UNIS ET DU CANADA,

SECTION LOCALE 325 (Défenderesses) INTIMÉES - and - - et - ROBERT WAYNE HUGHES and ANDREW J. WOOD (Parties Added by RESPONDENTS Counterclaim) ROBERT WAYNE HUGHES et ANDREW J. WOOD (Parties ajoutées par voie de INTIMÉS demande reconventionelle) Local 772 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada v. The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325 and Hughes and Wood, 2013 NBCA 33

Section locale 772 de l’Association unie des compagnons et apprentis de l’industrie de la plomberie et de la tuyauterie des États-Unis et du Canada c. Association unie des compagnons et apprentis de l’industrie de la plomberie et de la tuyauterie des États-Unis et du Canada, Association unie des compagnons et apprentis de l’industrie de la plomberie et de la tuyauterie des États-Unis et du Canada,

section locale 325, Hughes et Wood, 2013 NBCA 33

CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Turnbull The Honourable Justice Deschênes CORAM : L’honorable juge en chef Drapeau L’honorable juge Turnbull L’honorable juge Deschênes Appeal from a decision of the Court of Queen’sBench: October 2, 2012 Appel d’une décision de la Cour du Banc de laReine : Le 2 octobre 2012 History of Case: Historique de la cause : Decision under appeal: 2012 NBQB 322 Décision frappée d’appel : 2012 NBBR 322 Preliminary or incidental proceedings: Court of Queen’s Bench: 2009 NBQB 50 2012 NBQB 216 Court of Appeal:[2009] N.B.J. No. 112 [2012] N.B.J.

No. 270 Procédures préliminaires ou accessoires : Cour du Banc de la Reine : 2009 NBQB 50 , 2009 NBBR 50 2012 NBQB 216 , 2012 NBBR 216 Cour d’appel : [2009] A.N.-B. no 112 [2012] A.N.-B. no 270 Appeal heard: February 20, 2013 Appel entendu : Le 20 février 2013 Judgment rendered: May 2, 2013 Jugement rendu : Le 2 mai 2013 Reasons for judgment by: The Honourable Chief Justice Drapeau Motifs de jugement : L’honorable juge en chef Drapeau Concurred in by: The Honourable Justice Turnbull The Honourable Justice Deschênes Souscrivent aux motifs : L’honorable juge Turnbull L’honorable juge Deschênes

Counsel at hearing: For the appellant: E.J. Mockler, Q.C. and P. Lynne Lenihan For the respondent The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325: Jack K. Townsend For the respondent Robert Wayne Hughes: No one appeared For the respondent Andrew J. Wood: No one appeared Avocats à l’audience : Pour l’appelante : E.J. Mockler, c.r., et P.

Lynne Lenihan Pour les intimées l’Association unie des compagnons et apprentis de l’industrie de la plomberie et de la tuyauterie des États-Unis et du Canada et l’Association unie des compagnons et apprentis de l’industrie de la plomberie et de la tuyauterie des États-Unis et du Canada,

section locale 325 : Jack K. Townsend Pour l’intimé Robert Wayne Hughes : Personne n’a comparu Pour l’intimé Andrew J. Wood : Personne n’a comparu THE COURT In determining a motion for dismissal of an action on account of the plaintiff’s failure to furnish security for costs, as ordered, the court must take a flexible, all-things-considered approach, whose objective is a disposition that is just for all parties. That approach requires the court consider the totality of the circumstances of the case, including the action’s chances of success at trial.

Where those chances are low, the court will more easily be persuaded dismissal is appropriate. By the same token, when the chances of success at trial are significant, the court will, as a rule, tend to shy away from such a Draconian disposition. In denying the appellant’s application to extend the time for furnishing security for costs, as ordered, and in allowing the respondents’ motion for dismissal of the action based upon the appellant’s default under the existing order, the motion judge exercised a discretionary power, one conferred by Rule 58.05 of the Rules of Court .

As such, the standard of review approved in Beaverbrook Canadian Foundation v. Beaverbrook Art Gallery , 2006 NBCA 75 , 302 N.B.R. (2d) 161, applies and, as a result, this Court is at liberty to interfere only if the contested decision is shown to be unreasonable or to flow from an error of law, an error in principle or a palpable and overriding error in the assessment of the record. Applying that standard, the Court dismisses the appeal, with one set of costs in the amount of $2,500 payable to the respondents. The judgment of the Court was delivered by

DRAPEAU, C.J.N.B. I. Introduction [ 1 ] Local 772 and three other Locals of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada were consolidated into Local 325 under an Order of Consolidation issued by the United Association’s General President. The Order specified – unnecessarily, in my view – that all “assets, real property and monies” of the predecessor Locals were to become the property of the newly formed Local 325.

Despite having argued – as it turned out, successfully – in favor of consolidation in pre-Order proceedings, Local 772 reversed course and, unlike its companion predecessor Locals, refused to comply with the Order’s ancillary terms, including the mandated transfer to Local 325 of the funds in its bank and investment accounts. [ 2 ] Local 772’s post-Order objections to consolidation prompted the underlying action for a declaration of invalidity and consequential relief.

That prayer for relief is advanced in Local 772’s Statement of Claim and reiterated in its Amended Statement of Claim on the basis of what it contends are: a failure to satisfy a condition precedent to the lawful issuance of the Order; and vitiating procedural missteps in preliminary proceedings.

Neither of Local 772’s successive pleadings features a clear assertion of the two claims put forward at the hearing in the court below and in this court: (1) the Order could not, as a matter of law, include the term providing for the transfer of Local 772’s assets to Local 325; and (2) in any event, no such transfer could be effectuated without approval of at least a majority of Local 772’s members. [ 3 ] Years into the litigation, and after finding Local 772 was to blame for the “inexplicable” slow pace of the litigation and casting doubt over the merits of its action, a judge of the Court of Queen’s Bench nonetheless denied the respondents’ motion to dismiss the action for delay, settling upon the more plaintiff-friendly option of merely requiring the furnishing of security for costs within a specified timeframe.

Although the deadline was extended by way of consent order, Local 772 failed to comply with the court’s order. On motion by the United Association and Local 325, and after hearing extensive submissions, both oral and written, another judge of the Court of Queen’s Bench refused to further extend the time for furnishing security for costs and dismissed the action pursuant to Rule 58.05 of the Rules of Court .

The judge did so after considering “the overall circumstances of the case”, including her finding that the action was bereft of merit and was bound to fail: United Assn. of Journeymen and Apprentices of the Plumbing and Pipefitting Industry Local 772 v. United Assn. of Journeymen and Apprentices of the Plumbing and Pipefitting Industry Local 325 , 2012 NBQB 322 , 395 N.B.R. (2d) 246, para. 10 ).

Local 772 appeals, focusing principally on that finding. [ 4 ] Both sides agree the order under appeal was discretionary and that, as such, its review attracts the application of the most deferential standard: reversal is appropriate only if the contested decision is “unreasonable” (i.e. nothing in the record could justify its issuance), or founded upon an error of law, an error in principle or a palpable and overriding error in the assessment of the record (see Beaverbrook Canadian Foundation v. Beaverbrook Art Gallery , 2006 NBCA 75 , 302 N.B.R. (2d) 161). Applying that standard, I would dismiss the appeal.

In the text that follows, I formulate a general framework for adjudication of motions such as the one giving rise to the present appeal and conclude the motion judge did not commit reversible error in dismissing the action. In my view, while not impossible, it is highly unlikely that the Order of Consolidation would be set aside at trial and it is equally unlikely that a trial judge would conclude Local 772 retained ownership of the assets it held prior to consolidation.

Applying the framework in question, I conclude the underlying action’s chances of success at trial are so poor that the interests of justice do not warrant a disposition short of dismissal. II. The Context [ 5 ]

Section 84 of the United Association Constitution is at the heart of the debate. It reads: Whenever, in the judgment of the General President, it is apparent that there is a superfluous number of Local Unions in any locality, and that a consolidation would be for the best interest of the United Association, locally or at large, he shall have the power to order Local Unions to consolidate and to enforce the consolidation of said Local Unions, or said territory in one or more Local Unions, provided such course received the sanction of the General Executive Board. [ 6 ] Prior to 2008, there were five United Association Locals in the Province of New Brunswick:

(1) Local 213 (Saint John);

(2) Local 512 (Bathurst);

(3) Local 694 (Moncton);

(4) Local 772 (Fredericton); and

(5) Local 799 (Miramichi). [ 7 ] In late 2007 or early 2008, the General President of the United Association was asked to consider a proposal to consolidate four of the five Locals, namely Local 512, Local 694, Local 772 and Local 799. That proposal was recommended by the United Association’s Director of Canadian Affairs and a Vice President, John Telford. As will be seen, it was also supported by Local 772. [ 8 ] The General President appointed Garth Cochrane to act as a “Hearing Officer” in the matter of that proposal. Following written notice to the Locals in question, with copies to each of Mr.

Telford’s recommendation, a hearing was conducted on February 6, 2008. James MacDonald, a “Special Representative” of the United Association and formerly the business manager and financial secretary of Local 772, presented evidence in favor of the proposed consolidation. The four Locals also presented evidence and offered views concerning the proposal. [ 9 ] Significantly, the spokesperson for Local 772 (the appellant) spoke in favour.

So did the spokesperson for Local 512 (Bathurst), although he stressed the importance of appointing bilingual representatives for his area. [ 10 ] The spokespersons for Local 694 and Local 799 voiced the following common concerns: (1) the loss of their respective autonomy; and (2) the failure to achieve a consensus regarding harmonization of the differences in collective bargaining agreements, by-laws and appointment of representatives. In addition, the spokesperson for Local 694 was troubled by the fact its members would have to travel several hours to attend the new Local’s meetings.

These concerns caused the spokespersons for the objecting Locals to express a preference for the formation of a council of Locals or, alternatively, “partial consolidation”. The General President would later indicate in his reasons for decision he was “satisfied that the positions and arguments of all parties were fully explored”. [ 11 ] On March 29, 2008, Mr. Cochrane submitted his report to the General President. In his view, a consolidation of the four Locals would be in the best interest of the United Association.

A copy of the report was attached to the General President’s decision. [ 12 ] On April 30, 2008, the General President rendered his decision, the dispositive part of which provides: […] I hereby order the consolidation of Local Unions 512, 694, 772 and 799 into a new Local Union 325, pursuant to

Section 84 of the United Association Constitution. Local 325 will be a combination Local Union with geographical jurisdiction over the territory previously within the jurisdiction of Locals 512, 694, 772 and 799. All assets, real property and monies of Locals 512, 694, 772 and 799 shall become the property of the newly formed Local Union 325. Any bona fide debts and liabilities of Locals 512, 694, 772 and 799 incurred up to the date of consolidation shall be assumed by Local Union 325.

All contractual obligations of Locals 512, 694, 772 and 799, including collective bargaining agreements, shall be assumed and carried out by Local 325. According to the Hearing Officer’s report, the Trust Agreements of the Pension, Health and Welfare Plans for these Locals are already consolidated. The new Local 325 shall seek to negotiate a merger of any fringe benefit funds, if any, provided for in the current collective bargaining agreements that are not currently merged.

To the extent that such efforts do not produce a merger of such funds during the terms of the current collective bargaining agreement, such mergers shall be effectuated in a subsequent agreement. Special Representative James McDonald is directed to assist in this process in any way possible. With the assistance of Special Representative James MacDonald, the new Local 325 shall seek to negotiate new combined collective bargaining agreements or addenda, either upon the expiration of current agreements or otherwise.

I hereby appoint Special Representative James MacDonald to supervise the consolidation process, and I authorize him to take any and all actions he deems necessary to effectuate the consolidation, including the preparation of bylaws and the appointment (if necessary) of temporary officers who shall serve under his direction. The United Association shall retain jurisdiction over this consolidation for a

period of three years. This Order of Consolidation will be submitted to the General Executive Board pursuant to

Section 84 of the United Association Constitution. Subject to the approval of the General Executive Board, I direct that Local Unions 512, 694, 772 and 799 be consolidated into Local Union 325, effective June 1, 2008. [ 13 ] The General President offered the following reasons in support of the Order of Consolidation: Based on my review of the matter, I have concluded that there is a superfluous number of Local Unions in the New Brunswick area, and that a consolidation would be in the best interest of the United Association locally and at large. I adopt the findings of the Hearing Officer.

I believe that combining the Local Unions in this area will free up resources for organizing and will allow the consolidated Local Union to be more effective against non-union competition. I believe that the consolidation will strengthen the UA’s position in New Brunswick and at large. I believe that combining the Local Unions in this area will promote the interests of UA members by consolidating existing efforts to build the UA’s market share of commercial work in New Brunswick and improve member mobility. Much of the hearing testimony discussed these issues. Specifically, I am impressed by the testimony of Mr.

MacDonald and his witness Mr. Bill Dixon, a representative of the Mechanical Contractor’s Association of New Brunswick. Both Mr. MacDonald and Mr. Dixon emphasized that in order for union contractors to be competitive, greater mobility of manpower within the Province is essential. Mr. Dixon stated that the MCA is interested in maintaining a good relationship with the Union and in working together to increase market share in the Province. He believes that a consolidation of the four Local Unions would further those goals.

I am also impressed by the testimony given by each of the spokesmen for the four Local Unions. It is apparent that the Locals already have a strong and cooperative relationship. I understand that the Locals have been working together and with Brother Telford for some time to craft a plan for consolidation and to address some of the issues facing the UA in New Brunswick. The spokesmen for Local 512 of Bathurst and Local 772 of Fredericton spoke in favor of the consolidation.

The spokesmen for Local 694 and Local 799 expressed concerns about a consolidation and suggested instead the formation of a council of Locals or partial consolidation. Their concerns can be summarized as follows: 1. Each of the Locals is concerned about maintaining their autonomy. 2. The Locals have been unable to come to agreement on how to harmonize the differences in collective bargaining agreements, by- laws and appointment of representatives. 3. The members of Local 694 are very concerned that a merger would require them to travel up to 6 hours to attend Local meetings.

Additionally, while the spokesman for Local 512 indicated support for the consolidation, he requested that any representative of the Bathurst area be bilingual as approximately 85% of the population is French-speaking. I have carefully considered all of these issues and believe that they can all be accommodated in the consolidation process. Each of the Locals agrees that the status quo in New Brunswick should not continue.

Moreover, I believe that the challenges faced by the UA in both organizing and protecting the jurisdiction of the Union in New Brunswick will best be served by uniting the forces of these four Locals. In

summary, based on my review of the matter, I have concluded that there are a superfluous number of local unions in the New Brunswick area and that a consolidation would be in the best interest of the United Association, locally and at large. I believe that consolidating these Local Unions will enhance organizing training programs. Furthermore, I believe that a consolidation will cut resource expenditures for duplicative services between these Local Unions. [ 14 ] I hasten to point out there is no evidence the General President’s decision misstates the facts or provides an erroneous account of the process that culminated with the Order of Consolidation. Moreover, it is common ground that:

(1) the Order of Consolidation was submitted to and approved by the United Association’s Executive Board; (2) the United Association Constitution provided a right of appeal from the Order of Consolidation; (3) such an appeal was not pursued by Local 772 or its members. When queried on why the internal appeal process was not resorted to and exhausted, counsel for Local 772 opined it would have been a wasteful exercise; and

(4) Locals 512, 694 and 799 transferred the funds in their respective bank accounts to Local 325. Local 772 refused to follow suit and transferred the funds in its bank and investment accounts ($235,551.36) to a trust account held by its firm of solicitors.

On September 22, 2008, it commenced the underlying action. [ 15 ] In its Amended Statement of Claim, Local 772 seeks, in addition to damages and costs, a declaration that the consolidation in question “is invalid and contrary to law and […] that any and all steps taken, made or implemented by the [respondents] or its officers, managers, appointees and directors are without legal validity”.

It goes on to seek complementary orders: “enjoining, prohibiting and restraining the officers, managers, appointees and directors of [the United Association] from proceeding with and implementing the said alleged consolidation including the collection of dues and the takeover of assets of [Local 772]”; and “for an accounting of all monies received by the [respondents] from monies collected from members of [Local 772] since June 2008 to the date of judgment herein”. [ 16 ] According to the Amended Statement of Claim, the Order of Consolidation is of no force and effect for the following reasons: 7. [Local 772] says that there is not a superfluous number of Local Unions in any locality in N.B. as required by

Section 84 of the Constitution of the U.A. to permit the General President to exercise the power to order Local Unions to consolidate […]. 8. Further and in the alternative the General President in making said Order ordered a Hearing Officer to conduct a hearing into the issue of consolidation and the hearing was conducted on or about March 29, 2008 by one Garth M.

Cochrane. 9. [Local 772] says the Constitution does not give the General President of the U.A. the power to appoint such a hearing officer for this purpose and the said appointment amounts to an illegal delegation of the power of the General President […]. Similarly the actions of the said Garth M. Cochrane in holding a hearing and submitting a report are of no force and effect. 10.

Alternatively if the appointment and subsequent hearing and report were legally sanctioned the said hearing was conducted without proper notice or rules of procedure contrary to and in breach of the rules of natural justice. [ 17 ] In their Amended Statement of Defence and Counterclaim, the respondents assert Local 772 was consolidated into Local 325 and “thereafter had no status or authority under the UA Constitution”. They go on to deny the existence of Local 772 and claim it “has no standing and lacks the capacity to bring an action”.

Throughout their pleadings, the respondents refer to Local 772 as the “purported plaintiff”. They plead, as well, that Local 772’s failure “to pursue the requisite appeal process in respect of any alleged breaches of the UA Constitution […] is fatal to the purported plaintiff’s ability to maintain the action described in the Statement of Claim”.

The respondents conclude by denying “that the purported plaintiff is entitled to the relief claimed […]”. [ 18 ] In December of 2008, Local 772 applied, by way of motion, for injunctive and other relief, including an order authorizing the payment of its legal fees out of the funds that were to be transferred to Local 325 under the Order of Consolidation and which had been deposited with its solicitors. The Notice of Motion described the relief claimed in these terms: (

a) An ORDER restraining and enjoining the defendant, its officers, servants, appointees, agents and employees from taking any further steps in the implementation of the Consolidation Order and from interfering with the operation and administration of Local 772 and its property until final disposition of this action or until further Order of this Court; (

b) An ORDER that Local 772 be authorized to spend from the funds held in trust by E.J. Mockler, Professional Corporation such reasonable amounts for legal services and disbursements including HST from time to time by E.J. Mockler, Professional Corporation and that notice of this ORDER to E.J. Mockler, Professional Corporation shall be good and sufficient authority for the charging of such invoices against said funds; (

c) The call up list as it existed prior to the intervention of Local 325 be the list for call up of all Local 772 members until final disposition of this action or until further ORDER; (

d) That Wayne Hughes be reinstated as Business Manager of Local 772 and be paid his wages in the normal course (including unpaid

wages to the date hereof) until final disposition of this action or until further ORDER; (

e) That all other officers and executive members of Local 772 previously elected be declared the validly elected officers and executivecommittee members as they existed prior to the Consolidation Order and they be entitled to perform the duties imposed on them as suchofficers and executive of Local 772 until final disposition of this action or until further ORDER; (

f) That an interim accounting of all funds collected, received and levied as dues or special payments against members of Local 772since June 2008 to date be made forthwith by the defendants and the funds so collected, levied and received be paid into Court for creditto this action and disposed of as the Court may Order on final disposition of this action and that the same action be taken respecting anyfurther levies by the defendants after the date hereof; (

g) And if necessary an Order that the time for service be abridged. [19] At the hearing, the parties delved into the application of the tripartite test for interlocutoryinjunctions adopted in RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J.No. 17 (QL). The respondents conceded the issues raised by the pleadings were “serious”, as that expression is defined in thejurisprudence, and thus met the inarguably low threshold set by the first criteria.

The opposition to injunctive relief focused on the issuesof irreparable harm and balance of convenience. [20] On March 9, 2009, a judge of the Court of Queen’s Bench denied Local 772’s motion andordered the funds held by its solicitors be paid into court (see Local 772 of United Assn. of Journeymen and Apprentices of [the]Plumbing and Pipefitting Industry of the United States and Canada v. United Assn. of Journeymen and Apprentices of the Plumbing andPipefitting Industry of the United States and Canada, Local 325, 2009 NBQB 50, 342 N.B.R. (2d) 200). Local 772 sought leave toappeal from that disposition.

It also sought leave to adduce “fresh evidence”. Both motions were dismissed by Quigg, J.A. on April 29,2009. She ordered Local 772 pay costs of $1,500 (see Local 772 of United Assn. of Journeymen and Apprentices of the Plumbing andPipefitting Industry of the United States and Canada v. United Assn. of Journeymen and Apprentices of the Plumbing and PipefittingIndustry of the United States and Canada, Local 325, [2009] N.B.J. No. 112 (QL)).

Local 772 paid the funds into court on June 10,2009, but it waited more than three years to pay the costs ordered by Quigg, J.A. [21] Examinations for discovery took place in July of 2009. However, the person put forward byLocal 772 to be discovered on its behalf refused to allow his answers to bind Local 772.

The latter did not designate someone else untilthe hearing of the respondents’ motion for dismissal on account of delay in June of 2012. [22] In August of 2009, the respondents requested the Labour and Employment Board process the“successorship” application they had filed in November of the previous year, and which, by consent, had been put on hold. Specifically,the respondents sought a declaration pursuant to s. 58 of the Industrial Relations Act, R.S.N.B. 1973, c.

I-4, that, by reason of the Orderof Consolidation, Local 325 acquired the statutory rights, privileges and duties of Local 772, as well as those of Locals 512, 694 and 799.Section 58(1) reads as follows:

SUCCESSOR RIGHTS 58

(1) Where a trade union or council of trade unions claims that by reason of a merger or amalgamation or a transfer of jurisdiction it is the successor of a trade union or council of trade unions that at the time of the merger, amalgamation or transfer of jurisdiction was the bargaining agent of a unit of employees of an employer and any question arises in respect of its right to act as the successor, the Board, in any proceeding before it or on the application of any person or trade union concerned, may declare that the successor has or has not, as the case may be, acquired the rights, privileges and duties under this Act of its predecessor, or the Board may dismiss the application.

DROITS DU SUCCESSEUR 58

(1) Lorsqu’un syndicat ou un conseil syndical prétend qu’en raison d’une amalgamation, d’une fusion ou d’un transfert de compétence, il est le successeur d’un syndicat ou d’un conseil syndical qui, au moment de l’amalgamation, de la fusion ou du transfert de compétence, était l’agent négociateur d’une unité de salariés d’un employeur et qu’une question se pose relativement à son droit d’agir comme successeur, la Commission peut, dans toute procédure pendante devant elle ou sur la demande d’une personne ou d’un syndicat intéressé, déclarer que le successeur a ou n’a pas, selon le cas, acquis les droits, privilèges et obligations de son prédécesseur, en application de la présente loi, ou la Commission peut rejeter la demande. [ 23 ] Vice-Chairperson Brian D.

Bruce, Q.C., granted the sought-after declaration on December 2, 2009. In comprehensive supporting reasons, he explained it was his understanding that “property rights [were] currently before the court”. He then underscored his decision “simply declares that the Consolidation Order for purposes of bargaining rights under the provisions of the Act is effective”. Nevertheless, the Vice-Chairperson acknowledged the obvious, namely that the exercise of his jurisdiction required a determination of the validity of the Order of Consolidation.

In making that determination, he targeted the objections articulated by Local 772 in its pleadings in the underlying action, and rejected each. [ 24 ] On June 7, 2012, a judge of the Court of Queen’s Bench dismissed Local 772’s application for judicial review of the Vice-Chairperson’s decision (see Local 772 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada v. Mechanical Contractors’ Association of N.B.

Inc., Moncton, New Brunswick and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325 , F-M-16-10 dated June 7, 2012, unreported). In doing so, she passed upon the reasonableness of Vice-Chairperson Bruce’s

interpretation of the United Association Constitution:

Interpretation of the Constitution Beginning at paragraph 16, Bruce identified the distinction between what the Court must decide in these circumstances and what must be decided by the Board. He quotes from an Ontario Board decision ( Hyde Park Masonry Ltd. [2004] O.L.R.D. No. 2118) as to the purpose of the successor rights provision (Section 58 of the Act ): “[It] does not create a right to transfer jurisdiction; it gives the Board the power to decide whether or not a purported transfer will be effective for the purposes of the Act ” (emphasis added).

After reviewing Local 772’s objections to the way in which the consolidation was accomplished and after pointing out that the Constitution offered 772 a number of internal appeal processes, none of which were pursued, Bruce concluded at paragraph 37: 37. It is seen that any objections by Local 772 are of a very technical nature and are not sufficiently serious to invalidate the Consolidation Order issued by the President. Further, any impropriety by the Hearing Officer, could have been corrected through the appeal processes open to Local 772. The Board’s reasons are thorough and clear. In Dunsmuir v.

New Brunswick [2008] 1 S.C.R. the court directed that in order to meet the standard of reasonableness the reasons must be justified, transparent and intelligible. I find that Professor Bruce’s reasons meet all of those tests and that the outcome is one of the possible acceptable outcomes. It therefore meets the test of reasonableness. [paras. 19-21] It may be timely to record that the judge whose decision is under appeal in these proceedings had previously heard and determined Local 772’s motion for injunctive and other relief in March of 2009.

Moreover, she heard and determined Local 772’s application for judicial

review. The upshot of all this is that she was very familiar with the case. [ 25 ] Local 772 filed a Notice of Appeal from the dismissal of its application for judicial review. The respondents countered with a motion for an order requiring security for costs on the appeal. On consent of the parties, the hearing of that motion, which was scheduled for September 7, 2012, was adjourned sine die . The Court’s records show Local 772’s appeal stands un- perfected.

Accordingly, leave would be required for the appeal to be pursued. [ 26 ] On June 27, 2012, another judge of the Court of Queen’s Bench dismissed the respondents’ motion for dismissal of the action based on delay (see Local 772 of United Assn. of Journeymen and Apprentices of [the] Plumbing and Pipefitting Industry of the United States and Canada v. United Assn. of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325 , 2012 NBQB 216 , 390 N.B.R (2d) 356 ).

Although satisfied the delay in prosecuting the action was “inordinate”, the judge concluded dismissal was inappropriate given the dearth of evidence of impairment in the respondents’ ability to make full answer and defence. [ 27 ] However, the judge ordered Local 772 furnish security for costs in the sum of $10,000 within 20 days. In her judgment, it was necessary “to determine, once and for all, whether Local 772 is actually motivated to move the litigation forward”.

In the course of succinct, but pointed reasons for decision, the judge made the following observations on the merits of Local 772’s action: There is a real question as to whether Local 772 even exists. It has no status under the UA constitution. After four years, it was only on June 22, 2012 at this hearing that Local 772 has appointed a person whose discovery evidence can bind at trial. Even then, there was no consent filed by Wayne Hughes, and he was not present in court for the hearing.

Security for costs is discretionary, but it is necessary to determine, once and for all, whether Local 772 is actually motivated to move the litigation forward. Local 325 needs this matter to proceed and not continue to burden its members. Local 772 suggests that an order for security for costs may prevent it from having its day in court. It further contends that the Local 772 is impecunious. One factor considered relevant to making of such an order is the merits of the case.

Without prejudging the matter, and given the UA constitution, the decision of the adjudicator, the prior decisions of the Court of Queen’s Bench and the Court of Appeal, and the inexplicable delay, the merits of this case are debatable. [paras. 15-17] [ 28 ] Local 772 applied for leave to appeal against the order obligating it to furnish security for costs. Robertson, J.A. dismissed the application with costs of $1,500 (see Local 772 of United Assn. of Journeymen and Apprentices of [the] Plumbing and Pipefitting Industry of the United States and Canada v.

United Assn. of Journeymen and Apprentices of [the] Plumbing and Pipefitting Industry of the United States and Canada, Local 325 , [2012] N.B.J. No. 270 (QL) ). [ 29 ] I note parenthetically that in both its Amended Statement of Claim and Appellant’s Submission, Local 772 claims 150 members. Accordingly, a contribution of less than $70 by each member would have sufficed to discharge the burden imposed by the order for security for costs. At any rate, despite an extension of the judicially imposed deadline for the furnishing of security, Local 772 defaulted.

The respondents then moved for an order dismissing the action, an option provided by Rule 58.05. The hearing of the Respondents’ motion was scheduled for September 26, 2012. [ 30 ] A week before the hearing, Local 772 delivered a cheque for $10,000 to the clerk of the Court of Queen’s Bench in Fredericton. It appears a former member of Local 772 mortgaged personal property to raise the funds. Be that as it may, the clerk took the indisputably correct position that he lacked jurisdiction to accept the funds in purported satisfaction of the order for security for costs.

He advised Local 772 it would have to apply for an extension to the court-specified deadline. [ 31 ] On September 24, 2012, Local 772 applied “for an order that the Court permit the late posting of the security for costs in this action and that the existing order be [varied] to include two cost orders for $1,500 each that are presently outstanding, together with an Order abridging the time for service of this motion”. [ 32 ] Both motions were heard two days later, on September 26, 2012.

Within one week, the judge delivered judgment, denying Local 772’s motion for an extension of time and dismissing its action (see United Assn. of Journeymen and

Apprentices of the Plumbing and Pipefitting Industry Local 772 v. United Assn. of Journeymen and Apprentices of the Plumbing and Pipefitting Industry Local 325 , 2012 NBQB 322 , 395 N.B.R. (2d) 246) . After briefly reviewing the history of the litigation and the kernel of the parties’ respective positions, the judge acknowledged adjudication of the motion for dismissal required she “ consider the overall circumstances of the case”. She cited the following judicial precedents in support of that proposition: John Susin Construction Co. v. Peel (Regional Municipality) , [1997] O.J. No. 415 (C.A.) (QL) ; MacDonald v.

Jollymore , 2007 NSCA 46 , [2007] N.S.J. No. 165 (QL); Ocean v. Economical Mutual Insurance Co. , 2012 NSSC 144 , [2012] N.S.J. No. 212 (QL); Toch v. Grove , 2010 BCCA 428 , [2010] B.C.J. No. 1920 (QL); Torres v. McPherson Lawn & Snow , 2012 ONSC 2501 , [2012] O.J. No. 1825 (QL); and Western AG-Resources Inc. v. McCain Produce Inc. , 2006 NBQB 369 , 305 N.B.R. (2d) 362. It bears noting that, in the last-mentioned case, Rideout J. granted the plaintiff an additional 30 days to comply with the existing order for security for costs.

Clearly, the motion judge was alive to the possibility of making an order less Draconian than dismissal. [ 33 ] The judge then identified the following as relevant circumstances: (1) costs of $1,500 ordered by Quigg, J.A. on April 29, 2009 were not paid until June 2012; (2) costs of $1,500 the judge ordered, on June 7, 2012, in dismissing Local 772’s application for judicial review remained unpaid; (3) costs of $1,500 ordered by Robertson, J.A., on July 30, 2012, had not been paid; (4) there was considerable evidence of efforts to raise the funds after Justice Robertson’s decision; (5) however, to Local 772’s knowledge, the respondents’ motion for security for costs had been filed nearly a year earlier (December 2011);

(6) Local 772 had known for at least seven months that $10,000 was being sought as security; (7) there was “little or no evidence” of membership support for Local 772’s action.

The judge inferred its former members were unwilling to contribute financially to the lawsuit from the “fact that one individual was attempting to mortgage his own property to raise funds”; (8) the person produced by Local 772 for the purposes of its examination for discovery refused to accept his testimony would bind Local 772 and it “was not until the hearing on security for costs that counsel for 772 stated that another representative would be designated whose testimony would bind 772”; (9) although Local 772 filed a Notice of Appeal from the judicial review decision of June 7, 2012, the appeal was not perfected, a fact confirmed by my review of this Court’s records; (10) although the time limit for posting security for costs expired on July 30, 2012, Local 772 waited a month and a half to file a motion to further extend the time.

That motion was filed on September 24, two days before the hearing of the motion that gives rise to the present appeal. Finally, the motion judge turned her attention to the merits of the action. [ 34 ] As mentioned, she was of the view that Local 772’s “claim [did] not have merit and would ultimately be dismissed”. In coming to that conclusion, the judge agreed with Vice-Chairperson Bruce’s assessment that Local 772’s objections were “not sufficiently serious to invalidate the Consolidation Order”. Taking into consideration all of the circumstances adumbrated above, the judge dismissed Local 772’s action.

Correlatively, she ordered all funds paid into court pursuant to the order of March 9, 2009 be turned over to Local 325. [ 35 ] In its Notice of Appeal, Local 772 asserts the motion judge erred: (1) “in her assessment of the evidence or in the failure to give any or sufficient weight to some of the evidence”; (2) in failing “to take account of the fact and circumstances that [it] had raised the money for the security and had done so after a continuous and successful effort throughout the Summer of 2012”; and (3) in taking into account “an extraneous matter not raised before her”, namely that [it] had not yet perfected the appeal of her decision [on judicial review] and failed to inquire into the reason for same which had been done by consent of the parties”.

In my respectful view, these complaints are devoid of merit, and nothing further need be said on topic. [ 36 ] The Notice of Appeal also features the allegation that the motion judge erred: (1) in holding Local 772’s claim was without merit and was doomed to fail even though she had “found” in dismissing its motion for an interlocutory injunction in March of 2009 that there was a serious issue to be tried, a fact conceded at that time by the respondents; and (2) “in her application of the governing principles respecting the exercise of her discretion”.

Finally, Local 772 contends in its Notice of Appeal that, in dismissing the action, the judge “acted unreasonably and created an injustice to [Local 772] in that [it] was driven from the seat of justice or denied access to justice by her Order when no prejudice to the Respondents in the continuation of the proceedings was shown”. [ 37 ] The parties added by counterclaim, Robert Wayne Hughes and Andrew J. Wood, did not participate in the appeal.

Although identified as respondents in the style of cause, unless the context dictates otherwise, they are not covered by any reference to “the Respondents” in these reasons. Specifically, neither is entitled to or liable for costs on appeal. III. Analysis and Decision A.

Preliminary matters [ 38 ] A few days before the hearing of the appeal, Local 772 filed and served, out of time, a Notice of Motion seeking the following relief: (1) an order abridging the time for service and hearing of its motion; (2) an order granting leave to file the transcript of the March 5, 2009 hearing into its motion for injunctive and other relief; (3) an order granting leave to file the transcript of the hearing in the court below; (4) an order granting leave to file a transcript of discovery evidence provided in July of 2009;

(5) an order granting leave to file an affidavit sworn by one of its solicitors; and (6) an order granting leave to amend the Notice of Appeal for the purpose of challenging the decision under appeal on further grounds, namely that: (

a) the motion judge erred in making a finding on the merits when they were “not in issue in the prayer for relief set out in the Notice of Motion”; and (

b) she did not “give any or adequate reasons for finding that the claim had no merit”. [ 39 ] The respondents objected to all prayers for relief, except (1) and (3). In their submission, the transcripts referenced in (2) and (4), which were offered as “fresh evidence”, could have been provided to the motion judge by the exercise of due diligence on Local 772’s part, have no bearing upon the issues raised on the appeal and would not have affected the outcome in the court below.

The respondents also opposed the motion to amend the Notice of Appeal on the grounds of tardiness and prejudice. [ 40 ] Given the respondents’ consent, we allowed the abridgment of time and, without passing upon its necessity, granted the requested leave to file the transcript of the proceedings in the court below. However, we saw merit in the respondents’ objections to the other prayers for relief and, more generally, remained un-persuaded the interests of justice would be served by granting them. The case for relief not having been made, we dismissed the contested prayers. B. The appeal

(1) Standard of review [ 41 ] The standard of review in an appeal against an order for security for costs is the standard applicable to discretionary judicial decisions: Williamson v. Gillis , 2011 NBCA 53 , 374 N.B.R. (2d) 311, per Richard J.A. for the Court. As mentioned in my introductory remarks, that standard is described in The Beaverbrook Canadian Foundation v.

The Beaverbrook Art Gallery : Like any other discretionary judicial decision, it may be interfered with on appeal only if it is founded upon an error of law, an error in the application of the governing principles or a palpable and overriding error in the assessment of the evidence (see British Columbia (Minister of Forests) v. Okanogan Indian Band , [2003] 3 S.C.R. 371, 2003 SCC 71 at para. 43 ) or if it is unreasonable, in the sense that nothing in the record can justify it (see The Honourable R.P.

Kerans, Standards of Review Employed by Appellate Courts (Edmonton: Juriliber Limited, 1994) at pp. 36-37 and Secretary of State for Education and Science v. Tameside Metropolitan Borough Council , [1977] A.C. 1014 (H.L.) Lord Diplock at p. 1064). [para. 4] Both sides posit that standard also applies to an appeal, such as the present one, from the dismissal of an action for default in furnishing security for costs in accordance with an order under Rule 58.

Thus, Local 772 can only succeed if it establishes the order is: (1) unreasonable, in the sense that nothing in the record can justify it; or (2) the product of an error of law, an error in principle or a palpable and overriding error in the assessment of the record.

(2) The issues raised in the action [ 42 ] Rule 27.06(1) requires a plaintiff to set out in his or her pleading a concise statement of the material facts upon which there is reliance for the claim. Conclusions of law, such as the legal invalidity of the Order of Consolidation which is alleged in the Amended Statement of Claim, “may be pleaded provided that the material facts supporting such conclusions are pleaded”: Rule 27.06(2). More generally, and as in all cases, the issues requiring adjudication are defined by the pleadings.

Courts must not “permit a civil trial to lapse into a sort of free-ranging general inquiry” (see Lax Kw’alaams Indian Band v. Canada (Attorney General) , 2011 SCC 56 , [2011] 3 S.C.R. 535, at para. 11 ). Civil litigation does not bring into play the “commission of inquiry” model in which one or more commissioners embark on a “voyage of discovery armed only with very general terms of reference” (see Lax , at para. 40). In ADI Limited v. 052987 N.B.

Inc., 2000 NBCA 55 , 232 N.B.R. (2d) 47, Turnbull, J.A., writing for the majority, described the overarching purpose of the rules of pleading applicable to a plaintiff as being “to ensure a defendant can prepare for the case that must be met” (para. 3). By defining the issues, pleadings give the opposing parties and the court fair notice of the case they must deal with.

To borrow Binnie, J.’s colourful language in Lax “[t]he trial of an action should not resemble a voyage on the Flying Dutchman with a crew condemned to roam the seas interminably with no set destination and no end in sight”. [ 43 ] The importance of producing pleadings that respect both the letter and the spirit of Rule 27 was recently underscored in Burke Estate v. Royal & Sun Alliance Insurance Co. of Canada , 2011 NBCA 98 , 381 N.B.R. (2d) 81. In that

case, the defendant’s pleadings neither set out a concise statement of the material facts in support of corporate veil lifting nor featured arequest for that equitable remedy: […] In Parlee v. McFarlane (1999), (NB CA), 210 N.B.R. (2d) 284, [1999] N.B.J. No. 88 (C.A.) (QL), the Courtcautioned against non-compliance with those rules: It is commonplace that trial by ambush has no place in our modern system of justice. The rules of pleading enunciated in Rule 27 of theRules of Court are designed to ensure that the relevant issues are raised, and that no party is taken by surprise.

The importance ofpleadings cannot be underemphasized. They define the issues not only for the parties, but for the judge as well.

Indeed, I cannot fathom asituation where a trial judge could properly decide the case before him or her on a basis not raised in the pleadings or at trial. [para. 33] The reference in that passage to “issues [...] not raised [...] at trial” intended to signal that a case could properly be decided on an un-pleaded basis where it and the material facts had been spotlighted and brought home to the opposite party in non-prejudicial fashion.Those rare situations allow this Court to sustain the judgment at trial on the basis that the pleading was “deemed” amended. It goeswithout saying that the Court in Parlee v.

McFarlane did not encourage trial judges to overlook non-compliance with the rules ofpleading in circumstances where, as here, an un-pleaded or improperly pleaded defence would, if effect were given to it, cause prejudiceto the plaintiff that an adjournment or a suitable award of costs would not sufficiently minimize. For the equitable remedy of corporate veil lifting to be in play, Royal & Sun Alliance had to ask for it.

If the Amended Statement ofDefence had featured such a request, a concise statement of the material facts in support would have been required. […] That said, even if I could be persuaded the features, failings and inadequacies of Royal & Sun Alliance’s pleadings did not forecloseresort to corporate veil lifting, I would still hold that equitable remedy was inappropriate given the trial judge’s unimpeachable findingthat Mr.

Burke used 1021256 Ontario Inc. for entirely legitimate purposes. [paras. 56-59] [44] Local 772 did not seek relief on the grounds that s. 84 of the United Association Constitutiondid not authorize the General President to make the order providing for the transfer of Local 772’s assets to the new entity, Local 325.Nor did Local 772 seek relief on the grounds that no consolidation could take place without at least a majority vote of its members infavour.

As mentioned, the issues raised by the Amended Statement of Claim were whether: (1) there was a “superfluous number ofLocals” within the meaning of s. 84 of the United Association Constitution; (2) the General President could delegate to Mr. Cochranethe task of conducting a hearing into the advisability of consolidation; and (3) rules of natural justice were denied in the process leadingto the making of the Order of Consolidation. [45] I realize the proceeding in the court below was not a trial. However, the motion’s objective wasas serious as could be: dismissal of the action.

As will be seen, the merits of the action were most relevant in the determination of thatmotion. Assessing those merits necessarily required reference to the pleadings to ascertain the live issues. No doubt, the motion judgewould have viewed favorably any application by Local 772 to amend its Amended Statement of Claim to raise issues beyond thoseclearly pleaded. No such application was made.

It follows the motion judge cannot be faulted for not addressing Local 772’s un-pleadedobjections to the Order of Consolidation. [46] That said, I will discuss the un-pleaded issues because: they were raised in Local 772’s pre-motion brief and at the hearing in the court below; the takeover of Local 772’s assets is targeted by the Amended Statement of Claim;the Amended Statement of Defence takes issue with Local 772’s existence following consolidation; and, more broadly, it is in theinterests of justice that those issues be addressed.

(3) Decision [47] The pertinent parts of Rule 58 read as follows: SECURITY FOR COSTS SÛRETÉ EN GARANTIE DES DÉPENS

58.01 Where Available A plaintiff may be ordered to furnish security for costs where it appears that (

a) he is ordinarily resident out of New Brunswick, (

b) the defendant has a judgment or order against the plaintiff for costs in another action, and those costs remain unpaid in whole or in part, (

c) he is a nominal plaintiff, and there is reason to believe that he has not sufficient assets in New Brunswick to pay the costs of the defendant if ordered to do so, (

d) it is an association as defined in Rule 9.01 or is a corporation and there is reason to believe that it has not sufficient assets in New Brunswick to pay the costs of the defendant if ordered to do so, or (

e) the defendant is entitled by a statute to security for costs. […] 58.05 Default of Plaintiff Where a plaintiff defaults in furnishing the security ordered, the defendant who obtained the order may apply on motion to dismiss the action. 58.06 Amount May be Varied 58.01 Applicabilité Une ordonnance enjoignant au demandeur de donner une sûreté en garantie des dépens peut être rendue s’il est établi

a) qu’il réside habituellement à l’extérieur du Nouveau-Brunswick,

b) que le défendeur a obtenu, dans une autre action, un jugement ou une ordonnance condamnant le demandeur aux dépens et que ceux-ci n’ont pas encore été acquittés en tout ou en partie,

c) qu’il est constitué demandeur à

titre nominal et qu’il y a lieu de croire qu’il ne possède pas suffisamment de biens au Nouveau-Brunswick pour rembourser les frais du défendeur s’il est condamné aux dépens,

d) qu’il s’agit d’une association selon la définition de la règle 9.01 ou d’une corporation, et qu’il y a lieu de croire qu’elle ne possède pas suffisamment de biens au Nouveau-Brunswick pour rembourser les frais du défendeur si elle est condamnée aux dépens ou

e) qu’en vertu d’une loi, le défendeur a droit à une sûreté en garantie des dépens. […] 58.05 Inaction du demandeur Si le demandeur néglige de donner la sûreté imposée par l’ordonnance, le défendeur qui a obtenu l’ordonnance peut demander à la cour, sur motion, d’annuler l’action. 58.06 Modification du montant La cour peut, en tout temps, augmenter ou diminuer le montant de la sûreté en garantie des dépens […]

The amount of security for costs may beincreased or decreased by the court at anytime. […] 58.10 Security for Costs on Appeal

(1) A judge of the Court of Queen’s Bench orof the Court of Appeal may order security forcosts (Form 58B) to be given by an appellantif (

a) a motion for such security is made within15 days from the service on the respondent ofthe notice of appeal, and (

b) the judge is satisfied that such securityought to be provided.

(2) Unless the Court of Appeal ordersotherwise, an appellant who fails to complywith an order for security for costs shall bedeemed to have abandoned his appeal withcosts to the respondent. 58.10 Imposition en appel

(1) Un juge de la Cour du Banc de la Reineou de la Cour d’appel peut ordonner à unappelant de donner une sûreté en garantie desdépens (formule 58B)

a) si une motion à cet effet est présentée dansles 15 jours de la signification de l’avisd’appel à l’intimé et

b) si le juge constate l’opportunité d’une tellemesure.

(2) Sauf ordonnance contraire de la Courd’appel, l’appelant qui n’obéit pas à uneordonnance imposant une sûreté en garantiedes dépens sera réputé avoir abandonné sonappel avec dépens à sa charge. [48] The use of the word “may” in Rule 58.01’s introduction confirms it is open to the court todismiss a motion for security for costs even where one of the conditions precedent in sub-rules (a), (b), (c), (

d) and even (

e) are extant. InBuraglia v. New Brunswick Research and Productivity Council (1995), (NB CA), 161 N.B.R. (2d) 197, [1995] N.B.J.No. 177 (C.A.) (QL), Hoyt, C.J.N.B., who delivered the Court’s reasons for judgment, adopted the view that an order for security forcosts may rightfully be declined where a non-resident’s impecuniosity would make such an order the source of an injustice “bywrongfully denying a worthy plaintiff the opportunity of having his or her cause adjudicated upon” (emphasis added).

That message’sbroad implications are clear: if a plaintiff resists a motion under Rule 58.01 on the grounds that an injustice will result (e.g. dismissal onaccount of default traceable to impecuniosity), it behooves him or her to establish the action has significant merit.

In that context, andbroadly speaking, the stronger the case, the stronger the odds of a more manageable security burden for a plaintiff whose means might beproblematic. [49] Likewise, the moving party would be well-advised to showcase the strength of his or herdefence as the court will more likely exercise its discretion under Rule 58.01 in his or her favor where the defence appears meritorious.In Williamson v.

Gillis, Richard, J.A., writing for a unanimous panel, confirmed the apparent merits of the moving party’s defence is aproper consideration in the exercise of discretion under Rule 58.01: […] On the one hand, the Court does not want to bar the plaintiff’s action, and, on the other, it wants to prevent a defendant from beingdeprived of costs if the action is dismissed. In balancing these competing interests, it is not surprising that the merits of the defencefeature among the various factors a judge must weigh.

The question is whether the defendant seeking security for costs must depose tohaving a valid defence or whether an inference of a serious triable issue, drawn from the facts or from the pleadings, is sufficient. […] […] [I]n Edmundston Roladrome et al. v. Roynat Inc. et al. (1985), (NB KB), 62 N.B.R. (2d) 444, [1985] N.B.J. No.193 (Q.B.) (QL), Dickson J. refused to impose upon a defendant the requirement to state, in an affidavit in support of a motion for

security for costs, that there is a good defence on the merits. Instead, he opined that “an obvious lack of merit in a defence apparent onthe face of the material before the court [would be] considered by a court in its discretion as sufficient reason for refusal of an order forsecurity” (para. 12). […] Edmundston Roladrome was followed in 036550 (N.B.) Ltd. v. Shenstone Investments Ltd. (1987), (NB KB), 79N.B.R. (2d) 271, [1987] N.B.J. No. 82 (Q.B.) (QL). In my view, the motion judge was correct to likewise follow this line ofjurisprudence.

If there were to be, in this Province, a requirement that a defendant seeking security for costs make a specific assertion inan affidavit, this would have been provided for in the Rules of Court, or would arise by necessary inference. Several Rules mandatespecific language in support of various applications or motions: Rules 7.02, 7.06, 21.04, 22.02, 43.03, 44.01, 68.02, 71.02 and 76.03. Forexample, Rule 22.02(1) specifically provides that a plaintiff applying for

summary judgment must file and serve an affidavit “(

a) settingout the facts verifying the claim or part of the claim, and (

b) stating that he knows of no fact which would constitute a defence to theclaim or part of the claim except as to amount.” The failure to comply with the mandatory language of s. 22.01(1) is fatal: Harris v. W.H.Goodwin & Co. Ltd., 2008 NBCA 14, 327 N.B.R. (2d) 96. In my view, if there were to be a similar requirement for a motion under Rule58.01, it would have been expressly stated or, at least, would be a necessary inference from the language of the Rule. This is not to say, however, that the merit of the defence is not a proper consideration.

In cases of interlocutory injunctions or of stays ofexecution, the first step in the analysis is to determine whether there is a serious question to be determined: RJR-MacDonald Inc. v.Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17 (QL). In my view, this is also a properconsideration in a motion seeking security for costs. While it will certainly be prudent for a defendant seeking security for costs to set outsufficient facts verifying the seriousness of the question(

s) to be tried, the failure to do so will not always be fatal, especially if thepleadings are before the motion judge and the seriousness of the issue can be inferred from these. That is the approach Richard C.J.Q.B.took in Brunswick Printing and the one the motion judge adopted in this case. This approach is also consistent with the jurisprudence of this Court regarding security for costs on appeal pursuant to Rule 58.10. InDugas Estate (Bankrupt), Re (2003), (NB CA), 261 N.B.R. (2d) 99, [2003] N.B.J.

No. 230 (C.A.) (QL), DrapeauC.J.N.B. stated: In my view, an order for security for costs should only be issued when it is required in the interests of justice. It goes without saying thata key consideration in the exercise of the judicial discretion recognized by Rule 58.10(1)(

b) is the apparent strength of the grounds ofappeal. An appellant’s financial means or lack thereof may also come into play. On that score, I note that judges have shown a great dealof reticence in granting orders for security for costs where the impecuniosity of the appellant is such that the likely consequence of theorder will be a deemed abandonment of an apparently meritorious appeal. That said, an appellant’s impecuniosity would not necessarilypreclude an order under Rule 58.10(1)(

b) if the appeal appears to have a very poor chance of success or is vexatious. [para. 9] This statement applies mutadis mutandis to security for costs under Rule 58.01. I therefore conclude the motion judge did not err in law in ruling that there is no requirement for specific language in an affidavit insupport of a motion seeking a plaintiff to post security for costs.

The judge correctly held that one of the considerations in the Rule 58.01analysis is whether or not there is a serious question to be tried, and he was correct in finding that this factor could be inferred frompleadings. [paras. 18-26] [Emphasis added.] [50] At the hearing of the motion for security for costs, the respondents, as moving parties, bore theburden of establishing the conditions precedent to the application of Rule 58.01 were met and that the court ought to exercise itsdiscretion in their favor. At that point, it sufficed if their defence raised “a serious question to be tried”: Williamson v.

Gillis, para. 26.The respondents discharged that admittedly light burden thereby opening the door to their success on the motion for an order prescribingsecurity for costs. [51] Local 772 rightly concedes the validity of the order for security for costs is not in issue. Asmentioned, in her supporting reasons, the judge who made that order raised a red flag regarding the merits of the action: There is a real question as to whether Local 772 even exists.

It has no status under the UA constitution. […] Security for costs is discretionary, but it is necessary to determine, once and for all, whether Local 772 is actually motivated to move thelitigation forward. Local 325 needs this matter to proceed and not continue to burden its members.

[…] One factor considered relevant to making such an order is the merits of the case.

Without prejudging the matter, and given the UA constitution, the decision of the adjudicator, the prior decisions of the Court of Queen’s Bench and the Court of Appeal, and the inexplicable delay, the merits of this case are debatable . [paras. 15-17] [Emphasis added.] [ 52 ] At the hearing of the motion under Rule 58.05, the respondents, as moving parties, bore the burden of establishing that the dismissal of the action was just, having regard to the totality of the circumstances, which, in this jurisdiction, includes the apparent merits of the action.

Those merits can, in the right circumstances, tip the scales in favour of one outcome over the other. Interestingly, the last-mentioned consideration does not appear to come into play in Nova Scotia (see Ocean v. Economical Mutual Insurance Co. , per Smith, A.C.J.S.C.).

The difference may be explained by Nova Scotia’s particular set of rules and procedural history. [ 53 ] At any rate, in her reasons for decision, the motion judge indicates she considered the following unrelated-to-merits circumstances in exercising her discretion in favour of dismissal: (1) costs payable under two court orders remained unpaid; (2) costs under another remained unpaid for over three years; (3) although there was “considerable evidence” of efforts to raise the funds post-default, Local 772 knew the motion for security for costs had been filed nearly a year earlier and that the respondents were seeking $10,000 as security; (4) there was “little or no evidence” of membership support for Local 772’s action; (5) the person produced by Local 772 to be examined on its behalf at discovery refused to accept his testimony would bind Local 772 and it “was not until the hearing on security for costs that counsel for 772 stated that another representative would be designated whose testimony would bind 772”; (6) although Local 772 filed a Notice of Appeal from the judicial review decision of June 7, 2012, the appeal was not perfected, a fact confirmed by my review of this Court’s records; (7) even though the time limit for posting security for costs expired on July 30, 2012, Local 772 waited a month and a half to file a motion to further extend the time.

That motion was filed, out of time, two days before the hearing of the motion that gives rise to the present appeal. [ 54 ] Its default thus contextualized by those findings, none of which is reversible in my view, and given the defences raised in the Amended Statement of Defence, Local 772’s action was at great risk of being dismissed absent a showing that its chances of success at trial were significant.

In meeting that challenge, Local 772 could not rest its case on the motion judge’s previous acknowledgement, based entirely on a tactical concession by the respondents, that the case raised a serious question to be tried. Nor was it sufficient for Local 772 to actually show that its Amended Statement of Claim raised issues of such seriousness that the first requirement for an interlocutory injunction might be satisfied.

If that remained the standard after Local 772’s default, the law would countenance a wholly unacceptable trivialization of a party’s disregard for: the Rules of Court ; his or her obligation to move the case forward with reasonable speed; and court orders, including, most importantly, an order for security for costs. [ 55 ] Given the motion judge’s findings, viewed in the light of the apparently serious defences raised in the Amended Statement of Defence, it was incumbent upon Local 772 to demonstrate its action’s dismissal would be unjust, having regard not only to its interests but, as well, those of the respondents.

It would be unwise, in my judgment, to define rigidly what showing regarding the merits of the action will suffice to fend off a motion for dismissal under Rule 58.05 where the record reveals, as here, the default is added to the following, regrettably all-too-common, combination of circumstances: inordinate delay attributable to the plaintiff in the prosecution of the action, apparent seriousness of the pleaded defences, the plaintiff’s unexplained tardiness in paying court- ordered costs, outstanding costs orders against the plaintiff and his or her procrastination in taking steps to discharge the burden imposed by the order for security.

I offer the following, admittedly general, framework: having regard to the record, including the pleadings and the evidence, are the action’s chances of success such that the plaintiff’s default, viewed contextually, warrants a judicial response short of dismissal? Thus, in finding Local 772’s action was without merit and bound to fail, the motion judge went further than was necessary.

However, her overreach provides no succor to Local 772 since it failed to demonstrate the underlying action’s chances of success are such that its failure to abide by the court’s order for security for costs, viewed contextually, deserves a judicial response less Draconian than dismissal. I come to that conclusion for the following reasons. [ 56 ] Local 772 has failed to persuade me Vice-Chairperson Bruce fell into error in rejecting the objections to the Order of Consolidation formulated in its Amended Statement of Claim.

The first objection is based upon the contention that a condition precedent to the General President’s jurisdiction under s. 84 of the United Association Constitution was not satisfied, namely “a superfluous number of Local Unions in any locality”. The Vice-Chairperson rejected that objection for the following reasons: Whether the Consolidation Order is Constitutionally Valid 25. […] At the time of the consolidation there were five Locals in the Province of New Brunswick. They included the Fredericton Local, Bathurst Local, Miramichi Local, Moncton Local and Saint John Local.

The Consolidation Order merged the four Locals other than the Saint John Local.

26. The individual Locals in New Brunswick were either certified or voluntarily recognized in the past at the request of the UA for the purpose of representing employees in a bargaining unit in a geographical area of New Brunswick. It is argued by Local 772 that there cannot now be a superfluous number of Local Unions in “any locality” in New Brunswick given that each Local was certified for a geographical area or locality.

It is clear from the Consolidation Order, however, that the General President, William Hite, based his decision to consolidate the four Locals on his conclusion that there was a “superfluous number of Local Unions in the New Brunswick area”. As noted earlier there were five Locals in the New Brunswick area and the General President’s decision was that four of these Locals should be consolidated into one Local. 27. It is the conclusion of this Board that the wording of

section 84 encompasses the situation that existed in New Brunswick and that the decision taken by the General President to merge the four Locals was, therefore, not in conflict with

section 84. It must be seen that the Constitution, being a Union document, contemplated that locals under that Constitution would be certified to represent employees in an appropriate bargaining unit defined by a geographical area. The Constitution contemplated that a chartered local within a legislatively defined jurisdiction, such as New Brunswick, could be merged with one or more other locals in contiguous areas within New Brunswick so that the new local would be able to conduct labour relations in a larger geographical area within New Brunswick.

There is no requirement that all of the locals in New Brunswick would have to be merged in order to take advantage of the consolidation process in

section 84 . [Emphasis added.] [ 57 ] The second objection is that the General President could not lawfully delegate his powers to Mr. Cochrane, the so-called Hearing Officer. In dismissing that objection, Vice-Chairperson Bruce stated: Whether the General President illegally delegated his powers to a Hearing Officer. 29. The General President appointed Garth Cochrane, a Business Manager of a local in Ontario to act as a Hearing Officer with respect to the proposed consolidation. The report of the Hearing Officer and the Consolidation Order summarize the process followed by the Hearing Officer. 30. There is no reference in any of the sections of the Constitution, including

section 84, that specifically authorizes the President to appoint a hearing officer to gather information from Locals that could potentially be affected by a Consolidation Order under

section 84 of the Constitution . There are provisions in the Constitution, such as

section 92, that refer to the appointment of a hearing officer with respect to a specific investigation. In the case of

section 92, specific time lines are also established for the serving of notice of charges against individuals. 31. There are no provisions in the Constitution, however, that specifically prohibit the General President from asking an individual to investigate and gather information with respect to other matters.

It is to be expected that the general powers of the General President would enable the General President to delegate to an individual the job of gathering information that would assist the General President in reaching a decision with respect to the merger, which, in the present case, was initially recommended to the General President by the Vice-President and Director of Canadian Affairs.

Section 46(

f) of the Constitution empowers the General President to render decisions concerning the

interpretation of the Constitution or any matter related to the UA.

Section 46(

f) goes on to state that the President may delegate his authority. 32. The report of Hearing Officer Cochrane merely outlined the information which he had gathered from meeting with representatives of the four Locals and on which he based his recommendation to the General President. The Hearing Officer had no decision making powers and merely made a recommendation to the General President that there should be a consolidation of the four Locals. 33. The General President made it clear in the Consolidation Order that he had reviewed the matter himself, including the report of Hearing Officer Cochrane.

The General President provided reasons for his conclusion that a consolidation would be in the best interest of the UA locally and at large. In the decision of the Ontario Labour Relations Board, I.B.E.W., Local 594 v. I.B.E.W., Local 586 [1988] O.L.R.B., Rep. 491, the Ontario Board was considering whether a merger of two locals was in compliance with the applicable union constitution. In particular, the Board was determining whether the constitution implied the right of union members to vote on the merger. In paragraph 19 of the Ontario Board’s decision, it concluded as follows: “We are aware of no principle of

interpretation that would require, or even permit, us to imply a need for membership approval of a

merger or amalgamation, when the Constitution clearly empowers the International President to decide on mergers or amalgamation of Locals. We would observe that the Constitution gives some broad powers to the International President in relation to the organization and operation of the I.B.E.W.

It would appear to us to be difficult to reconcile a requirement for approval of a merger or amalgamation by the members of the Locals with these broad powers in the hands of the International President.” Although this Ontario decision was addressing a different question involving a merger of unions than that before this Board, the decision is helpful in recognizing that when broad powers are given to the President to effect a merger of locals that there is no implied power by the locals to approve it. 34.

In the final paragraph of the Consolidation Order, the General President stated that the Order was subject to the approval of the General Executive Board. This approval was subsequently obtained and the consolidation became effective June 1, 2008. Local 772 did not appeal the decision of the General President to the General Executive Board, which eventually approved it, nor did Local 772 appeal to the annual convention, which it is entitled to do under

Section 208 of the Constitution. [Emphasis added.] [ 58 ] The third objection, which is advanced by way of an alternative plea in the Amended Statement of Claim, is that the hearing by Mr. Cochrane was conducted contrary to and in breach of the rules of natural justice. Vice-Chairperson Bruce rejected that objection for the following reasons: 35. […] It is noted that this hearing was not a quasi-judicial proceeding but merely the gathering of information on which to base a recommendation to the General President.

It is clear from the Hearing Officer’s report that all four Locals were represented at the meeting he had called and were given an opportunity to make presentations to him. 36. The Court, in its decision with respect to Local 772’s Interim Motion, stated that a written notice of the hearing, called by the Hearing Officer, was given to the Business Manager of all the locals concerned.

Further, if any Local felt it had not had proper time to make a full presentation to the Hearing Officer, it would have been open under the Constitution for that Local to seek to provide any additional information it felt was relevant to the Hearing Officer, the General President or the General Executive Board.

Section 46(

f) of the Constitution states that all decisions of the General President are subject to appeal to the General Executive Board.

Section 206 of the Constitution sets out this right of appeal to the General Executive Board. Further, any decision of the General Executive Board can be appealed to the annual convention of the UA.

There were many opportunities for any dissatisfied Local to identify its concerns with respect to the decision making process followed and to clarify any information which it believed the General President to have relied on which the Local considered to be inaccurate. [Emphasis added.] In the Vice-Chairperson’s view, any “impropriety” by the Hearing Officer could have been corrected through the appeal processes open to, but not pursued by, Local 772. For a helpful discussion on the topic of the duty on a complainant to exhaust internal remedies, see George W.

Adams, Q.C., Canadian Labour Law , Vol. 2, 2 nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 1993), at paras. 14.1200- 14.1250. [ 59 ] I would add there is no evidence of any such “impropriety” in the record at our disposal. In the absence of any evidence on point, effect cannot be given to this objection. [ 60 ] In sum, Local 772 has not shown there is a realistic chance the Order of Consolidation could be invalidated at trial on the grounds explicitly raised in the Amended Statement of Claim.

This takes me to the contention that the Order of Consolidation could not prescribe, as a matter of law, the transfer of Local 772’s assets to the consolidated entity, Local 325. [ 61 ] In Local 37, Sheet Metal Workers’ International Association and the Individual Members and Applicants thereof v. Sheet Metal Workers’ International Association and Local 3 , 655 F.2d 892 (United States Court of Appeals, 8 th Cir. 1981), a case dealing with a Local’s challenge to a merger order, the court describ

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