February 15, 2010

B.C. Court of Appeal

Independent Contractors and Business Association allowed to reveal market recovery fund recipients

RICHARD GILBERT

staff writer

The open shop association in B.C. is upset a small group of electrical contractors received a large sum of money from the union to subsidize labour costs on bids, but the union says this is just part of an overall market entry strategy.

The International Brotherhood of Electrical Workers (IBEW) Local 213 originally sued the Independent Contractors and Business Association of British Columbia president Philip Hochstein for defamation in 2007.

The union objected to comments Hochstein made in a 2002 Vancouver Sun story, which they say falsely implied the market recovery program was an illegal tax evasion scheme.

“Part of the evidence was a list of everybody who got money from the union between 1992 to 2002,” said Hochstein.

“We said great and we want to confirm that we have the right to publish the data. The IBEW fought this tooth and nail.”

The union launched another legal battle in May 2009 to prevent their publication.

“We had to go to court again to see if we could legally publish the data,” explained Hochstein.

“So, they lost twice. They lost the defamation suit and they lost the fight to keep the information from the public,” he said.

The market recovery program allows the IBEW to compete for contracts by subsidizing some labour costs of unionized contractors, using funds received as union dues.

“We look at the whole electrical industry and the opportunities to solidify our involvement in various parts of the market,” said IBEW business manager and financial secretary Rick Dowling.

“From time to time we try to obtain work in areas that we don’t have a significant presence.”

According to Hochstein, the court documents show four contractors Canem West, Inlet Electric, Mott Electric, and Canem Systems received more than 40 per cent of about $24 million in market recovery funds distributed by the union between 1992 and 2002.

He said this data raises serious questions about how so much of the market recovery fund ended up being allocated to such a small number of contractors.

“These are new and specific markets we go for union contractors,” said Daniel Mott, president of Mott Electric.

“We are one of the biggest contractors in B.C. and there are only really five or six big unionized contractors that can bid for this type of work.”

Mott said that small firms get market recovery funds as well, but the large firms represent about 15-20 per cent of the whole electrical contracting industry.

“These markets are very specialized. This is why at a specific point in time only a small number of contractors were interested in bidding,” said Dowling.

“Some are reluctant to extend themselves into segments of the market they are not active in. We help contractors gain access to these markets and diversify their market share.”

Dowling said this strategy keeps union members working by helping unionized contractors gain access to new growth markets.

In contrast, the ICBA has consistently opposed market recovery funds on the basis that it violates the spirit of labour and competition laws in Canada.

The BC Supreme Court dismissed the IBEW’s defamation claim in a trial which ended in March 2007.

Justice Groberman said Hochstein’s statements were primarily about taxation policy rather than about the union.

Evidence included the IBEW’s annual financial statements from 1992 to 2002, which contained the amounts held in the market recovery fund and annual expenditures made from the fund.

The evidence also included speadsheets, which identify contractors who applied for and received funding from the market recovery program, the amount of funding the contractors were to receive from the fund, the total hours funded and the rate at which those hours were to be funded.

The ICBA recently won the case in the B.C. Court of Appeal that gave the association the right to share the information on the market recovery program.

The spreadsheets were posted on their website late last month.

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