[1980] OLRB Rep. August 1167
1818-79-R Amalgamated Meat Cutters and Butcher Workmen of North America, A.F.L.—C.I.O.- C.L.C. and its Local P287, Applicant, v. Beef Terminal (1979) Limited, Respondent, v. Beef Terminal Owned & Operated by Sterling Packers & Town Packers, Intervener.
BEFORE: R. O. MacDowell, Vice-Chairman and Board Members E. J. Brady and O. Hodges.
APPEARANCES: Harold F. Caley and Stan Henderson for the applicant; Gordon Wood, J. Wilson and M. Kimber for the respondent; D. N. Corbett and D. F. Hirsh for the intervener.
DECISION OF R. O. MACDO WELL, VICE-CHAIRMAN AND BOARD MEMBER O. HODGES; August 8, 1980
The name "Beef Terminal 1979 Ltd." appearing in the style of cause of this application as the name of the respondent is amended to read: "Beef Terminal (1979) Limited."
This is an application under section 55 of The Labour Relations Act, in which the applicant union has also pleaded section 1(4) in the alternative. The union's primary contention is that there has been a "transfer of a business" within the meaning of section 55 from "Beef Terminal", a partnership owned and operated by Sterling Packers Ltd., and Town Packers Ltd. to "Beef Terminal (1979) Limited". The application arises from a lease (with option to purchase) of certain premises and equipment formerly used by Beef Terminal in its packing house business. There is no dispute that Beef Terminal (1979) Limited has acquired the use of these assets; nor, having regard to the extended definition of the term "sale" in section 55 is there any doubt that the assets have been "sold" within the meaning of the Act. The sole question before the Board is whether the new company can be said to have acquired a "part" of the predecessor's business within the meaning of section 55. In order to answer this question, it is necessary to set out something of the predecessor's history and the business context in which it operated.
I
Until the early 1960's, Town Packers, Sterling Packers and a related company known as William Putty Beef, operated from the premises of the City of Toronto abbatoir on Tecumseth Street. This abbatoir was owned, operated and staffed by the City of Toronto; and provided custom slaughtering services to customers, including a number of small meat packing companies who leased space on the premises. Town, Sterling and William Putty Beef were among these tenants who operated from the Tecumseth Street location, buying, selling and shipping beef; using the slaughtering facilities provided by the City; and displaying and storing the meat, prior to the delivery in rented cooler space on the premises. In other words, the abbatoir, and the meat companies, were engaged in separate, but functionally related businesses, carried on from the same premises.
In the early 1960's, Town, Sterling and William Putty Beef, moved to a new abbatoir location at 2225 St. Clair Ave. West, adjacent to the Ontario Stockyards. The arrangement at the new location was similar to that which existed at the City abbatoir, except that the three companies actually owned the slaughterhouse premises and were not merely tenants. As at the City abbatoir, each company had its own designated cooler, display, office, and docking facilities, and each maintained its own work force and separate identity. The three companies operated as independent competitors in the marketplace; (although they were related because of the family ties of their principals) and shared in the running of the slaughterhouse facilities. Phillip Greenspan, one of the principals of Town (and subsequently Beef Terminal) explained that the three companies jointly set up a "kill floor" to slaughter cattle on their behalf, hired staff, and shared expenses. The cattle slaughtering facility came to be known as "Beef Terminal", and while the evidence does not disclose the precise relationship between Beef Terminal Ltd. (another company owned by the Town! Sterling interests) and the operation of the slaughterhouse known as "Beef Terminal", there is no doubt that the slaughterhouse itself was regarded by the three companies as an independent entity whose sole purpose was to run a "kill floor".
Beef Terminal as such did not purchase or sell cattle until November, 1977 when that name was adopted as the style for a partnership of Sterling and Town. By this time, the interest of William Putty Beef had been purchased by the other companies. A related holding company, known as Junction Holdings Limited, actually owned the land building and premises at 2225 St. Clair Ave. West. (There is no contention that the existence of this holding company has any significance, for it is clear that it was simply an instrumentality of Town and Sterling, and while an apparent party to the transactions with which we are here concerned, had no independent interest.)
The formation of Beef Terminal, a partnership owned and operated by Sterling Packers and Town Packers, created a new legal framework for what was already a comprehensive, fully integrated packing house business. It also resulted in a "sale of a business" determination by the Ontario Labour Relations Board under section 55 of The Labour Relations Act. The employees of Town and Sterling had been represented by different trade unions, and when the two companies formed the new partnership, and intermingled these employees, the Board found a "sale" within the meaning of section 55, and ordered a representative vote under section 55(6). This vote was won by the applicant union. The union was declared to be the bargaining agent for the employees of Beef Terminal (see the decision of the Board in Board File #1384-77-R, dated December 22, 1977); and subsequently, entered into a series of collective agreements, the most recent of which is dated February 5, 1979.
Beef Terminal ran a "comprehensive" packing house business of considerable size. At its peak capacity, the business slaughtered as many as 2,500 head of cattle per week and had annual sales exceeding $75 million. The business employed a number of experienced cattle buyers who purchased livestock from stockyards and collection points throughout Canada, and a sales force who sold meat to the firm's customers. These customers included all of the major chain stores in Ontario, as well as processors (such as sausage producers) and purveyors who processed beef for the hotel, restaurant and institutional trade. The firm had its own fleet of trucks, drivers, garage, and mechanics, so that meat could be delivered to its customers. There were about 160 employees at the St. Clair Avenue location. Of these about 70 were in the company’s' cooler areas, and about 52 worked on the kill floor. In addition there were truck drivers, operating engineers, salesmen, maintenance personnel, about 20 employees who worked in the "boning room" preparing broken cuts, briskets, points, etc. for direct sale, as well as about a dozen employees working on meat remnants or by-products in the "fancy meat", "blood-drying", and "edible rendering departments". Rendering of inedible byproducts was done by Ontario Rendering, pursuant to contract, with equipment installed on the premises but owned and operated by Ontario Rendering.
It is unnecessary to describe in detail all of the functions performed by Beef Terminal's employees or all of the operations associated with the slaughtering of cattle. For our purposes a general outline is sufficient. Cattle, purchased from the stockyards or elsewhere were conveyed to the abbatoir's premises (by rail, truck, and down the "runway" from the stockyards) marshalled in Beef Terminal's barns, then taken to the "kill floor" where the cattle were slaughtered, the hide removed, and the meat was roughly dressed. The meat was stored temporarily in a "chill room" to reduce its temperature; then transported to the cooler areas where it was graded and displayed. Meat was received in the cooler areas on a "government inspected" basis and shipped to the customer's order from adjacent loading docks.
The years 1978 and 1979 were difficult ones for the meat industry. During this period, nine packing houses closed. Beef Terminal's own economic problems were exacerbated by Federal meat quotas, high interest rates, and cash flow problems related to the buying practices of large chain stores, which generated an unusually high (and expensive) level of accounts receivable. The company began to wind down its business as early as January, 1979. In early 1979, its trucking fleet was sold, its garage closed, and its mechanics were laid off. Trucks were leased on a "maintained basis" from Hertz. Meanwhile, the company was actively seeking to sell its business. A number of other large packers were approached (Beef Terminal was the second largest packer in Ontario), and agents were hired who canvassed potential buyers in North America and Europe. These efforts proved to be unsuccessful. Ultimately, the company decided that it would be unable to continue, and on April 23, 1979 advised the Minister of Labour that it planned to terminate its business. On April26, 1979 the employees were notified that their employment would be terminated on June 22, 1979.
The shut-down proceeded in an orderly fashion. Notices were sent to customers, insurers, utilities, creditors, The Toronto Livestock Exchange, and businesses such as Hertz, which had outstanding service contracts which would have to be terminated. The last kill took place on June 18th. Thereafter, almost all of the employees were terminated except fora few who were kept on to dispose of existing stocks of meat, and maintain the sanitary condition of the plant. The company still hoped to sell a viable slaughterhouse operation, and this would be impossible if refrigeration and cleanliness were not maintained. Gunnar Bjarno, a maintenance man, Robert Ryan, an operating engineer, and J. H. Wilson, the plant superintendent, remained on the payroll until November, 1979. The company was also anxious not to prejudice the status of its "establishment number" — the registered trademark issued by the meat inspection department of the Federal Government, identifying the origin of the firm's meat products and guaranteeing certain standards of sanitation, cleanliness, and inspection. The establishment number, as its name suggests, goes with the premises, but could be withdrawn if those premises ceased to meet inspection standards. Dr. Morris, an official of the meat inspection branch, explained that by having a viable establishment number, a company enhances both the value and marketability of its business; for it is much easier for a prospective buyer to take an assignment of an establishment number than to qualify for a new one. A plant may be idle for up to twelve months without prejudice; however during that period of time federal standards must be maintained.
When it became evident that the business of Beef Terminal would terminate, J. H. Wilson, the plant superintendent, began to explore ways in which the slaughterhouse could be purchased and carried on as a "custom slaughterhouse" — that is, a slaughterhouse serving resident and non-resident customers in much the same way as the City abbatoir used to do; or more recently, as Town, Sterling, and William Putty Beef were serviced prior to the creation of the partnership in 1977. Wilson had considerable experience in the business. He had been employed by Beef Terminal and its predecessors for ten years and had previously been superintendent of a cooperative packing house in Barrie owned and operated for the benefit of about 2,000 farmers. Wilson believed that a custom slaughterhouse, selling its services for a fixed charge per head slaughtered, but not purchasing any of its own cattle, could avoid the necessity of an extensive business infrastructure (i.e. salesman, buyers, transportation facilities etc.), and could avoid the risks associated with the purchase and sale of cattle, and the cash flow problems endemic to the sale of meat to chain stores. Wilson explored his idea with Gunnar Bjarno, the mechanical foreman, John Thomson, the livestock manager, and Robert Ryan, an operating engineer. These three Beef Terminal employees, authorized Wilson to explore the possibility of financing the enterprise. Subsequently the number of Beef Terminal employees involved grew to nine.
Wilson approached a number of financial institutions and government agencies seeking capital; but it soon became evident that no funds would be forthcoming unless the employees themselves had substantial capital. Beef Terminal placed a value on the slaughterhouse assets of more than $5 million, and it was clear that the employees would never be able to raise a large enough proportion of that sum to attract support from the lending institutions. Wilson then began to investigate the possibility of leasing all of the assets for a period of years with an option to purchase. In this way he hoped to demonstrate the viability of the enterprise, and to generate from profits a sufficient equity position to attract financial support from institutional lenders. The list of employees involved eventually grew to forty, —all but three of whom were employees of Beef Terminal. Each of these employees contributed funds from his own resources. None of the funds backing the business, which eventually became Beef Terminal (1979) Limited were derived from Beef Terminal (although in late October 1979 certain sums were paid from Beef Terminal to the principals of Beef Terminal (1979) Limited, in order to raise the premises to U.S. inspection standards, and in this sense Beef Terminal contributed a modest amount to Beef Terminal (1979) Limited's start-up costs).
There followed a period of hard bargaining between Wilson and his associates and the owners of Beef Terminal. The employees had amassed about $100,000 of their own funds, and were anxious to conclude an arrangement which did not require significant further funding. Beef Terminal, on the other fund, was anxious to sell all of the equipment associated with the slaughterhouse, and sought to strike a good bargain for itself, with a significant down payment and a reasonable monthly rental. Eventually, the parties concluded an agreement satisfactory to all of them. The precise terms of this arrangement are not relevant to our section 55 determination. It is sufficient to note that the transaction took the form of a lease with option to buy and as a result thereof the new business acquired the use of the building and all of the equipment previously used by the predecessor in the abbatoir aspect of its business. The new business also required the use of certain vacant pieces of land adjacent, or in close proximity to the abbatoir, which it used for parking; and a parcel of land known as the "stockyark option property" which is adjacent to the premises but is currently owned by the Ontario Stockyards, and was subject to an option in favour of Beef Terminal. There was no acquisition of accounts receivable, or customer lists, nor was there any express acquisition of goodwill, or a non-competition covenant. The business did assume certain service agreements respecting photocopying machines, fork lifts and the weigh scales then in place. The signs affixed to the company premises remained as they were, bearing the Beef Terminal name.
Beef Terminal (1979) Limited was incorporated in October, 1979. The nine initial prime movers behind the organization owned all of the preference shares, and retained control over the business by virtue of electing a majority of the Board of Directors. The rest of the forty "employees/ owners" only own common shares. Wilson testified that he considered them to be owners" rather than employees, but it would appear that they are paid a salary and are subject to the control and direction of "management". Apart from their investment (amounting to about $3,000 each), all of these employees are in approximately in the same position, vis-a-vis their employee status as they were when they worked for the predecessor. The employee status of these individuals also appears to be recognized of articles 24 and 25 of the shareholders' agreement which provide as follows:
"Member shareholders shall at all times be employees of the company, and further agree to form an association or union properly established under the laws of the Province of Ontario, including the election of required representatives, and cause the association to enter into a collective bargaining agreement with the company excepting those employees whose position of employment precludes such persons from such membership. Such association shall hold meetings regularly and provide one representative deemed elected by the common shareholders to be a member of the Board of Directors of the company.
The persons named in Schedule A hereby agree that the foregoing clauses 22, 23 and 24 are mandatory and constitute the qualifications for holding the said sharehold interest benefits and employment personally, and directly or indirectly through the said corporate interest to be provided by them, as the case may be and any departure from any of the foregoing requirements or conditions shall forthwith end all the foregoing rights and interest of such employee or his company, subject to repayment to him of the value of the financial interest and employee termination benefits as hereinafter set out."
These paragraphs not only presuppose the employee status of the individuals working in the new business but would seem to compel them, on pain of forfeiting their interest in the company, to form a union which would subsequently enter into a collective bargaining agreement with their employer. Whatever else may be said of these provisions, they clearly envisage the employee status of the "owners", as well as a process in which they will negotiate their terms and conditions of employment with their employer. Collective bargaining was not regarded as inappropriate. Wilson testified that he never contemplated maintaining the existing bargaining relationship or collective agreement, although it is clear that he was aware of the predecessor's bargaining relationship, and must be taken to be aware of the possibility that obligations in connection with that relationship might arise subsequent to the transaction with Beef Terminal (1979) Ltd. Article 25 of the agreement with the predecessor entitled "Agreement of Option to Purchase and Purchase and Sale" provides:
"COLLECTIVE AGREEMENT - RELEASE BY PURCHASER
The Purchaser acknowledges that The Amalgamated Meat Cutters and Butcher Workmen of North America and its Local P21-17 and The Canadian Union of Operating Engineers and General Workers collectively referred to as the 'Unions'), respectively, held bargaining rights as at June 22, 1979 pursuant to The Labour Relations Act(the 'Bargaining Rights') for certain of the Vendor's employees and that the Vendor was a party to collective agreements (the 'Collective Agreements') with the Unions with respect to the above-mentioned Vendor's employees. The Purchaser hereby releases, premises and forever discharges the Vendor from or in respect of any claim or action which it may now or hereafter have against the Vendor in respect of any and all proceedings, lawsuits, judgments, awards, damages, loss, orders, decrees, actions, causes of action, or claims which may at any time be asserted against the Purchaser by an employee, union, the Unions or any third party with respect to any matter arising on or subsequent to October 29, 1979 by reason of or related to the Bargaining Rights or the Collective Agreements."
The new company did not notify the trade union that the abbatoir would recommence operations nor were any of the union officials, committeemen, or shop stewards invited to participate as "employee! owners".
Once the new business had established its legal and financial framework, and acquired the predecessor's assets, Wilson was able to attract four "resident" and one "nonresident" customer for whom the company would provide slaughtering services. None of these customers has any financial interest in Beef Terminal (1979) Limited, nor were they directed to that company by the predecessor. Beef Terminal (1979) Limited persuaded these new customers that it could provide a better service than that provided by Metropolitan Packers where, apparently, the same form of tenant! servicing arrangement is available. The tenants are small meat firms with a steady business, based upon ethnic customers. Their business does not fluctuate like that of the chain stores and since they pay a service charge per head slaughtered, there are no significant accounts receivable. As has already been mentioned, Beef Terminal (1979) Limited does not buy or sell beef, but merely supplies slaughtering and cooler services on a maintained basis. A monthly fee covers the cost of rent and maintenance; and the service charge covers the cost of slaughtering.
Beef Terminal (1979) Limited now employs approximately 40 employees — most of them on the kill floor. Because it is a service organization which does not own its own beef, there is no cooler staff (other than maintenance personnel), truck drivers, mechanics, purchasing agents, or sales staff. At the time of the hearing there were no boning room, "fancy meats", or edible rendering operations; although it is by no means clear that such operations could not begin again once the company is firmly established in its main business. The new company acquired the necessary equipment, and Wilson told the Board that certain renovations had been made in the basement in contemplation of new business initiatives. The relationship with Ontario Rendering in respect of the inedible rendering products is being maintained as it was with the predecessor company. Wilson estimated that when the business is fully operational, processing (slaughtering) charges will account for 50 per cent of its revenues, rent for 15 per cent, and the disposal of remnants 35 per cent. Wilson noted, however, that the disposal of remnants portion of the business is not yet fully developed, so that currently rent and slaughtering charges make up a much larger proportion of its total revenues. The estimated kill in the first year is 1,000 head per week; and in the second year is I ,600 head per week. Although not as large as the predecessor in its busiest periods, this is nevertheless a significant number. The actual slaughtering process, the equipment, and many of the employees remain essentially the same as when the predecessor operated the abbatoir. Cattle owned by the resident tenants are brought to the kill floor, slaughtered, kept temporarily in the chill room, then passed to the tenants in an inspected/approved condition, for display and sale in the tenants' cooler areas.
The functions performed by Beef Terminal (1979) Limited for its customers are essentially the same as those provided by the same slaughterhouse facility to Sterling, Town and William Putty Beef in the years prior to 1977. At that time, it will be recalled, the three companies operated as independent business entities, each occupying separate cooler space on the premises, and having their slaughtering done by a slaughterhouse jointly owned by them. As Phillip Greenspan told the Board, Wilson's idea is not "something new", but rather "something old". In an effort to minimize their risks and financial commitments, Wilson and his associates have adopted a business form not unlike that of the city abbatoir (or the co-op packer with which Wilson was associated in Barrie) and functionally very similar to the operation of the slaughterhouse prior to the creation of Beef Terminal in 1977. Wilson acknowledged that this was the case although he pointed out that, at that time, Beef Terminal was a "tool" of the other three companies. On the other hand, there is no doubt that Beef Terminal (1979) Limited has not acquired the total business of Beef Terminal, nor is it even operating the slaughterhouse at the level operated by Beef Terminal in its busiest periods. The new company simply lacks the financial resources, expertise, personnel and general economic organization, necessary to operate the kind of comprehensive packing house business run by the predecessor. As Phillip Greenspan candidly remarked: "if Beef Terminal (1979) tried to do so, it wouldn't last two weeks". The issue before this Board, however, is not whether Beef Terminal (1979) has acquired all of the business of the predecessor. Section 55 also continues bargaining rights when there has been a "sale" of "part" of the predecessor's business. The question before the Board therefore is: Has Beef Terminal (1979) Limited acquired a "part" of the predecessor's business within the meaning of section 55? If it has, the trade union's bargaining rights and collective agreement continue insofar as they are applicable to that part.
II
- This case raises an interesting question concerning the intended meaning of the phrase "part of the business" appearing in section 55 of the Act; but before addressing this central issue, it may be useful to briefly review the purpose of section 55 and the Board's general approach to its interpretation. The relevant parts of the statute are as follows:
"55. (1) In this section,
(a) 'business' includes a part or parts thereof;
(b) 'sells' includes leases, transfers and any other manner of disposition, and 'sold' and 'sale' have corresponding meanings.
(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application."
- The effect of section 55 is abundantly clear. When a business, or a part thereof, is transferred or disposed of, the union retains bargaining rights for the employees employed in the "like unit" to that which existed prior to the transfer, and the transferee must continue to apply the collective agreement to its employees until the Board otherwise declares. Sections 55(4) and 55(6), give the Board certain limited powers, inter alia, to define the "like unit" and redefine the bargaining structure so as to eliminate conflict in bargaining rights, but the section operates automatically to continue bargaining rights in their existing form until the Board otherwise declares. The purpose of section 55 has recently been discussed by the Board in More Groceteria Ltd., [1980] OLRB Rep. Mar., in a long passage to which we might usefully refer:
"15. Section 55 of The Labour Relations Act is a very important part of the legislation guarding against the subversion of acquired collective bargaining rights and providing some permanence to them in an otherwise volatile commercial context. In the former respect, it is assisted by the various unfair labour practice sections of the Act together with section 1(4) which permits the Board to treat as one employer a business carried on through more than one corporation where there is a common control or direction and whether or not these businesses are being carried on simultaneously. An interesting early example of this unfair labour practice aspect of the provision can be found in the important Thorco Manufacturing Limited(1965), 65 CLLC ¶116,052 case, a case that today could be just as fairly dealt with under section 1(4). However, this purpose of the provision is not applicable in the facts at hand. We are satisfied that the relationship between the respondent(s) and Loblaws has been arms length and there is no evidence that the subject commercial transactions were other than for bona fide business purposes.
Unfortunately, however, the latter function of the section providing some permanence to collective bargaining rights is often the most difficult to apply. Here the Legislature has determined that the objectives of labour relations policies require that the rightful prerogatives of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by protection to the employees from a sudden change in the employment relationship. Indeed, the transition from one corporate organization to another will in most cases be eased and industrial strife avoided if employees and their representatives are assured of some real measure of continuity in the collective bargaining process by operation of law. So strong is the basis to this policy that the Supreme Court of the United States arrived at a similar conclusion without the benefit of a specific statutory provision like section 55. See John Wiley & Sons Inc. v. Livingston (1964), 376 U.S. 543, 84 5. Ct. 909; Goldberg, The Labour Law Obligations of a Successor Employer (1969), 63 N.W.L. Rev. 735; Note, (1966), 66 Col. L. Rev. 967; Note, (1969), 82 Harv. L. Rev. 418. This ongoing nature of collective bargaining agreements underlines again that such documents are not "ordinary contracts" nor are they in any real sense the simple products of consensual relationships. See McGavin v. Toastmaster Ltd. v. Ainscough et al, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718; 54 D.L.R. (3d) 1, Laskin, C.J.C. It is against these impressive policy considerations that the Board must give meaning to and apply section 55.
The fundamental issue in cases of this kind is the threshold determination of the section: Has a business been sold? The term 'sells' is defined to include 'leases, transfers; and any other manner of disposition.' This all-embrasive definition obviously reflects the labour relations policy considerations discussed generally above. To repeat, collective bargaining rights are not to be treated as co-extensive with commercial ownership and, to this extent, labour law policy seeks to insulate industrial relations from disruption by necessary and inevitable interaction in the market place. The term 'business', on the other hand, is simply defined to include 'a part or parts thereof. No similar exhaustive definition was attempted by the Legislature in recognition, we think of the great diversity in commercial affairs and the resulting need for a case by case elaboration of the term in the light of labour law policy. A brief perusal of the many factual situations giving rise to the Board's jurisprudence bears testimony to the wisdom of this legislative choice. Accordingly, at the outset of reviewing a few of the cases that have applied the term 'business' in the context of retail food stores, it should not be surprising to learn that the Board in determining whether a business has been sold has not deferred to the commercial documentation employed; has not been influenced by the use of intermediary agents to effect transfers; and has not made simple distinctions between asset and business dispositions. Rather, it has tried to make workplace assessments with respect to the continuity of a particular enterprise, activity, or service arriving at conclusions that a court of law in a commercial matter might not arrive at, but conclusions which are fair to both the statute and context under review. See Gordons Markets (decision of the Divisional Court of Ontario, unreported, November 21, 1978). This we understand to be the main purport of the following excerpt taken from R. v. B. C. Labour Relations Board ex parte Lodum Holdings Ltd., (1969), 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41 (B.C. S.C.) at page 52 per Dryer J.
'The importance of the 'business' in its labour relations aspect is the jobs it provides for the employees. One factor to be considered therefore, is whether the same or substantially the same jobs are being performed. That depends on a number of factors, such as whether the [ir] jobs are being performed at the same or substantially the same times and places, in respect of the same or substantially the same goods or services, and for the same or substantially the same customers or patrons, etc. These matters are, in my opinion, more important than the form of transfer."'
Most of the cases under section 55 involve an alleged sale of "a business"; and only a few consider the possible meaning of the words "part of a business". The Board has found a sale of part of a business where one of a chain of retail stores has been sold to a competitor (Supercity Discount Foods, [1970] OLRB Rep. April 118; Loblaws Groceterias Ltd., [1973] OLRB Rep. Jan. 73); where there was a transfer of certain milk delivery routes in a particular geographic area (Borden Company Limited, [1970] OLRB Rep. Jan. 1244) and where there was a transfer of the oil burner installation and service branch, of a firm which was primarily engaged in the sale and delivery of fuel oil) Automatic Fuels Limited, [1971] OLRB Rep. May 515). In British Columbia Provincial Council, United Fishermen and Allied Workers Union and Central Native Fishermen's Co-operative et al., [1977] 1 Can LRBR 329, the British Columbia Labour Relations Board found that there had been a sale of a "part of a business" when a cannery which was part of a larger business organization was sold to a fishermen's cooperative. The Board declined to cancel the union s certification because it found that, notwithstanding the fact that the workers shared in the profits of the operation, they nevertheless carried out their day-to-day work functions in essentially the same manner and under similar direction as they had done when the operation was owned and run by the predecessor company.
In Canac Shock Absorbers, [1973] OLRB Rep. Oct. 508 and in Alcan Building Products Limited, [1968] OLRB Rep. May 212, the Board dealt with business situations which have a number of similarities to the one presently before us. In Canac the predecessor was engaged in the manufacture of a variety of product lines, most of which were related to the automobile industry. Its operations were divided into a number of departments. One of these was the shock absorber department, which employed approximately 20 per cent of the predecessor's total production personnel. The predecessor's corporate parent decided to liquidate the predecessor's business, and the shock obsorber portion of that business was transferred to Canac which, inter alia, leased machinery, equipment, tools, and that portion of the premises used the predecessor (Acme Screw and Gear) to produce shock absorbers. The resulting situation was described by the Board as follows (at paragraph 22):
"Canac is presently engaged in the production of shock absorbers, and to that extent is carrying on part of the business formerly operated by Acme. The operation takes place in the same area of the plant as was used by Acme in the production of shock absorbers. The superintendent of the Acme shock absorbers department, and 11 or so other supervisory staff of that company, occupy similar posts in the new company. Canac is, in effect, the shock absorber department of Acme Incorporated, but otherwise continuing in much the same manner before incorporation."
In Canac, the Board found a sale of part of the predecessor's business and held that the union's bargaining rights were preserved. In Alcan Building Products Limited, a corporate entity was engaged in the production of aluminum products and carried on business through separate divisions, each of which had its own employee complement and produced a variety of product lines. For economic reasons, a decision was made to discontinue one of these divisions. The successor acquired the premises and some of the equipment used by the predecessor (the rest being disposed of to unrelated purchasers), retained a few of the former employees, and continued to produce two products which had accounted for only a small proportion of the predecessor's total production. The Board nevertheless found a sale of "part of the predecessor's business".
In each of the cases to which we have referred, the Board found that the predecessor had transferred a coherent and severable part of its economic organization — managerial or employee skills, plant, equipment, "know how" or goodwill, — thereby allowing the successor to perform the economic functions formerly performed by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms and conditions of employment, together with the union's right to bargain about them, were preserved. The part of the predecessor's business which it no longer wished to continue provided the business opportunity which the successor was able to pursue to its own advantage. In all of these cases there was a transfer of a distinct part of the predecessor's configuration of assets and no material change in the character of the work performed by employees within that asset framework. There was a continuation of the work performed, the essential attributes of the employment relationship, the skills of employees, and the functional coherence of the employee complement; and, but for section 55 the established bargaining and collective agreement rights would have been lost. This was the very mischief to which section 55 is directed, and the Board was satisfied on the evidence in each case that it should be applied.
In the present case, it is not contended that Beef Terminal (1979) acquired "the business" of Beef Terminal in its totality; but it did acquire the use of all of the land, buildings and equipment formerly used by Beef Terminal (including certain stockyard option properties and parking areas) as an abbatoir, and this acquisition permitted the new company to carry on the custom slaughterhouse business from which its revenues are derived. Apart from certain renovations which had to be done by the new company, it is difficult to find in its organization anything which cannot be traced directly to the predecessor. Many of the service contracts and business arrangements were maintained (for example with Ontario Rendering and Toledo Scales) and, of course, there is no real change in the character of the work. A significant portion of the employee and supervisory complement has been preserved and continues to perform substantially the same job functions as were performed for the predecessor. If there had been a substantial change in the essential attributes of the employment relationship, or fundamental differences in the character of the severed portion of the predecessor's business, such that continued representation by the trade union would seem inappropriate or unreasonable, the Board might be less inclined to infer a transfer of part of the predecessor's business within the meaning of section 55; but such is not the case. Indeed, the shareholders' agreement itself recognizes the functional coherence and community of interest of the employee group, because it purports to compel them to form a new trade union to bargain a collective agreement regulating their terms and conditions of employment. In the circumstances, it is difficult to attach much significance to the fact that the employees also have an equity interest in the business, for their employer has clearly recognized their employee status, and the appropriateness of maintaining a collective bargaining relationship. It might also be noted that many of the collective bargaining rights of the predecessor's employees, including their rights respecting seniority, promotion and layoff, were prescribed on a departmental basis and would not appear to be unworkable in the new context. We are satisfied moreover that the facts of this case clearly exhibit the "mischief' (i.e. the erosion of bargaining rights) to which section 55 was directed.
We are further satisfied that Beef Terminal (1979) continues to slaughter cattle very much as before, and we do not attach much weight to the fact that it is now supplying its services to different customers (i.e. serving a different market). This will frequently be the case where the predecessor is an integrated operation which, prior to the transfer provided its own market for the output of the department, division, or subsidiary transferred. The fact that the severed portion can exist as a separate entity, and can develop and serve its own market is not insignificant; but it is not determinative of the application of section 55. A business is not synonymous with its customers (or its employees for that matter) and it would be an unusual sale of a business transaction in which the new owner did not put his own imprint on the undertaking acquired from the predecessor. If the new owner had not thought that he could do so the transaction would not have occurred in the first place. Of more significance in this case is the historical evidence before the Board. This evidence demonstrates that prior to 1977, the slaughtering facilities, assets and equipment, were used to provide a service to Town, Sterling (and formerly William Putty Beef) which is very similar to that now provided by Beef Terminal (1979) Limited to its resident tenants. Town, Sterling and William Putty Beef, each maintained its separate identity in the marketplace, occupied its own separate cooler space, and carried on business with its own customers in a manner not unlike Beef Terminal (1979) Limited's current tenants. The slaughterhouse facility was regarded as a distinct operation which was set up to serve the three related companies who also had a form of tenancy relationship (with Junction Holdings apparently being the actual owner of the real property). This arrangement was also similar to that which Sterling, Town and William Putty Beef had when they were tenants at the City abbatoir. In the circumstances, it is difficult to accept that the abbatoir cannot be considered as a coherent and severable portion of the predecessor's total undertaking, which, once severed and transferred, can properly be regarded as a "part of the predecessor's business" within the meaning of section 55. We might also note that there was not a lengthy hiatus period between the departure of the predecessor, and the transfer to the successor of the land, premises and equipment at 2225 St. Clair Ave. West. Some of the key employees who subsequently became the first principals of Beef Terminal (1979) Limited remained employed by Beef Terminal until November, 1979 to maintain the licensed status of the premises and enhance its value as a saleable entity. The establishment number — a registered trade mark — was acquired and maintained; and after the transfer the new company continued to use containers, labels and packaging bearing that number. The number was generally recognized and accepted in the industry. While the respondent contended that the name meant nothing, we cannot accept that the name "Beef Terminal" was entirely valueless. It had been associated with a successful business and the respondent maintained the signs bearing that name. It is also interesting to note that Beef Terminal (1979) Limited must change its name to a dissimilar name of the termination of the lease for any reason or the expiry of the lease, if the option to purchase is not exercised. While undoubtedly this provision is designed primarily to protect the principals of Beef Terminal, who may wish to re-enter the business at some time in the future and recapture any goodwill associated with the name " Beef Terminal", we are not persuaded that the respondent receives no advantage from its association with the predecessor and continued use of its name.
The Board is satisfied, after carefully considering the totality of the evidence, that there has been a sale of part of the business of Beef Terminal, to the respondent, Beef Terminal (1979) Limited. Moreover, we do not think there has been a substantial change in the character of the transferred part of the predecessor's business so as to merit the exercise of the Board's discretion under section 55(5) to terminate the union's bargaining rights. Accordingly, the Board declares that Beef Terminal (1979) Limited is the successor of Beef Terminal, must continue to recognize the applicant's bargaining rights in the "like unit" to that which existed prior to the transfer, and must continue to apply the collective agreement mut at is mutandis to that unit. Town, Sterling, Junction and Beef Terminal were engaged in related activities under common control and direction, but there is no evidence that Beef Terminal, and Beef Terminal (1979) Limited are under common control and direction. Accordingly, the union's application under section 1(4) of the Act is dismissed.
DECISION OF BOARD MEMBER E. J. BRADY:
I have now had the opportunity of considering the decision of my colleagues in this matter. I agree that there has been a "sale" of "part" of the predecessor's business to Beef Terminal (1979) Ltd. It is also clear however, that the new company is operating in an entirely different financial and market context. In my view, the successor has significantly changed the character of the business so that it is substantially different from the business of the predecessor. Accordingly, I would exercise the discretion vested in the Board under section 55(5) of the Act to terminate bargaining rights.