Labourers' International Union of North America, Local 506 v. Trans-Nation Incorporated, 1980 CanLII 874

Ontario Labour Relations Board

[1980] OLRB Rep. December 1835

0448-80-R Labourers' International Union of North America, Local 506, Applicant, v. Trans-Nation Incorporated and Valentine Enterprises Contracting, Respondents

BEFORE: R. A. Furness, Vice-Chairman, and Board Members O. Hodges and J. A. Ronson.

APPEARANCES: Chris G. Paliare and Peter Hitchen for the applicant; Adrian Hill for Trans-Nation Incorporated; and Robin B. Cumine, Q. C., and James Valentini for Valentine Enterprises Contracting

DECISION OF R. A. FURNESS, VICE-CHAIRMAN, AND BOARD MEMBER J. A. RONSON; December 11, 1980

1. The names: "Trans-Nation Incorporated, Valentine Enterprises and Valentine Enterprises Contracting" appearing in the style of cause as the names of the respondents are amended to read "Trans-Nation Incorporated and Valentine Enterprises Contracting".

2. The applicant has applied to the Board for an order under section 1(4) of The Labour Relations Act. The applicant has alleged that Trans-Nation Incorporated and Valentine Enterprises Contracting ("Valentine") carried on associated or related activities or businesses under common control or direction. The applicant has requested a declaration that the respondents constitute one employer for the purpose of the Act and all relevant collective agreements. The applicant has also requested a declaration that Trans-Nation Incorporated is bound by all the terms and conditions of employment as those which bind Valentine with respect to employees for whom the applicant has bargaining rights. The respondents have denied that they are under common direction or control.

3. Trans-Nation Incorporated was incorporated under The Corporations Act of Ontario by Letters Patent dated April 27, 1964, under the name Trans-Nation Land Corpo­ration (Toronto) Limited. This name was changed by articles of amendment dated October 3, 1974, to Trans-Nation Incorporated. By articles of amalgamation effective December 14, 1978, Trans-Nation Incorporated was amalgamated with 399038 Ontario Limited to continue as one corporation under the name Trans-Nation Incorporated ("Trans-Nation"). Trans­Nation Land Corporation (Toronto) Limited was originally a private corporation and became a public corporation in 1969. Trans-Nation reverted to a private corporation on September 6, 1979, by an order of the Supreme Court of Ontario.

4. John Franciotti is the secretary-treasurer and a director of Trans-Nation. He gave evidence that for the past fifteen years Trans-Nation has been acquiring commercial and other buildings in Toronto. Trans-Nation has refurbished these buildings and has become a landlord of these buildings. This work has been Mr. Franciotti's full-time occupation and in carrying out such acquisition and refurbishing, Trans-Nation has employed managers and office staff. The work of refurbishing has been accomplished by the use of subcontractors. In the past, Mr. Franciotti has also operated restaurants, bars and discotheques. He was an original shareholder in Trans-Nation and late in 1978 he acquired additional shares. At that time Mr. Franciotti became an officer and director in Trans-Nation and presently has voting control of 502,000, or half of Trans-Nation's shares, through a family trust. Mr. Franciotti exercises day to day control over the business activities of Trans-Nation. The other half of Trans-Nation's shares are owned by Emilio Valentini, James Valentini, Morris Prychidny and William Robinson. Emilio Valentini owns twenty-five per cent of the shares, James Valentini owns fifteen per cent of the shares and the remaining ten per cent of the shares are owned by Morris Prychidny and William Robinson.

5. Emilio Valentini is the president of Trans-Nation and has been the president of Trans-Nation and Trans-Nation Land Corporation (Toronto) Limited since 1964. Emilio Valentini and his brother James Valentini are directors of Trans-Nation. Valentine is a limited partnership pursuant to The Limited Partnerships Act of Ontario. The partners in Valentine are a trust, Milio Trust, and Valentine Enterprises Contracting Limited. The trust has a ninety per cent interest in Valentine, and Valentine Enterprises Contracting Limited has a ten per cent interest in Valentine and is the managing partner. Emilio Valentini has a sixty-five per cent beneficial interest in the trust and James Valentini has a thirty-five per cent beneficial interest in the trust. Emilio Valentini owns sixty-five per cent of the shares in Valentine Enter­prises Contracting Limited and James Valentini owns the remaining thirty-five percent of the shares in that corporation.

6. Mr. Franciotti exercises control over day to day operations of Trans-Nation and has divested himself of most of the commercial buildings that he was formerly involved in. During October of 1979 Trans-Nation purchased the King Edward Hotel in Toronto for $6.3 million. It is the intention of Trans-Nation to refurbish and open the hotel in March of 1981. Trans-Nation has hired architectural and design consultants and commencing in November 1979 a series of contractors have been engaged to perform the renovation and refurbishing of the hotel. This work includes knocking out some walls and reconstructing other walls. The size of some rooms is being changed and decorative changes are being made to the dining rooms.

7. Trans-Nation had employed James Devereaux as a general manager for the past ten years. Mr. Devereaux, who left the employ of Trans-Nation prior to the hearing of this application, hired a project manager, Bert Redfern, for the refurbishing of the hotel, secretarial personnel and a security man on the door. In addition, Trans-Nation took over the employment of four stationery engineers who had worked for the hotel prior to its sale. Trans­Nation has abided by the terms of an existing collective agreement covering the stationery engineers and has entered into a new collective agreement covering the stationery engineers. Mr. Franciotti has an office in the hotel and the project manager and secretarial personnel work out of the hotel.

8. The work of refurbishing the hotel is being performed, or will be performed, by contractors whose employees are represented by trade unions and by contractors whose employees are not represented by trade unions. Approximately eighty per cent of the work being performed at the hotel is being performed by employees who are represented by trade unions. The decisions with respect to the refurbishing of the hotel are made by Mr. Franciotti and Emilio Valentini and are supervised by Mr. Redfern.

9. Valentine has been in operation since 1962 and has operated in Toronto and in Ontario generally. Valentine performs principally sewer and watermain work with some onsite servicing work. James Valentini is in charge of Valentine's operations and its labour relations. Emilio Valentini has not been involved in Valentine's operations for many years. There are three limited partnerships which are active. Valentine Realty Limited owns and sells land. Valentine Development Limited looks after developing land and Valentine Enterprises Contracting Limited performs the construction work. Valentine has never operated a hotel and James Valentini has not worked at the King Edward Hotel. However, Mr. Franciotti and Emilio Valentini are equal partners in the Essex Hotel in Toronto. Adjacent to the hotel approximately nineteen townhouses were being built on property which was apparently owned by Trans-Nation. The townhouses were being built by Valentine Developments Limited and will ultimately be owned and sold by Trans-Nation. A billboard in front of the townhouses carried the sign "A project by Trans-Nation".

10. None of Valentine's equipment or employees have been used at the hotel. Valentine has its office at 451 Atwell Drive in Rexdale and does not have an office at the hotel. Trans­Nation has an office at the hotel which it uses and has it head office at 451 Atwell Drive in Rexdale. Apparently, Trans-Nation does not use the office in Rexdale. While Trans-Nation uses a bank near the hotel, its funds are transferred to a bank in Mississauga. Valentine uses the same bank in Mississauga.

11. In January of this year, Nikolas Habermel was hired as an employee of one of Trans-Nation's subcontractors, Berkley Mechanical Contracting ("Berkley"), at the King Edward Hotel. Mr. Habermel became involved in disagreements with various persons at the hotel when he attempted to sign employees of some of the subcontractors as members of the applicant. These disagreements led to his dismissal from the employment of Berkley. There had been other areas of friction between Mr. Habermel and Berkley with respect to appren­tices. It appears that Berkely was unable or unwilling to reinstate Mr. Habermel to his former position. A series of complaints were filed on Mr. Habermel's behalf under section 79 of the Act. These complaints were settled upon the payment of a sum of money to him by Trans-Nation and by hiring him as a labourer in Trans-Nation's employment. Trans-Nation adopted this course of action in order to restore harmony in labour relations to the King Edward Hotel. In this way, Mr. Habermel became the only labourer employed by Trans-Nation at that hotel.

12. In April of this year Mr. Habermel made a complaint to the Health and Safety Branch of the Ministry of Labour concerning the health and safety conditions of the hotel. It was alleged that Mr. Habermel was isolated from other employees and transferred to the townhouses to sweep up at that site. A further complaint was filed under section 79 of the Act which alleged violations of the Act and of The Occupational Health and Safety Act, 1978. The complaint was settled by the agreement of the parties which provided for the reinstatement of Mr. Habermel together with the payment of compensation and an undertaking by Trans­Nation to cease and desist from coercing and! or intimidating its employees from exercising their rights under The Labour Relations Act and The Occupational Health and Safety Act, 1978.

13. On April 9 of this year Mr. Habermel was informed by a man known as Walter that he was to be transferred to the townhouses effective the next day. Walter gave Mr. Habermel a piece of paper on which was written, "199 Mutual Street. Phil French. 8 o'clock". Mr. Habermel reported for work in accordance with the directions on the piece of paper. He located Mr. Finch, who was expecting him, and was referred to a foreman who assigned him to general clean-up work. Mr. Habermel was laid off by Valentine on April 22 of this year and received a separation slip for unemployment insurance purposes from Valentine. On April 9, when he was transferred from the King Edward Hotel, Mr. Habermel was unaware that he was becoming an employee of Valentine. He was paid for his work at the townhouses by Valentine and for his work at the King Edward Hotel by Trans-Nation during the time he was an employee of Trans-Nation.

14. In the Walters Lithographing Company Limited case, [1971] OLRB Rep. July

406, the Board referred to certain criteria to be considered in determining whether two or more

entities should be treated as constituting one employer for the purposes of the Act:

The indicia or criteria which the Board considers relevant in making a determination as to whether the activities or businesses of one or more corporations, individuals, firms, syndicates or associations, or any com­bination thereof are carried on under common direction and control and therefore may be treated as one employer are—(l) common owner­ship or financial control, (2) common management, (3) interrelationship of operations, (4) representation to the public as a single integrated enterprise, and (5) centralized control of labour relations.

15. The question of common ownership or financial control shows that Emilio and James ownership or financial control shows that Emilio and James Valentini own and control Valentine. In addition, Emilio and James Valentini own forty percent of the shares of Trans-Nation. Emilio Valentini is the president of Trans-Nation and Emilio and James Valentini are directors of Trans-Nation. With respect to the question of common management, the evidence establishes that Mr. Franciotti and Emilio Valentini manage the day to day operations of Trans-Nation with respect to refurbishing the King Edward Hotel. On the other hand, the management of Valentine is conducted by James Valentini. There is some evidence of an interrelationship of operations in the construction of the townhouses on Mutual Street in Toronto. In addition, Valentine and Trans-Nation in theory, at least, have their head offices at the same address. There is no evidence that there is any representation to the public as a single integrated enterprise. It is with respect to the centralized control of labour relations that Valentine and Trans-Nation quite clearly appear to be under common direction and control. Mr. Habermel became an employee of Trans-Nation under unusual circumstances as part of a settlement of another employer's violations of the Act. The motives for the employment of Mr. Habermel as a labourer by Trans-Nation were clearly for the purpose of attempting to preserve harmonious labour relations at the hotel. However, notwithstanding the origin of Mr. Habermel's employment by Trans-Nation, the ease with which he became an employee of Valentine when it suited Trans-Nation's purposes indicates a centralized control of labour relations. The evidence indicates that Mr. Franciotti, James Valentini and Mr. Habermel were unaware of the transfer of Mr. Habermel from Trans-Nation to Valentine until some time after it had occurred. The transfer was apparently arranged by the middle-management of Trans-Nation and Valentine.

16. In considering the criteria set forth in the Walters Lithographing Company Limited case, supra, the Board is prepared to assume for the purpose of argument, without so deciding, that Trans-Nation and Valentine are under common control or direction. However, before the Board may exercise its discretion under section 1(4) of the Act, there are three conditions which must be found to exist. In addition to the obvious requirement that there be more than one corporation, individual, firm, syndicate or association involved in the application, there is the requirement that these business entities be both "associated or related" and under common control or direction". As the Board stated in the Diversev (Canada) Limited and Diversev Environmental Products Limited case, [1978] OLRB Rep. Sept. 814 at 817:

The need for these latter two requirements is not difficult to understand. Section 1(4) allows the Board to pierce the corporate veil in order to avoid the types of situations outlined in Industrial Mine. It is not designed to bind independent or unrelated enterprises. In deciding whether the statutory prerequisites have been satisfied, the Board has regard to a broad range of industrial relations considerations, some of which may overlap in their relevance to the various issues, and all of which may vary in importance depending upon the particular fact situation at hand.

17. The question of whether Trans-Nation and Valentine are "associated or related" requires the Board to consider the nature of their business activities. Trans-Nation is engaged in the acquisition, refurbishing through subcontractors, leasing and sale of commercial land and buildings. Valentine is almost entirely engaged in sewer and watermain work. As the Board stated in the Brant Erecting and Hoisting case, [1980] OLRB Rep. July 945, businesses or activities are "related~~ or "associated" be cause they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills and are carried on for the benefit of related principals. It is clear that Trans-Nation and Valentine are neither of the same character nor serve the same general market. In addition, Trans-Nation and Valentine do not employ the same mode and means of production. The employment of Mr. Habermel by Valentine as a labourer utilized skills which some of Valentine's employees would exercise from time to time. On the other hand, Mr. Habermel's employment by Trans-Nation was fortuitous and the skills he exercised as an employee of Trans-Nation were totally unlike the skills exercised by the other employees of Trans-Nation. In the opinion of the Board, Trans-Nation and Valentine are not carrying on associated or related activities or businesses within the meaning of section 1(4) of the Act.

18. We find that Trans-Nation and Valentine are not associated or related, and, accordingly, that they may not be treated as one employer. It therefore follows that the applicant is not entitled to a declaration that Trans-Nation is bound by all the terms and conditions of employment as those which bind Valentine with respect to employees for whom the applicant has bargaining rights.

DECISION OF BOARD MEMBER O. HODGES:

1. I dissent. I disagree with the majority view that one of the two companies under common control, to the very great extent that Trans-Nation Incorporated and Valentine Enterprises Contracting Ltd. are under common control, can operate in the construction business independent of any collective bargaining responsibilities which the other might have to a construction industry trade union.

2. Section 1(4) of the Act gives the Board a discretion to declare that two businesses are one employer for the purpose of all relevant collective agreements where those two businesses are related and under common control. The section provides:

1(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.

3. The majority have assumed for the purposes of argument that Trans-Nation and Valentine were under common control. This was the only reasonable view to take. Emilio and James Valentini, who own and control Valentine, also hold forty per cent of the shares of Trans-Nation; both businesses have the same head office; and they jointly developed a townhouse project. But perhaps the best example of the extent of common control of these two enterprises is provided by the case of Mr. Habermel. This employee was discharged, allegedly for union activity, by one of Trans-Nation's subcontractors. As part of the settlement of Mr. Habermel's section 79 complaint against the subcontractor, Trans-Nation hired him. After complaining of violations of The Occupational Health and Safety Act, 1978 by Trans-Nation, Mr. Habermel was transferred from the hotel work site to the townhouse work site and into the employment of Valentine. In paragraph 15 the majority notes that "the ease with which he became an employee of Valentine when it suited Trans-Nation's purposes indicates a centralized control of labour relations".

4. The majority declined to find that the businesses were related. On this point, counsel for the applicant trade union directed our attention to Elmont Construction Ltd., 74 CLLC ¶116,115 where the Board found two firms to be related even though their principal concerns were different. On the authority of this case, I would have said that Trans-Nation and Valentine were not unrelated merely because one is primarily engaged in refurbishing while the other is primarily "engaged in sewer and watermain work", since "general contracting" is included in their statement of business activity in their registration under The Corporations Information Act, 1976, S.0. 1976, c. 66. Some of the jobs these companies perform in the construction industry are the same. And there is no doubt that they are carried out for the benefit of related principals. For these reasons, I would have found Trans-Nation and Valentine to be related.

5. In the result I would have declared that the respondents constituted one employer for the purposes of the Act and all relevant collective agreements.