International Union of Operating Engineers, Local 793 v. Donald A. Foley Limited, 1980 CanLII 916

[1980] OLRB Rep. April 436

0956-79-M; 1222-79-R; 1223-79-R International Union of Operating Engineers, Local 793, Labourers' International Union of North America, Local 247, Applicants, v. Donald A. Foley Limited and Kingston Sand & Gravel Ltd. and/or Kingston Aggregates and/or Maceron Limited and/or 429185 Ontario Limited, Respondents.

BEFORE: N. B. Satterfield, Vice-Chairman and Board Members F. W. Murray and W. F. Rutherford.

APPEARANCES: B. Fishbein, P. Gauthier, G. Steers, M. Sullivan and I. Rafeiro for the applicant; Don Foley for Donald F. Foley Limited and Jim Cameron for Kingston Sand & Gravel Ltd., Kingston Aggregates, Maceron Limited and 429185 Ontario Limited.

DECISION OF N.B. SATTERFIELD, VICE-CHAIRMAN AND BOARD MEMBER W.F. RUTHERFORD; April 18,1980

1. The names "D. A. Foley Construction Ltd. and Maceron Construction" appearing in the style of cause as respondents are amended to read: "Donald A. Foley Limited" and "Maceron Limited". For reasons given hereunder, 429185 Ontario Limited is made a respondent to the proceedings in File No. 1222-79-R and File No. 1223-79-R.

2. File No. 0956-79-M is a referral to arbitration under section 112a of The Labour Relations Act of a grievance in the construction industry. It was first heard by the Board on September 7, 1979 and adjourned until a date to be set by the Registrar. Subsequently on September 26, 1979, before the matter was re-scheduled, the applicant International Union of Operating Engineers, Local 793 ("the Engineers") filed an application under sub-section 4 of section 1 and section 55 of the Act, File No. 1222-79-R. A similar application was filed on September 26, 1979 by the Labourers' International Union, Local 247 ("the Labourers"). All three files were scheduled for hearing on November 14, 1979. At that hearing the Board ruled that it would hear and decide first the applications in File No. 1222-79-R and File No. 1223-79-R since its decision would affect whether the Engineers would pursue the grievance in File No. 0956‑79‑M.

3. The Engineers and the Labourers are alleging that there has been a sale of a business within the meaning of section 55 between Donald A. Foley Limited and one or more of Kingston Sand and Gravel Ltd., Kingston Aggregates, Maceron Limited and 429185 Ontario Limited. Or, in the alternative, that Donald A. Foley Limited and one or more of those same respondents are companies which, within the meaning of section 1(4), constitute one employer for purposes of the Act. Substantial evidence was heard by the Board during six days of hearings which took place over two months. Having reviewed and considered all of the evidence the Board finds the significant facts to be as set out hereunder but does not regard section 55 as being applicable to these facts. Nor was section 55 argued by the applicants.

4. It remains, then, for the Board to make a determination under subsection 4 of section 1 of the Act which reads as follows:

"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."

5. The respondent Donald A. Foley Limited ("Foley") was incorporated August 22, 1969. Mr. Donald A. Foley, who was the only witness for Foley, is the sole owner, director and president of the company. Foley is a general contractor engaged primarily in road building but which also does sewer and watermain construction and building excavation. It does work with its own work force and, as well, sub-contracts to other contractors such work as: curbs and gutters, electrical, mechanical, asphalting, concreting, fencing, pipe laying and the supplying and levelling of gravel. Mr. Foley stated that his company uses some 32 sub­contractors from time to time, including the respondents Maceron Limited and Kingston Aggregates. Foley's average 1979 workforce of engineers and labourers combined was 15. At all material times, the Engineers and Labourers were entitled to bargain on behalf of the operating engineer and labourer employees of Foley. The Engineers and Foley are parties to a collective agreement signed May 24, 1979 and which purports to operate from May 1, 1979 until April 30, 1980. The Labourers and Foley are bound to a collective agreement which purports to operate from May 1, 1979 until April 30, 1981, but which was signed October 23, 1979 according to the undisputed evidence of Mr. Isadore Rafeiro, secretary-treasurer of the Labourers. Both collective agreements are successor agreements to earlier ones.

6. The respondent Maceron Limited ("Maceron") was incorporated on August 11, 1976 and as of December 17, 1976 was substantially organized for business with Mr. James Cameron as the sole owner, director and president of the company. Maceron engages in the construction business as a general contractor and sub-contractor doing sewer and watermain work, building excavation and rock drilling, blasting and crushing. During 1978, Maceron did work by sub-contract for Foley. Maceron is not a party to or bound by any collective agreement with the Engineers or Labourers or any other trade union.

7. Kingston Aggregates is the name under which the numbered corporation 429185 Ontario Limited trades in business. Letters patent were issued to the numbered corporation subsequent to these applications on October 26, 1979 and it was substantially organized for business by December 17, 1979 with Mr. James Cameron as its sole owner, director and president. Mr. Cameron, who was the only witness for his companies, told the Board that he decided in March 1979 to start a new company to operate a quarry to complement his construction business. Since he realized it would take time to acquire a property and a license to operate it as a quarry, he decided also to engage the new company in construction in the interim in order to build capital. Cameron decided upon the name Kingston Sand and Gravel Ltd. ("Kingston Sand"), arranged a $50,000 line of bank credit and by March 9, 1979 received his first contract for work which was from Foley. Cameron applied in April to have Kingston Sand incorporated but was advised by his lawyer in late August that the name was unavailable for use. Cameron adopted the trading name of Kingston Aggregates and in late September applied for incorporation of 429185 Ontario Limited. Kingston Aggregates either in that name or in the name of Kingston Sand engages in the same kind of construction work as Maceron and has performed work in 1979 for Foley under sub-contracts. Kingston Aggregates also is the purchaser in an agreement of sale and purchase for a property on which it intends to operate a quarry and for which purposes it is awaiting a decision from the Ontario Municipal Board on an application for a license to operate a quarry. Kingston Aggregates is neither a party to nor bound by any collective agreement with the Engineers or Labourers or any other trade union. During June, July and August 1979 its combined work-force ranged from 30 to 55 employees.

8. Mr. Cameron relies on word-of-mouth advertising and his own knowledge of and reputation in the construction business in the Kingston area to get work. Neither of his companies is listed in the telephone director and do not have their own telephone numbers. Mr. Cameron uses his home telephone for business purposes. His home mail box (R.R. #8, Kingston) bears the name Maceron Limited but not the name Kingston Aggregates. Neither the equipment owned by Mr. Cameron, nor rented from Foley bears any identification with Maceron or Kingston Aggregates. When either company is on one of Foley's projects its name does not appear on any project sign, but this is no different from other sub-contractors on these projects. Other sub-contractors, however, have project offices and use safety barriers and equipment which bear their names. Maceron and Kingston Aggregates use rented equipment and barriers, which bear no identification with the two companies but instead bear the name of the renter, Foley.

9. Mr. Foley is not a shareholder, director, officer or employee of Kingston Sand, 429185 Ontario Limited or Maceron. Mr. Cameron is not a shareholder, director, officer or employee of Foley or of any other companies owned by Mr. Foley about which we heard evidence but which have no other relevance to these matters. Kingston Aggregates and Maceron share the same head office address and it is not the same as Foley. Foley and Kingston Aggregates have accounts in the same bank branch but Maceron's account is with another bank. It may be reasonably inferred from the evidence that Foley does not use the same solicitors or accountants as the other respondents.

10. As may be seen from some of the foregoing facts the contractual relations between Foley and Kingston Aggregates or Maceron are that of general contractor and sub­contractor. While Kingston Aggregates and Maceron each also performed as a general contractor, neither sub-contracted work to Foley. Maceron (with the exception of one job) and Kingston Aggregates have not competed with Foley for the larger jobs because they are not eligible for the bonding commonly required to bid and perform large construction jobs. Foley in turn is not interested in the smaller jobs which the two companies could perform on their own. In 1977 Maceron did no more than $10,000 in business and there is no evidence that any of it was for Foley. Maceron did total business of $290,000 in 1978, of which $48,000 was on three jobs for Foley. Maceron rented construction equipment and obtained the fuel and lubricants used in the equipment from Foley. Maceron did not bill Foley and Foley did not bill Maceron and no payment exchanged hands until the end of 1978 when they exchanged cheques for the gross amounts of business transacted between them. Foley estimated the total value of its contracts in 1978 to be $2 million. Maceron has not done any work for Foley since December 1978 and did not perform work for any customers in 1979. Foley has approximately $3,000,000 of contracts in 1979, the bulk of which came from five major projects. Kingston Aggregates had sub-contracts on four of the five projects worth approximately $700,000. The total value of Kingston Aggregates business with Foley in 1979 was $815,000, $100,000 of the additional value coming from stone drilling, blasting and crushing and the remainder for stone delivery. By comparison, Foley sub-contracted asphalting, concreting and the supplying and levelling of gravel to three other contractors for a total value of approximately $700,000 plus another $135,000 for trucking let to yet other contractors for a total value of $845,000. The total of $1,660,000 of sub-contracts to Kingston Aggregates, the three other contractors and the trucking contractors represents the majority of the work sub-contracted by Foley. While Mr. Foley's testimony was that Foley's sub-contracts were awarded on a competitive bid basis, a large part of the work which Kingston Aggregates did on the four Foley projects was sewer and watermain with some road­work and excavation and there is no specific evidence before us of competitive bids for this type of work. Kingston Aggregates did work valued at $165,000 in 1979 for eight other contractors bringing the total value of its 1979 contracts to $980,000.

11. The general contractor/sub-contractor relationship between Foley and Kingston Aggregates is not the full extent of the business relationship between the two companies. Kingston Aggregates owns tools and equipment valued at approximately $20,000, included in which are a half-ton truck and a car. Kingston Aggregates chooses to rent rather than own all of the remaining equipment which it requires. In 1979 it spent approximately $325,000 on equipment rentals of which all but $32,000 was for equipment rented from Foley. The equipment was rented from Foley on a daily, weekly or monthly basis as needed. For some equipment, Foley supplied the operator, but most of it was rented without operator. Fuel, grease and oil worth $38,500 were supplied by Foley and charged to Kingston Aggregates but payment was not required until accounts between the two were settled at the end of the year. The same conditions applied to $178,000 of building materials supplied by Foley and $438,000 for payroll advances made by Foley to Kingston Aggregates. This latter amount was advanced weekly against invoices submitted by Kingston Aggregates to Foley in amounts equivalent to Kingston Aggregates weekly payroll costs for all labour employed by it without regard to whether it was for labour employed on Foley's or other projects. During this same period Kingston Aggregates only used about $15,000 of its bank credit. After allowing for back charges from Kingston Aggregates to Foley, the net amount owing from Kingston Aggregates to Foley was approximately $875,000, or some $60,000 more than the work performed by Kingston Aggregates for Foley during the same period. Mr. Cameron testified that he expected to recover the $60,000 shortfall from the $165,000 owed by other clients, since the labour, fuel and equipment rental costs incurred in doing that work are already accounted for in Foley's charges to Kingston Aggregates.

12. When Mr. Cameron started business using the name Kingston Sand he made arrangements with Brenda Brown, one of Foley's employees to organize and administer Kingston Sand's payroll. Mr. Cameron opened an account for Kingston Sand at the same bank used by Foley for Ms. Brown's convenience because she handled Foley's payroll and dealt at the bank for that purpose. She also made all the arrangements with the Unemployment Insurance Commission, Revenue Canada, Workmen's Compensation Board and others as required and arranged to have all returns sent to Foley's office at 800 Burnett Street, Kingston. After the commencement of this case (and therefore after adopting the name Kingston Aggregates), this was all changed to Mr. Cameron's residence address, R.R. #8, Kingston. Kingston Aggregates' head office is at Mr. Cameron's residence address and he maintains an office in his home from which he conducts his business. Ms. Brown receives the time records for Kingston Aggregates employees, prepares the weekly payroll and the invoices to Foley for the advance to cover the payroll, makes the bank deposit and issues the payroll cheques. She also does some general typing for Kingston Aggregates. All of this is said to be done on her own time, either at home or during free time at the office. Mr. Foley may not have been aware and given his approval to this arrangement when it was set up, but he allows it to operate and told the Board that Kingston Aggregates would be billed at an hourly rate for the work. According to Mr. Cameron, the arrangement is for him to pay Ms. Brown at an agreed hourly rate for her work for Kingston Aggregates. It is unnecessary for the Board to decide which is the correct version.

13. Mr. Cameron uses for Kingston Aggregates' benefit other facilities of Foley. Clients know he can be reached at Foley's office and messages are left there for him. Mr. Cameron on average is in Foley's office every other day for a couple of hours and he has hired employees from that office for his companies. He has two-way radios that use the same frequency as that used by Foley, although there is a third party who subscribes to the same commercial service and, like Mr. Cameron, has access to Foley's frequency. Employees of Kingston Aggregates use Foley credit cards to purchase material for supply and installation on Foley projects and also for equipment, fuel and lubricants used in Kingston Aggregate's vehicles and equipment rented from Foley, payment for which is made when the accounts between Foley and Kingston Aggregates are settled at the end of the year. In fact, it was the unchallenged evidence of the Kingston Aggregates serviceman, who fuels the equipment for Kingston Aggregates and Foley and picks up other material and supplies for Kingston Aggregates using Foley credit cards, that he has never charged anything to Kingston Aggregates. While Mr. Foley maintains that any of his contractor clients can order material charged to Foley for its projects, there is no evidence that this is on the same payment terms as apply to Kingston Aggregates. Kingston Aggregates is not eligible for bonding so it relies on the protective umbrella of Foley's bonds when bid or performance bonds are required. Kingston Aggregates has the privilege of crushing stone for its own use from a quarry owned by Foley and paying a royalty for stone used, with payment terms being the same as for other materials. While Kingston Aggregates does quarrying and crushing for Foley and another client, it does not have the same privilege of using the other client's quarry. Although it was Mr. Cameron's evidence that his employees only did repairs or maintenance to the equipment rented from Foley that could be done on site to avoid temporary loss of use of the equipment and, further, that Foley was responsible for any breakdown repairs, the evidence of some Kingston Aggregates employees was that they serviced equipment used by Kingston Aggregates in Foley's Kingston shop.

14. Kingston Aggregates co-operates with Foley in other ways. Kingston Aggregates' fuel truck driver fuels equipment used by Foley in projects in Kingston and Kingston Aggregates back-charges Foley for the cost of the fuel supplied. Equipment which Kingston Aggregates rents from Foley on a monthly or weekly basis, which is usually operated by a Kingston Aggregate employee, can be diverted for a day or two at a time by Mr. Foley to other Foley customers. When this happens Foley is back-charged for the equipment rental and the operator, to be settled in their overall accounts.

15. The evidence also reveals that Messrs. Cameron and Foley at different times took independent actions with the other's employees which both characterize as helping one another out. William Robinson, who had been employed by Foley during 1978, worked as a truck driver for Kingston Aggregates in 1979. When he was hired on by Kingston Aggregates, he was called by Mr. Foley to his office and asked if he wanted to do the same work which he had done in 1979. He accepted and was told by Mr. Foley where to report. While Robinson thought he was going to work for Foley, his first pay cheque was from Kingston Sand and he realized his employer was not Foley. All of his subsequent regular pay cheques were from Kingston Sand and Kingston Aggregates. He was, however, a participant in a pay system known as an hours bank by which hours worked in excess of a certain weekly maximum were not paid for at the time worked but were recorded in the bank and could be drawn on when there were weeks of short hours. When Mr. Robinson drew on the bank it was his uncontradicted evidence that he was paid by Foley cheques. In another incident involving payment of wages, a Kingston Aggregates employee, Leroy Fox, went to Foley's office about an underpayment because he was unable to contact Mr. Cameron. While the employee was noisily discussing the problem with one of Foley's employees, Mr. Foley came out of his office to see what was going on. When the short payment was explained to Mr. Foley, he instructed his employee to prepare a cheque to Mr. Fox for the missing amount. The cheque was issued on Foley's account and signed by Mr. Foley. While he explained this as merely a convenient way of ending the disruption created by the Kingston Aggregates employee, it was Mr. Fox's evidence (and he was not contradicted) that Mr. Cameron was in Mr. Foley's office while the incident took place. A former Maceron employee, John Otenhof, who worked for Foley in 1979 thought he had been hired by Mr. Cameron but admits he was paid by Foley. Mr. Cameron contends that he had known Mr. Otenhof for many years and had only referred him to Mr. Foley for employment. Nonetheless Mr. Cameron later interceded with Mr. Foley to get a raise in pay for Mr. Otenhof and also signed a Workmen's Compensation Board form reporting the period during 1979 that Mr. Otenhof had worked for Foley. When Mr. Otenhof filed a pay grievance with Foley, he was called from a job by Mr. Cameron to come to Foley's office. When the employee arrived at the office Mr. Cameron told him that he would have to await Mr. Foley's arrival. The employee was subsequently called into Mr. Foley's office in Mr. Cameron's presence and asked about the grievance.

16. Another area of co-operation between Foley and Kingston Aggregates is in respect of the picking up of weekly time sheets for both companies from job sites, their delivery to Brenda Brown in Foley's office and the subsequent delivery of pay cheques to the job sites. Kingston Aggregates' serviceman routinely collects the time sheets of Foley and Kingston Aggregates from job sites in Kingston and Napanee and delivers them to Ms. Brown. He picks up the pay cheques from her and delivers them to the job sites.

17. Section 1(4) of the Act grants discretion to the Board to treat two or more entities as though they constitute one employer for the purpose of the Act if:

(a) more than one corporation, firm individual, association or syndicate is involved;

(b) the entities are engaged in associated or related businesses or activities, whether or not simultaneously; and

(c) the entities are under common control or direction.

One of the significant purposes of section 1(4) is to guard against the dilution or undermining of bargaining rights already obtained such, for example, as occurs when work is diverted from a unionized employer to an associated, newly created non-union one as in Evans-Kennedy Construction Limited, [1979] OLRB Rep. May 388; or when there is a risk or threat that bargaining rights may be eroded, as in West York Construction Limited, [1978] OLRB Rep. Sept. 879. For a more detailed review of the purpose of section 1(4), however, see Industrial Mine Installations Limited, [1972] OLRB Rep. Oct. 1029 at paragraphs 9 to 13 inclusive.

18. It is stating the obvious to say that there is more than one entity involved here and it is clear on the facts that Donald A. Foley Limited, Maceron Limited, Kingston Aggre­gates (and therefore 429185 Ontario Limited) are engaged in the same kind of construction work. Thus they are most certainly engaged in related activities. Insofar as we are concerned with Kingston Sand and Gravel Ltd., it may be inferred from the unavailability of that name to Mr. Cameron that it is attached to some other entity. We have no evidence other than its use as a predecessor name in trade to the name Kingston Aggregates used by 429185 Ontario Limited and it is only in that context that any further reference will be made to Kingston Sand. Therefore the section 1(4) application in respect of Kingston Sand and Gravel Ltd. is dismissed. Having found that Foley, Maceron, Kingston Aggregates and 429185 Ontario Limited meet the first and second pre-conditions to a section 1(4) declaration, do they meet the third one of being under common direction or control? The evidence does not support a finding that Foley and any of Mr. Cameron's companies are under common direction, therefore if the Board is to be satisfied as to this third condition, the facts must establish to the Board's satisfaction that Foley and one or more of Mr. Cameron's companies are under common control.

19. There is no doubt on the evidence that Maceron and 429185 Ontario Limited trading as Kingston Aggregates are being operated under the common direction and control of James Cameron their sole shareholder, director and president. There is nothing in the facts in respect of the relationship between Foley and Maceron which convinces the Board that they are under common control. So the answer to the question of whether Foley and one or more of Mr. Cameron's companies are under common control must be found in the facts pertaining to the relationship between Foley and Kingston Aggregates. In determining if they are under common control, the Board must examine the total extent and nature of the existing relationship within the context of section 1(4). The Board is assisted in doing so by applying to the facts of that relationship the criteria set forth in paragraph 21 of Walter's Lithographing Company Limited, [1971] OLRB Rep. July 406 which states:

"The indicia or criteria which the Board considers relevant in making a determination as to whether the activities of 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 - (1) 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. No single criterion is likely to decide the issue. Rather, as has been stated, the Board's determination undoubtedly will be based on an appraisal of all of them in the light of the particular facts before it. It hardly need be said that in applying the above criteria, the greater the degree of functional coherence and interdependence which the Board finds among the associated or related activities and businesses the more probable it is that the Board will conclude that the entities carrying on these activities should be treated as one employer. We would mention here also that the indicia or criteria themselves obviously overlap. For that reason, in applying them to the facts of the instant case we have not attempted to deal with each other criterion on an individual basis."

20. This is a case in which what does not exist in the relationship between two entities is more readily apparent than what does exist. There is no common ownership, directors or officers; no common head office; no common solicitors or accountants; no common telephone listing; no common cheques; and in the usual sense of the terms, no common management, office or premises, or common control of wages, benefits and working conditions. These circumstances are a natural consequence of the fact that there is no corporate interrelationship between Foley and Kingston Aggregates. But section 1(4) both allows and requires the Board to examine the degree of functional interdependence which exist between business entities so it must also look at the contractual and economic arrangements between them, and, in fact, at all elements of interdependence.

21. The Board finds if helpful to begin with an examination of the development, extent and nature of the subcontracting relationship between Foley and Kingston Aggregates. Mr. Cameron, having generated and executed $290,000 of business through Maceron in 1978, conceived the idea in March 1979 of a new company which would operate a quarry to complement Maceron's construction business. Maceron is left idle while the new company does construction work to build capital. Within a few days of the idea and four or five weeks before deciding; to incorporate, Mr. Cameron has accepted (in the name Kingston Sand) a purchase order for his first job from Foley. Within nine months Kingston Aggregates has done $700,000 sub-contracting on four projects for Foley, plus another $115,000 of other work. The average value of each of the four Foley projects to Kingston Aggregates was greater than the gross value of the work it did for eight other contractors. In 1978 the business Maceron did with Foley represented 16.5 per cent of Maceron's gross. Kingston Aggregates, in 1979, did nearly three and a half times as much business as Maceron, but the value of Foley sub-contracts represented 85 per cent of Kingston Aggregates' gross volume. Maceron did $242,000 or nearly 85 per cent of its 1978 business with clients other than Foley, yet Kingston Aggregates did only $165,000 or about 15 per cent of its gross volume with other clients in its first year of operation.

22. Kingston Aggregates did business of nearly $1 million in 1979 on working capital advanced almost entirely from Foley by means of the credit arrangements between the two companies. Kingston Aggregates obtained net working capital of $875,000 from Foley in this manner while at the same time having to commit in its own rights only $20,000 in equipment and tools and $15,000 of bank credit. While this indicates a great degree of financial dependence of Kingston Aggregates on Foley, it does not follow automatically that the dependent gives Foley control of Kingston Aggregates. There are, however, other indications that Foley exerts some influence and control over Kingston Aggregates. Kingston Aggregates does not Did in competition with Foley. Foley's employee, Brenda Brown, has cheque signing authority with Kingston Aggregates, prepare its payroll, invoices Foley for the weekly payroll advances and types Kingston Aggregate's bid proposals to Foley and also does Foley's payroll work, issues Foley cheques for weekly payroll advances to Kingston Aggregates and does the banking related thereto for both Kingston Aggregates and Foley at the same bank Mr. Robinson was hired by Mr. Foley for Kingston Aggregates and received payments out of the hours bank system on Foley cheques. Mr. Foley directed that a pay adjustment be made to Mr. Fox, and had a Foley cheque issued for that purpose. Mr. Cameron's involvement with Mr. Otenhof's employment relationship with Foley goes sufficiently beyond referring or recommending him for employment so as to be characterized as Mr. Cameron being responsible to Foley for Mr. Otenhof’s employment. Mr. Foley can divert to Foley's other customers equipment which it has on rent to Kingston Aggregates along with Kingston Aggregates' operator.

23. The Board is satisfied that there is no evidence to support the applicants' claim that the field forces of Kingston Aggregates and Foley were directed by each other's supervisors. The most that could be made of the evidence is that supervisors of one of the companies issued instructions to employees of the others as to the proper sequencing of work according to the contracts between them, a common occurrence on construction sites. The same cannot be said however about the above referred circumstances in respect of Messrs. Robinson, Fox and Otenhod. In the Board's view those circumstances, taken together with the ability of Foley to divert equipment rented to Kingston Aggregates are at least strongly suggestive that Messrs. Cameron and Foley are involved in some common management control of Kingston Aggregates and Foley.

24. Many aspects of the relationship between Foley and Kingston Aggregates speak to a substantial functional interdependence. For example, Kingston Aggregates' use of the 800 Burnett Street, Kingston, address for its payroll cheques and for the various payroll related remittances and returns, as well as Mr. Cameron's personal use of the premises; his use of Foley's radio frequency, and the miscellaneous business uses which he made of the premises already referred to herein. Kingston Aggregates' dependence on Foley for supplies of equipment fuel and lubricants and building material, its use of Foley's shop for performing equipment maintenance, its use of Foley's quarry for Kingston Aggregate's aggregate supply and Kingston Aggregate's dependency on Foley for the availability to Kingston Aggregates of the large jobs done by Foley which Kingston Aggregates cannot get on its own because it is not bondable are yet other aspects of this interdependence. While for Foley it may be an interdependence of convenience, it does depend on Kingston Aggregates to fuel Foley equipment in the Kingston area and to pick up Foley time sheets and deliver Foley pay cheques for jobs in Kingston and Napanee districts.

25. Kingston Aggregates has no discernible public identity, not even to the extent of having a name on a rural mail box which Maceron enjoyed. There is little or nothing in the way of an outward sign that it is in business, no telephone listing, none of the trappings ordinarily associated with even a private business concern. There is nothing on Foley's job sites that would indicate Kingston Aggregate's presence on them. When Kingston Aggregates is on projects other than Foley's virtually all of the visible equipment and safety barriers used by Kingston Aggregates bear Foley's name and there is no visible sign to the public of Kingston Aggregate's presence on the site. In fact, Foley's name appearing on barriers and equipment give the appearance that it is Foley forces which are on the job. Kingston Aggregate's identity is even obscured to many of its suppliers because of its use of Foley's credit cards. Even Kingston Aggregate's identity with the Workmen's Compensation Board, Unemployment Insurance Commission and Revenue Canada are through Foley's head office address. Mr. Cameron, who relies on his reputation in the construction business for Kingston Aggregate's business opportunities, is known to be reachable through Foley's office and mobile radio frequency. In the result, Kingston Aggregate's identity is totally submerged with that of Foley and publicly Foley and Kingston Aggregates appear as one concern, Foley.

26. While Messrs. Foley and Cameron each maintain that they control the employee relations for his own company only, there is evidence that Mr. Foley, as well as controlling the employee relations of Foley, exerts some effective control over Kingston Aggregate's employee relations. The most visible sign is with the payroll procedure. Kingston Aggregate's serviceman delivers the weekly time sheets to Foley's employee Brenda Brown for all of Kingston Aggregate's employees as well as for Foley's employees in the Kingston and Napanee areas. Ms. Brown prepares the payroll for both companies, invoices Foley for the payroll advance to Kingston Aggregates and issues Foley's cheque to Kingston Aggregates for the amount of the invoice, prepares the payroll cheques for both companies and gives them to the serviceman who delivers them and completes the cycle. Other indications of Mr. Foley's control is his issuing of a Foley pay cheque to Fox and the payment of Robinson on a Foley cheque for hours withdrawn from the hours bank. Mr. Cameron's intercession with Mr. Otenhof, a Foley employee, to get him a raise in pay, the signing of the Workmen's Compensation Board form for Mr. Otenhof and Mr. Cameron's part in the grievance filed by the employee indicate that Mr. Cameron was acting with authority or direction from Mr. Foley.

27. This case has several interesting aspects to it compared with many applications which raise section 1(4) of the Act. The most significant is the absence in this case of any ownership connection, either direct or through a third party, of any form of corporate inter-relationship including common directors, officers, solicitors or corporate familiar relationship between Foley and Kingston Aggregates. In the majority of cases, the Board is attempting to determine if there is common direction or control between entities carrying on related activities or business, between which there is some form of ownership connection or corporate inter-relationship. Another unusual feature of the case is the virtual absence of any public identity of Kingston Aggregates. While the Board occasionally deals with section 1(4) cases involving a party or parties the public identity of which is obscure (see for example Del Zotto Enterprises Limited, [1973] OLRB Rep. Aug. 533), in most instances the Board is dealing with circumstances where all of the parties have some public identity, unlike the situation before us where there is no outward appearance of Kingston Aggregate's existence. Finally, the essential relationship between Foley and Kingston Aggregates is that of contractor and sub-contractor. While this is not unusual of itself where it is alleged that two or more entities are under common control or direction, it is unusual in the absence of any ownership connection or corporate inter-relationship. If the contractor/sub‑contractor relationship was the extent of the relationship, then the Board would need to go no further, for, as the Board has observed in its decision issued December 18, 1979 (as yet unreported) in Metropolitan Auto Parking Inc., [1979] OLRB Rep. Dec. 1193, a close economic relationship is implicit in a simple sub-contracting arrangement. A close economic relationship in and of itself, however, does not establish common control or direction of one business by another, just as it does not establish that a contractor which is economically dependent on another is a dependent contractor as defined in Section 1(ga) of the Act. The Board's observation in Canada Crushed Stone, [1977] OLRB Rep. Dec. 806, that it had to consider the total character of the business in deciding whether a contractor was more like an employee (and therefore a dependent contractor) or an independent contractor in his relationship with the employer is, by analogy, equally applicable to examining the relationship between Kingston Aggregates and Foley; it is the total character of the relationship that must be considered. What is significant about the relationship between these two companies, besides the nearly total dependence of Kingston Aggregates on Foley, is the total lack of the arms-length relationship which is characteristic of independent businesses contracting together. A number of the arrangements between the two companies could be viewed as enterprising (or at least novel) accommodations between two entrepreneurs if there was otherwise an arms-length relationship. There is nothing intrinsically suspect in Kingston Aggregates not wanting to risk capital investment in its own equipment; in Foley extending generous terms for renting its equipment to Kingston Aggregates; or in Kingston Aggregates borrowing nearly its entire working capital from the company which is the source of 85% of Kingston Aggregate's revenue. But how do these arrangements look in the context of the total relationship? Kingston Sand started getting business from Foley almost coincident with the birth of Mr. Cameron's idea to start a second company and six weeks before he moved to incorporate in the name of Kingston Sand. Within seven months from the idea, Kingston Aggregates had done $815,000 work of business with Foley, 85% of its total business for the year. Add to this picture the lack of evidence that Kingston Aggregates is capable of being in an arms-length contractor/sub-contractor relationship with Foley, the evidence that there is substantial, functional interdependence between the two companies and the indicia herein of other elements of common control and the economic reality of the relationship emerges as Foley exercising common control over Kingston Aggregates. In fact, one effect of that control is that there is no need for Kingston Aggregates to hold itself out to the public as a business in the usual manner. While Foley does not have any shareholdings in Kingston Aggregates, directly or beneficially, its providing of 85% of Kingston Aggregate's working capital may be seen, in the context of all the other elements of their relationship, as being the reasonable equivalent of an ownership position.

28. Having regard to all of the evidence and to the total character of the relationship between Foley and Kingston Aggregates, the Board is satisfied that they are carrying on related businesses under common control within the meaning of section 1(4) of the Act. The question now is whether the Board should exercise its discretion under section 1(4) to declare that the two companies constitute one employer for purposes of the Act. One of the significant purposes of section 1(4) is to protect bargaining rights gained by a trade union from being eroded by work being diverted by one means or another from a unionized business to a related, non-unionized one. One of the results of the total relationship between Foley and Kingston Aggregates is that Foley can go on projects as a "union" contractor and through Kingston Aggregates perform work within non-union labour, with no visible indication of Kingston Aggregate's presence on the project. At the same time, it permits Kingston Aggregates to operate under Foley's umbrella and gain access to large jobs which it would not otherwise be able to do. A potential effect of this practice is to erode the bargaining rights of the applicants. The Board does not have evidence before it that such erosion has taken place, although a strong inference exists from the fact that Foley employed an average combined workforce of 15 engineers and labourers in 1979 while Kingston Aggregates had a workforce of some 30 to 55 employees. It is true that similar risk of erosion would result from Foley entering into a bona fide, arms-length relationship with another non-union contractor and section 1(4) could not protect the applicants. The fact is that it is Foley's control of Kingston Aggregates, a firm carrying on related business, which presents the risk of erosion to the applicant's bargaining rights. It is not necessary for there to have been an actual erosion of those rights before the Board exercises its discretion. As the Board stated in Kustom Insulation Ltd., [1979] OLRB Rep. 531,:

"It is not necessary, however, for the union company to fall apart before concluding that an employer's scheme of operating a business through a union and non-union company has undermined a union's bargaining rights."

While the respondents argued that there was no scheme or intent to avoid or dilute the applicants' bargaining rights, it is the reality that erosion has resulted or that there is a risk of erosion of bargaining rights which may cause the Board to exercise its section 1(4) discretion to remedy the situation. In this case, the applicants have acted promptly upon learning of Kingston Aggregate's existence to bring these applications before the Board and the Board concludes that in all the circumstances of this case, it is an appropriate one in which to exercise its discretion and grant a declaration. Accordingly, the Board declares that Donald A. Foley Limited and Kingston Aggregates are one employer for purposes of the Act. Since Kingston Aggregates is the name under which 429185 Ontario Limited trades in business and by virtue of the common ownership, direction and control between Maceron Limited and 429185 Ontario Limited, the Board further declares that Donald A. Foley Limited, 429185 Ontario Limited, operating as Kingston Aggregates and Maceron Limited are to be treated as one employer for purposes of the Act.

DECISION OF BOARD MEMBER, F. W. MURRAY:

1. I dissent.

2. I would not have found that the Respondents were carrying on a related business in common control or direction within the meaning of section 1(4) of the Act.

3. While there is clearly some functional interdependence between the two companies, I would rot, particularly in the construction industry and more particularly in this segment of the industry, be moved to declare that the two companies constitute one employer for purposes of the Labour Relations Act in the absence of hard evidence concerning common ownership, either by way of shares, or evidence by way of records as to common directorships.

4. Moreover, I also believe that the Board has erred in failing to exercise its discretion under section 1(4) of the Act and decline to declare the companies to constitute one employer for purposes of the Act. It was open to the Applicant to historically show the numbers employed by Foley in previous years. Foley's business as a general contractor as I understand it would not necessarily generate a large number of employees, particularly when such a large portion of his business was and is the rental of construction machinery across the province. Had there been an erosion or if there was a threat of erosion, it would have been a simple task indeed for the Applicant to have submitted the history of employee members in the area and to show that during 1979 this number had been affected by the employment of 30 to 55 employees of Kingston Aggregate during 1979. In failing to exercise the discretion available to it under section 1(4) of the Act, the Board's decision may well have the effect of extending the bargaining unit to a sub-contractor working at least in part on jobs that otherwise would be "non-union", and the evidence indicates that a great deal of Kingston Aggregate's competition in the area falls in this category.