[1981] OLRB Rep. August 1102
1966-80-M United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local Union 67, Applicant, v. Braneida Mechanical Service Ltd., and Oliver Plumbing and Heating Limited, Respondents
BEFORE: Ian Springate, Vice-Chairman, and Board Members H. J. F. Ade and C. A. Ballentine.
APPEARANCES: Stanley Simpson and Trevor G. Byrne for the applicant; Peter Quinlan, John P. Oliver and Donald R. Herbison for Braneida Mechanical Service Ltd.; L. T. Oliver for Oliver Plumbing and Heating Limited.
DECISION OF IAN SPRINGATE, VICE-CHAIRMAN AND BOARD MEMBER H. J. F. ADE; August 28, 1981
Oliver Plumbing and Heating Limited is hereby added as a party respondent to these proceedings.
These proceedings were commenced as a referral of a grievance to the Board under section 1 12a of The Labour Relations Act alleging that the respondent Braneida Mechanical Service Ltd. ("Braneida") was in violation of a provincial agreement between the Mechanical Contractors Association of Ontario and the Ontario Pipe Trades Council of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada which is binding on the applicant.
It is not disputed that neither the applicant nor any other local of the Ontario Pipe Trades Council has been certified or voluntarily recognized as the bargaining agent for employees of Braneida. However, the applicant has for some forty years been the bargaining agent of certain employees of the respondent Oliver Plumbing and Heating Limited ("Oliver"). It is the contention of the applicant that there has been a sale of a business from Oliver to Braneida and that pursuant to section 55(2) of the Act Braneida is bound by the terms of the provincial agreement referred to above.
It should be noted that in its filings the applicant also took the position that section 1(4) of the Act was applicable to the facts of this case, but it abandoned this contention during the hearing.
All of the shares of Oliver are currently held by Mr. Len Oliver and his wife. Len Oliver's father began the business in 1921 as a plumbing and heating contractor, although the firm was not formally incorporated until 1947. Len Oliver joined the Oliver firm in 1945 and at some point, the date was not given in evidence, he took over the running of the company. Under Len Oliver the company engaged in the design and installation of plumbing, heating, air conditioning, ventilating and sprinkler systems.
During the 1960's and the early 1970's, Oliver was a highly successful operation, frequently being engaged on contracts worth over half a million dollars. At its peak, the company employed some seventy employees. In the mid-1970's, the company's volume of work began to fall and the company lost money in 1977, 1978 and 1979. Oliver continued to lose money in 1980 and by the spring of 1980 the number of employees with the firm had dropped to between fifteen and twenty.
In the spring of 1980, Len Oliver retained the services of a business consultant friend of his, Mr. B. Mussen, to advise him as to what should be done with Oliver. Mr. Mussen's advice to Len Oliver was that he simply liquidate the business, advice which presumably was based on the conclusion that Oliver would continue to lose money if it stayed in operation. In testifying before the Board, Len Oliver indicated that he had always hoped that his son John and son-in-law Don Herbison would be able to continue the business of Oliver, but that in the circumstances, and since he felt that the two were lacking in financial and trade knowledge, he concluded that he should take the drastic step of liquidating the business. Mr. Oliver testified that the decision to liquidate the business was made easier by the fact that two "key people" (of whom no details were given) had already left the firm for other jobs.
On June 17, 1980, Len Oliver advised Oliver's employees that the company was ceasing operation and that they would all be terminated as of July 1, 1980. Subsequently, Oliver disposed of all of its assets. At the time of the hearing, Oliver still existed as a corporate entity, although it had long ceased to be an active operation. Len Oliver, together with his friend Mr. Mussen, now operates a new non-construction business totally unrelated to the business previously carried on by Oliver. Although Len Oliver's new business rents space from Braneida (at a commercial rate), we are satisfied that this new business is of no relevance to these proceedings.
Len Oliver's son John was one of Oliver's employees. John commenced his employment with the company as an apprentice. It is not clear when John Oliver ceased to be an apprentice, but at the time of the hearing he was a journeyman air conditioning and refrigeration mechanic and a qualified gas fitter. There is nothing in the evidence to indicate that prior to Oliver ceasing operations John Oliver had assumed any managerial responsibilities with the firm. Oliver also employed Len Oliver's son-in-law, Mr. Donald Herbison. Mr. Herbison began with the company as an apprentice but switched over to preparing estimates and doing sales work. No evidence was led as to whether or not Mr. Herbison had the authority to decide which jobs should be bid on, or whether he had any other responsibilities with respect to the operation of Oliver.
John Oliver testified that when he and Mr. Herbison were advised by Oliver that they were being terminated, the two of them decided to incorporate a business of their own rather than seek employment with another established firm. To this end, in June of 1980 they arranged for the incorporation of Braneida. The name Braneida is short for "Brantford North East Industrial Area", which is part of Brantford in which they leased space for the firm. It should be noted that the building owned by Oliver in which it had its offices was in a different section of Brantford entirely.
Braneida acquired its original working capital by way of a bank loan. The loan was personally guaranteed by John Oliver and Donald Herbison and their wives, and also by Len Oliver in his personal capacity. At the time of the hearing the bank was considering a request from Braneida that these personal guarantees be dispensed with.
On or about June 20, 1980, Braneida arranged to purchase from Oliver various tools and equipment and certain pieces of office furniture. The total price paid for these items was $8,063.00 which was apparently a "fair market" figure. Subsequent to this sale, Oliver sold, by auction, the bulk of its equipment, including inventory and two vehicles, for some $45,000.00. Apparently Oliver later also disposed of its building. In addition to the items purchased from Oliver, Braneida also arranged to lease five of the nine vehicles which had previously been leased by Oliver. Quite apart from these dealings, Braneida purchased some ladders, racks and material from wholesalers and also rented some scaffolding, drills and pipe threading machines. Unfortunately, the value of these items was not put before the Board.
When Braneida started up, John Oliver and Donald Herbison circulated letters to some 450 potential customers advising them of the firms existence. The letters indicated that the two men had previously been employed by Oliver.
Apart from John Oliver and Mr. Herbison, Braneida began its operations with a number of persons who had previously worked for Oliver, namely, an estimator, a bookkeeper, three refrigeration mechanics, two of whom have now left the company, and a plumber, Doug Oliver, who did service work for Oliver and who now does the same type of work for Braneida.
The day to day affairs of Braneida are directed by Mr. Herbison and John Oliver. The firm engages in much the same type of work as did Oliver, although on a smaller scale and doing much smaller jobs.
Oliver ceased operations about the first of July, 1980. Braneida started up about July 14, 1980. It appears that prior to ceasing operations, Oliver finished up all of its work then underway. However, at the time it ceased operations, Oliver had not started work on certain contracts which it had been awarded. These contracts were all subsequently re-let to other firms. Braneida sought to acquire the contract for only one of these jobs, but was unsuccessful, the work being awarded instead to another Brantford-based mechanical firm.
Subsequent to Oliver going out of business, additional work had to be done on three of its jobs. Oliver retained Braneida to do this work. One such job involved fixing a leaky toilet while another involved the installation of a meter. For each of these jobs Braneida billed Oliver about $50.00. The third job involved repair of some air lines improperly installed by Oliver. No evidence was led as to how much Braneida billed Oliver for this work.
Braneida has performed work for a number of firms that had not previously used Oliver. Braneida has also performed work for at least two formers customers of Oliver. One of these was the Canwirco Company in Simcoe. Oliver had earlier installed some air lines for Canwirco. According to John Oliver, Canwirco planned to have its own employees install some additional lines, but that John Oliver and Mr. Herbison went to Canwirco's premises in Simcoe and convinced Canwirco to assign this additional work to Braneida. The resulting contract, worth approximately $40,000.00 has been the largest awarded to Braneida.
Section 55, subsections (1) and (2) of the Act read as follows:
55.-(l) In this section,
(a) "business" includes a part of 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.
It is to be noted that the term "sale" is defined very broadly, and that the term "business" is not defined at all. As the Board stated in the Raymond Cote case, [1968] OLRB Rep. March 1211:
The meaning to be attached to the word "business" depends to a great extent on the facts and circumstances in each particular case. It cannot be said that any one facet of an enterprise taken by itself necessarily comprises a business. It has been expressed that a business is "the totality of the undertaking". The physical assets of buildings, tools and equipment used in a business are not necessarily the undertaking per se but are, along with management and operating personnel and their skills, necessary in the operations to fulfill the obligations undertaken with a hope of producing profit to assume its success. The total of these things along with certain intangibles such as goodwill constitute a business.
Because of the nature of the industry, the determination as to whether or not an existing construction "business" has been transferred as opposed to a new one started is always a particularly difficult one to make. In Tatham Company Limited [1980] OLRB Rep. March 366, the Board dealt with a situation somewhat analogous to that now before us. When a construction firm, The Tatham Company Limited, went out of business a number of its employees set up a new company, Magnus Engineering and Construction Limited, which in turn purchased much of Tatham's equipment. The Board concluded that there had been a sale of a part of the business of Tatham to Magnus. The facts in the instant case, however, differ in a number of material respects from those in the Tatham case. In particular, whereas Magnus purchased some two-thirds of the equipment of Tatham (with much of the remainder being left to rust) and continued to use both Tatham's office and "yard" facilities, Braneida purchased only some fifteen per cent of Oliver's equipment, and set up business on the other side of town. In a more recent case, Rivard Mechanical, [1981] OLRB Rep. May 550, the Board also dealt with the situation of an existing business closing down and another being started up by a number of its former employees. There the prime mover behind the new company was the brother of the owner of the firm that had ceased operations. The Board concluded that there had not been a sale of a business, and in doing so made the comment that the case ought not to turn solely on the family relationship between the two brothers.
In the instant case, certain considerations, such as the fact that Braneida's original personnel had all been employees of Oliver and that Braneida purchased much of its tools and equipment from Oliver, do suggest that there might have been a transfer of all or part of Oliver's business to Braneida. However, on balance a number of other considerations, including the difference in name and location of Braneida, and the fact that Oliver disposed of its building and some eighty-five per cent of its tools and equipment to firms other than Oliver, leads us to the conclusion that Braneida is in reality a new business and not the continuation of the business of Oliver. In the result, we are content that while there has been a sale of certain tools and equipment from Oliver to Braneida, there has not been a transfer or sale of the business of Oliver to Braneida within the meaning of section 55 of the Act.
Having regard to our determination set out above, and to the fact that Braneida is not bound to the provincial agreement referred to above, it is clear that the grievance referred to the Board cannot succeed, and this referral is hereby dismissed.
DECISION OF BOARD MEMBER C. A. BALLENTINE;
I dissent from the majority decision. I am satisfied that all necessary facts have been established by the applicant for the Board to issue a declaration under section 55 of the Act.
The evidence establishes that part of Oliver's business was transferred to Braneida and in fact all of Braneida's business was transferred from the Oliver business.
In Raymond Cote, [1968] OLRB Rep. March 1211 at page 1214, the Board set outs the criteria necessary to find that a sale of a business has occurred in the following passage:
“… along with management and operating personnel and their skills, necessary in the operations to fulfill the obligations undertaken with a hope of producing a profit to assure its success. The total of these things along with certain intangibles such as good will constitute a business."
In the instant case, whatever managerial know-how and expertise that Braneida needs, they were transferred from the Oliver Company. Donald R. Herbison, son-in-law of Len Oliver the owner of Oliver, was an estimator and in charge of sales for Oliver. John Oliver, son of Len Oliver, was a licensed journeyman mechanic with Oliver, and is quite capable of carrying out the field supervision for Braneida, which he does. They both gained their experience with the Oliver Company and now are partners of the Braneida Company. It is a fact that all the personnel of the Braneida Company came from Oliver, bringing with them the same skills necessary in the operation of the Braneida Company as was the case with Oliver. Len Oliver participated in guaranteeing a loan for Braneida and guaranteed the lease of vehicles from the same leasing company that serviced the Oliver company. Everything Braneida needed to fulfill the obligations undertaken with a hope of producing a profit to assume its success came in whole from Oliver, including good will.
John Oliver gave evidence that Doug Oliver, a plumber who was employed by the Oliver Company doing service work, is now doing the same type of work for Braneida. He stated, "there are a good number of satisfied customers in the service end of the business". In my opinion, when you combine this evidence with the fact that Braneida sent letters out to prospective customers advising them that they were formerly employees of Oliver, I believe that Braneida was acquiring the "good will" of Oliver.
For the majority to have considered what percentage of Braneida's business came from Oliver and thereby use that as a distinguishing factor from Magnus Engineering and Construction Limited, as they do in paragraph 20 of their decision, the Board then is taking unto itself a discretionary power that does not exist. A section 55 declaration, contrary to a section 1(4) declaration, operates automatically upon a "sale" or "transfer" or "part" thereof of a business. The Board does not have the discretion to refuse to apply it when the statutory preconditions for its application have been established. When the pre-conditions have been met (as they have, in my opinion, in the instant case), the union retains bargaining rights for employees in a "like unit" to that which existed prior to the "transfer", and the transferee must apply the collective agreement to the predecessor's employees in that unit until the Board otherwise declares. However, the Board does have power to terminate the collective agreement of the bargaining rights if the successor employer substantially alters the business, to redefine the unit if there is an intermingling of the unionized employees, hold a representation vote in regard to the bargaining unit if the union represents some of the employees in the new structure but the remainder are either unrepresented, or represented by another union. None of the foregoing situations exist in the instant case.
It is my opinion that the majority have overlooked the fact that this application is by the "United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 67", the object of which is to preserve its long-established bargaining rights. Doug Oliver, a plumber, was the only employee in the bargaining unit when the Oliver Company purported to wind up its business and now he is the only plumber in the unit under the Braneida Company, as previously mentioned in paragraph 4 of this dissent. He is doing exactly the same type of work for the successor company as he was doing with the Oliver Company. The Total bargaining unit has been transferred.
It is my opinion that "Braneida" is the successor business of "Oliver" and that "Braneida" is bound to the provincial collective agreement with the applicant union.