United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Local 463 v. George Hamers Limited and L. & M. Plumbing & Heating
Before: E. Norris Davis, Vice-Chairman, and Board Members A. Hershkovitz and F. W. Murray.
Appearances: L. C. Arnold and C. Burroughs for the applicant; G. Grossman, Karl Schaqf and Charles Schaaf for the respondents.
Decision of the Board
Upon agreement of the parties the above files involving an application under section 63 of the Act, an application under section 1(4) of the Act and an application under section 124 of the Act, are hereby consolidated.
George Hamers Limited as incorporated in 1957 and in the same year became bound by a collective agreement in respect to its plumbing and pipefitting business. It is now bound by the provincial collective agreement between the Mechanical Contractors Association and the Ontario Pipe Trades Council of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, in respect to work in the I.C.l. sector.
From 1957 onwards Hamers' work was largely in school construction, some industrial construction and also service work which later was always carried out by a separate group of Hamers' employees. The service work at that time involved school boards in the area, various plants in the area and residential servicing of oil furnaces. From 1955 there existed a partnership between Leo Tiggelers and Mike Probinsky operating as L. & M Plumbing and Heating which was involved in service work and installations at shopping centres. Tiggelers, sometime in the 1960's, moved out of the country and Probinsky carried on by himself until 1967 when he approached Karl Schaaf to buy the operation. As a result, in 1967 George Hamers Ltd. acquired all the assets of the partnership, including the trade name, under the Bulk Sales Act. A Declaration of Dissolution of Partnership was filed June 12, 1967. Hamers since 1967 has owned L & M and there has been no change in structure since that time. Subsequent to this sale all service work done by Hamers was done under the name of L & M. Probinsky was employed and continued until 1970/71 to operate the service business under the name of L & M, and continuing to use the same shop and warehouse located at 137 Brock Street. Karl Schaaf in cross-examination was asked "From then on Hamers Ltd. carried on business as George Hamers Ltd. and as L & M?" and the response was "No, as George Hamers Ltd. and Mike Probinsky carried on as L & M". A further question was "Was Mike Probinsky employed by Hamers? and the response was "By the income of L & M Company. Hamers had separate "income" and further "at the time of the takeover there was an arrangement between Probinsky and George Hamers Ltd. that he would operate L & M and would keep the profits as wages and would be given advances". With Probinsky's retirement the L & M business was stated to be more or less dormant with the service work earned out mainly by Karl Schaaf, the principal shareholder of George Hamers Limited, except for the summer months when students were hired to take care of furnace installations.
Charles Schaaf, son of Karl, who is currently in charge of the day to day business of L & M, became employed around 1969 or 1970 and completed his apprenticeship in 1974 or 1975 when he received his plumber's license. For a time prior to that date he was overseeing the jobs and taking care of the men. In his words, "I became like the Manager of L & M. L & M is a Division of George Hamers." While the L & M Business is currently conducted under the license of Charles Schaaf, it was, prior to his obtaining his license, conducted under the license of Karl Schaaf.
Currently, there are persons employed in the office, Karl and Charles Schaaf and Mrs. Karl Schaaf, as unpaid employees. Karl Schaaf stated he was not a paid employee although he had been at one time. He pays Charles from the L & M account. At previous times there was also a secretary up to 1976, and two supervisors. One of these supervisors had started as a sheetmetal apprentice with L & M and was promoted to supervisor in Hamers. It appears that from 1978 there was only one supervisor and that condition existed till March 1981. The secretary and supervisors were employed by George Hamers Ltd. and did work for L & M for which an annual accounting charge was made. Separate stationary is used for Hamers and for L & M, and there are separate bank accounts with Karl Schaaf signing cheque on both. Hamers has a line of bank credit. L & M does not. There are no inter company transfers of money. An outside Accounting firm performs work for Hamers and L & M. Karl Schaaf stated "There are separate books and statements for both companies including balance sheets".
Robert Wood, hired in 1978 as a supervisor was responsible for estimating jobs for Hamers and Karl Schaaf testified that Wood did no estimating for L & M but that any estimating was done between Charles and himself. Wood, on the other hand testified that he had done some estimating work for L & M perhaps a year before April 1980 which was the time at which both Hamers and L & M moved to an address on Charles Street.
In respect to the acquisition of business, Hamers acquired business mostly through public tender and through the Bid Depositary. As a result of the market conditions work for school boards and industrial construction fell off drastically with the result that where, at one time, Hamers employed a peak of 25-30 employees, in 1980 it was 4-5 employees and in July 1980 the roster was down to two employees and since May 1981 there have been no employees. In the case of L & M Charles Schaaf testified that a lot of business is acquired through word of mouth, advertising and personal contacts as well as repeat business, but sometimes in respect to public bidding invitation. In response to a question relating to a job at a bank in Bowmanville in 1981, as to whether thejob had been bid by Hamers, Charles Schaafstated'l don't know. . . but the General Contractor said he had a contract with L & M. I think my father bid it. He oversees 99 per cent of the bidding". And when asked who signed L & M contracts the response was "My father signs. Sometimes I do". We note that a contract executed January 3. 1973 between Pineridge Management Construction (a Division of Ronald C. Deeth Ltd. and L & M Plumbing (a Division of George Hamers Ltd.) is signed on behalf of the latter by "K. Schaaf, President".
It was Wood's testimony that it was his practice to make bids on behalf of Hamers from information gleaned from the Daily Commercial News unless instructed to make bids on behalf of L & M. Throughout a year he would bid an average of four jobs per week for Hamers, and stated on the same period he had successfully bid on four jobs for L & M.
L & M, prior to the purchase by Hamers, operated out of a shop at 137 Brock Street. Hamers operated at a location at 210 Brock Street up to 1964 when it remodelled a section of the storage yard immediately behind this location and with an address of all Colborne Street. The Colborne Street property was sold in 1980 and the entire operation moved to a new address on Charles Street. Up to that time the L & M group worked mainly out of the Brock Street shop but used Colborne Street as a meeting place, and for gassing trucks. Some materials were stored there and some use was made of the shop facilities there. The entrance to the office at Charles Street bears a plaque with the name at the top of "George Hamers Ltd., Mechanical Contractors" and a phone number together with "L & M Plumbing & Heating Division" and a phone number. There had been no sign at the Colborne Street location regarding "L & M" or "L & M Division". The Charles Street property is leased by Karl Schaaf personally from a Peter Vanhood, and the rent is paid in alternate months by a Hamers or L & M cheque.
Trucks are registered in the names of Hamers and of L & M and are painted distinctively different colors. Basic materials inventory is the Hamers inventory and everything is now stored under one roof and it was Charles's practice all along to draw from this inventory when short. Equipment for Hamers and for L & M is painted different colors and used interchangeably from time to time. Most of the L & M equipment is stored on the L & M truck with the "bigger stuff' stored at Brock Street.
II. The applicant argued, initially, that it is a condition precedent to the exercise of the Board's discretion under section 1(4) that there be more than one legal entity carrying on an associated or related business or activity and that the evidence before us establishes the existence of only one legal entity, George Hamers Ltd. The applicant relied on the case of General Bakeries Limited[l 979] OLRB Rep. May, 400. The respondent took an opposite view of the evidence and that L & M Plumbing and Heating was a Division of Goerge Hamers Ltd. The respondent argued that the Board in its Radio Shack decision [1979] OLRB Rep. July, 689 recognized that a division of a corporation was an entity within the meaning of section 1(4).
- The Board's consistent approach to applications under this section is succinctly set out in paragraph 7 of the Radio Shack decision, supra, as follows:
"Section 1(4) of the Act provides:
'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.'
Section 1(4) of the Act is designed to deal with situations where more than one legal entity carries on related business or activities under common control and direction and where 'it may not make industrial relations sense to allow the legal form to dictate and possibly fragment the collective bargaining structure.' There are three conditions which must be met before the section can be applied.
(a) There must be more than one corporation, firm or individual association or syndicate involved.
(b) These entities must be under common control or direction, and
(c) they must be engaged in associated or related business activities.
If these three conditions are met the Board is given a discretion under the statute to make a declaration that the entities in question constitute one employer for purposes of the Act. The Board has consistently exercised its discretion under section 1(4) to preserve rather than to extend bargaining rights. It has been reluctant, however, to make a section 1(4) declaration where the applicant union has delayed its application with the result that the declaration will impose a bargaining agent upon a group of employees who may desire a different bargaining agent or no bargaining agent at all."
The decision in the General Bakeries Limited case, supra, similarly makes it clear that the Board there proceeded on the application of the same principles as enunciated in Radio Shack. The ratio for the Board's decision in General Bakeries Limited is set out as,
"In the case before us we have only one legal entity, General Bakeries Limited. That corporation has divisions within it but none of the divisions relevant to the disposition of the matter before us has separate legal personality or entity apart from General Bakeries Limited. Therefore, the application under section 1(4) cannot succeed."
It becomes evident that whether a segment of a corporation's business, designated by it as a division, is to be treated as a legal entity or not is a question of fact in each case.
The use of the word "division" as descriptive of a business' activities has many and varied connotations, and is, of itself, not determinative of the existence of a separate business entity. In the case before us the evidence is not clear that the word "division" was from 1967 always included as part of the identification of L & M Plumbing and Heating. It is clear, however, that as far back as 1973 contracts were signed in which one of the parties is identified as "L & M Plumbing (A Division of George Hamers Limited)", and that since 1980 the business offices have been signed "George Hamers Limited, mechanical contractors and immediately below that "L & M Plumbing & Heating, Division". Accepting as fact that "L & M" is known as a division of George Hamers Limited, the question before us is whether "L & M" is itself a legal personality or entity apart from George Hamers Limited.
The Board notes that prior to the 1967 acquisition by George Hamers Limited of the assets, there had existed a legal entity in the form of a joint partnership which carried on business under the name of L & M Plumbing and Heating. That partnership was dissolved June 12, 1967 and amongst the assets acquired by Hamers was the trading name "L & M Plumbing and Heating". Immediately prior to the sale, the legal personality or business entity was the joint partnership and it was dissolved concurrent with the sale. George Hamers Limited remained an ongoing legal personality or entity and it is the Board's task to determine whether, subsequent to the sale, a new legal personality or business entity was created.
The Board also notes that for some years prior to 1967 George Hamers Limited had both a construction operation in the I.C.I. sector and a collective agreement relating to that operation, and also a separate group of employees in a service operation both of which did business under the name of George Hamers Limited. In our view the acquisition of assets from the joint partnership by George Hamers Limited in itself in no way changed the employer-employee relationship of those two groups. All persons employed in the construction operation and in the service operation at the time of the 1967 purchase were employees of George Hamers Limited. Subsequent to the sale the service operation of George Hamers Limited continued to do business in the same segment of the market under the name of “L & M Plumbing and Heating", and it was established that there had been no structural organization changes since 1967.
It was Karl Schaafs testimony that, concurrent with the 1967 purchase, there was an arrangement with Probinsky (a former partner) to operate L & M and to keep the profits as wages. Schaaf stated that "Probinsky carried on as L & M" and when asked if Probinsky was employed by Hamers, he replied "By the income of L & M Company. Hamers had separate income". It must be noted that the use of the word "Company” in Schaafs response has to be viewed as only a convenience in reference inasmuch as there was no evidence of any "Company" other than George Hamers Limited. We concluded that whatever the mode of remuneration of Probinsky, his status was that of an employee of George Hamers Limited, and it was George Hamers Limited which owned the assets and carried on the business. It was stated that truck vehicles were now registered in the names of George Hames Limited and L& M Plumbing and Heating and that there was a segregation of tools used by the construction operation and the service operation. There was evidence that there is a separate income statement and balance sheet for the L & M operation and that this is consolidated for reporting purposes of National Revenue. There was no evidence as to the assets originally acquired in 1967 being transferred in part or totally to the L & M balance sheet. Subsequent to Probinsky's departure from the scene in 1970 or 1971 the service operation continued at a low level with the actual work being carried out by Karl Schaaf until the completion of Charles Schaafs apprenticeship in 1974 or 1975 when, around that time, in his words, "I became like the Manager of L & M. L & M is a division of George Hamers."
The Board concludes that from the time of the purchase/sale in 1967 and the years immediately following there existed only one legal personality or business entity, that being George Hamers Limited. The Board also concludes that there was no change in the conduct of business activities thereafter from which it can be concluded that at any stage there had evolved an additional business entity.
In the Radio Shack case, supra, the Board dealt with two divisions of one company which each, in its business activities, acted totally independent of one another. There was no commonalty of management in the day to day activities and each division reported individually to the corporate headquarters of the parent corporation in the United States. There is no such sharp distinctions in the present case of Hamers and L & M each acting as individually integrated business entities. Indeed the Board must conclude that the business activities in the construction sector and in the service sector were directed on a day-to-day basis by the same management and the interposition of Charles Schaaf as manager of the service activities does not detract from that conclusion.
In the acquisition of work to be performed by L & M, much of the service work came to it by reason of repeat customers, word of mouth, advertising and personal solicitation of Charles Schaaf. However in that area where there was a response to invitation to tender it was established that Karl Schaaf and/or the estimator employed by George Hamers Limited exercised a determining judgement as to whether bids were submitted in the name of George Hamers Limited or in the name of L & M. Karl Schaaf testified that he invariably used Hamers forces to do L & M work and used the L & M bidding procedure to get work for Hamers. Moreover, on Charles Schaafs evidence, 99 percent of the contracts which L & M entered into were signed by Karl Schaaf and in some cases it was apparent that Charles Schaaf, as Manager of L & M, had no input into the decision to bid for ajob and no knowledge that a bid had been submitted in the name of L & M. In at least one instance on where Charles Schaaf worked on a project he had no knowledge whether the contract was in the name of Hamers or of L & M. In at least one case where a contract had been secured in the name of L & M, Karl Schaaf decided that the work would be "sub-contracted" to George Hamers Limited in order to provide employment to employees in the construction sector. It was also established that Karl Schaaf was consulted by Charles Schaaf prior to making an employment decision in respect to hiring an employee for the L & M Division. From all of the evidence, the Board concludes that the facts of the case before us most closely resembles the facts existing in the General Bakeries Limited case, supra. Rather than a separate and individual entity conducting its business affairs totally independent of other Divisions as existed in Radio Shack, what we have in the case before us is a division whose business affairs are directed and controlled on a day-to-day basis in such a manner as is more consistent with the conclusion that George Hamers Limited was carrying on business under it's corporate name and the name of L & M Plumbing and Heating, than with a conclusion that L & M was a separately identifiable integrated entity in the conduct of business activities. This conclusion is fortified by the absence of any evidence that there existed any legal personality other than that of George Hamers Limited.
For all of the foregoing reasons the application under section 1(4) must be dismissed.
The application brought under section 63 of the Act was not seriously pressed. The evidence was clear that at the time at which George Limited acquired the assets of L & M, there was no collective agreement in force covering the employees of the joint partnership. Under such circumstances the provisions of section 63 are not applicable and the application must therefore be dismissed.
Implicit in our finding that L & M is not a separate legal personality or entity is the finding that persons employed primarily in the service sector under the supervision of L & M were, in fact, employees of George Hamers Limited. George Hamers Limited is bound by a collective agreement with the applicant running from May21, 1980 to April 30, 1982 in respect to all employees working in the I.C.I. sector of the construction industry as plumbers, steamfitters, pipefitters, welders and apprentices thereof. Article 12 of that collective agreement requires an employee to be in good standing with the union as a condition of employment and Article 101 defines certain obligations and procedures in respect to hiring of employees. The union has referred a grievance under section 124 of the Act to the Board for final and binding determination.
L & M acquired a construction contract in 1980 respecting the Royal Bank in Bowmanville and the contract was completed in January, 1981. The greater part of the plumbing work was completed by John Turner, an employee of Hamers construction operation. Charles Schaaf explained that at the time there was no work available for Turner in the construction operation and Schaaf didn't want to see Turner laid off. Charles Schaaf himself installed the gas piping on the roof. Mr. Chris Burrows, Union Business Agent, stated he had visited the site in January, 1981 and was informed by the superintendent of the general contractor that the job was a Hamer'sjob. Burrows phoned John Turner that night and Turner stated the job was a Hamer's job and that he was doing it. One week later, Burrows followed a Hamer's truck to the Bowmanville site where the ladders and piping were unloaded by the truck driver, Charles Schaaf and one other. Burrows talked to Schaaf stating that he had been under the impression this was a Hamer's job, to which Schaaf replied "What difference does it make". Burrows informed Schaaf he intended the remainder of the work to be done by Hamers, and subsequently spoke to Turner telling him to be sure he completed thejob and not L & M. Burrows stated that several nights later Turner informed him that the gas lines had been completed by L & M. Turner gave evidence corroborative of Burrows.
The Board finds that work which fell within the scope of the collective agreement between Hamers and the applicant was performed on the Royal Bank site by Charles Schaaf, an employee of George Hamers Limited who was not a member of the applicant.
In respect to a project in 1981 at Dupont, Charles Schaaf testified that he had worked on the job with John Turner and was not aware whether it was a Hamer's contract or not. He stated that in signing in on the job it was possible that he had indicated he was a Hamer's employee by putting ditto marks under Turner's name, and that he had been on the job at times when he did not sign in at all. There was insufficient evidence to establish the nature of work which may have been done by Charles Schaaf on this particular job and the Board makes no finding.
In respect to a construction project at the Whitby Police Station in 1981, Charles Schaaf testified that John Turner had done the roughing in plumbing work and that Charles Schaaf finished the work. Turner testified he had voiced an objection to Schaaf that if he (Turner) started a job, even though it was a L & M job, that he should finish that job as otherwise it would "create union problems for all of us", and that Schaaf seemed to agree. The Board finds that there was work performed on this project by Charles Schaaf which fell within the scope of coverage of the collective agreement.
The Board finds that in respect to work done by Charles Schaaf on the Royal Bank Bowmanville project, and in the Whitby Police Station project which fell within the scope of work covered by the collective agreement, George Hamers Limited was in violation of that collective agreement. George Hamers Limited, by assigning an employee, not a member of the union, to do such work disregarded Article 12. 1 of the collective agreement requiring such employees to be "in good standing with the union" and Articles 101.1 and 101.4 relating to its obligation to give preference in employment to union members and to notify the union in advance of its manpower requirements. The union is entitled to damages for any losses suffered as a consequence of such violations and in the event the parties are unable to agree on the quantum of such losses the Board will remain seized of the matter.