Canadian Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers, Local 304 v. The Charming Hostess Inc., 1982 CanLII 824

Ontario Labour Relations Board

[1982] OLRB Rep. April 536

0607-81-R Canadian Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers, Local 304, Applicant, v. The Charming Hostess Inc., Amsterdam Catering Services Limited, and Molson's Brewery (Ontario) Limited, Respondents

BEFORE: R. O. MacDowell, Vice-Chairman, and Board Members J. D. Bell and O. Hodges.

APPEARANCES: J. McNamee, for the applicant; J.P. Sanderson, Q. C. and .1. Forbes-Roberts for The Charming Hostess Inc.; P. Graham and WJ. Whittaker, Q.C. .for Amsterdam Catering Services Limited; J. W Healy Q.C., M. J. Addario and R.L Busch for Molson's Brewery (Ontario) Limited.

DECISION OF THE BOARD: April 1, 1982

I

1. This is an application under sections 63 and 1(4) of the Labour Relations Act, involving the subcontracting relationships between Molson's Brewery (Ontario) Limited, The Charming Hostess Inc., and Amsterdam Catering Services Limited. For ease of reference, the parties will be referred to as: "the union", "Molson's", "Charming" and "Amsterdam". The union contends that Molson's has transferred "part" of its "business" to Charming and Amsterdam or alternatively that the subcontracting arrangements are such that all three respondents should be considered one employer for the purposes of the Act.

2. The respondent Molson's operates a brewery at 641 Fleet Street in the City of Toronto. From approximately 1955 until October 1980, the Toronto brewery had a "hospitality room" on its premises known as the "Anchor Room". In October 1980, the respondent closed the Anchor Room, and the four members of the union employed therein were transferred to jobs at the same rate of pay in the packaging department of the brewery. These four individuals remain employees of Molson's within the bargaining unit represented by the applicant union. The Anchor Room itself was totally demolished and the space is now used for Molson's centralized marketing offices.

3. Contemporaneous with the conversion to office use of the space formerly occupied by the Anchor Room, the respondent engaged a number of construction contractors to build a new hospitality suite on the roof of the brewery. This new facility known as the "John Molson Room", opened in June 1981. Charming supplies hosts and hostesses for the functions held in the John Molson Room. Amsterdam supplies the required food services. In view of the argument made by the union, it will be necessary to consider the functions of the old and new hospitality facilities in some detail.

4. The Anchor Room occupied approximately 4800 square feet and had room for 80 to 100 people. It was used primarily as a reception area for casual tours by outside groups visiting the plant, and by Molson's' own employees at lunch time, and after work. The room was also used on occasion for employer-employee functions, such as safety or retirement dinners.

5. For the most part, food services in the Anchor Room were rudimentary, consisting in the morning, of danish pastries and coffee, and in the afternoon, of pretzels, chips, cheese, pickles and, of course, beer. The food was distributed to the tables by the "bar stewards" who also served the beer. There were four stewards on staggered shifts covering the 12 to 14 hour period during which the Anchor Room was open. The stewards were the only full-time employees working in the room.

6. For evening tours, the fare was more varied and could include open-faced sandwiches, salads, lasagna (precooked but warmed on the premises), or other fairly simple items served buffet style. Full "sit-down" dinners were infrequent, as were any complicated cooking requirements. The food was generally prepared and served by six part-time kitchen staff —although the bar stewards would assist, as required, (for example by carving the meat, or boiling eggs earlier in the day), and would help to clean up after the tour had left. The food was purchased and the menu prepared by a Molson's supervisor. The individual overseeing the operation was Gerry Dyment, the Toronto hospitality supervisor.

7. In addition to the four stewards and six kitchen staff, the Anchor Room employed fourteen part-time tour guides who, along with the stewards, actually conducted the tours. The hostesses were primarily responsible for welcoming the guests, and ensuring that they enjoyed their visit; however, the employees' functions were not mutually exclusive or rigidly compartmentalized. Like the stewards, the tour guides would help out to the extent necessary, and in the evening, when there was only one steward on duty, the tour guides served beer. Similarly, the stewards would assist in welcoming the guests and conducting tours.

8. The trade union has never asserted its bargaining rights with respect to either the kitchen staff or the tour guides. Of the approximately twenty-four individuals working in the Anchor Room, the union has sought to represent only the four bar stewards. It should be noted however, that the collective agreement between Molson's and the union specifically mentions the Anchor Room, and treats it as an ancillary part of Molson's business, much like the retail store which is also maintained on the premises.

9. By 1977, Molson's had become dissatisfied with the way in which the Anchor Room was operating and the calibre of service provided. Management concluded that the existing facility was not promoting the image of quality which the company sought to maintain, and for a time, they considered closing the Anchor Room altogether. Instead, Molson's decided to substantially upgrade the facilities, and institute a new hospitality program as an adjunct to a more ambitious marketing strategy directed to a more sophisticated clientele. These marketing and organizational considerations ultimately resulted in the demolition of the Anchor Room and the construction of the new hospitality facility now known as the John Molson Room. The same considerations prompted Molson's to engage a professional caterer to provide food services and an outside agency to supply hostesses. Both Amsterdam and Charming have an established reputation in their respective fields.

10. The physical facilities of the John Molson Room are quite different from its predecessor. The new hospitality complex includes: a main room with a capacity for 150 people, two outside terraces with city and waterfront views, a "taste panel room" (for blind market testing with adjoining training facilities), and a fully equipped kitchen and bar with walk-in cooler (designed for licensee training). The John Molson Room is more than twice the size of the Anchor Room excluding patio space. A somewhat rudimentary slide projector and visual presentation has been replaced by a more sophisticated video tape recorder and large screen T.V. monitors.

11. The use of the John Molson Room is different from that of the Anchor Room. Casual "drop in" tours are a minor as opposed to a primary use, and after the first few weeks of its operation were cancelled altogether. There is now a much more careful assessment of the sales or marketing value associated with a function, and, because the facilities have been significantly upgraded, the company is able to entertain a much more varied and sophisticated clientele. Typically, the booking of the room now originates internally with an employee in the marketing department who envisages a specific target group and sales objective which can be achieved by entertaining his clients in the company's own hospitality suite.

12. There is no doubt that, in a general sense, the John Molson Room is functionally similar to its predecessor. It is a hospitality facility used by Molson's as a marketing and promotional instrument. As before, hostesses give a verbal presentation about the mechanics of the brewing process supported by audio-visual aids, point out historical artifacts on display around the room, conduct the guests to a glassed-in area where they can overlook the production line, and generally welcome visitors and try to ensure that they are comfortable and their needs are met. To admit this functional similarity however, is not to ignore the real differences in the quality and sophistication of the services provided, nor can one ignore that the operation of the John Molson Room is much more closely related to a concerted marketing strategy. The general focus is quite different from that of the Anchor Room and, in Molson's view, this shift in objectives required the employment of outside agencies.

13. As we have already noted, Amsterdam was chosen to provide the food services to the John Molson Room because it could provide a broad range of catering services tailored specifically to Molson's needs on any occasion. Amsterdam has been in the catering business since 1974 when its established restaurant business was expanded to accommodate the demands of various corporate patrons which required food services for their meetings and conferences. This early indication of a potential market induced Amsterdam to specialize in catering services for corporate needs. Amsterdam now has more than 150 corporate clients of which 50 use its services at least once a week. Amsterdam has serviced such diverse entities as the Canadian Opera Company and Du Maurier Ltd., and has the franchise to provide all of the food services at the Toronto Harbourfront Recreation Complex. It has long term contractual relationships at Harbourfront, Molson's, the Canadian Broadcasting Corporation, the Canadian Red Cross, and the Canadian Bar Association. These other long term contractual relationships are not unlike the one with Molson's. Molson's accounts for about 5% of Amsterdam's total sales and about 10% of its catering business.

14. Amsterdam currrently employs more than 100 full-time employees in the various aspects of its business as well as between 30 to 50 part-time employees, some of whom are "on-call" and used as needed. Most of the full-time employees work either in Amsterdam's own restaurant, or in the several restaurants and cafeterias at Harbourfront. In the summer, Amsterdam hires an additional 50 full-time employees to satisfy the expanded needs of the Harbourfront operation. The catering aspect of Amsterdam's business employs 15 people on a full-time basis, and about 50 part-time employees - although there is some interchange among employees in various parts of its operation who are shifted around in accordance with customer requirements.

15. Because of the size and flexibility of its organization, Amsterdam can now meet just about any customer need - from a sit-down or buffet dinner for 150 (or more) patrons, to an intimate multi-course gourmet meal for a customer's special clients. Some insight into the Amsterdam operation can be gleaned from the range of specialists it employs.

16. Amsterdam has on its staff qualified chefs, sous-chefs, and cooks, as well as a baker, a "chef de legumes", a saucier (whose specialty is preparing sauces, condiments and garnishes to accent meat or fish dishes), and a "garde-manger" (whose expertise is in food arrangement and decoration, to improve its visual impact or "eye appeal"). Amsterdam's two senior chefs were trained in Europe and have more than 30 years experience, having worked at such Toronto establishments as the Inn on the Park, the Four Season's Hotel, and Fenton's. As Paul Graham, the owner of Amsterdam, put it, the chefs organizational, budgeting, and cooking abilities, are the key to a successful restaurant operation. Chefs of this calibre are not trained, he said, they are "stolen" (i.e. hired away) from competitors. Graham maintains that he has two of the best chefs in the City of Toronto, and their salaries, of course, are commensurate with their experience. The chef not only supervises the cooking (and sometimes cooks himself) but is also responsible for quality control, costing, food management, and personnel relations. The chef performs important managerial functions concerning both the delivery of food services, and the organization and direction of the employee team engaged in that activity. Amsterdam did not have to increase its staff to service the Molson's account, nor does it employ any former Molson's employees.

17. Amsterdam has about 60 established menus from which its clients can choose. The items and combinations of items vary in quality, and price. Molson's makes its choice and indicates the number of people to be served. Amsterdam does the rest. Molson's is not involved in the buying, preparation or serving of the food; moreover, Molson's derives a considerable benefit from Amsterdam's efficiency and "bulk-buying" as well as from Amsterdam's ability to reduce surplus and spoilage by using the food in other parts of its operation. Amsterdam has its own kitchens, specialized food preparation devices, refrigeration equipment and storage facilities, which give it much more flexibility than Molson's would have if it sought to handle its food services itself. Indeed, there is little doubt that Molson's could not provide the kind of food service which it now purchases from Amsterdam. Amsterdam's flexibility, size, expertise, bulk-buying advantage, and "back-up" facilities are all parts of the package which made it attractive to Molson's. Molson's considered other caterers, but it never considered supplying its own food services in the John Molson Room. It was recognized that it would not be able to do so economically.

18. The number of Amsterdam's employees working at Molson's at any particular time depends upon the nature of the function scheduled, the number of persons involved, and the complexity of the catering requirements. On average, Amsterdam employees are at Molson's two or three times a week; but this, of course, varies with Molson's needs. Paul Graham suggested that a function involving 150 guests would take place, on average, once or twice a week. To serve a function of this size, Amsterdam would have 12 to 14 employees on the site, including: a supervising chef, or sous-chef, one or more cooks, kitchen help, waiters and waitresses. Like the chefs, all of these individuals were hired by Amsterdam because of their restaurant experience and can be shifted to other parts of Amsterdam operation, or other locations where Amsterdam is engaged. Consequently, the employee group working at Molson's will change from day to day and function to function. None of the Amsterdam employees work full-time for Molson's. One unskilled employee spends about 50% of his time there, to ensure that the kitchen is clean and that necessary supplies have arrived.

19. For the most part, Amsterdam attempts to prepare hot food on the Molson's premises, although buffet meals can sometimes be prepared elsewhere, and if Molson's equipment breaks down or is inadequate, Amsterdam uses its own. The chef directs and controls the employees' activities and determines their numbers, hours, wage rates, schedules, time off, etc. Part-time employees are called in as required. Molson's has no involvement with Amsterdam's employees. Amsterdam employees do not serve beer.

20. The contractual relationship between Amsterdam and Molson's is fairly simple. Amsterdam acquires the exclusive right to provide food services at the John Molson Room (with certain minor exceptions not here relevant) and undertakes full responsibility for the purchase, preparation and serving of food, as well as the employment and supervision of the personnel engaged in those activities. Amsterdam provides periodic reports concerning food inventories used in the John Molson Room and its records are subject to inspection. Molson's provides the kitchen facilities and equipment (including dishes, cutlery, glassware, etc.) used by Amsterdam on site, and pays for the food necessary to fulfill its requirements. Remuneration to Amsterdam is in two parts; a management fee (which Paul Graham told the Board was calculated on the basis of his estimated managerial and overhead costs which in turn are based upon an anticipated volume of business), and a further sum based upon the number of hours worked by cooks, maitre d's, waiters and waitresses, busboys, and dishwashers. However, the hourly labour rate which Molson's is charged is not the same as the wage rates payable to the employees. Molson's has no involvement in the determination of the wages and benefits of Amsterdam's employees. Officials of Amsterdam and Molson's meet about once a week, to ensure that the services are being provided in accordance with the agreement, and to iron out any problems which might arise. To date, there have been no such problems. The Molson's official attending these meetings is either Gerry Dyment, the Toronto hospitality supervisor or Brian Vachon, the assistant manager for sales promotion. The contract is for one year and is terminable on notice.

21. The motivation for the contract with Charming was similar. Molson's concluded it could enhance the image of its products by engaging "professional" hostesses to perform hospitality functions. Charming has been in this line of business since 1971, and has operated in Ontario since about 1976. It also has service offices in San Francisco, Los Angeles, Montreal, Winnipeg, Calgary and Edmonton. Its employees are former or off-duty airline hostesses. Its clients have included such companies as Chrysler, Kodak, and the Canadian National Exhibition; and it has provided hostesses to various industrial and trade shows. Molson's however, is its only long term contract.

22. Charming employs about 25 employees in the Toronto area (seemingly on a parttime or casual basis). No training is necessary because the hostesses all have at least five years experience with an airline. For the Molson's contract, Molson's supplies certain background material, so that the hostesses can give a welcoming address, and will be familiar with the brewing process. Uniforms are Charming's responsibility. The hostesses are used on an "as needed" basis depending upon the size of the function. As in the case of Amsterdam, remuneration to Charming consists of a management fee, together with a payment in respect of the number of hours worked by each hostess. There is an "on-site" supervisor to coordinate the activities of the hostesses if such is required. A Charming representative meets with Molson's every week or two, to review the situation, and discuss any problems which may have arisen. Molson's has no direct control over the employer-employee relationships of Charming, nor does Molson's know the wage rates payable to the Charming employees.

23. Molson's has no financial or ownership interest in either Charming or Amsterdam. In corporate terms they are entirely independent companies. The only relationship is based upon the contracts and business dealings described above. There is no allegation that in entering those contracts, Molson's was motivated by anti-union animus. The applicant union concedes that Molson's was motivated solely by bona fide business considerations. Moreover, it appears that the subcontracts cannot be viewed as a cost saving measure, as might be the case in other subcontracting arrangements. While the evidence is somewhat sketchy, it appears that in order to upgrade the service provided in the John Molson Room Molson's has had to pay more than it did before.

II

25. Since the union's case is pleaded in the alternative, it will be convenient to deal with each aspect in turn. The relevant provisions of the statute are as follows:

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.

63 (1) In this Section,

(a) "business" includes a part or parts thereof;

(b) "sells" includes leases, transfers and any other manner of disposition, and "sold" and "sale" have corresponding meanings.

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade union sells his business, the person to whom the business has been sold is, until the Board other wise 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.

26. When a business or part of a business is disposed of, the transferee acquires it subject to the collective bargaining obligations of his predecessor. Section 63 preserves the labour relations status quo. by transforming collective bargaining rights into a form of "vested interest", which attaches to the business entity, and like a charge on property "runs with the business". To accomplish this objective the statute gives a special meaning to the term "sale", envisages the continuation of bargaining rights in a severable "part" of an employer's operation, abrogates the notion of privity of contract, and virtually eliminates the significance of the separate legal identity of the new employer. Collective agreements are not treated like ordinary contracts, nor are a union's representation rights co-extensive with commercial ownership. In Marvel Jewelry Limited [1975] OLRB Rep. September 733, the Board summarized the effect of section 63 (then section 55) as follows:

"Section 55 recognizes that collective bargaining rights, once attained, should have some permanence. Rights created either by the Act, or under collective agreements, are not allowed to evaporate with a change of employer. To provide permanence, the obligations flowing from these rights are not confined to a particular employer, but become attached to a business. So long as the business continues to function, the obligations run with that business regardless of any change of ownership."

27. The terms "sale" and "business", have not been exhaustively defined in the Act, in recognition, we think, of the great variety of commercial relationships to which they might be applied, and the need for a case by case elaboration of the law in light of labour law policy. This responsibility has been accorded exclusively to the Board (see section 63(12), 108, and R. ex rel Kitchener Food Market Ltd. et al. (1966), 1965 CanLII 165 (ON HCJ), 54 DLR (2d) 219); and in view of the broad language of section 63 and its intended remedial thrust, the Board has always been disposed to give it a liberal interpretation. The Board has not placed much reliance on the legal form which the business disposition happens to take as between the predecessor and successor. On the other hand, not every business decision which prejudicially affects bargaining rights will fall within the ambit of section 63, nor will every commercial disposition be a transfer of "part of a business" resulting in a continuation of bargaining rights. The task faced by the Board in any particular case is to give section 63 an interpretation which is consistent with its language and intent, and is also fair to the labour relations context under review.

28. It is seldom very difficult to determine that a predecessor has disposed of "something", nor is it difficult to discern when a trade union's bargaining rights have been prejudicially affected. A more complex question, however, is whether the nature of the disposition and what is disposed of, bring the transaction within the scope of section 63. This requires an assessment of the transaction in its totality and a consideration of its labour relations (rather than commercial law) perspective. In addition to the continuity of the work or jobs (without that, a continuation of the collective bargaining relationship would make little sense) a number of other factors may be relevant to the successor rights issue. In Culverhouse Foods Ltd. [1976] OLRB Rep. Nov. 691, the Board listed some of these:

"In each case the decisive question is whether or not there is a continuation of the business.., the cases offer a countless variety of factors which might assist the Board in its analysis: among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of hiatus in production as well as the service or lack of service of the cus­tomers of the predecessor have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life of its own; none will - necessarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same as it was."

If many of the elements that made up the predecessor's business organization can be found in the hands of the successor, and are used for the same business purposes, there is usually a strong inference that there has been a "sale of a business" to which section 63 should apply. If, on the other hand, the alleged successor has its own established business organization by which it services the predecessor's customers, the inference may be otherwise - even if it has acquired some assets or other incidental elements which might be traced to the predecessor. (See also Kenmir v. Frizzel et al., [1968] 1 All E.R. 414, and R. v. B. C. Labour Relations Board Ex parte. Lodum Holdings Limited (1969), 1968 CanLII 586 (BC SC), 3 DLR (3d) 41.)

29. The term "business" is at the heart of section 63, but it is this concept which is the most difficult to define. One usually thinks of a business as a profit-making economic activity, but in the Labour Relations Act, the term cannot be so restricted. The Act applies to municipalities, public libraries, universities, school boards, hospitals, and other non-profit service undertakings which have employees and engage in collective bargaining. The economic activities of these entities are of an entirely different character from those of commercial enterprises, yet the definition of "business" must be broad enough to include them. And in the case of undertakings in the service sector, such things as "know how", managerial systems, and other intangibles may be much more important factors in the overall organization than a particular physical plant or configuration of assest. In The Tatham Company Limited[1980] OLRB Rep. March 366, the Board suggested the following approach:

"A business is a combination of physical assets and human initiative. It is an economic organization which, in a sense, is more than the sum of its parts. In Raymond Cote [1968] OLRB Rep. Mar. 1211, the Board put it this way:

“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 necesarily 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.”

(emphasis added)

A business is a commercial vehicle which has been rationally constructed to produce certain goods or services for a defined market - profitably, in the case of private sector interprises but, in any event, efficiently. It is one harmonious whole consisting of many interrelated parts. From a labour relations perspective, however, the employer-employee relationships take on a special significance. From this viewpoint, the importance of the business is that it generates work for employees. The entrepreneurial activities of the business require it to enter the labour market as an employer and, this in turn, may give rise to the collective bargaining relationships to which The Labour Relations Act is directed. Section 55 preserves the stability of those established collective bargaining relationships if the business, or a coherent part of it, are transferred to a new owner.”

30. The successor rights provisions can also be triggered by the transfer of "part of a business". That is what the applicant claims has happened in the instant case. But what meaning should be ascribed to the words "part of business"? Clearly, a successorship can arise from the disposition of something less than the whole business; but to what extent can the business be sensibly subdivided? In The Tatham Company Limited case, supra, the Board defined a "business" as an integrated combination of elements all of which contribute to the business' existence as a going concern, and all of which, in a literal sense, could be described as a "part" of the business. But if this organization is dismantled (in whole or in part) and its elements are dispersed, would bargaining rights always attach to each of the "pieces"? Surely it could not have been intended that a union's bargaining rights would be rooted in any single fragment of the respondent's business organization (see the list of such potential "pieces" in Culverhouse, supra).

31. The Board has found a transfer of "part of a business" where one of a chain of retail stores has been sold to a competitor (Loblaws Groceterias Limited [1973] OLRB Rep. Jan. 72; More Groceteria Limited, supra); where there was a transfer of certain milk delivery routes in a particular geopgraphic area (Borden Company Limited, [1970] OLRB Jan. 1244); where there was a transfer of the oil burner and installation service of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Limited, [1972] OLRB Rep. May 515); and where a slaughter house, which was formerly part of a much larger integrated meat packing company, was transferred to a new owner, (Beef Terminal [1980] OLRB Rep. Aug. 1167); and where a firm transferred the division or department responsible for one of its product lines (Canac Shock Absorbers [1973] OLRB Rep. Oct. 508, Alcan Building Products [1968] OLRB Rep. May 213). In Vaunclair Meats Ltd. [1981] OLRB Rep. May 581, the Board summarized the earlier jurisprudence:

“In each of the cases to which we have referred, the Board found that the predecessor had transferred a coherent and severable part of its economic organization - managerial or employee skills, plant, equipment, "know-how" or goodwill, definable part of the economic functions formerly performed by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms and conditions of employment, together with the union's right to bargain about them, were preserved. The part of the predecessor's business which it no longer wished to continue, provided the business opportunity which the successor was able to pursue to its own advantage. In all of the cases, there was a transfer of a distinct part of the predecessor's configuration of assets, and no material change in the character of the work performed by employees within that asset framework. There was a continuation of the work performed, the essential attribute of the employment relationship, the skills of employees, and the functional coherence of at least a part of the employee complement; and but for section 55, the established bargaining and collective agreement rights would have been lost. This was the very mischief to which section 55 is directed, and the Board was satisfied on the evidence in each case that it should be applied.”

32. Two important propositions emerge from the cases which in our view are of particular relevance here. The first is one we have already mentioned; namely that the way in which a transaction is labelled or characterized has little bearing upon the application of section 63. To describe the relationship between parties as a lease, franchise, or "merely contractual" does not advance the issue one way or the other. Thus it does not assist the respondents to assert, as they do here, that the situation is "just contracting out". In Metropolitan Parking Inc., supra, for example, the Board specifically adverted to a situation which might be described as "subcontracting" but which nevertheless could arguably support an inference of a transfer of "part" of a business:

“The present case involves a form of subcontracting, and subcontracting arrangements always involve the transfer of work. Work or services performed by A's employees withing A's own organization are 'contracted out' to B, and B uses his own managerial skills, plant, equipment and 'know how' to supply to A, for a price, the product, services, facilities or components formerly produced by A's employees. A, therefore, is contracting for the use of B's economic organization in lieu of his own. A is generating a particular demand, or market, for B's product, and it is implicit in the arrangement that, thereafter, the two businesses will remain in a kind symbiotic relationship, bound together by close economic ties. The continuity of the work, and the preservation of a close economic relationship, between the two parties is implicit in subcontracting and does not, in itself, establish a transfer of all, or part of a business. If it is clear on the evidence, however, that B is unable to fulfill A's requirements with his existing equipment or organization, and received from A a transfer of capital, assets, equipment, managerial skills, employees or know how, then the transaction no longer looks like a simple contracting out of work. A may not be making use of B's economic organization, rather A may be transferring part of his economic organization to B (and recall that section 55 is triggered by the transfer of ‘part of a business’) or merely permitting B to make use of A's organization while retaining control and direction of the related economic activity. Of course, it is to be expected that when A phases out part of his operation there may be certain equipment or assets which are now surplus and which can be disposed of on the market. These assets may, as a matter of convenience, be purchased by B. None of these factors unequivocably demonstrates or forecloses the application of section 55 (or section 1(4).) If, however, ‘but for’ the transfer of such assets, licences, know-how or property interests from A, B would be unable to fulfill the contract, then it is easier to infer a transfer of part of A's business albeit a part which A no longer wishes to operate itself.”

The Board went on to hold on the facts of that case that a change of subcontractors did not trigger a successorship as between them, even though there was a continuity of the employees' work.

33. The second proposition emerging from the cases is much more concrete, and was the point upon which Metropolitan Parking Inc. turned; namely, that while from a labour relations perspective the importance of the business is the jobs it provides for its employees, "the business" itself is not synonymous with the employees or their work. A transfer of work, by itself, is insufficient to trigger section 63:

“Despite the labour relations focus of the statute "the business' is not synonymous with its employees or their work. In exceptional circumstances the accumulated skills, ability, know how or business contacts of the employees may be so crucial, or irreplaceable, that their loss would mean the demise of all or part of the business as a going concern; but these cases are rare. For the most part, the continued employment of the predecessor's employees is only one factor to be considered. The reason for this is a succinctly stated by the Canada Labour Relations Board in N.A.B.E.T' v. Radio CJYQ Ltd. et al., (1978) 1 Can. LRBR 565:

The purpose of the successorship provisions is to preserve bargaining rights in spite of changes in the ownership or control of an enterprise. Bargaining rights are typically granted to a trade union as bargaining agent for a unit of employees or an employer employed in certain classifications or at a certain location, or for all employees with specified exceptions. Bargaining rights do not attach to certain specific employees as individuals. Therefore, in defining the concept of business for the purpose of successorship, it would be incorrect to focus upon whether certain identifiable persons formerly in the employ of A are now in the employ of B. Furthermore, to focus on that question would invite employers to avoid the successorship provisions by refusing to maintain continuity of the individuals employed. A key to the protecting of bargaining rights must be whether there is continuity in the nature of the work done (i.e. in classifications or job content for which the union was certified) not in the actual persons who perform it...

But continuity of the work done is not sufficient alone to satisfy section 144. There must be some nexus between two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successorship. There must be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand.

(emphasis added)

A continuity of the work and/or the employees is significant, but it is not always sufficient, to sustain a finding of successorship. This Board adopted a similar view in British American Bank Note Co. Ltd. [1979] OLRB Rep. Feb. 72 a case which, like the present one, involved the consequences of a loss of a contract:

There are limits, however, to the extent to which section 55 can be used to preserve collective bargaining rights. It is clear that the provisions of this section do not attach bargaining rights to the work being performed by a business but only to the business itself. While this distinction may not be easy to draw in some cases, it is essential that it be maintained since section 55 cannot be interpreted as guaranteeing to a bargaining agent an absolute right of property in the work performed by its members. Section 55 serves only to preserve bargaining rights that have become attached to a business entity so that when that business entity is transferred, either in whole or in part, those bargaining rights survive and bind the successor employer.

This focus of section 55 is the business entity - the employer's total economic organization - not simply the work which the employees perform.'”

III

34. With this background then, (and bearing in mind that the purpose of section 63 is to preserve not extend a union's bargaining rights,) we return to the facts of the instant case.

35. Has a "part" of Molson's business, formerly known as the Anchor Room been transferred to Amsterdam or Charming? In our view, the answer is clearly no. Its successor, the John Molson Room, still provides hospitality services (albeit of a superior quality) to a somewhat different clientele but, like the Anchor Room it remains firmly a part of Molson's business operated for Molson's benefit. Indeed, the evidence indicates that the operation of the John Molson Room is even more closely integrated into Molson's marketing strategy than was the case before. This part of Molson's business has not been transferred to the two subcontractors; rather, Amsterdam and Charming have been engaged to help Molson's run it better.

36. Culverhouse, supra listed a variety of factors which, if transferred to a new owner, might indicate a successorship. None of them are present here. It is difficult to discern any tangible parts of Molson's business which have actually been transferred. In Charming's case, the subcontractor acquired nothing at all other than the right to supply Molson's requirements with its own personnel. Amsterdam acquired the right to use certain kitchen equipment and dishes on the Molson's premises, and, no doubt, the availability of this equipment is a factor in Amsterdam's ability to efficiently meet Molson's needs; but in view of Amsterdam's established presence in the food service industry, substantial organization in its own right, back up facilities, and recognized expertise, it is difficult to accord much significance to this fact.

37. Molson's certainly has not disposed of its whole business, nor is it easy to accept that certain kinds of work performed (not exclusively we reiterate) by four of its unionized employees should be held to constitute "part of a business" within the meaning of section 63. The situation here is readily distinguishable from the one in Vaunclair Meats, supra, as well as from the other "part of a business" cases referred to therein. The situation here is also distinguishable from Thunder Bay Ambulance Services Inc. [1978] OLRB Rep. May 467 where an ambulance service previously run by two hospitals was transferred to the employee who had been employed by them to run it, and that former employee continued to run it on his own behalf, with the same employees, very much as before. Here there are no pre-existing links between Molson's and the subcontractors, and a one year contract, terminable on notice, cannot be equated with the total and final disposition which the Board had before it in Thunder Bay Ambulance. In the instant case, the situation is much more like that in Ontario 474619 Limited, [1981] OLRB Rep. Oct. 1452, where a hotel had entered into an arrangement with a subcontractor to supply managerial and employee services for use in the operation of its hotel business. The Board found that section 63 had no application and left open the related employer issue since no such application had been made. The services provided in that case were much more extensive than those involved here, but the Board was still not persuaded that a severable, coherent, and independently operating "part" of a going concern had been transferred to the subcontractor. Nor are we.

38. We are reinforced in this view by a consideration of the actual impact of a section 63 finding on the parties herein, and the difficulty in defining the "like unit" to which (pursuant to section 63(3)) the union's bargaining rights would then apply. As we have already noted, the hospitality functions performed in the Anchor Room were never performed exclusively by members of the applicant and those functions are now distributed in a different way and performed in a different manner than they were before. It is contended by the union that the "like unit" can be described with reference to "full-time employees" working in the John Molson Room. But as the situation now exists, there are no such employees. To this extent a declaration under section 63 would be academic unless the Board were to root bargaining rights in certain kinds of work which, on the evidence, were never performed exclusively by the four employees represented by the applicant.

39. In our view, Molson's has not disposed of the Anchor Room or the John Molson Room or even the "hospitality part" of its business (whatever that may mean). Rather, Molson's is operating its business in a different way, making use of the services of subcontractors to fulfill needs which it could not meet within its own organization or with its own employee complement. If this situation is caught by the statute at all, it is under section 1(4), not section 63. We do not think there has been a disposition of "part" of a business, within the intended meaning of the successor rights provisions.

IV

40. In the instant case, section 1(4) was pleaded in the alternative, for, to some extent, section 63 and 1(4) are complementary. Both sections are designed to preserve the collective bargaining status quo despite commercial transaction which alter the legal identity of the employing entity, and would consequently undermine established bargaining rights. In Brant Erecting and Hoisting Limited [1980] OLRB Rep. July 945, the Board made the following comments about the origin and purpose of section 1(4):

“Section 1(4) was enacted in 1971 and deals with situations where the economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one legal entity. Where such legal entitles carry on related business activities under common control or direction, the Board is empowered to pierce the corporate veil. Section 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure; nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1(4) is similar to that of section 55 which preserves the established bargaining rights and collective agreement when a “business” is transferred from one employer to another. Section 55 has been part of the scheme of the Act since the mid 1960's. Neither remedial provision requires a finding of anti-union animus; their primary application is to bonafide business transactions which incidentally undermine or frustrate established statutory rights. Since the two sections are complementary, it is not unusual, as in the present case, for an applicant to rely on both.

13. Section 1(4) does not require that related business activites under common control or direction be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase "whether or not simultaneously". The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and, business may be effectively transferred from one corporate entity to another, without any of the indicia of a "transfer of a business" which might trigger the application of section 55.”

41. Because of the amendment to section 1(4) in 1975, it is not necessary that there be shared participation in a common business endeavour or even contemporaneous economic activity. The relationship between the related employer is a functional rather than a temporal one. (For a discussion of the reasons for amendment see: Brant Erecting, supra, at paragraphs 13 - 14). Section 1(4) creates a regime of collective bargaining law which (like section 63), significantly modifies common law notions of "privity of contract" or "the corporate veil". But while the language of section 1(4) is very broad, the section is not intended to be applied in every case which, in a general sense, meets it statutory criteria. The Board has a discretion concerning the application of section 1(4) and, in the past, it has exercised that discretion carefully in light of the circumstances of particular cases, and labour relations policy considerations.

42. Section 1(4) does impose some limits on the degree to which an employer can avoid its obligations under a collective agreement by substituting the employees of another employer for its own - even though the arrangement may not have been undertaken for the purpose of subverting bargaining rights (in which case unfair labour practice considerations might also arise). This is especially the case where the functions performed by the employees of the other employer are carried out on the first employer's premises, with the first employer's equipment, in conjunction with the work perfomred by the first employer's own employees, and subject to the first employer's overall direction and control. In The Great Atlantic and Pacific Company of Canada Limited [1981] OLRB Rep. March 285, for example, legislation required "A & P" to create a new corporate vehicle to run the pharmacy department which it had established in its larger food stores. There was no anti-union motive, but the separate legal identity of the "drug company" was totally artificial from a collective bargaining point of view. And the Board issued a related employer declaration. The drug company was completely dominated by A & P, and had no business activities apart from it. The fact that the drug company hired employees, paid them and directed them in their daily activities did not obscure the reality of the situation.

43. The union argues that the language of section 1(4) is broad enough to cover a variety of subcontracting arrangements - especially those which do not involve "contracting out", but which might more appropriately be described as ''contracting in'', or ''labour only" subcontracting. Where A enters into a relationship with B whereby B comes into A's premises to perform functions to A's specifications formerly undertaken by A's own employees, there will inevitably be what the Board in Metropolitan Parking Inc., supra, described as a "symbiotic relationship" between the two business entities. The activities carried on by the two firms will be complementary. They will obviously and necessarily be "related", and efficiency will usually require that there be some degree of coordination, common control, or direction. That is the applicant's characterization of the situation in the instant case.

44. The Board accepts that there may be subcontracting relationships which can be characterized as a form of joint venture and could fall within the ambit of section 1(4). The Board adverted to that possibility in Ontario 474619 Ltd., supra. The more closely the purchaser of employee services controls when, where, how, by whom and at what price the employee services are provided, the more the activities will appear to be under joint control or direction. If at the same time the subcontractor is effectively dominated by the purchaser and it appears that the notion of a subcontract is introduced not to provide independent managerial and employee skills but rather a separate ''non-union" corporate vehicle which permits the purchaser to have the same work performed in much the same way as before but beyond the ambit of its collective agreement, a section 1(4) declaration might well be warranted. It was considerations such as these which appear to have prompted the Board to issue 1(4) declarations in Donald A. Fole Limited[1980] OLRB Rep. Apr. 436, and J. H. Normick Inc. [1979] OLRB Rep. Dec. 1176, even though there was no direct financial ownership of the subcontractor in either case.

45. However, in the Board's view it is both undesirable and unnecessary in the instant case to speculate about the potential reach of section 1(4), or catalogue the many factors distinguishing the present situation from that before the Board in Normick or Foley. It is clear on the evidence that Charming and Amsterdam are independent businesses, with their own established employee complement, operated for the benefit of their own principals, and providing their specialized services to a variety of purchasers of which Molson's is only one. Both businesses were in operation long before the Molson's contract, and, no doubt, they will continue thereafter. Neither is a mere shell or a device to avoid collective bargaining obligations, and neither can be regarded as an instrumentality of Molson's. We do not think the situation here falls within the intended ambit of section 1(4). And even if the prerequisites for a section 1(4) declaration could be made out, there are compelling countervailing considerations which militate against the making of related employer declaration in the circumstances of this case.

46. Of the approximately twenty-four individuals employed in the Anchor Room the union purported to represent only four. The union never asserted bargaining rights in respect of the hostesses or the kitchen staff. They were treated as employees of Molson's who were beyond the scope of the union's bargaining rights. Whether or not as a matter of law this is actually the case, the fact remains that for years, the union never sought to represent these employees. Nor is there any evidence that the union ever complained that the functions performed by the bar stewards (for example serving beer) were shared with non-union employees. If the union were concerned about an erosion of its bargaining rights and work jurisdiction, it appears to have tolerated such erosion for some years. Yet now, the union argues that the Board should issue a related employer declaration. But that declaration would either by academic, (because the bar stewards’ jobs, as such, no longer exist,) or a springboard for an assertion of rights in respect of employees and work never previously regulated exclusively by the union's collective agreement.

47. The purpose of section 1(4) is to preserve bargaining rights not extend them; but, in substance, it is an extension of bargaining rights which the applicant seeks in the instant case. Even if the applicant were able to make out the statutory prerequisites for a section 1(4) declaration, we are satisfied that in the circumstances of this case, no such declaration should be made.

48. For the foregoing reason, the union's section 1(4) and 63 applications are both dismissed.