International Ladies Garment Workers' Union v. 490296 Ontario Limited, 1982 CanLII 873

[1982] OLRB Rep. June 828

1540-81-R; 1680-81 -R; 1681-81-U International Ladies Garment Workers' Union, Applicant/Complainant, v. 490296 Ontario Limited, carrying on business as Chandelle Fashions, Respondent, v. Group of Employees, Objectors

BEFORE: R. O. MacDowell, Vice-Chairman, and Board Members J. A. Ronson and W. F. Rutherford.

APPEARANCES: E. McIntyre, E. Marszewski and L. Goguen for the complainant, R. C. Filion and R. H. Saunders for the respondent; M. Weinberg for the objecting employees.

DECISION R. O. MacDOWELL VICE-CHAIRMAN AND BOARD MEMBER J. A. RONSON; June 4. 1982

Background

1. The Board directs that the above applications and complaint be and the same are hereby consolidated.

2. This is an application for certification which was heard concurrently with applications under sections 63 and 1(4), and a related unfair labour practice complaint. These are but the latest in a long series of proceedings involving the business known as "Chandelle Fashions". In order to appreciate the context in which the current proceedings arise, it will be necessary to refer briefly to this earlier litigation. For ease of reference the firm Chandelle Fashions Limited will be referred to as "Chandelle"; the International Ladies Garment Workers Union will be referred to as the "ILG"; the Amalgamated Clothing and Textile Workers Union will be referred to as the "Amalgamated"; and 490296 Ontario Limited will be referred to as the "Numbered Company".

3. Chandelle was a manufacturer of ladies' wear with factory facilities in the City of Toronto. In early October 1980, the Amalgamated began an organizing campaign among Chandelle's employees. It was assisted in this endeavour by Vittoria Bellissimo and Anna Cipresi.

4. The Amalgamated was not the only union interested in organizing Changielle's employees. At about the same time, the ILG initiated its own independent campaign. The ILG's principal employee contacts were Lisa Kronquist and Lina Bisogni.

5. The two campaigns proceeded in tandem throughout the early weeks of October; and both had some success. The Amalgamated started first, and eventually solicited more membership cards; however, the ILG's claim that it was the best union to represent workers in the ladies' garment industry also had considerable impact. Indeed, the existence of parallel organizing efforts made it somewhat difficult to ascertain the employees' true allegiances, and some employees signed cards in both unions.

6. Both campaigns were brought to a dramatic halt on or about October 21, 1980, when Chandelle laid off the principal supporters of both unions. On October 31, 1980, the Amalgamated filed a formal application for certification requesting that a pre-hearing representation vote be taken. In addition, the Amalgamated filed unfair labour practice complaints on behalf of its two supporters. When the Amalgamated lost the representation vote, it made a further application arguing that the employer's unfair labour practices had so influenced the balloting that the true wishes of the employees could no longer be reliably ascertained by this means, and seeking a certificate pursuant to section 7a (now section 8) of the Act.

7. The ILG also filed unfair labour practice complaints on behalf of its two supporters; but the ILG opposed the certification of the Amalgamated on the ground that the ILG also had a significant core of support, and that a section 8 certificate would therefore be inappropriate. For its part, Chandelle denied that the lay-offs were motivated by the employees' union activities, and opposed the Amalgamated's certification application. Chandelle asserted that the lay-off was caused by deteriorating business conditions, and the the selection of persons to be laid off was based entirely upon a bona fide assessment of their relative abilities. It was simply a coincidence that the key union supporters of both unions had been selected. These individuals were recalled immediately before the commencement of the enquiry before the Board. As it turned out, that enquiry was a protracted one.

8. The arguments submitted in the earlier proceeding are fully set out in the decision of the Board dated July 17, 1981. It is unnecessary to reiterate them here. It suffices to say that the Board rejected Chandelle's explanation for the lay-offs, and found that the four union supporters (Bellessimo, Cipresi, Kronquist and Bisogni) had been selected for lay-off because of their union activities. The Board directed that the four employees be compensated for the wages and benefits lost by reason of their unlawful lay-off. On the other hand, the Board rejected the Amalgamated's contention that it should be certified pursuant to section 8 of the Act. While Chandelle's conduct was undoubtedly a serious interference with its employees' statutory rights, both unions had established a significant core of support, and both union organizing campaigns had been detrimentally affected by the employer's unfair labour practices. Moreover, it appeared to the Board that there had been a shift in support towards the ILG, which in itself might have contributed to the Amalgamated's poor showing in the representation vote. In the circumstances, the Board determined that the appropriate response was a liberal exercise of its remedial authority under section 89 (then section 79) of the Act, in order to counteract and adverse impact of the employer's illegal conduct, and, insofar as it was possible, restore each of the unions, to the position it would have been in had such illegal conduct not occurred. Finally, the Board set aside the earlier representation vote, and ordered that a new representation vote should be taken after the Board's remedial order had been complied with. Since the ILG had not applied for certification, it had no immediate right to appear on the ballot, although it was free to campaign against the Amalgamated as it had done before. An application made by the ILG on June 18, 1981, was untimely and not processed pursuant to section 103(3)(c) of the Act, because, at that time, the Amalgamated's application was still pending before the Board.

9. As we have already noted, these orders and remedial directions were made by a decision of the Board dated July 17, 1981. On June 29, 1981, the Bank of Montreal appointed a receiver to manage the affairs of Chandelle. When the two unions approached the receiver to discuss the implementation of the Board's remedial orders, the receiver refused to comply with any of them, and refused to compensate the aggrieved employees for the losses which they had suffered as a result of Chandelle's breaches of the Labour Relations Act. Pursuant to section 89(6) of the Act, the two unions then requested the Board to find that there had been non‑compliance, and to determine the precise amounts owing to each of the grievors — a matter of which the Board had remained seized pending the parties' own efforts to settle the quantum of compensation. A few days later, on August 4, 1981, the receiver caused an assignment in bankruptcy. The application under section 89(6) came on before the Board nevertheless, and by a decision dated September 8, 1981, the Board determined the amounts which the four grievors had lost by reason of Chandelle's breach of the Act.

10. In summary therefore, the result of the first set of proceedings was:

(a) a direction that Chandelle should compensate the aggrieved employees for the monetary losses they had suffered as a result of their unlawful lay-off;

(b) a direction that Chandelle take certain affirmative action to remedy the consequent damage to the two unions involved;

(c) an order that the Amalgamated's certification application would be resolved by the taking of a new representation vote after the other remedial orders had been complied with.

11. The outcome of these earlier proceedings is directly linked to those currently before the Board. In June 1981, when the proceedings had not yet been concluded, the ILG enjoyed a resurgence, and was able to attract additional employee support which became the basis for its own certification application filed on October 16, 1981. By this time the employees were employed by the Numbered Company, which is now carrying on the business of Chandelle Fashions. The ILG claims that the Numbered Company is a "related employer" under section 1(4), or a "successor employer" under section 63, so that it "stands in the shoes" of Chandelle in respect of the earlier proceedings. Thus, the union claims that the remedies obtained against Chandelle "flow through" to the Numbered Company, and that the principals of the Numbered Company became responsible for their implementation. Finally, the JLG contends that the Numbered Company has committed a new unfair labour practice in its own right when it failed to recall Kronquist and Bisogni, the grievors in the earlier proceedings, after their lay-off in the summer of 1981.

12. The evidence in respect of these various applications overlaps to some extent, however, for ease of exposition, it will be convenient to deal with each of them separately, beginning first with the application for certification.

The ILG's Certification Application

13. The Board finds that the applicant is a trade union within the meaning of section 1(1)(p) of the Labour Relations Act.

14. Having regard to the agreement of the parties, the Board finds that all employees of the respondent in Metropolitan Toronto, save and except forepersons, persons above the rank of foreperson, office and sales staff, mechanics, designers, shippers, truck-drivers, persons regularly employed for not more than twenty-four (24) hours per week, and students employed during the school vacation period, constitute a unit of employees of the respondent appropriate for collective bargaining.

15. Counsel for the Amalgamated has written to the Board to advise that the Amalgamated has no interest in the ILG's certification application or the related proceedings. The Amalgamated did not intervene in any of them. Accordingly, the Board finds that the Amalgamated has abandoned any rights which it might have had to represent the employees of the Numbered Company. The Board further finds that the Amalgamated's application for certification in respect of the employees of Chandelle (Board File No. 1651-80-R) should be, and the same is, hereby dismissed.

16. In support of its October 16th application for certification, the ILG filed documentary evidence of membership on behalf of 43 individuals. This documentary evidence takes the form of membership cards, which include a combination application for membership and an attached receipt. The cards are signed by the employees, and the receipts are countersigned, and indicate that a payment of $1.00 has been made within six months immediately preceding the terminal date for the application. The documentary evidence is supported by a properly completed Form 9 statutory declaration as to its regularity. There are no allegations of impropriety in the solicitation of this membership evidence nor are there any apparent defects.

17. The membership evidence submitted by the ILG meets the statutory definition of "member" in section l(l)(l) of the Act, as well as the Board's prescriptions concerning the form and time for filing of such evidence. Some of the individuals on whose behalf cards were submitted, were no longer employees of the Numbered Company at the time the application for certification was made; however, even if this is taken into account, it is evident that more than fifty-five per cent of the employees in the bargaining unit at the time the application was made were "members" of the applicant union as at the terminal date fixed by the Board pursuant to section 103(2)(j) of the Act. If this membership evidence were standing by itself, the Board would ordinarily grant certification to the applicant pursuant to section 7 of the Act, without recourse to a representation vote.

18. However, there was also filed with the Board a "statement of desire" or "petition" signed by a number of employees and indicating that they wished to oppose the applicant's certification. This petition includes the names of certain individuals who had earlier signed membership cards and paid membership fees, and had, therefore, become "members" of the applicant within the meaning of section 1(1)(1). These "members" had had a purported change of heart, and now allegedly no longer wish to support the applicant's certification.

19. Statements of desire or "petitions" are not regulated by the Act as directly or precisely as union membership evidence. There is no statutory definition equilavent to section 1(1)(1), nor is there any requirement for a monetary payment (in the nature of consideration), or a supporting statutory declaration similar to Form 9. But the possibility of a “statement of desire” is contemplated by section 103(2)(j) of the Act and Rule 73 of the Rules of Practice; and, the Board has a long established practice of giving effect to them, if they are voluntary and properly supported in accordance with the Rules. If the petition contains the signatures of a sufficient number of persons who have previously signed membership cards so that there is some doubt that the union's members continue to support its certification, the Board will ordinarily exercise its discretion to seek the confirmatory evidence of a representation vote. The Board must be satisfied however that when those union members signed the petition evidencing an apparent change of heart, they were not motivated by a perceived threat to their job security or a concern that their failure to sign would be communicated to their employer or could result in reprisals. It must be clear that the circulation of a petition is entirely free from the actual or perceived influence of management (see: Radio Shack [1978] OLRB Rep. Nov. 1043, and Siegfried Krieser Industries Limited [1980] OLRB Rep. Nov. 1691). For this reason, the Board undertakes the inquiry into the origination, preparation, and circulation of the petition contemplated by Rule 73. In this case it is also necessary to consider the circumstances in which the union's membership cards were signed.

20. While the litigation involving Chandelle, proceeded through the Spring of 1981, the ILG sought to maintain its base of support. By this time, Andrew Tarka, Chandelle's unpopular production manager, had left, but Tarka's departure did not result in a marked improvement in employer-employee relationships. Tarka's replacement was no better and the ILG was the beneficiary of that employee discontent. In mid-June a large number of employees joined the union. At this point, of course, the Amalgamated's certification application was still pending before the Board.

21. The ILG's own certification application was made on October 16, 1981. It was supported by the documentary evidence of membership gathered in mid-June when the employees were employed by Chandelle. Now they are employed by the Numbered Company. Of course the employees are substantially the same, but the fact remains that they joined the union four months before the certification application, before the departure of Tarka's unpopular successor, before the receivership, before Chandelle's bankruptcy, and before the business was taken over by new principals.

22. The two employees instrumental in preparing and circulating the petition were Manny Weinberg, a cutter, and Fortunata Benatti, a sample maker. Neither employee exercises managerial responsibilities, nor is there any direct evidence of managerial support for the petition. For the most part, the petition was circulated on company premises during breaks and lunch hour. Some of the signatures were probably obtained on the shop floor during work hours; but, there was nothing in the circumstances which would create the perception of managerial involvement, or impinge upon the employees' ability to voluntarily express their current wishes.

23. The situation here is quite different from that of most petition cases, where the employee "change of heart" comes only a few days after the employee has indicated his support for the union. In those cases, a natural question arises as to what happened to prompt the employee to change his mind; and in a not inconsiderable number of cases, the Board has found that the employee was only motivated to sign a petition because of employer conduct suggesting that continued support for the union would result in the loss of his job. In the instant case, however, we do not have a sudden change of heart occurring within days of an unequivocal expression of support. Here, the employee change of heart occurred four months after they had signed membership cards, after the business had gone through serious financial difficulties, after it had been revived by the infusion of new capital from new principals, and long after the departure of the production manager whose conduct had prompted the employees to turn to the union in the first place. Against this background, it is not at all surprising that employees might reconsider their original support for the union's certification. There is no evidence of management involvement in the origination or circulation of the petition, and the Board is not prepared to accept the union's contention that the petition does not represent the voluntarily wishes of those who signed it. Accordingly, it is our view that the employees in the bargaining unit, should have the opportunity, by representation vote, to determine whether or not they now wish to be represented by the ILG in their relationship with their employer.

24. On the basis of all the evidence before it, the Board finds that more than fifty-five per cent of the employees of the respondent in the bargaining unit at the time the application was made, were members of the applicant on October 27, 1981 the terminal date fixed for this application and the date which the Board determines, under section 103(2)(j) of the Labour Relations Act, to be the time for the purpose of ascertaining membership under section 7(1) of the said Act. Nevertheless, for the reasons set out above, the Board is satisfied that it should exercise its discretion under section 7 of the Labour Relations Act to direct the taking of a representation vote.

25. A representation vote will be taken of the employees of the respondent in the bargaining unit. All employees of the respondent in the bargaining unit on the date hereof who do not voluntarily terminate their employment or who are not discharged for cause between the date hereof and the date the vote is taken will be eligible to vote.

26. Voters will be asked to indicate whether or not they wish to be represented by the applicant in their employment relations with the respondent.

27. The matter is referred to the Registrar.

The Unfair Labour Practice Charges Against The Numbered Company

28. The union alleges that the Numbered Company has contravened sections 64, 66 and 70 of the Labour Relations Act. The thrust of that complaint can be stated quite simply. Kronquist and Bisogni were well known and active supporters of the LLG. In October 1980, they were identified as such, and illegally laid off by Chandelle in an effort to undermine the ILG's organizing campaign. The two employees subsequently returned to work, but were laid off along with other employees in the summer of 1981 as a result of Chandelle's financial difficulties. Many of those other employees were recalled. Kronquist and Bisogni were not. The union maintains that the failure to recall the grievors was motivated, once again, by an employer awareness that they were union supporters. The business now has new principals, but the operating management is essentially the same, and it is not disputed that at this level, the grievor's union sympathies were well known.

29. The Numbered Company resumed the production of Chandelle's fall lines in the first week of October 1981. By October 6th, the date of the certification application, it had a complement of 30 employees — about 60% of what Chandelle previously employed. Its labour force continued to grow as production stabilized. By February 1982, the number of employees exceeded 40.

30. Tern Hegendorfer was the only witness to give any direct evidence as to how the Chandelle employees were selected for recall. Mrs. Hegendorfer testified that the intention was to recall as many Chandelle employees as possible, because they were regarded as a pool of skilled labour from which the Numbered Company could draw. But, there would be no room for "troublemarkers" or persons who would disrupt work, and the actual selection of the persons to be recalled was left to Maria di Bartolomeo, the forelady. Ms. di Bartolomeo took part in the earlier proceedings and was well aware of the grievors' role in supporting the ILG.

31. Mrs. Hegendorfer told the Board that a "recall list" had been prepared, and, to the best of her recollection Lisa Kronquist's name was on it. Mrs. Hegendorfer also referred to certain "efficiency reports" prepared for former Chandelle employees; however neither the recall list nor the efficiency reports were produced, and, on cross-examination, it became clear that Mrs. Hegendorfer was not fully familiar with the identifies, let alone the work performance, of the various Chandelle employees. Maria di Barlolomeo did not give evidence.

32. Kronquist and Bisogni are experienced former employees of Chandelle. Neither employee was contacted by Ms. di Bartolomeo, yet, early in November, totally inexperienced employees, fresh from George Brown College, were hired; and on November 12, the business took out newspaper advertisements seeking single needle operators. Both Kronquist and Bisogni are single needle operators. In response to this advertisement, Kronquist called and left her name. Her call was not returned. Mrs. Hegendorfer said she could not understand why this was the case. The two employees were not offered jobs until late December well after the commencement of the instant proceedings.

33. In an unfair labour practice complaint of this kind, section 89(5) casts upon the respondent employer the onus of demonstrating that it did not act contrary to the Act. Where, as here, it is alleged that a managerial decision was discriminatory, it is generally necessary to produce the individual making that decision so that he can explain the basis for it, and demonstrate that it was not motivated in whole or in part by anti-union animus. Indeed, given the background of this case, it is arguable that some explanation would be called for even in the absence of the statutory reversal of the onus of proof.

34. On the basis of the evidence before us, and especially in light of the onus cast upon the respondent by section 89(5) of the Act, the Board cannot accept its submission that the failure to recall the grievors was based upon bona fide business reasons. No such reasons were explained to the Board, and the person making the ultimate decision did not even give evidence. Two experienced operators who were key union supporters were not recalled, even though one was apparently on the recall list. Kronquist's response to the newspaper advertisement was not even acknowledged; and if there is a reason for rejecting the grievors based upon their relative ability, the evidence before us does not support it. In the circumstances, the Board is compelled to conclude that the grievors were not recalled because of their trade union activities, and that consequently the respondent has contravened sections 64, 66 and 70 of the Act.

35. Having regard to the foregoing:

(a) The Board directs that the respondent forthwith offer employment to Lisa Kronquist and Lina Bisogni.

(b) The Board directs the respondent, the Numbered Company, to post copies of the attached notice marked "Appendix" after being duly signed by the respondent's representatives, in conspicuous places at its place of business where the notices are most likely to come to the attention of the employees in the bargaining unit. The respondent shall keep these notice posted for 60 consecutive days. Reasonable steps shall be taken by the respondent to ensure that the notices are not altered, defaced, or covered by any other material. Reasonable physical access to all such premises shall be given by the respondent to a representative of the ILG, so that the union may satisfy itself that this posting requirement has been complied with.

(c) The Board directs that the respondent employer compensate the grievors for any loss which they have suffered as a result of the failure to recall them to employment. In this regard, the Board notes both that the grievors were offered employment in December, 1981, and refused to return at that time; and that it appears that the wages earned by the grievors in alternative employment may well exceed the sum which they would have earned in the respondent's employ. However, the Board did not hear complete evidence on this issue, and will remain seized in the event that there is a disagreement between the parties as to the amount of compensation (if any) to which the grievors, Kronquist and Bisogni are entitled.

(d) Should the grievors Kronquist and Bisogni accept employment in accordance with this remedial direction, they shall be entitled to vote in the representation vote which the Board has directed.

The Successor Rights/ Related Employer Issues

36. The ILG argues that there has been a "transfer" of Chandelle's "business" to the Numbered Company so that the latter is a successor employer within the meaning of section 63. In the alternative the ILG argues that the Numbered Company is a "related employer" within the meaning of section 1(4). The questions which must be determined on this branch of the case, therefore, are:

(a) whether the Numbered Company is a "successor" and or "related" employer to Chandelle; and

(b) if the Numbered Company is a successor or related employer, whether it thereby becomes responsible to remedy Chandelle's unfair labour practices.

The statutory provisions relevant to these matters are as follows:

1 (4) Where, in the opinion of the Board, associated of 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 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.

(12) Where, on any application under this section or in any other proceeding before the Board, a question arises as to whether a business has been sold by one employer to another, the Board shall determine the question and its decision thereon is final and conclusive for the purposes of this Act.

37. The principals of Chandelle were Fred and Tern Hegendorfer, who were also the firm's general manager and sales manager, respectively. John Hoogenboom was Chandelle's operations manager. He looked after the office, and did the accounting, credit investigations, and collections. Shirley Crowe managed a sales force of about 250 persons, engaged in direct sales to customers through "showings" in private homes. Arnold Grandili was Chandelle's head-cutter. Maria di Bartolomeo was the factory forelady.

38. The principals of the Numbered Company are Don James and Jeff Conway (with the latter in the role of a "silent partner"). Don James is Shirley Crowe's brother. James and Conway provided a source of finance which revived Chandelle as a going concern. As James put it, he and Conway became the firm's "pocket book". Neither James nor Conway have any knowledge or experience in the garment industry. They are successful extrepreneurs in the telecommunications business.

39. As early as May or June 1981, James was tentatively approached by Shirley Crowe as a potential source of capital for the ailing business. James was impressed by the enthusiasm of the sales force, which he regarded as a key element in the business' potential success, and when the Bank of Montreal put the business into receivership, James was annoyed. He considered the move precipitous, unnecessary, and high handed. There were managerial problems, but in his view, the underlying business was sound.

40. Discussions with a view to purchasing Chandelle proceeded throughout June and July. These discussions involved the Hegendorfers, the receiver, James, and Conway, and their legal and financial advisors. The lawyers and accountants were unenthusiastic about the prospect of buying Chandelle, and the receiver proved difficult to deal with; moreover, the inability to reach a compromise threatened to delay production of Chandelle's fall lines. If the firm was to remain a viable entity, it had to maintain continuity of production, as well as contact with its regular customers. But the receiver continued to be intransigent, and Conway and James decided to let the business go into bankruptcy. A bankruptcy would depress the value of Chandelle's assets, and improve their leverage with the receiver.

41. Following the assignment in bankruptcy on August 4, 1981, negotiations to acquire the business continued. Robert Saunders, solicitor for the Numbered Company, gave evidence with respect to those negotiations. The acquisition involved several related transactions which were closed at different points in time, as satisfactory terms were concluded, and the legal documentation completed.

42. The first purchase was concluded sometime in August, and involved certain fabric which was badly needed if the business was to go into production with its fall lines. The design work and sampling had either already been done, or posed no real difficulties; but there were other potential purchasers for this fabric, and it was essential to move quickly to acquire it. Once this was done, the new principals could pursue their acquisition of the other aspects of Chandelle's business.

43. The main agreements were concluded on September 10, 1981, and October 23, 1981. On September 10, the Numbered Company acquired all regular and sample fabric on Chandelle's premises, together with all goods in production, trim, patterns, all existing promotional items and 136 samples. (Certain finished goods had already been disposed of by the receiver who temporarily employed some of the Chandelle sales force.) On October 2, 1981, an agreement of purchase and sale was entered into respect of most of Chandelle's fixed assets and equipment, including: sewing machines (single needle and serging) chairs, tables, lockers, time clocks, clipping machines, fusing machines, electric knifes, racking, desks, postage meters, etc. and 4500 finished garments. The Numbered Company also acquired the name "Chandelle Fashions", all existing trademarks and tradenames, pamphlets, inventory, stationery and brochures. Tern Hegendorfer testified that people relied on the name "Chandelle" and it was recognized by hundreds of the firm's former customers. Although the second transaction did not close until October 23rd, production actually began in the first week of October, and by October 16th, the date of the ILG's certification application, more than half of Chandelle's former employees had been "recalled" to work for the Numbered Company.

44. Thus, by early October, the Business was under way again, and carrying on its production and sales activities very much as before, from the same premises, under the same name, with the same configuration of assets, with substantially the same employee complement and sales force, and the same managerial team. Fred Hegendorfer remains the general manager. Tern Hegendorfer remains the designer and marketing manager. John Hoogenboom is the operations manager. Shirley Crowe continues to manage the sales force, and is now also assistant secretary treasurer to a director of the Numbered Company. Arnold Grandili is the head-cutter. Maria di Bartolomeo is the factory forelady. From an economic and industrial relations point of view, there is little change in the outward appearance or functioning of the business save that it now has new financial backers who retain ultimate control over its economic destiny. From the employees' point of view, they continue to perform the same work, in the same place, using the same machines, to produce the same goods under the same supervisors. As far as they are concerned they still work for "Chandelle".

45. Each of the witnesses called on behalf of the respondent employer was closely cross-examined as to his or her knowledge of the outstanding Board proceedings and the orders against Chandelle. The Hegendorfers, were obviously aware of these orders; but they did not mention them to James, Conway or their solicitors. Shirley Crowe was only vaguely aware of the trade union activity and thought the matter was over with when the Amalgamated lost the first representation vote. Crowe was frequently "on the road" and not in close contact with the day to day happenings at Chandelle. Robert Saunders, of the firm of solicitors who acted for the Numbered Company, was unaware of any employer-employee difficulties, and did not conduct any search which would bring the Board's orders to his attention. Saunders testified that it would be unusual to make such enquiries of a receiver in bankruptcy, and there was nothing in the situation of which he was aware which would trigger any concern.

46. The receiver, of course, was well aware of the outstanding Board proceedings, having been in effective control of Chandelle as receiver-manager at the time the remedial orders were made, and having been served with notice of the non compliance hearing. Those orders, it might be noted, were made prior to Chandelle's bankruptcy, so there can be no question of paramountcy or other complications arising from the federal bankruptcy legislation. The evidence before the Board is that the receiver, who was then in defactor control of Chandelle, simply directed the Hegendorfers to ignore the Board orders and "throw them in the waste basket". Had they been complied with, as at that stage at least, the law required, a notice would have been posted on Chandelle's premises, and anyone inspecting those premises would have been aware of the outstanding labour relations problems. But the receiver chose not to comply with the Board orders either before or after the bankruptcy, and as a result, the unfair labour practices were not remedied, and the Numbered Company was deprived of important information about the business it was seeking to acquire. On the basis of the evidence before it, the Board finds that James and Conway, the principals of the Numbered Company, were bona fide purchasers for value without notice of the oustanding Board orders.

II

47. Section 63, of the Act, significantly alters the common and commercial law consequences of a change in the legal ownership of a business. When a business or part of a business is disposed of, the transferee acquires it subject to the established collective bargaining obligations of his predecessor. In effect, section 63 substantially preserves the labour relations status quo. 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, modifies the notion of privity of contract, and, for labour relations purposes, reduces the significance of the separate legal identity of the new employer. Collective agreements are not treated like ordinary contracts, nor are the union's representation rights co-extensive with commercial ownership. In Marvel Jewellery Limited, [1975] OLRB Rep. Sep. 733, the Board summarized the effect of section 63 (then section 55) as follows:

“The primary issue in this case is whether the transaction between the receiver and the Danbury-Shirene partnership amounted to the sale of a business, and not just the sale of a bundle of discrete assets. 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.”

48. The terms "sale" and "business" have not been exhaustedly defined in the Act, in recognition, we think, of the great variety of commercial relationships to which the successor rights concept must be applied, and the need for a case by case elaboration of the law in light of industrial relations considerations and labour law policy. But in view of the broad language of the section and its intended remedial thrust, the Board has always been disposed to give it a liberal interpretation. In particular, the Board has not placed much reliance on the legal form which the business disposition happens to take as between the predecessor and successor, as long as it results in a continuation of the business organization, so that there is a rational basis for preserving the established collective bargaining rights. Thus, the inter-position of a third party, such as a receiver acting as agent or conduit affecting the transfer, has not been considered to be a bar to a successorship, but rather has been held to be simply the "manner of disposition". (See Marvel Jewellery Limited, supra, Field-Price Limited, [1973] OLRB Rep. Oct. 543, Parnel Foods Limited, [1971] OLRB Rep. Nov. 715, and Hughes Boat Works Incorporated, [1977] OLRB Rep. Dec. 818- application for judicial review dismissed). The broad sweep intended by the extended definition of the term "sale" was discussed in Thorco Manufacturing Limited, (1965) 65 CLLC 91 16,052 a decision of the Board issued shortly after the passage of the first successor rights provisions:

“According to its strict signification, the term sells is unsually taken to describe a transaction involving the disposal of property by one to another in consideration of a sum paid or agreed to be paid by the recipient in money or its equivalent. As used in section 47a, however, the word sells has been given a wide definition which includes lease, transfers and any other manner of disposition of the business or part thereof. In legal parlance the word lease generally denotes a specific kind of contract by which one party, called the lessor, for a consideration in money or its equivalent, confers on another, called the lessee, the exclusive possession of certain property for a period of time. The word transfers, however, is obviously a term of wide signification and unless restricted by the context is capable of describing a multitude of transactions whether by sale, exchange, gift, trust or otherwise by which property, rights or interests, etc. are transmitted absolutely, conditionally etc. or by operation of law from one person to another. We are unable to find anything in the language of the section to denote any legislative intention to restrict the meaning of the word transfers to any particular kind of transfer. Also, having regard to the particular language used and the remedial object sought to be attained by and the wide meaning which must be attributed to the preceding word transfers, it is our opinion that the generality of the words and other manner of disposition is not intended to be in any way limited by or interpreted ejusdem generis with the words leases, or transfers. In our opinion, it is more in harmony with the language of and the remedy envisaged by the enactment to interpret the words and any other manner of disposition as an omnibus or saving provision intended to include dispositions of the business or a part or parts thereof by any mode or means whatever which are not appropriately described by the preceding words which state that sells includes leases or transfers.”

And, in R v. B. C. Labour Relations Board Exparte Lodum Holdings Ltd. (1969), 1968 CanLII 586 (BC SC), 3 DLR (3d) 41, Dryer J. noted the importance of analyzing the transaction from a labour relations perspective, and considering its substance rather than its form:

“One must keep in mind that the problem before the Labour Relations Board was one of labour relations and consequently, though as pointed out above the whole law must be considered, the weight to be assigned various factors and the inferences to be drawn from certain evidentiary facts is not necessarily the same as would be the case if the problem were one of, say, taxation or control of assets. The importance of the "business" in its labour relations aspect is the jobs it provides for the employees. One factor to be considered therefore, is whether the same or substantially the same jobs are being performed. That depends on a number of factors such as whether the jobs are being performed as the same or substantially the same times and places, in respect of the same or substantially the same goods or services, and for the same or substantially the same customers or patrons, etc. These matters are, in my opinion, more important than the form of transfer.”

49. In contrast to the term "sale", the term "business" is left undefined, — although it is clearly intended to encompass the notion of a business organization made up of a variety of interrelated (and potentially severable) "parts". The Board has frequently found it useful to apply a kind of "tracing principle" in order to identify the extent to which a predecessor's business organization has been acquired by an alleged successor. In Culverhouse Foods Ltd., [1976] OLRB Rep. Nov. 691, for example, the Board listed a number of factors to be considered:

“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], IALL E.R.414, and R. v B.C. Labour Relations Board Exparte Lodum Holdings Limited (1969), 1968 CanLII 586 (BC SC), 3 DLR (3^rd) 41.)

50. In the instant case, if it were not for Chandelle's bankruptcy — which arguably constitutes the legal "death" of a business in a commercial law sense — there would be no doubt that the Numbered Company is a successor employer within the meaning of section 63 of the Act. It carries on the Chandelle business under the same name, from the same premises, with the same assets, production employees, sales force and managerial complement, to produce the same product lines (some of which were designed and sampled before the bankruptcy), for the same customers and market. It cannot be said that James and Conway established a new similar business on the ashes of the old, nor did any of the witnesses even suggest that this was the case. All of them candidly conceded that throughout, the purpose of their endeavours was to buy the business and maintain it as a going concern when the continued operation of the business was threatened by the premature intervention of the debenture holders. James and Conway thought that Chandelle was a viable business operation, and did all that they could to maintain it intact. Even the bankruptcy itself was a step toward this objective, because it allowed James and Conway to purchase the business on more reasonable terms than would otherwise be available. The business was not broken up or liquidated. On the contrary, it was purchased "lock, stock, and barrel" and in operation again barely weeks after its purported demise. Whatever the commercial law consequences of Chandelle's bankruptcy in August 1981, it is clear that Chandelle's business was transferred to and is now being operated by the Numbered Company. It would be ignoring the evidence as to what has actually transpired here, the way the witnesses themselves characterized the transaction, and the plain meaning of the words in section 63, if the Board were to hold otherwise. It must be noted that that section is triggered automatically upon the fact of a business being transferred from one person to another and further that no provision of the Bankrputcy Act was cited which would modify the operation or effect of section 63; however, because of the view we take of the interpretation of that section, it is unnecessary to canvass the bankruptcy issue.

51. The principal issue before us is the potential effect of successor status, assuming that the business transfer which occurred here is unaffected by paramount federal legislation. Ordinarily, a section 63 declaration is a device for preserving established bargaining rights and a collective agreement — but here, the ILG had neither. The ILG had not even filed an effective certification application prior to Chandelle's transfer to the Numbered Company, and in any event, it is not disputed that the Numbered Company is now properly named for that purpose. Prior to the transfer, all that the ILG had were certain remedial orders to assist it in organizing Chandelle's employees orders which, in the event, were irrelevant because the employees were organized without them. The remedial order designed to facilitate contact between the employees and the ILG was issued in mid-July, and by that time the ILG had already organized more than 80% of the employees.

52. Of more immediate concern are the compensation orders in respect of the two employees unlawfully dealt with by Chandelle. The receiver refused to pay such compensation prior to the bankruptcy, and as a result, the employees have not been compensated for the amounts which they lost. It is these remedial orders which the ILG now seeks to enforce against the Numbered Company. In order to determine whether this is a potential consequence of a successor status determination, we have found it helpful to consider both the origin of section 63, and some recent Board decisions touching on that issue.

III

53. In the absence of a successor rights provision, any change in the legal entity constituting the employer would destroy subsisting bargaining rights, whether they flow from certification or a collective agreement. The incorporation of the business, its transfer to a new owner, a change in a partnership, etc. would all change the legal identity of the "employer", and undermine bargaining rights, - even where the plant, equipment, products, and workforce remained substantially the same. The employees might find themselves working at the same plant, at the same machine, under the same working conditions, with the same supervision, doing much the same job as before, but as a result of a transfer of which they might not even be aware, their collective bargaining rights and their collective agreement would disappear. This disruption in the collective bargaining status quo was considered by both the Legislature's Select Committee on Labour Relations (195 7-58) and later by H. Carl Goldenberg, Q.C. in his Report of the Royal Commission on Labour Management Relations in the Construction Industry (Queen's printer, Toronto 1962). In Goldenberg's view, the preservation of bargaining rights on a transfer of ownership was essential to the orderly conduct of industrial relations. At page 114 of his report, he recommended:

i. The Act should provide that where a business or part the re of is sold, leased or transferred, the purchaser, lessee or transferee shall be bound by all the proceedings before the date of sale, and shall become ipso facto a party thereto, and that the proceedings shall continue as if no such change has occurred, and that if a bargaining agent was certified the certification shall remain in effect, and if a collective agreement was in force that agreement shall continue to bind the purchaser, lessee or transferee to the same extent as if it had been signed by him.

ii. Consideration should be given to measures for the protection of acquired bargaining rights in situations arising from certain types of business practices which may affect such rights, for example, where a contractor, engaged on a number of projects in each of which he has a different partner, is in a position to shift employees from a project with respect to which certification has been granted to another.

(emphasis added)

54. But after the release of the Goldenberg Report, legislative change was incremental. The initial legislative response (the Labour Relations Amendment Act S.O. 1962-63 Chapter 70 section 47(1)) provided only for a continuation of a union's bargaining rights in the event of a business transfer. There was no "flow through" of any collective agreement then in effect. The Legislature clearly did not adopt the broader Goldenberg recommendation that the purchaser should be "bound by all of the proceedings before the date of the sale." Indeed, it has never expressly done so in those terms. Later amendments did provide for the preservation of subsisting collective agreements, the right to give notice to bargain to the successor employer, and the right to continue an ongoing certification proceeding respecting the employees of the new owner; however, the statute as presently framed still does not completely encompass the remedy proposed by Goldenberg. In contrast, section 53(1) of the British Columbia Labour Code expressly provides that the purchaser of a business is "bound by all proceedings under (the) Act before the date of the sale"; and section 144(1) of the Canada Labour Code provides that the person to whom a business is sold generally "becomes a party to any proceeding taken under the (industrial relations part of the code) that is pending on the date on which the business was sold and that affects the employees employed in the business or their bargaining agent." These provisions have been held to provide a foundation for liability against a successor in respect of claims initiated prior to the sale (see Uncle Ben's Industries Limited, [1979] 2 Can LRBR 126, and Victoria Flying Services Limited, [1979] 3 Can LRBR 216).

55. The National Labour Relations Board in the United States has adopted an analogous approach without the benefit of any statutory successor rights provision. In Perma Vinyl Corporation [1967] 164 NLRB 169, for example, the successor completed a sale transaction with knowledge that unfair labour practice proceedings were pending against the vendor, and the Board concluded that both companies were jointly and severally responsible to comply with the compensation and reinstatement orders:

“… To further the public interest involved in effectuating the policies of the Act and achieve the objective of national labor policy, reflected in established principles of federal law, we are persuaded that one who acquires and operates a business of an employer found guilty of unfair labor practices in basically unchanged form under circumstances which charge him with notice of unfair labor practice charges against his predecessor should be held responsible for remedying his predecessor's unlawful conduct.

In imposing this responsibility upon a bona fide purchaser, we are not unmindful of the fact that he was not a party to the unfair labor practices and continues to operate the business without connection with his predecessor. However, in balancing the equities involved there are other significant factors which must be taken into account. Thus, "It is the employing industry that is sought to be regulated and brought within the corrective and remedial provisions of the Act in the interest of industrial peace." When a new employer is substituted in the employing industry there has been no real change in the employing industry insofar as the victims of past unfair labor practices are concerned, or the need for remedying those unfair labor practices. Appropriate steps must still be taken if the effects of the unfair labor practices are to be erased and all employees reassured of their statutory rights. And it is the successor who has taken over control of the business who is generally in the best position to remedy such unfair labor practices most effectively. The imposition of this responsibility upon the bona fide purchaser does not work an unfair hardship upon him. When he substituted himself in place of the perpetrator of the unfair labor practices, he became the beneficiary of the unremedied unfair labor practices. Also, his potential liability for remedying the unfair labor practices is a matter which can be reflected in the price he pays for the business, or he may secure any indemnity clause in the sales contract which will indemnify him for liability arising from the seller's unfair labor practices.

56. This general approach was ultimately approved by a unanimous United States Supreme Court in Golden State Bottling Co. Inc. (1973) CCH 9114,124 where a successor purchased a business with knowledge of an outstanding reinstatement order directed against its predecessor:

“We agree that the Board's remedial powers under 5 10(c) include broad discretion to fashion and issue the order before us as relief adequate to achieve the ends, and effectuate the policies, of the Act. Early on, this Court recognized that 5 10(c) does not limit the Board's remedial powers to the actual perpetrator of an unfair labor practice and thereby prevent the Board from issuing orders binding a successor who did not itself commit the unlawful act. We have said that a Board order that, as in this case, runs to the "officers, agents, successors and assigns" of an offending employer, may be applied not only to a new employer "merely a disguised continuance of the old employer." Southport Petroleum Co. v. NLRB, [5 LC ¶ 51,126] 315 U.S. 100, 106 (1942), but also "in appropriate circumstances... [to] those to whom the business may have been transferred, whether as a means of evading the judgment or for other reasons." Regal Knitwear Co. v. NLRB,[9 LC ¶5 1,193] 324 U.S. 9,14 (1945) (emphasis added; see also NLRB v. Ozard Hardwood Co., [40 LC 9166,759] 282 F. 2d 1, 5 (1960). If the words "person named in the complaint engaged in... any unfair labor practice" in 5 10(c) do not restrict Board authority to prevent orders running to the offending employer's successors and assigns who have acquired the business as a means of evading the Board order, we do not see how those provisions may be read to bar the Board from issuing reinstatement and back-pay orders against bona fide successors when the Board has properly found such orders to be necessary to protect the public interest in effectuating the policies of the Act. The Board's orders run to the evader and the bona fide purchaser not because the act of evasion or the bona fide purchase is an unfair labor practice, but because the Board is obligated to effectuate the policies of the Act. Construing S10(c) thusly to grant the Board remedial power to issue such orders results in a reading of the section, as it should be read, in the light of "'the provisions of the whole law, and... its object and policy.’” Mastro Plactics Corp. v. NLRB 129 LC 9169,779] 350 U.S. 270, 285 (1956), see NLRB v. Lion Oil Co., [31 LC 91 70,446] U.S. 282, 288 (1957).

[Policy of Act]

We in no way qualify the Burns' in concluding that the Board's order against All American strikes an equitable balance. When a new employer, such as All American, has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations, those employees who have been retained will understandably view their job situations as essentially unaltered. Under these circumstances, the employees may well perceive the successor's failure to remedy the predecessor employer's unfair labor practices arising out of an unlawful discharge as a continuation of the predecessor's labor policies. To the extent that the employees legitimate expectation is that the unfair labor practices will be remedied, a successor's failure to do so may result in labor unrest as the employees engage in collective activity to force remedial action. Similarly, if the employees identify the new employer's labor policies with those of the predecessor but do not take collective action, the successor may benefit from the unfair labor practices due to a continuing deterrent effect on union activities. Moreover, the Board's experience may reasonably lead it to believe that employers intent on suppressing union activity may select for discharge those employees most actively engaged in union affairs, so that a failure to reinstate may result in a leadership vacuum in the bargaining unit. CF. Phelps Dodge Corp. v. NLRB[4 LC 91 51,120] 313 U.S. 177, 193 (1941). Further, unlike Burns, where an important labor policy opposed saddling the successor employer with the obligations of the collective agreement, there is no underlying congressional policy here militating against the imposition of liability.

Avoidance of labor strife, prevention of a deterrent effect on the exercise of rights guaranteed employees by S7 of the Act, 29 U.S.C. S 157, and protection for the victimized employee - all important policies subserved by the National Labor Relations Act, see 29 U.S.C. S 141 - are achieved at a relatively minimal cost to the bona fide successor. Since the successor must have notice before liability can be imposed, "his potential liability for remedying the unfair labor practices is a matter which can be reflected in the price he pays for the business, or he may secure an indemnity clause in the sales contract which will indemnify him for liability arising from the seller's unfair labor practices." Perma Vinyl Corp., supra, 164 NLRB, at 969. If the reinstated employee does not effectively perform, he may, of course, be discharged for cause. See 29 U.S.C. S 160(c).”

These two American decisions contain a good summary of the policy considerations underlying the argument the ILG urges upon us in the instant case; however, it must be noted that both American cases involved a purchaser with actual notice of outstanding unfair labour practice proceedings, while, here, the new owners had no such notice, and had no opportunity to take this factor into account when the transaction was being considered. Indeed, the evidence is that it might not have been completed at all, had James and Conway been aware of Chandelle's labour problems. Moreover, it is crystal clear that the new owners were not acting in any sense as agents for the principals of Chandelle, nor were the new principals parties to any scheme to interfere with rights under the Act. And, of course, in contrast to the situation in the United States, the rights of parties in successorship situations have been carefully prescribed and developed by the Ontario Act, which has been specifically amended from time to time to enhance them. Against this background, it is doubtful whether the Board has the jurisprudential flexibility of the National Labour Relations Board.

57. In Ontario there are a number of arbitral and judicial authorities which have held that a successor employer remains subject to grievances relating to the conduct of his predecessor, regardless of whether he has actual notice of the collective agreement, and whether or not arbitration proceedings were pending at the date of the sale. Such liability was considered to be a natural and necessary implication from the wording of section 63(2) binding the successor to the collective agreement "as if he had been a party thereto". (See: Man of Aran 1974 CanLII 2278 (ON LA), [1974] 6 LAC (2d) 238 Shime; Woodbridge Hotel 1976 CanLII 2221 (ON LA), [1976] 13 LAC (2d) 96 (Brown) and the decision of the Ontario High Court in Re Cassin-Remco Limited, 1979 CanLII 2013 (ON HCJ), [1980] 105 DLR (3d) 138). However, there is no equivalent language in section 63 vis-a-vis unfair labour practice liability, and the express mention of a continuation of certification proceedings as against the successor tends to suggest that other kinds of proceedings cannot be continued.

58. Only two Ontario Board cases have considered the possibility of a "flow through" of unfair labour practice liability, and neither of them is dispositive of the issues before us in the instant case. In Sunnylea Foods Limited [1981] OLRB Rep. Nov. 1640, the Board observed that "there is considerable difficulty in finding as a matter of law that a successor can be primarily responsible for the unfair labour practices committed by the predecessor employer", although ultimately the Board reached no conclusion on this matter, for there were no outstanding proceedings at the date of the sale, and the business did not remain unchanged so as to trigger the rationale set out in the latter part of the Golden State decision. Similarly, in Winchester Press Limited [1982] OLRB Rep. Feb. 284, there were no proceedings actually pending at the time of the sale and, in consequence, the Board held that it did not have to finally decide the issue currently before us. It merely adverted to the potential importance of notice, and distinguished between reinstatement and compensation orders:

“The strong legislative intent evident in section 1(2) of the Act that a person ought never to lose his employee status by reason of a dismissal contrary to the Act combined with the broad wording of section 89(4) provides considerable support for the contention that this Board has the jurisdiction to direct a purchaser to reinstate an individual whose discharge was the subject of unfair labour practice proceedings that were pending before the Board at the time of the sale. However, none of the cases arising in other jurisdictions goes so far as to grant remedial relief against an innocent purchaser who is unaware of his predecessor's unfair labour practice at the time of the sale and in respect of which no unfair labour practice proceedings were pending at the time of the sale. It may not be unduly onerous to expect the prospective purchaser to determine if any unfair labour practice proceedings are pending against the party from whom he proposes to purchase a business and, if such proceedings are pending, to take into account their potential outcome, including his potential responsibility for providing some redress to the affected employee(s). It is quite another matter altogether to subject an innocent purchaser to remedial relief in respect of actions of the vendor that might constitute unfair labour practices but in respect of which no complaint has been filed with the Board by the time of the sale. It is simply not realistic to expect a prospective purchaser to investigate all of the vendor's actions that might possibly constitute unfair labour practices. To be meaningful, such an investigation would have to go beyond merely asking the vendor about his actions and obtaining from him a denial of any wrongdoing. A meaningful investigation would require the prospective purchase to make extensive inquiries of the vendor's employees, which inquiries could well result in disclosure of information concerning union activities by various individuals and other information that the Board would not wish to encourage a prospective purchaser to obtain.

Accordingly, even if the combined wording of sections 1(2) and 89 permits us to direct 2Womor to "reinstate" Ms. MacNaughton by offering employment to her, the Board is of the view that it would not be appropriate for us to do so in the circumstances of this case, although we would encourage 2Womor to voluntarily offer to employ Ms. MacNaughton in the next position that becomes available for which she is qualified.”

59. In the instant case the successor stresses the apparent inequity in having to remedy unfair labour practices to which it was not a party and of which it had no knowledge. The ILG on the other hand asserts that the Numbered Company could have learned of the outstanding orders against Chandelle had it exercised due diligence in its enquiry, and that there are strong policy reasons why an unfair labour practice should not go unredressed. There is something to be said for both submissions, and, for this reason in choosing between them it is especially important to consider the particular (and perhaps limited) purpose, language, and history of the Ontario successor rights provisions.

60. The essence of the union's submission is that section 63 in its present form is broad enough to encompass the full range of protections proposed in the Goldenberg Report. The ILG agues that the successor becomes subject to all outstanding proceedings. But the Legislature did not wholeheartedly embrace this view either initially or later, and, in contrast with the situation in other jurisdictions, it has not made the successor expressly responsible "for all proceedings pending at the date of the sale." Such legislative models could have been adopted when the Act was amended in 1975, but the legislature did not do so. Indeed, we need not look to other jurisdictions for an appropriate form of words. Section 62, (which deals with the result of a trade union successorship) is unequivocal in its terms:

“Where the Board makes an affirmative declaration under subsection (1), the successor shall for the purposes of this Act be conclusively presumed to have acquired the rights, privileges and duties of its predecessor, whether under a collective agreement or otherwise, and the employer, the successor and the employees concerned shall recognize such status in all respects.”

(emphasis added)

The more limited language of section 63 and its piecemeal evolution, merely reinforce our view that the rights created by section 63 are also more limited. While we are not unsympathetic to the union's concerns, when considered in cotext, we do not think the existing language of section 63 is broad enough to meet them. We do not think a bona fide purchaser for value without notice of outstanding unfair labour practice orders, is bound by reason only of its status as a successor employer to remedy its predecessor's unlawful acts. Accordingly, the Board will not direct the Numbered Company to compensate the grievors for the wage loss they sustained as a result of Chandelle's unfair labour practices. Since the grievor's are entitled to reinstatement in any event because of the Numbered Company's own unfair labour practice, the Board need not address the issue raised in Winchester Press or decide whether the combined effect of sections 63, 89, and 1(2) at least preserve an aggrieved employee's employment status vis a vis a successor employer. And in finding that an innocent and uninformed successor is not responsible for the illegal acts of his predecessor, we wish to make it clear that we express no opinion on the personal liability of the Hegendorfers, or of the receiver who, as noted above, before the assignment in bankruptcy, chose to disregard the Board orders to the potential prejudice of both the grievors and the Numbered Company. Finally, the Board reiterates that the law of bankruptcy was not argued before us, so our interpretation of section 63 does not depend thereon.

IV

61. The ILG's alternative argument is that Chandelle and the Numbered Company are "related employers" under section 1(4), because both firms employ the same managerial team. The ILG admits that the Hegendorfers et al do not have legal control of the Numbered Company, nor do they have ultimate control of its purse strings. But they do have control of the firm's day to day operations - just as they did for Chandelle. The ILG asserts that this is sufficient to establish "common direction" within the meaning of section 1(4), and argues that it is unnecessary that the related activities be carried on simultaneously. It is no defence to say that the two companies were not in business contemporaneously or that their activities are not related in a temporal sense. That is not a requirement of section 1(4).

62. Section 1(4) is designed to preserve established bargaining rights and prevent them from being undermined by a change in the legal vehicle through which the business activity is carried out. (See Brant Erecting [1980] OLRB Rep. July 945.) Section 1(4) ensures that a union s representational rights will be rooted in a business activity rather than its legal envelope, and, in this respect, its purpose is similar to that of section 63. However, here, the ILG had no bargaining rights to preserve. The sole purpose for arguing section 1(4) is to find a solvent party against whom the ILG can enforce its money judgements.

63. The situation here is quite different from that in Brant Erecting, supra. There a dominant partner wound up his business arrangements but continued to carry on exactly the same business through a corporate vehicle nominally owned by his wife, but in all material respects controlled by him. Neither business vehicle had much in the way of transferrable assets so as to call into play section 63, however, the economic reality was that the business had simply undergone a change in corporate form and continued to be carried on, as before, for the primary benefit of the same principal. That is not the situation here. The Hegendorfers are not principals of the Number Company, and the latter cannot be considered their alter ego. They have maintained their nominal positions, but their status has been reduced to that of employees.

64. The facts of this case do not fit easily within the ambit of section 1(4) or the mischief which it was designed to cure. There are no bargaining rights prejudicially affected by the purchase of Chandelle. The LLG has no bargaining rights at all. The sole purpose of the section 1(4) application is to attach liability, to a bonafide purchaser for value without notice of the outstanding labour practice claims. In our view this is a proper case for determination under the successor rights provisions, and it must stand or fall on that basis. It is not a situation to which section 1(4) was intended to apply. Even if it could be said that the two corporate entities herein (despite their different principles) were under common managerial "direction", the Board would not exercise its discretion to make a section 1(4) declaration.

65. For the foregoing reasons the applications under sections 63 and 1(4) are dismissed.

DECISION OF BOARD MEMBER W. F. RUTHERFORD;

1. I have read the decision of the Board in this matter. I agree with the unfair practice finding. I also agree that the ILG's right to represent the employees should be determined by a representation vote. I do not agree with the Board's finding on the successor rights issue. I will not attempt to deal with the law of bankruptcy. Even the lawyer for the Numbered Company admitted he was unable to find any cases dealing with this issue. I prefer to approach the matter from a practical labour relations point of view.

2. It is obvious what has happened here. The Numbered Company has bought Chandelle's business. The Numbered Company was trying to buy the business before August 4, 1981, but the price was too high. After the bankruptcy, it got a better deal. There is no evidence that anyone else was trying to buy Chandelle and no real change in the way it is operating. It is the same business as it always was and it would be ignoring the evidence to find otherwise.

3. In my view, the question before the Board is a very simple one: whether you can break the law and get away with it. The breach of the Labour Relations Act occurred before the backruptcy. The Board decision occurred before the bankruptcy. The Board order was made before the bankruptcy. Yet the Hegendorfers testified that the receiver told them to disregard the Board order and "throw it in the waste basket". I find this attitude high handed, offensive and hardly likely to engender respect for the law among employees. It may even be illegal, for I see no reason why a receiver appointed to run the affairs of a company should have any license to disregard the law. Why should the agent of the Bank of Montreal et al be permitted, prior to a bankruptcy, to thumb its nose at the Labour Relations Act and the employee rights protected by that Act? I find this offensive, and contrary to both the purpose of the Act and the interests of employers and employees governed by it.

4. In my view, the approach which the Board should take in this case is that of the American Board and Courts in cases such as Perma Vinyl. It seems to me to be entirely inconsistent to suggest that an "innocent purchaser" must recognize established employee rights under a private collective agreement, but need not recognize employee rights under the Act itself. One does not have to have much imagination to see the mischief which could arise if a successor had no responsibility for redressing the unfair labour practices of its predecessor. The employees, whose statutory rights had been violated, could be left without jobs and without compensation even though the business continues on as before and, as here, may even employ the same management. I cannot believe that this is what the Legislature intended; and if I am wrong, it points up the need to amend section 63 so that it reads like the federal and British Columbia legislation.