Ontario Labour Relations Board
[1982] OLRB Rep. December 1975
2302-81-R Commercial Workers Union, Local 486, Applicant, v. Steinberg Inc., and Yesteryear Grocers Inc., Respondents, v. Group of Employees, Objectors
BEFORE: N. B. Satterfield, Vice-Chairman and Board Members J. Wilson and B. L. Armstrong.
APPEARANCES: Alick Ryder, Q. C., Barry Baily and Guy Seguin for the applicant; R. Budd for Steinberg Inc.; C. M. McKeown, Q.C., for Yesteryear Grocers Inc.; James Fyshe, Doug Rombo, Mitch Plummer and Claire Patoine for the objectors.
DECISION OF THE BOARD; December 15, 1982
This application made under section 63 of the Labour Relations Act with section 1(4) pleaded in the alternative, came on for hearing before the Board differently constituted on June 23rd, 1982. That hearing was adjourned and the application was scheduled for a continuation of hearing on July 8th before the panel as constituted herein. As indicated in the interim decision of the Board with respect to the June 23rd hearing, the Board dealt with and decided certain preliminary procedural issues. When the application came back on for hearing on July 8th before the Board as constituted herein, counsel for the respondents objected to the Board proceeding with the application on the grounds that the Board as constituted at the June 23rd hearing was seized with the application. They contended that the June 23rd Board had made a ruling with respect to the objectors' status, had heard extensive submissions on the procedural challenge to the Board's jurisdiction to entertain this application, after which it made a careful, reasoned ruling and having done so was seized with the application. The Board rule that, since the Board as constituted on June 23rd had not heard any evidence, there was no bar to this Board hearing the application. It would abide by the prior Board's ruling to hear the evidence and representations of the parties with respect both to the respondents' challenge to the Board's jurisdiction to hear the application and with the merits of the application, deciding the procedural issue first in order to determine whether it is necessary to deal with the application on its merits.
The applicant alleges that there has been a sale of a business within the meaning of section 63 of the Act from Steinberg to Yesteryear as a result of which Yesteryear is the successor employer pursuant to section 63(2). The applicant alleges in the alternative that Steinberg Inc. ("Steinberg") and Yesteryear Grocers Inc. ("Yesteryear") are carrying on related activities or businesses under common direction or control and, therefore, the Board should treat them as constituting one employer for the purposes of this Act. The applicant seeks a declaration from the Board that Yesteryear, on either ground, is bound to a collective agreement between Steinberg and the applicant which purports to be effective from October 1, 1980 to September 30, 1982 ("The Agreement"). Hearings into the application by the Board as constituted herein were held on July 8th, 13th (in Toronto), September 9th, 10th (in Ottawa), and October 13th (in Toronto).
The application was filed with the Board on February 5th, 1982 and the Board's customary notice of the application and hearing date was sent to the two respondents and the applicant on February 8th. That notice set a terminal date of February 17th and gave notice that a hearing would be held into the application on March 1st. That hearing was adjourned on February 25th on the agreement of the solicitors for the applicant and the respondents and with the consent of the Board, with a new date to be set by the Registrar in April. On March 10th the hearing was rescheduled for April 15th. The Board was later advised by a letter dated April 1st from Mr. Barry Baily, President of Commercial Workers Union, Local 486 ("Local 486") that he and the respondents had agreed to adjourn the April 15th hearing to a date to be set by the Board in consultation with the parties. On that agreement, the Board consented on April 7th to adjourn the hearing. On April 28th, the application was scheduled for hearing on June 23rd. The replies to the application filed by the solicitors for both respondents were received by the Board on June 21st and the application proceeded to hearing on June 23rd as noted above.
The Board's findings of fact set out below will show that the following sequence of events was taking place prior to and after the filing of the application. Baily met in Ottawa with Normand Duchemin, Vice-President Operations for Steinberg, on December 8th, 1981 at Duchemin's request. Duchemin advised Baily of Steinberg's plans to close two of its stores in Ottawa because they were losing money. He told Baily that Steinberg was prepared to replace the stores with stores which would operate under a new concept, but would need to have greater flexibility in their operation. Duchemin asked Baily whether he would be prepared to negotiate a separate collective agreement with Yesteryear which would give it greater flexibility than that available under the Agreement with respect to wages, benefits and contract language. Following the December 8th meeting, Yesteryear and Local 486 met on January 4th, 1982, March 9th, March 31st and May 5th and attempted to conclude a collective agreement. They were unsuccessful and after the May 5th meeting no further meetings were held. Baily and another officer of Local 486, Jean-Guy Seguin, Vice-President and business agent of the Local met with Steinberg's zone manager for Ottawa and another Steinberg store manager shortly before Christmas 1981 to be apprised of the details of how the employees of the two Steinberg stores would be dealt with upon closing. Baily and Seguin also participated together with Steinberg managers in meetings of the store employees one week before the stores closed on January 9th, 1982. At these meetings, the employees were told on what basis they either would be transferred to other Steinberg stores within the geographic scope of the bargaining unit or, in the case of some part-time employees, be laid off. At the time Baily knew that no Steinberg employees would be retained for the new operation and that Yesteryear would be hiring new employees for its operation of the stores.
The Board heard the testimony of seven witnesses during four days of hearings. The findings of fact set out below are made after taking into account such factors as the consistency of their evidence, their ability to recall the events about which they were testifying, the firmness of their memory, their ability to resist the influence of self-interest to modify their recollections, their ability to express their recollections clearly and their demeanor.
Yesteryear was established to introduce a food marketing concept of warehouse stores. These stores operate in Ontario under the style of "Basic" and in the Province of Quebec under the style of "Jadis". It is not entirely clear from the evidence when the concept was introduced, but the first store in Quebec was established in Montreal in September 1981 and some time before December 1981 Yesteryear identified a total of nine stores in the two provinces, including the two stores in Ottawa with which this application is concerned, to be converted to this concept. For ease of reference those two stores will be referred to collectively as the Basic stores and when referred to individually they will be referred to as the Montreal Road stores and the Merivale Road stores. Until January 9th, 1981, these stores were operated by Steinberg and were covered by the Agreement between Steinberg and Local 486 referred to above. By means of this application, Local 486 is seeking to have the Agreement apply to the two Basic stores. The Agreement covers full time and part time employees and describes the scope of the bargaining unit in the following terms:
The Employer recognizes the Union as a sole bargaining agent for all employees including maintenance employees employed in its stores situated in the Ontario Counties of Renfrew, Frontenanc, Lanark, Carleton, Leeds, Grenville, Dundas, Stormont, Russell, Prescott and Glengary, save and except Store Managers, personnel above the rank of Stores Manager and one (1) Department Manager in each store.
The Montreal Road and Merivale Road stores have been included in that bargaining unit for at least ten years.
When Duchemin met Baily in Ottawa on December 8th. and advised Bailey of Steinberg's plans to close the two stores, he told Baily that Steinberg would transfer all of the full-time employees to other stores in the bargaining unit and some of the part-time employees according to their seniority. He told Bailey also that Steinberg was prepared to introduce the new store concept if Baily was prepared to discuss more flexible arrangements with respect to wages, benefits and collective agreement language in a separate agreement with Yesteryear. Duchemin was satisfied with Bailey's response and he reported the results of the meeting to Mr. Morris Ledenheim, a Vice-President of Steinberg and Vice-President and General Manager of Yesteryear. A decision was made in mid-December to proceed with the conversion of the Ottawa stores to the Basic stores concept.
That decision resulted in Steinberg closing the two stores on January 9th and transferring all of the full-time employees, except two who did not wish to move, to other Steinberg store locations within the geographic scope of the bargaining unit in the Agreement. 31 of approximately 60 part-time employees were recalled to other Steinberg stores in the unit after first being laid off. At least another ten were hired by Yesteryear. Those employees were required to resign from Steinberg before they were hired by Yesteryear and there was no undertaking to treat them any differently than other persons hired off the street. Baily had been advised of the Steinberg plan for dealing with their employees of the two stores on closing, but he had no part in the making of the decision. He did participate in its implementation to the extent indicated above in paragraph 4. Nor was he part of the decision that Steinberg employees from the two stores would not be transferred to or given preference in hiring by Yesteryear. Steinberg did not consider its employees to have any rights with respect to employment in the two Basic stores and Yesteryear did not want them for the Basic stores, preferring instead to hire and train new employees in the Basic store concept. Steinberg's disposition of the full-time employees exceeded the requirements of the agreement. When the full-time employees and those part-time employees who were transferred to other stores were all relocated, the proportion of full-time hours worked to part-time hours worked throughout the bargaining unit had changed from a 50/50 relationship to a 70/30 relationship.
The Steinberg leases for the two stores were assigned to Yesteryear and some assets, mostly refrigeration equipment and a few leasehold improvements, were transferred from Steinberg to Yesteryear under an agreement by which Yesteryear assumed a debt of $285,535.10 repayable by issuing to Steinberg one common share of Yesteryear. Yesteryear refitted the stores for the Basic store operation, purchased inventory and stocked stores. It hired new employees and re-opened the stores for business on February 10th. Yesteryear also engaged Mr. Alain Bilodeau, a lawyer who practices labour law in the Province of Quebec to act as spokesman in its negotiations with Local 486.
Negotiations began on January 4th, 1982, a date agreed to at the December 8th meeting between Duchemin and Baily. Bilodeau presented a complete proposal including language, benefits and wages at that meeting. The discussion was of a general nature and only the recognition clause in the proposal was discussed in any detail. Duchemin had made it clear to Baily on December 8th that Yesteryear was prepared to recognize Local 486 for the two Basic stores and, while the wording of the recognition clause was not settled at the January 4th meeting they had agreed on wording which described an all employee unit with the same geographic scope as the Agreement. The evidence of Duchemin, Bilodeau and Baily is in conflict with respect to whether Baily made any reference to a successor rights/related employer issue under the Act at the January 4th meeting. Both Duchemin and Bilodeau state that their recollection of any question of successor rights was at one of two negotiating meetings in March.
The parties agreed to meet again on February 4th, but that meeting was cancelled at the request of Yesteryear. Following cancellation of the meeting, Baily instructed the union's solicitor to file this application. Other negotiating meetings were held on March 9th, March 31st and May 5, during which the parties attempted to arrive at a collective agreement. While substantial progress had been made by May 5th, the parties were unable to conclude a collective agreement. The most important wage and benefits issues had been left for the May 5th meeting and were the main unsettled items when that meeting ended. Bilodeau states that Baily also wanted to know what kind of protection Yesteryear would be prepared to consider for Steinberg employees should any other Steinberg stores be converted to Basic stores, whether they would be considered for those stores and what pay protection would apply to them. There were no further negotiating meetings after May 5th and no final written agreement document was submitted to the union. By that date, the notice of hearing for the June 23rd hearing into this application had already been sent to the applicant and the two respondents.
No promise was sought of Baily at the December 8th meeting or any of the negotiating meetings to waive any rights under the Act and no promise was made by him to do so. He did not promise and was not asked to promise not to file a successor rights application under the Act and after filing this application he made no undertaking to withdraw it, although, as indicated, he did agree to adjournments of one or more of the hearings scheduled for the application during the course of his negotiations with Yesteryear. Bilodeau testified that his first knowledge of any claim that Local 486 had waived its right to bring or pursue this application was late in June shortly before the June 23rd hearing. He was not in attendance at that hearing and learned of the claimed waiver from the office of Yesteryear's solicitors.
Yesteryear is a wholly owned subsidiary of Steinberg and some of its directors are also directors of Steinberg. Its President is Melvin A. Dobrin who is also Chairman of the Board of Steinberg Ledenheim is an officer of Steinberg and Vice-President and General Manager of Yesteryear. Jean-Claude Babin, Director of Operations for Yesteryear, and the store managers of the two Basic stores were transferred to Yesteryear from Steinberg without any loss in service. Part of Ledenheim's salary is charged back to Yesteryear. Yesteryear is also charged for the use of any Steinberg corporate service, and it uses its accounting and legal services. Although it is a wholly owned subsidiary of Steinberg, Yesteryear does enjoy substantial independence in its day to day business functions. It does all of its own buying and has its goods shipped to its stores by public carrier, not by Steinberg's trucks. It does its own advertising, has different colours for its corporate logo on stores. Yesteryear employees are paid by cheques of Yesteryear and are not paid through the Steinberg payroll.
There are differences between the type of retail food supermarket operated by Steinberg under the Agreement and the Basic stores. Basic stores sell groceries, dairy products, produce and meats, the same four major food divisions which exist in Steinberg stores, but do not have in-store bakeries or delicatessens as the Steinberg stores usually do. The Basic stores carry fewer varieties of each product, for example milk is only available in bags, not in bottles or cartons. Fewer brands of products are available and there is very little duplication of products. Prices are displayed on the shelves, not on the items, and grocery products are displayed on shelves in their original cartons. Less in-store services are available: meats are pre-cut, customers have to supply their own bags or pay extra for them and' produce is not pre-packaged. The average inventory consists of approximately 1100 items compared with 2400 in a supermarket. Yesteryear claims that the customers' costs are 30% less than in a supermarket.
The respondents base their contention that the Board does not have jurisdiction to hear the application on the evidence with respect to the December 8th meeting between Duchemin and Baily, the actions taken by Steinberg and Yesteryear following that meeting and the subsequent negotiating meetings with Baily. They argue that Baily was advised of the new store concept at the December 8th meeting and was told "that the two stores were his"; in other words, Local 486 would be recognized as bargaining agent for the employees in the two stores when the new operations began and that this undertaking was reinforced throughout the collective bargaining meetings which followed the December 8th meeting. Counsel contend also that this recognition was solidified by March 31st when the remaining issues with respect to the recognition clause which Yesteryear had proposed were settled. They assert that neither Steinberg nor Yesteryear were aware during December or January of the possibility that an application would be made under sections 1(4) and 63 of the Act. They contend, that Baily has recognized Yesteryear as a separate employer from Steinberg by engaging in negotiations for a separate collective agreement with Yesteryear for the two Basic stores, a position wholly inconsistent with the filing of this application which is a claim that Steinberg and Yesteryear are one employer. The totality of the evidence with respect to the December 8th meeting and the collective bargaining meetings, they argue, supports the fact that when bargaining began on January 4th, Local 486 was recognizing Yesteryear as a separate employer from Steinberg.
As a branch of the foregoing argument, counsel argued further that Baily had effectively agreed to a carve out the Ottawa stores from the bargaining unit described in the Agreement. That result, they contend, arises from the fact that prior to the January 4th negotiating meeting Baily knew, from his December 8th meeting with Duchemin and his subsequent meetings with other Steinberg managers, that Steinberg would be transferring all full time employees of the two stores to other stores and as many part time employees as could be accommodated; that the rest of the part time employees would be laid off; that the laid off employees would not be given preferential treatment with respect to being hired for the Basic stores and that Yesteryear would be hiring new employees to staff the stores, and yet did not challenge any of these actions. Thus by allowing Steinberg to proceed with the relocation of employees from the two stores, by allowing Yesteryear to subsequently staff the two Basic stores with new employees and by negotiating with Yesteryear towards a separate collective agreement, Baily has agreed to an amendment to the bargaining unit description in the agreement by excluding the two stores.
In summary, counsel for the respondents contend that Yesteryear and Local 486 have agreed that Local 486 is the bargaining agent for Yesteryear's employees in the two Basic stores and any other Basic stores which might be opened within the geographic scope of the bargaining unit description which the respondents say has been agreed to between them. Moreover, Baily, by his actions on behalf of Local 486, has agreed to have the two Ottawa stores carved out of the bargaining unit described in the agreement between Steinberg and Local 486.
Counsel for the objectors adopts these same arguments.
Sections 1(4) and 63 of the Act, the two sections under which the application was filed and under which the Board's jurisdiction to hear it has been challenged, provide as follows:
Section 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 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.
The evidence of Duchemin and of Bilodeau, the spokesman for Yesteryear in its negotiations with Local 486, establishes unequivocally that Baily did not promise on December 8th or during the collective bargaining meetings that he would not file applications under sections 1(4) and 63 of the Act, nor did he promise to forego any rights of Local 486 and its members under the Act. Baily filed this application February 5th, approximately one month after the first collective bargaining meeting and again the evidence of Duchemin and Bilodeau is unequivocal that he did not offer or promise to withdraw the application. The Board is also satisfied that he was not asked to withdraw it, although he was requested and did agree to adjournment of the hearings which had been scheduled prior to June 23rd.
Were there a voluntary recognition agreement in writing between Yesteryear and Local 486 as contemplated by sections 5(3) and 16(3) of the Act, and there is no assertion by any of the parties to these proceedings that there is, would that recognition agreement bar Local 486 from bringing this application under section 1(4) and the Board from entertaining it? The Board thinks not. The question of whether Steinberg and Yesteryear are carrying on associated or related activities or businesses under common control or direction is a question of fact which would not be altered by Yesteryear and Local 486 having entered into a voluntary recognition agreement. If the Board were to find on the facts that Steinberg and Yesteryear were carrying on related activities or businesses under common control or direction, there being no evidence of Steinberg or Yesteryear attempting to eliminate, diminish or otherwise frustrate Local 486's bargaining rights with Steinberg, the existence of an unchallenged voluntary recognition agreement in all likelihood would cause the Board to exercise its discretion under section 1(4) not to declare Steinberg and Yesteryear as constituting one employer for purposes of this Act, but it would not refuse to hear this application. Therefore, even if the Board was satisfied that there was a de facto voluntary recognition, and it makes no conclusion either way, the Board is satisfied that it has jurisdiction to hear this application insofar as it pertains to section 1(4) of the Act.
With respect to section 63 of the Act, the questions for the Board are, again, questions primarily of fact as to whether Steinberg has sold, leased, transferred or made any other manner of disposition of a business or part thereof to Yesteryear and whether Steinberg is bound to a collective agreement with Local 486 for purposes of section 63(2). It is not a question of whether Local 486 has bargaining rights with Yesteryear, the purported successor employer in the alleged sale of the business. If a trade union other than Local 486 was claiming to have bargaining rights for the Yesteryear employees and there was a conflict between those rights and the rights of Local 486 as the trade union that represented the employees of Steinberg, the predecessor employer, the Board would have jurisdiction under subsection 4 to modify the bargaining unit in either collective agreement. Subsection 4 clearly contemplates also that a finding has already been made under either subsection 2 or subsection 3 of section 63. If, as it appears, bargaining rights held by a trade union other than Local 486 for employees of Yesteryear would not bar the Board from entertaining Local 486's application, it is difficult to see why it should be barred from entertaining the application because of the claim that Local 486 holds those bargaining rights. Therefore, even were the Board satisfied that there is a de facto voluntary recognition agreement between Yesteryear and Local 486, and the Board reiterates that it makes no conclusion either way, the Board would not be persuaded that it lacked jurisdiction to hear this application.
Nor does the Board agree with the arguments of counsel for the respondents and objectors that there has been a carving out or dissolution of Local 486's bargaining rights with respect to the two Basic stores so that the scope clause of the Agreement would no longer encompass the employees of the stores. Certainly this has not been achieved by any agreement in writing signed by the parties and, while section 52(5) which accommodates revision by mutual consent of provisions of a collective agreement other than provisions relating to its term of operation makes no reference to the need for such revisions to be in writing and signed by the parties, section 1(l)(e) of the Act which defines a collective agreement does so require. It would seem reasonable, therefore, that an amendment by mutual consent of the bargaining unit in the Agreement would be in writing and signed by the parties. In the absence of such an agreement, the Board is satisfied that there has been no carving out or dissolution of bargaining rights with respect to the two Basic stores. In the result, the Board finds that there is no bar to its jurisdiction to hear this application and, therefore, it finds that it has jurisdiction to hear and determine it on its merits.
Counsel for the respondents and the objectors argued in the alternative that, by the same evidence, Local 486 was estopped from bringing this application and that the Board should apply the doctrine of promisory estoppel to it. Counsel for the objectors contended as well that the evidence supported application of the doctrine of estoppel by encouragement or acquiescence and also by waiver.
Counsel for the respondents relied on a variety of authorities fro the proposition that Local 486 should not be allowed to enforce its strict legal rights by bringing this application when, by Baily's conduct, Steinberg and Yesteryear have been led to believe that Local 486 would not do so. They contend that Steinberg, as a result of Baily's undertaking at the December 8 meeting and his subsequent conduct, proceeded to close the two stores, transfer the employees of those stores under terms more generous and more expensive to Steinberg than called for by the collective agreement and to transfer the leases for the stores and certain assets to Yesteryear. Yesteryear proceeded to renovate the two stores, stock them with inventory, hire new employees to staff the stores and engage counsel to represent Yesteryear in collective bargaining with Local 486. Counsel referred to the Board to Brown and Beatty, Canadian Labour Arbitration, Agincourt, Ontario, Canada Law Book Limited 1977, topic 2:2210 at p. 67 with respect to the application of the doctrine generally by arbitrators, to seven decisions of this Board as authority for the Board's recognition of the doctrine and to Canadian National Railway Co., 1981 CanLII 2953 (ON HCJDC), 34 OR. (2d) 385, a review by the Ontario Divisional Court of the award of an arbitrator, as authority for the Court's recognition that a claim could be based on a representation to one party made by the conduct of another party. Counsel for the objectors referred the Board also to the judgement of Denning, J., in Central London Property Trust Limited v. High Trees House Limited, [1947] K. B. 130, as authority for the principle of promissory estoppel. Counsel argued that as a result of Baily's conduct and in addition to the other actions taken by Steinberg and Yesteryear referred to by the respondents, Yesteryear entered into new contracts of employment with its newly hired employees and Baily stood by allowing Yesteryear to do this without attempting to enforce the rights of Local 486 and its members under the agreement. Therefore Local 486 should not now be able to seek to enforce those rights by bringing this application. In this respect, counsel referred the Board to the judgement of the Supreme Court of Canada in Grassett v. Carter, [1883] 5CR. 105. For all of these reasons, counsel for the objectors argues that Baily should be estopped from going back on his agreement with Steinberg with respect to the carving out of the two stores from the bargaining unit of the Agreement and from the voluntary recognition agreement with Yesteryear.
Should the Board still proceed to decide the application on its merits, counsel for the respondents argue that the Board should dismiss the application with respect to section 1(4) because the requisite criteria are not present, in particular there is no functional inter-dependence and coherence between Steinberg and Yesteryear; Local 486 has not satisfied the burden of proof and, even if the Board finds that Steinberg and Yesteryear carry on related businesses or activities under common direction or control, the Board should exercise its discretion to refuse to declare them as constituting one employer for purposes of the Act. They submit that it makes no labour relations sense to say they are the same employer when Local 486, by bargaining with Yesteryear, has recognized it as a separate employer and because there would be greater prejudice to Yesteryear by granting a declaration than there would be to Local 486 by refusing to grant it. That greater prejudice would result from Yesteryear being forced into the Agreement if the Board allows the application, whereas, if the Board dismisses it, the security of Local 486 and its members has been protected by Steinberg's agreement to not lay off full-time employees when it closed the two Ottawa stores and by Yesteryear's undertaking to recognize Local 486 as bargaining agent for the new employees of the two Basic stores.
With respect to the application as it pertains to section 63 of the Act, counsel for the respondents argue that the Board has the discretion to not declare the successor to be bound by the collective agreement of the predecessor even if it finds that a sale of a business has taken place. Therefore, if the Board finds a sale of the business between Steinberg and Yesteryear on the facts herein, because Yesteryear's recognition of Local 486 as bargaining agent for its employees goes beyond the two Basic stores to include the same geographic scope as the bargaining unit in the Agreement, the Board should confirm that recognition and preserve those bargaining rights, declare the Agreement not to be binding on Yesteryear and order the parties to return to the bargaining table with access to conciliation services.
Counsel for the objectors argues that Local 486 should be estopped from seeking by means of this application to enforce in respect of the two Basic stores its bargaining rights under the Agreement because, by Baily's conduct, he has waived the rights of Local 486 under the Agreement. First, Baily has effectively agreed to an amendment to the Agreement in standing by and not seeking to enforce its terms while Steinberg transferred employees to other locations and while Yesteryear hired new employees to replace them in the new operations at the two stores. Counsel submits that this amounts to a contraction of the bargaining unit in the agreement and an amendment. That result is reinforced by Baily's undertaking to discuss with Yesteryear recognition for Local 486 and by seeking to obtain the same scope of bargaining rights with Yesteryear as was in the agreement. Counsel argues that Baily's actions constitute a waiver of rights under the Agreement and the consideration with respect to this waiver was by Steinberg and Yesteryear promising to give Local 486 the bargaining rights for Yesteryear's new employees at the two Basic stores. In this respect, counsel referred the Board to topic 1471 of Halisburys Laws, vol. 16 and to the judgement of McKay, I in Legatt v. Bank of Montreal and McLean, 1938 CanLII 289 (ON HCJ), [1939] 1 D.L.R. 137 (S.C.O.)
Counsel for the objectors argues further that the Courts have applied the doctrine of estoppel by encouragement or acquiescence to protect the rights of third parties and that the Board should apply that principle in the facts of this case in order to protect the new employees hired by Yesteryear. He referred the Board to the discussion of this principle in 11 Handsbury and Maudsley, Modern Equity, Stevens and Sons Limited, 1981. The new employees of Yesteryear, he contends, will suffer detriment if Local 486 is allowed to enforce by means of this application a right which it had under the agreement. Therefore the union should be estopped from enforcing that right because some or all of these employees would be prejudiced by the Steinberg employees exercising bumping rights under the seniority provisions of the Agreement. In support of this proposition, counsel relied on the judgement in Legatt, supra.
In the alternative, if the Board finds that the bargaining rights of Local 486 for Steinberg's employees flows through with the Agreement via either section 1(4) or section 63(2) of the Act, counsel for the objectors submits that the Board should exercise its discretion to prevent Local 486 and its members from applying the seniority provisions of the Agreement and bumping the new Yesteryear employees. In counsel's view, the Board has discretion under section 1(4) and under subsection 8 of 63 to prevent the exercise of those rights.
The Board has considered fully the various arguments of counsel for the respondents and objectors that Local 486 should be estopped from pursuing this application, but the Board is not persuaded by any or all of them that the facts of this case fit within the principles on which those arguments are based. Baily made no promise that Local 486 would not exercise its rights under the Act and specifically no promise that Local 486 would not apply under either section 1(4) or section 63 of the Act to protect its bargaining rights for Steinberg employees. Nor did Baily promise to withdraw the application after it was filed. Steinberg's decision to transfer its employees from the two Ottawa Stores upon closing them under terms more generous than called for by the Agreement was not one in which Baily participated. Nor did he participate in Steinberg's decision that none of its employees would be retained at the two stores or in Yesteryear's decision to hire new employees. It is not surprising that he did not participate in either decision because Duchemin considered the Steinberg employees to have no rights with respect to the Basic stores and Ledenheim made it clear in his testimony that he did not want Steinberg employees for the new operation, rather he insisted on new employees being hired and trained in the new store concept. What Baily has done is to attempt to meet the request of Steinberg and Yesteryear to bargain a more flexible arrangement for the Basic stores in a separate collective agreement. To that end, he has participated in collective bargaining with Yesteryear both before and after the filing of this application. The fact that Baily has chosen, at the invitation of the respondents' representatives, to pursue the negotiating route rather than pressing litigation under the Act, should not prevent him from proceeding with the application which he had made under this Act on February 5th when the negotiations failed to produce a settlement, as they did, particularly absent any promise not to pursue Local 486's rights under the Act. For all of these reasons, the Board considers this application to be properly before it for determination on its merits.
Turning first to the question of whether there has been a sale of a business within the meaning of section 63(1) of the Act, the two parts to the question are: has there been a sale within the definition of subsection; and, if so, is the subject of that sale a business or part of a business of the vendor? The facts in this case reveal that there has been an assignment of the leases for the two Basic stores from Steinberg to Yesteryear. This assignment took effect on January 9th, 1982, the day on which the two stores ceased to operate as Steinberg stores. On the same day a transfer of assets was affected from Steinberg to Yesteryear for due consideration. While there was no transfer of employees at the bargaining unit level, three key management staff transferred from Steinberg to Yesteryear without loss of service credits. Yesteryear took immediate possession of the premises and began to renovate them and within a month of the closing of the stores by Steinberg, Yesteryear had re-opened them for business as a retail food outlet offering to the public groceries, meats, produce and dairy products, the same four food groups which had been available to Steinberg customers.
The Board consistently considers the substance and not the form of the transaction when it is determining whether there has been a sale of a business within the meaning of section 63 of the Act. See the Board's decision in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193. In that regard, the fact that no employees other than managers transferred from Steinberg to Yesteryear is not significant, particularly in light of Steinberg's failure to offer any opportunity for the employees to remain at the two stores, its insistence that they had no rights with respect to the new operation and Yesteryear's wish to hire new employees instead. See Gordons Markets, [1978] OLRB Rep. Dec. 1102 at paragraph 34. Nor is it significant that Yesteryear purchased none of Steinberg's stock in trade. The Board has over many years attached substantial significance however to the occupation by one employer in the retail food industry of premises previously occupied by another employer in that industry relative to other factors considered to be indicia of any sale of a business under the Act. See Darrigo Consolidated Holdings Inc., [1980] OLRB Rep. Jan 29. It has even greater significance when the new occupant and the prior one are corporations within a common corporate organization and the change in occupancy results from a transaction between them, the transfer of leases for the two stores in this case, which hardly can be viewed as an arm's-length one. See Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan. 47. In our view, considerable goodwill of the Steinberg customers would attach to the premises to the advantage of Yesteryear in these circumstances. While the Basic stores represent a different style of retailing food products, the products available are substantially similar to those which had been sold by Steinberg when it occupied the two stores and Basic would benefit to a significant degree from the shopping habits of the former Steinberg customers. Having regard to the foregoing principles and to the facts herein, the Board finds that the Basic stores constitute a continuation of Steinberg's business in the hands of Yesteryear and, therefore, that there has been a sale of part of Steinberg's business to Yesteryear within the meaning of section 63 of the Act.
There was frequent reference to the Basic stores representing a new concept in food merchandising at the retail level, the two stores still offer to the public groceries, produce, meat and dairy products although not with the same variety as Steinberg had. While there is to doubt that the purpose of this concept food merchandising is to make food products available at a lower retail price, it still remains that the continuing focus of the business is the retail sales of food stuffs in those four groupings. To this extent, in the opinion of the Board, the change in concept would not represent a change by Yesteryear in the character of the business so that it is substantially different from the business of Steinberg, the predecessor employer, such that would accommodate an application under subsection 5 of section 63.
Counsel for the respondents and the objectors both argued that the Board had the discretion to and should grant relief from the flow through of the Agreement and/or the bargaining rights attached to it should the Board find that there has been a sale of a business under section 63. The objectors' counsel was seeking relief for Yesteryear employees against the possible exercise by Local 486 members of seniority rights under the Agreement to displace any Yesteryear employees. The Act does not give the Board the sort of broad discretion that would be required to grant the relief requested. In this respect, see the Board's decision in G.A.C. Industries Ltd., [1981] OLRB Rep. June 658 in which the Board considered a request to declare that a collective agreement did not flow through and in John Lester Drugs Ltd., [1982] OLRB Rep. June 886 which adopted the reasoning of G.A.C.. For similar reasons the Board herein cannot make the declaration sought by counsel.
The Board is not without concern for the rights of the employees hired by Yesteryear. If they have a cause of action against Yesteryear or Local 486, however, section 63 of the Act does not give the Board the discretion to accommodate such cause. Therefore, they either would have to look to some other section of the Act, to the Agreement or to civil action.
Accordingly, for all of the reasons set out herein, the Board concludes that Yesteryear was bound by the collective agreement between Steinberg Inc., and the Commercial Workers Union, Local 486 at the time of the sale on June 9, 1982 and has continued since that date to be bound by it according to all of its terms, and the Board so declares.
In the result, it is unnecessary for the Board to deal with the application as it pertains to section 1(4) of the Act.
DECISION OF BOARD MEMBER J. WILSON;
I concur with my colleagues that there has been a sale of part of Steinberg's business to its wholly owned subsidiary Yesteryear. Nonetheless I would like to add some comments about the employees of Yesteryear and their treatment by the parties.
It is my feeling that the union and the corporate entities involved have been less than fair to the employees hired for the Basic stores by disregarding their legitimate interests.
The union and Yesteryear negotiated for some time to arrive at a separate agreement for the Basic stores. When news of the Dominion Stores agreement came to Mr. Baily's attention in March or April he wanted the same provisions and negotiations broke down.
Mr. Baily then moved to litigate his deferred successor rights/related employer application before this Board which, although a legitimate ploy, does raise in my mind, a question of what were his original intentions.
In my view this case has done much to harm employer-employee relationships between the parties involved. It is to be hoped that their future actions will be directed towards renewing their prior good relationships.