[1983] OLRB Rep. April 616
1620-82-R Graphic Arts International Union, Applicant, v. Total Marketing Incorporated, Respondent
BEFORE: M. G. Picher, Vice-Chairman, and Board Members E. J. Brady and A. Hershkovitz.
APPEARANCES: Geoffrey A. Beasley for the applicant; no one appearing for the respondent.
DECISION OF M. G. PICHER, VICE-CHAIRMAN AND BOARD MEMBER E. J. BRADY; April 29, 1983
- This is an application under section 1(4) of the Act. Section 1(4) provides:
(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 operation, 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.
The facts are not in dispute. The applicant has a bargaining relationship with Sepcographics Incorporated, which is a wholly owned subsidiary of the respondent Total Marketing Incorporated. In an arbitration award dated August 21, 1981, it obtained an order for the payment of $3,403.39 against Sepcographics Incorporated. Sepcographics Incorporated was insolvent at the time of the arbitration and subsequently made an assignment in bankruptcy. The full amount of the arbitration award remains unsatisfied. By this application the applicant seeks to put itself in a position to realize its arbitration award, now registered in the Court as a judgment debt, against the respondent Total Marketing Incorporated.
The material before the Board establishes that the two corporate entities are under common control and direction, and would qualify as related companies within the meaning of section 1(4) of the Act. This is not a case, however, where the Board should exercise its discretion to declare that Total Marketing Incorporated is a related employer for the purposes of the Act.
It is clear that Sepcographics Incorporated has ceased operations, and that the work which it performed is no longer being done. There has been no transfer of work, and in that sense no undermining or erosion of the applicant's bargaining rights. If it appeared on the material before us that the respondent had spun off a similar company to do identical work the case might be more compelling for relief, whether by way of declaration of successorship under section 63 of the Act or by the application of section 1(4). In those circumstances the Board could, by the operation of section 1(4) pierce the corporate veil in the interests of protecting the bargaining rights. (See e.g., Devon Studio, [1980] OLRB Rep. July 961). Those facts are not shown in the instant case. The purpose of section 1(4) of the Act is to preserve bargaining rights. It is not intended to give a party to a collective agreement the right to a "deep pocket" recovery of an unsatisfied debt against a related corporation.
The Labour Relations Act is predicated on the free choice of employees. It is also drafted in contemplation of the existing economic order, with due allowance for the realities of commercial law, including principles of limited liability for corporations. While section 1(4) provides an exception to that law for a limited purpose, that purpose must always be kept in mind. The section was not intended to extend bargaining rights, nor should it be used to extend the liabilities that arise under them, when bargaining rights have not in fact been transferred or undermined. (cf. Re Cassin—Remco Ltd., 1979 CanLII 2013 (ON HCJ), [1980] 105 D.L.R. (3d) 138 (Ont. H.C.)). The Board should not generally allow a union with bargaining rights for the employees of a subsidiary to use section 1(4) to automatically obtain a declaration that its bargaining rights extend to the parent company and its employees, or to a sister company. We do not see why the consequences should be any different simply because the subsidiary has become insolvent. (cf. Chandelle Fashions, [1982] OLRB Rep. June 828 at 848—49).
The Board is not without sympathy for the hardship' suffered by the applicant. It is left with an uncollectable bad debt. That result, however, is a risk that unions and employees have always assumed like all participants in the economic marketplace. Whether employees of a bankrupt subsidiary or their union should have a claim for an unpaid debt against a parent company that is solvent is a policy question of substantial consequence best resolved legislatively. It is not a result that should, absent clear and unequivocal language in the Act, be ushered in by this Board through a novel interpretation or application of section 1(4).
For the foregoing reason the application is dismissed.
DECISION OF BOARD MEMBER AL HERSHKOVITZ;
- In dissenting with the decision of the Board I must point out as the majority did that:
(a) The facts are not in dispute.
(b) The material before the Board establishes that the "two corporate entities are under common control and direction and would qualify as related companies within the meaning of section 1(4) of the Act".
I submit that section 1(4) of the Act gives the Board discretionary powers by the very language in which it is framed and I quote, "Where in the opinion of the Board associated or related activities or business are carried on, whether or not simultaneously by, or through more than one operation, 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 corporation, 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".
If one examines the facts as related by the applicant and agreed to by all parties in light of labour relations rather than "allowances for the realities of commercial law", one must come to the conclusion that the legislative intent of section 1(4) was to remove issues such as this from the "realities of commercial law" and bring it into the realities of labour law.
The majority decision makes much of the fact that "if it appeared on the material before us that the respondent had spun off a similar company to do identical work the case might be more compelling for relief'. However, it was the respondent that was totally responsible for determining the direction that Sepcographics Incorporated would take, since Total Marketing Incorporated had a hand in glove relationship rather than an arms length relationship with Sepeographics Incorporated.
To argue that because Total Marketing Incorporated did not form another company to continue to the function of Sepcographics Incorporated, and therefore is freed from any financial responsibility to what is in the final analysis its work force, even though it may be through another party would open the door for a practice that would be inimical to the very principles as envisioned by our legislature and as spelled out in section 1(4) of the Act.
In light of the foregoing I would grant the applicant the relief asked for under section 1(4) of the Act.