Ontario Labour Relations Board
[1983] OLRB Rep. December 1959
0303-83-R; 0304-83-R United Brotherhood of Carpenters and Joiners of America, Local 494, Applicant, v. Arbis Construction Ltd., Tony Azar Construction, Tony Azar Construction Limited, Respondents
BEFORE: R. A. Furness, Vice-Chairman, and Board Members J. D. Bell and P. J. O'Keeffe.
Appearances
APPEARANCES: David McKee and James Caron for the applicant; Sheldon L. Schwartz for Tony Azar Construction and Tony Azar Construction Limited; no one appearing for Arbis Construction Ltd.
Decision of the Board
DECISION OF THE BOARD; December 19, 1983
The applicant has applied to the Board for a declaration under section 63 of the Labour Relations Act that there has been a sale of a business or part of a business from Arbis Construction Ltd. ("Arbis") to Tony Azar Construction ("Azar") and as a consequence Azar is bound to the collective agrements between the applicant and Arbis. The applicant has also applied to the Board for an order under section 1(4) of the Act that Arbis and Azar are one employer for the purposes of the Act and for a declaration that Azar is bound to the collective agreements between the applicant and Arbis.
Having regard to the agreement of the parties, Tony Azar Construction Limited ("TACL") is added as a respondent to this proceeding.
At the commencement of the argument before the Board, the applicant informed the Board that it was addressing argument on the application for relief under section 1(4) and would not be making submissions with respect to its request for relief under section 63 of the Act. Having regard to the evidence and representations before it, the Board dismisses the application under section 63 of the Act.
At the commencement of the hearing, Azar and TACL raised for the first time and argued that the onus requirements in sections 1(5) and 63(13) of the Act were contrary to the provisions of section 11(c) and (d) of the Canadian Charter of Rights and Freedoms (being Part I of the Constitution Act, 1982). After hearing the argument of the parties, the Board made the following oral decision at the hearing:
The applicant has made application for relief under sections 1(4) and 63 of the Labour Relations Act. By virtue of the provisions of sections 1(5) and 63(13) “the respondents to the application shall adduce at the hearing all facts within their knowledge that are material to the allegation”. The respondents raised at the hearing for the first time an objection to the provisions of sections 1(5) and 63(13). It was the position of the respondents that sections 1(5) and 63(13) were contrary to the provisions of section 11(c) and (d) of the Canadian Charter of Rights and Freedoms (being Part I of the Constitution Act, 1982) in that an onus or duty is imposed on the respondents and also that the respondents were being compelled to be witnesses in proceeding against themselves with respect to an offence.
The provisions of sections 1(4) and 63 do not refer to onus but rather to a requirement to adduce facts within the knowledge of the respondents. In this regard sections 1(5) and 63(13) are unlike section 89(5) of the Labour Relations Act which refers to "burden of proof'. In our opinion, the respondents have not been charged with an offence within the meaning of section 11 of the Canadian Charter of Rights and Freedoms and since the legal onus of establishing entitlement to relief under sections 1(4) and 63 rests with the applicant there is no presumption of guilt, responsibility or liability against the respondents or compulsion to be a witness within the meaning of sections 11(c) and (d). The provisions of sections 1(5) and 63(13) are evidentiary requirements and do not constitute a violation of sections 11(c) and (d) of the Canadian Charter of Rights and Freedoms. Therefore, the Board has jurisdiction to hear the application for relief under sections 1(4) and 63 and sections 1(5) and 63(13) are not in violation of sections 11(c) and (d) of the Canadian Charter of Rights and Freedoms.
Azar and TACL advised the Board that they would proceed under protest.
Tony Azar is a finish carpenter and cabinet-maker of some fifteen years' experience and Harry Bischoff is a carpenter with more than thirty years' experience. Both of them were formerly members of the applicant. They were familiar with each other's ability and experience having previously worked for a common employer and in 1979 decided to carry on business together as equal and the only shareholders in Arbis. Arbis operated for the last nine months of 1979 and had sales of about $150,000. In 1980 sales were $400,000 and in 1981 sales were $570,000. In 1979 and 1980, Arbis enjoyed profits of $28,000 and $33,000, respectively. In 1981, Arbis suffered a loss of $25,000. Messrs. Azar and Bischoff had a meeting with their chartered accountant Terence Loebach in October of 1981, at which time the losses were becoming evident. As a result of the meeting they decided to try and cut costs. However, Arbis' financial situation began to deteriorate even more and in April of 1982 a similar meeting was held and it was obvious that Arbis was in an extremely difficult financial position. Mr. Loebach advised Messrs. Azar and Bischoff that Arbis had gone past any point of return with the extremely poor state of the economy in Windsor, with construction at a standstill and with interest rates in excess of twenty per cent. He advised them to discontinue operations and Arbis, in fact, discontinued operations in 1982. During the period when Arbis made a profit, Messrs. Azar and Bischoff made draws on a roughly equal basis.
Arbis during its brief existence performed work in the form of additions to homes, construction of small strip-plazas and land development. In 1979, the biggest job was for the Pompeii Restaurant in Windsor. In 1980 a job for the Becker Milk Company at Thompson and Wyandotte in Windsor provided Arbis with about three quarters of its income. In 1981, a job for the same company on Ottawa Street in Windsor provided Arbis with between two-thirds and three-quarters of its income. Mr. Arbis and Mr. Bischoff managed Arbis and performed basically the same functions such as estimating, obtaining work and quoting contract prices. Arbis had an office at 1715 Wyandotte Street in Windsor after Arbis had moved its office from Mr. Bischoff's home. Arbis had a shop on Westcott Street in Windsor together with a small warehouse. Azar and TACL have never used either Arbis' office or shop or Mr. Bischoff's home.
When Arbis ceased operations, Mr. Bischoff looked for a job and found work and continues to work as an employee of his son who had decided to commence his own business. Mr. Azar also searched for employment and became a salaried supervisory employee of Praxis Builders Inc. ("Praxis") for two and a half months in the Windsor area. Towards the end of his period of employment with Praxis, its principal recommended Mr. Azar for work in the masonry field with a company called Anchor Machine in Windsor. Anchor Machine was aware of Mr. Azar’s past and plight in the construction industry. Anchor Machine accepted the recommendation and purchased the material for Mr. Azar to perform the work in the fall of 1982.
Arbis employed between three and ten employees (including Messrs. Azar and Bischoff), hired employees through the applicant and owned small hand tools, a construction trailer, a dump truck and a mortar mix machine. The office equipment used by Arbis belonged to Messrs. Azar and Bischoff personally. Arbis purchased its material and supplies from a variety of sources. The construction trailer is now in the possession of a bank and the dump truck is presently in the possession of a garage because Arbis has been unable to pay for necessary diesel repairs. The records of Arbis and the mortar mix machine are in the custody of Mr. Bischoff. Messrs. Azar and Bischoff have considered having Arbis make an assignment in bankruptcy. However, Arbis does not have the money to pay a trustee in bankruptcy. The two of them also were engaged in another unsuccessful business venture when they arranged to lease a store and open a fast food outlet in a plaza which they had developed.
Mr. Azar was able to start up in business through the business opportunities presented after doing work for Anchor Machine. TACL was incorporated in May of 1983. Azar has not purchased any equipment from Arbis and has used different bookkeepers, offices and telephone numbers. Azar has never operated out of Arbis' shop and has used neither the logo nor the green and black colour scheme of Arbis. With one minor exception, Azar has not performed work for Arbis' customers. Azar is engaged almost entirely in performing masonry work, unlike Arbis and its source of work is entirely different from the source of work which was tapped by Arbis. Azar and Arbis purchased their materials and supplies from different suppliers. TACL has recently purchased its own office equipment from a supplier of such equipment. Mr. Bischoff has never worked for Azar.
In Walters Lithographing Company Limited, [1971] OLRB Rep. July 406, the Board set forth certain indicia or criteria for making determinations with respect to section 1(4) of the Act. These indicia or criteria for determining whether the activities or businesses of one or more corporations, individuals, firms, syndicates or associations, or any combination thereof are carried on under common direction or control and therefore may be treated as one employer are: (1) common ownership or financial control, (2) common management, (3) interrelationship of operations, (4) representation to the public as a single integrated enterprise, and (5) centralized control of labour relations.
With respect to the first criterion, Mr. Azar and Mr. Bischoff were equal owners in Arbis and Mr. Azar is the sole owner of Azar. To this extent, there is a degree of common ownership in Arbis only. This criterion reveals some common ownership and constitutes some evidence for a finding under section 1(4). The second criterion of common management is similar to the first criterion. Mr. Azar and Mr. Bischoff jointly managed Arbis while Mr. Azar is the sole manager of Azar. This criterion again indicates some evidence for a finding under section 1(4). In considering the third criterion, it is clear that there never has been an interrelationship of operations between Arbis and Azar. While the two companies have operated in the construction industry in general terms, there is no doubt that the two companies worked in different aspects of the construction industry. Arbis was engaged in the development of properties and in the construction and remodelling of commercial and residential properties. On the other hand, Azar is almost entirely engaged in masonry work. Moreover, with the exception of having done a small job for one customer which had previously engaged Arbis, Azar secured work from entirely different sources than Arbis. In considering the fourth criterion, there is no evidence that there was any representation to the public as a single integrated enterprise. On the contrary, Arbis and Azar used different offices, telephone numbers and bookkeepers. Arbis operated conspicuously out of a shop with its own truck, trailer and mortar mixer with its colours of green and black and its own logo. Azar does not operate out of a shop or warehouse, but rather out of Mr. Azar's residence, its corporate colour is green and it does not have a logo. Arbis and Azar used different suppliers of materials and supplies. Finally, there is no centralized control of labour relations by Arbis and Azar. In this respect, there has never been any common control much less centralized labour relations.
Arbis remains as an insolvent company which is inactive and seems likely to remain in this condition. In April of 1982, Mr. Bischoff and Mr. Azar were faced with the need to earn a living. Mr. Bischoff was able to secure employment with his son and is still so employed. Mr. Azar initially found employment with Praxis where he worked for two and a half months as a salaried employee. Due to fortuitous circumstances which he did not initiate, he was able to again endeavour to work for himself in the industry he knew best - the construction industry. Azar represents a new business disassociated from Arbis. Azar and Arbis each directed its services towards a different segment of the construction industry.
While there is some degree of correspondence of the first two criteria set forth in Walters Lithographing Company Limited, supra, on balance, the criteria have not been satisfied. Moreover, section 1(4) requires consideration of more than common control or direction. Section 1(4) states:
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, individual 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.
Before the Board may exercise its discretion under section 1(4) there are three conditions which must be found to exist. There is the obvious requirement that there be more than one corporation, individual firm, syndicate or association involved in the application. This requirement, of course, has been satisfied. However, there are the additional requirements that the entities be both "associated or related" and under "common control or direction". As the Board has indicated, Arbis and Azar affected by this application are not under common control or direction. There remains "associated or related". As the Board stated in Diversey (Canada) Limited and Diversey Environmental Products Limited, [1978] OLRB Rep. Sept. 814 at 817:
The need for these latter two requirements is not difficult to understand. Section 1(4) allows the Board to pierce the corporate veil in order to avoid the types of situations outlined in Industrial-Mine Installations Limited, [1972] OLRB Rep. Oct. 1209. It is not designed to bind independent or unrelated enterprises. In deciding whether the statutory prerequisites have been satisfied, the Board has regard to a broad range of industrial relations considerations, some of which may overlap in their relevance to the various issues, and all of which may vary in importance depending upon the particular fact situation at hand.
The question of whether Arbis and Azar are "associated or related" requires the Board to consider the nature of their business activities. As the Board pointed out earlier, Arbis and Azar are engaged in different aspects of property development and construction. As the Board stated in Brunt Erecting and Hoisting, [1980] OLRB Rep. July 945, buinesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills and are carried on for the benefit of related principals. In our view, Arbis and Azar are neither of the same character nor serve the same general market.
In conclusion, the Board finds that Arbis Construction Ltd. and Tony Azar Construction and/or Tony Azar Construction Limited is/are neither associated or related in their activities nor are they under common control or direction. The applicant is not entitled to a declaration that Tony Azar Construction and/or Tony Azar Construction Limited is/are bound by the collective agreements to which Arbis Construction Ltd. is bound. The application under section 1(4) of the Act is dismissed.