[1983] OLRB Rep. July 1184

1675-82-R London & District Service Workers' Union, Local 220, AFL, CIO, CLC, Applicant, v. Price Waterhouse Limited and The Maritime Life Assurance Company, Respondents

BEFORE: R. A. Furness, Vice-Chairman, and Board Members B. L. Armstrong and E. J. Brady.

APPEARANCES: David Starkman, Paul Middleton and Bernie Hanson for the applicant; R. Budd and B. Grossman for Price Waterhouse Limited; Philip Spencer, Q.C. for The Maritime Life Assurance Company

DECISION OF THE BOARD; July 11, 1983

1. The applicant has applied to the Board under section 63 of the Labour Relations Act with respect to its bargaining rights. The applicant has alleged that on or about February 16, 1982, there was a sale of a business by Chateau Gardens (Hanover) Inc. ("Chateau") to Price Waterhouse Limited ("Price") and The Maritime Life Assurance Company ("Maritime"). It was the position of the applicant that as a result of this alleged sale the respondents are bound by a collective agreement entered into by the applicant and Chateau.

2. In a letter dated December 23, 1982, the applicant informed the Board that it wished to) make representations as to the application of section 1(4) of the Act.

3. Initially, Price adopted the position that the applicant is not entitled to bring this application before the Board because it did not obtain leave of the Supreme Court of Ontario upon notice to Price of its intention to make this application and had not applied to the Court pursuant to paragraph six of the order of The Honourable Mr. Justice Anderson made on February 16, 1982, wherein Price was appointed the receiver and manager of Chateau. In a decision dated March 4, 1983, (now reported at [1983] OLRB Rep. Mar 441) the Board held that the leave of the Court was not required before the applicant may file this application.

4. During the earlier hearings of this application, Price informed the Board that attempts were being made to sell Chateau on January 17, 1983, subject to the consent of. the Court. During the course of the hearings, on April 27, 1983, the following minutes of settlement were entered into and filed with the Board.

Board File No. 1926-82-R

Minutes of Settlement

London & District Service Workers

Union Local 220, AFL, CIO, CLC

(Local 220)

• and -

Versa Care Ltd.

517800 Ontario) Ltd.

(Versa-Care)

The parties agree to) the following disposition:

1. Versa-Care Ltd. agrees that as of January 17, 1983 it became a successor employer and is bound by the collective agreement between Chateau Gardens (Hanover) Inc. and London and District Service Workers' Union, Local 220, which agreement is dated September 2, 1982.

2. Versa-Care Ltd. will assume its obligations under the collective agreement as of January 17, 1983. Local 220 will not attempt to enforce any alleged claims under the collective agreement which claims arose prior to January 17, 1983 until the Ontario Labour Relations Board has rendered a decision in Board File Number 1675-82-R.

3. Local 220 hereby withdraws Board File Number 1926-82-R.

Dated at Toronto this 27th day of April, 1983.

“M. Gordon Spear” “Lynn Malone”

“Marian Inthof

“Joan Weigel”

“Marie Zittler”

“Mary Ann Kivetsch”

“Paul D. Middleton”

For the Company For the Union

5. At this point Price moved for a dismissal of this application because it alleged there was no policy basis for continuing when the applicant had agreed that Versa-Care Ltd. became the successor employer on January 17, 1983, and bound by the applicant's collective agreement dated September 2, 1982. The applicant opposed Price's motion and adopted the position that it was concerned with bargaining rights and outstanding grievances, and, that while the issue of bargaining rights had been ultimately resolved, the outstanding grievances required an answer to the question of whether Price and/or Maritime was were successor employer(s) under section 63 between February 12, 1982, and January 17, 1983. The Board dismissed the motion of Price and ruled that the applicant was entitled to have a determination under section 63 with respect to whether Price and Maritime was/were successor employer(s) between February 12, 1982, and January 17. 1983.

6. The facts involved in this application are not in dispute. On May 24, 1979, Chateau was operating a nursing home in Hanover, and on that date it executed a debenture in favour of Maritime in the amount of almost four million dollars. On December 1. 1980. the applicant was certified by the Board to represent full-time employees of Chateau at Hanover. On December 8, 1980, the applicant gave notice to bargain to Chateau and bargaining between the applicant and Chateau continued during 1981. In August of 1981, the matter of a collective agreement was referred to arbitration under the Hospital Labour Disputes Arbitration Act. The Board established under that Act rendered its decision on July 19, 1982. On October 8, 1982, the applicant was certified by the Board for part-time employees of Chateau. The collective agreement which was settled by arbitration expired on December 1, 1982, and the applicant gave notice to bargain on November 18, 1982, with respect to the full-time employees for a new collective agreement. On October 12, 1982, the applicant gave notice to bargain with respect to the part-time employees.

7. Chateau went into default under its debenture to Maritime and on February 12, l982. Price was appointed receiver and manager of Chateau by Maritime pursuant to the debenture. On February 16, 1982, pursuant to an application by Maritime, the Supreme Court of Ontario, by the order of Anderson, J., appointed Price the receiver and manager o)f Chateau. The reason for the change in Price from a privately-appointed receiver and manager under the debenture to a court-appointed receiver and manager resulted from a concern and a consensus with respect to the interests of other creditors of Chateau. Well over one hundred investors loaned more than one million dollars to Chateau on unsecured notes. Chateau owed one hundred and fifty thousand dollars in property taxes. There was also a second mortgagee who was owed money. In addition, more than three hundred thousand dollars were owed to the Royal Bank of Canada.

8. Prior to February of 1982, the Minister of Health became concerned with deficiencies in the operation of the nursing home. To this end, the Ministry of Health had discussions with Diversacare (an organization experienced in owning and operating nursing homes). Diversacare put forward the name of Price. Diversacare and Price worked together to deal with the nursing care and financial problems of Chateau. Initially, two persons from Price and three persons from Diversacare entered the nursing home and Price commenced its stewardship as a receiver and manager. One of the greatest concerns initially was that the licence to operate a nursing home was in jeopardy.

9. Upon the arrival of Price as receiver and manager the management of Chateau was replaced. However, Chateau's board of directors continued to exist. Price held a meeting of the employees of Chateau on or about February 12, 1982. The employees were informed that it was Price's intention as receiver and manager to continue to operate. The employees were informed that they would be paid. However, this was not a personal undertaking by Price. Price attended on the local bank and Diversacare met with the director of care to dispel any alarm over the operations. The administrator of the nursing home was immediately replaced and, on the appointment of Harold Lebold to that position, Diversacare was satisfied that it need not become deeply involved in the operations of Chateau. Once sufficient controls were in place, Price felt that Chateau did not require the full-time presence of anyone from its firm. After the award of the board of arbitration was released in July of 1982, there was concern by the full-time staff over back pay and Mr. Lebold notified Price of this concern. Price responded by dictating a communiqué to Mr. Lebold over the telephone. The communiqué was typed on the stationery of Chateau and posted in the nursing home on September 3, 1982, and reads as follows:

September 3, 1982

TO THE EMPLOYEES OF SAUGEEN VILLA AND

CHATEAU GARDENS

As you are aware, the full-time union employees of Saugeen Villa and Chateau Gardens have recently been awarded an hourly wage increase following from an arbitrator's decision. Two issues have arisen from this:

1. substantial differences in wage rates that now exist between full-time union and other employees.

2. the retroactive wage award given to the full-time employees.

As Court-appointed Receiver and Manager, Price Waterhouse Ltd. is concerned about these issues and their effect on staff morale.

As you know we have been attempting to find a new owner for the complex and have advertised the complex for sale. On September 9 we will be opening any tenders received and hopefully selecting a new owner. Once this has been completed and a new owner found, or it has been determined that no suitable purchaser exists at this time, we will be proceeding without further delay with the issues of retroactive payments for the union employees and wage increases for the other employees. As part of the process in resolving these matters, we shall be seeking the advice and direction of the Court in order to determine how we should fairly proceed.

We thank you for your patience in these matters and for the continued dedication to quality health care that we have seen demonstrated through the course of our administration.

Should you have any questions, please feel free to discuss them with Mr. Harold Lebold. our Acting Administrator.

Price Waterhouse Ltd.

Court-appointed Receiver

and Manager of

Chateau Gardens (Hanover) Inc. and

Chateau Gardens (Hanover II) Inc.

10. The licence to operate the nursing home expired on March 31, 1982, and on that date a new licence was issued. The licence was in the name of Saugeen Villa Nursing Home ("Saugeen") at all material times and remained in the name of Saugeen until the consummation of the court-approved sale to Versa-Care Ltd. on January 17, 1983. At no time did any title pass from Chateau to Price. Title in the assets of Chateau passed from Chateau to Versa-Care Ltd. by means of a vesting order of the Supreme Court of Ontario. However, as may be expected, Price changed the names of the signing officers on Chateau's bank accounts in Hanover. The employees at the nursing home were paid on Chateau's cheques. Price's authority to act at Chateau originated in the court order wherein it was appointed receiver and manager. The powers set out in the order are in the usual standard form and permit Price to proceed in its stewardship. However, Price may seek directions from the court with respect to out of the ordinary matters.

11. At no time was title to any of Chateau's property vested in Maritime. None of Maritime's employees were present on the premises of Chateau during the period of Price's acting as receiver and manager. The debenture contains the usual provisions that in exercising any powers the receiver shall act as the agent for Chateau, no doubt because o)f the common law concept of a mortgagee in possession. The debenture also states that Maritime shall not be responsible for the receiver's actions.

12. During the period of the private appointment of Price between February 12 and 16.1982, Price drew its powers from the terms of the debenture. Price received an indemnification from Maritime during this period covering monies expended but excluding acts of negligence. Price had the power to continue or discontinue to operate the business of Chateau, to hire personnel in order to operate the business, to schedule hours of work and vacations and to create new job classifications. However, this last power was not exercised. In its role as manager, Price informed local suppliers that they would be paid for new supplies and Diversacare's services were paid for on Chateau's cheques. At the time Price became receiver and manager, Chateau was engaged in negotiations with the applicant, and Mr. Lebold was instructed to attend the negotiations. The solicitors who had previously represented Chateau in these negotiations were also instructed to continue in that capacity. When the award of the board of arbitration was communicated to Chateau, Price instructed Lebold to sign the collective agreement on behalf of Chateau. On January 17, 1983, Price terminated the employment of the employees of Chateau and posted the following notice (on the stationery of Price) on a bulletin board:

January 17, 1983

Management and Employees of

Chateau Gardens (Hanover) Inc. and

Chateau Gardens (Hanover II) Inc.

On Monday. January 17, 1983, a disposition of the assets of Chateau Gardens (Hanover) Inc. and Chateau Gardens (Hanover II) Inc. was completed. The assets were sold to Versa-Care Limited and 517800 Ontario Limited. The purchasers intend to operate the facilities known formerly as Chateau Gardens Retirement Community and Saugeen Villa Nursing Home. We would like to take this opportunity to thank the management and staff of Chateau Gardens (Hanover) Inc. for the assistance and co-operation demonstrated by them during the course of the receivership.

During the course of the next few days, the following will be issued to you:

(1) Separation certificates pursuant to the Unemployment Insurance Act.

2 Vacation pay accrued and not paid out to you.

3. T4's setting out your earnings for both the 1982 and 1983 year to date periods.

4. Ontario Hospital Insurance Plan Form ~l04. Yours truly.

"Price Waterhouse Limited"

Court appointed

Receiver and Manager of

Chateau Gardens (Hanover) Inc. and

Chateau Gardens (Hanover II) Inc.

J. S. Wilson, Vice President

It was the position of Price that the terminations were necessary because, upon the completion of the sale to Versa-Care Ltd., it was no longer the receiver and manager and the employees were no longer employees of Chateau. Price viewed the documentation referred to in the notice as a necessary administrative act on its behalf.

13. The applicant argued that the respondents had carried on the same business as Chateau and that this business had been sold, transferred or otherwise disposed of by Chateau to the respondents. The applicant posed the question of whether the appointment of Price by the court on February 16, 1982, amounted to a sale of a business to the respondents within the meaning of section 63 of the Act. The applicant referred to earlier decisions of the Board where the Board had been prepared to regard receivers and managers as employers in applications for certification. A review of these cases, however, contains no extensive analysis of the actual facts in these cases and it would not appear that the Board had the benefit of full argument. See, for example, Guaranty Trust Co. of Canada 47 CLLC ¶16,500. In Mount Citadel Limited, [1976[ OLRB Rep. July 367, the Board inclined to the view that a receiver-manager appointed by the court might be an employer.

14. The applicant queried who was the employer during the period from February 2, 1982, to January 17, 1983, if Price and/or Maritime was/were not the employer(s). In our opinion, the answer to this query is that Chateau remained the employer until the vesting order of the court and the approval of the sale by the court on January 17, 1983. At common law the appointment of a receiver and manager does not result in the dissolution of a company. See Davey v. Gibson 1929 CanLII 744 (ON SCHCD), 64 O.L.R. 627. A receiver and manager derives no title or estate from the court order which appointed him. He is merely an officer of the court responsible for collecting and dealing with the business or property covered by the terms of his appointment on behalf of the creditors. See Vine v. Raleigh (1883) 24 Ch. D. 238, 243; Re Beaumont (1910) 79 L.J. Ch. 744; Justice v. James (1898) 15 T.L.R. 181,182; Company Receivers and Managers (O'Donovan-1981) 294-297; and Kerr on Receivers, 14th Ed. (1972) 135:136. Chateau continued to exist but its ability to conduct its business had been drastically curtailed by its contractual obligation with Maritime in the form of a debenture. Once Chateau had defaulted under the terms of the debenture, Maritime was entitled to invoke the safeguards provided for in the debenture in order to protect its financial interests.

15. The functions of Price was to receive and disburse monies in managing the business of Chateau. As was stated earlier, no change in ownership occurred during the period of Price's acting as receiver and manager. Chateau continued to exist with a board of directors but with the full powers of Chateau to conduct its own business drastically curtailed. Price honoured the collective agreement during the period it was a receiver and manager. The purpose of section 63 is to preserve bargaining rights of a trade union and to maintain the status quo in collective bargaining. In order for a sale of a business to occur within the meaning of section 63, it is necessary that there be a disposition from Chateau which is a party to a collective agreement to another person. This did not happen until January 17, 1983. During the period between February 12, 1982, and January 17, 1983, Price acted as a receiver and manager privately and on the appointment of the court and it did no more and no less. During this same period, Maritime was merely seeking to protect its financial interests under the debenture. None of Chateau's assets or business was transferred to Maritime until after the sale of Chateau's business to Versa-Care Ltd. on January 17, 1983, when presumably Maritime's security was satisfied to the extent of the funds available from the sale. During the time Maritime was pursuing its financial interest, Chateau continued to exist with its control over the indispensable licence to operate a nursing home as part of its assets and the terms of the collective agreement being honoured on its behalf by Price. On the evidence before the Board, we are not prepared to find that Maritime became a successor employer due to a sale of a business within the meaning of section 63 of the Act. The mere happenstance of having loaned and trying to protect money to an unsuccessful employer is not, in itself, a reason to find a sale of a business.

16. A number of decisions of other Canadian Labour Relations Boards were cited to the Board. None of the cases cited were directly on point, see Ontario Worldair Ltd. 81 CLLC ¶16,117; Fraser Valley Arenas (1975) Ltd. (1979) 3 Can. L.R.B.R. 195; and Uncle Bens Ltd. (1979) 2 Can. L.R.B.R. 126. These cases considered different situations where a receiver or a manager or a receiver and a manager or a mortgagee in possession were involved and whether there was a difference between privately-appointed receivers and managers as opposed to court-appointed receivers and managers. It is clear that there are valid distinctions to be made in the field of commercial law in these areas for the property rights of the parties may be differently affected depending on the terms of the private instrument under which a receiver or manager are appointed compared with a court-appointed receiver or manager. It was agreed by counsel before the Board that from a labour relations point of view no distinction ought to flow from whether receivers and managers are appointed under the terms of a private instrument or by a court. The Board agrees that obfuscation ought to) be avoided by all means. (cf. Price Waterhouse Ltd., [19831 OLRB Rep. June 000).

17. This Board is in sympathy with this approach. In our view, the question of whether there has been a sale under section 63 is best approached by identifying the employer which is bound by the bargaining rights, the business or part thereof which is affected by the application, the function actually being performed by the receiver and/or manager, whether there has been an actual sale, lease, transfer or other manner of disposition of a business or part of a business and the identity of the person to whom such a sale, lease, transfer or other manner of disposition has occurred. We therefore find that the consequences upon labour relations flowing from a court-appointed receiver are no different than those which result from the private appointment of a receiver.

18. This application under section 63 is dismissed for the foregoing reasons. Although the applicant raised the question of the application of section 1(4) to this proceeding, neither evidence nor argument were addressed on this point. In these circumstances, the request for relief under section 1(4) is dismissed.

19. It was common ground among counsel that the board of arbitration had awarded retroactive pay to the employees of Chateau in the amount of $100,000. This award was released during the period when Price was the receiver and manager. Price has paid $40,000 to the employees of Chateau. This amount represents the portion of the retroactive pay which accrued during the term of Price's stewardship. There remains the issue of how the applicant is to obtain the outstanding $60,000 for the employees. It was the position of the applicant that since Price and Maritime had benefited commercially they ought to be responsible for this amount. This approach may be described as the well-lined pocket approach. While the Board has every sympathy for the employees in satisfying their reasonable expectations, there is no basis in this application for tapping the supposed well-lined pockets of a receiver and manager or an assurance company (or trust company, bank or private investor) merely because they have supposedly benefited in commercial relations with their employer. While it may be true that a lender of money has benefited from the labours of the employees, it may also be true that the money supplied has helped to create jobs, financial expansion and supplied liquidity during problems in cash flow and paid wages to the employees. There are clearly potential benefits on both sides of the relationship.

20. In closing, the Board notes that Price has commenced a proceeding in the Supreme Court of Ontario with a view of asking directions concerning the priorities among unsecured creditors. The applicant was invited to address the court with respect to the interests of the employees. The applicant did attend and present argument. A decision has yet to be released on this request for directions.