United Food and Commercial Workers International Union, AFL, CIO, CLC Region 18 on behalf of its Local 596 v. The National Bank, Price Waterhouse Ltd., The Federal Business Development Bank and Touche, Ross Limited, 1983 CanLII 882

[1983] OLRB Rep. June 944

1545-82-R; 1546-82-U United Food and Commercial Workers International Union, AFL, CIO, CLC Region 18 on behalf of its Local 596, Applicant/Complainant, v. The National Bank, Price Waterhouse Ltd., The Federal Business Development Bank and Touche, Ross Limited, Respondents

BEFORE: M. G. Picher, Vice-Chairman, and Board Members M. Eayrs and H. Kobryn.

APPEARANCES: David Starkman, Bernie Hanson, Kevin Corporon and Donald LaRose for the applicant complainant,' Gary Grierson, Joel Wiesenfeld and Mike Mueuer for the National Bank and Price Waterhouse Ltd., and D.S. Jovanovic and Ivan McKague for The Federal Business Development Bank and Touche, Ross Limited.

DECISION OF THE BOARD; June 29, 1983

This is an application for a declaration under section 63 of the Labour Relations Act and a complaint under section 89. These matters were heard together and are hereby consolidated by order of the Board.
Windsor Packing Company Limited (hereinafter referred to as ("Windsor Packing") is in the business of killing and processing pork and beef at its plant in Windsor. In September of 1982 it went into receivership. Under the receiver operations were wound down and, after a time, all of the employees were terminated. The complainant union maintains that the respondents, who are the two debenture holding banks and the receivers acting for them have violated the provisions of section 64 of the Labour Relations Act in their treatment of the employees and their union. The union also seeks a declaration that the banks and receivers are transferees of the business of Windsor Packing for the purposes of section 63 of the Labour Relations Act and are therefore liable for unsatisfied obligations of the insolvent company to the employees and the union.
The facts are not in dispute. The union holds bargaining rights for the production workers of Windsor Packing. A collective agreement was in effect between the company and the union from April 1, 1981 to March 31, 1983. On April 3, 1980 Windsor Packing gave a fixed and floating charge debenture to the Bank of Nova Scotia as security for a loan of seven million dollars borrowed at an interest rate of 25%. It was registered under the Corporation Security Registration Act on April 18, 1980. The Bank of Nova Scotia assigned its rights under the debenture to the respondent National Bank of Canada on April 30, 1980, the assignment being registered under the Corporation Security Registration Act on the same date. Windsor Packing then gave further security to the National Bank by executing a general security agreement on April 2, 1981 which was registered under the Personal Property Security Act.
Windsor Packing also borrowed substantially from the respondent Federal Business Development Bank. It took two loans, each for 2.25 million dollars from that bank on September 21, 1981. Those loans were secured by way of a first mortgage on the land, buildings and fixtures of Windsor Packing. The company also gave the Federal Business Development Bank further security in the form of a personal property security agreement under which a number of chattels, including furniture, machinery and office and production equipment were used as collateral to the loan.
Windsor Packing then had some eleven and a half million dollars in outstanding credit obligations to the banks. On September 21, 1981 the two creditors, the National Bank of Canada and the Federal Business Development Bank executed a postponement or subordination agreement establishing their respective priorities in the event of default on any of Windsor Packing's obligations. That agreement was duly registered under the Corporation Security Registration Act on October 29, 1981. As a result of these commercial transactions the Federal Business Development Bank had a first charge on the land and buildings of Windsor Packing as well as on a number of specifically listed chattels. The National Bank retained a first charge on the inventory of the company as well as against some of its chattels.
In September of 1982 it became apparent that Windsor Packing was in serious financial difficulty and would be unable to meet its loan obligations. On September 21, 1982 the National Bank made a written demand on Windsor Packing for the payment for several millions of dollars. The company responded in writing on the same date that it was insolvent and could not meet the demand. On the same day the National Bank named the respondent accounting firm Price Waterhouse Ltd., (hereinafter 'Price Waterhouse") receiver under both of its securities, the debenture security and the general security. On September 21, 1982 Windsor Packing consented to the appointment of the receiver.
The impact on the employees was swift. Late in the same day, pursuant to their appointment, Price Waterhouse went into possession of Windsor Packing's premises in Windsor. It did so between shifts, on the evening of September 21, 1982. The representative of the receiver advised the employees of the receivership, indicating to them that it intended to act as a receiver-manager pursuant to the provisions of the National Bank's security. A receiver-manager has latitude to make decisions on the economics of operating, ceasing to operate or selling a business in the interests of its client. On the morning of September 22, 1982 the receiver-manager communicated to the employees that the business of Windsor Packing would not be carried on. The employees were informed that under the receivership no guarantees could be made with respect to the payment of back wages, vacation pay or any other outstanding obligations owed by Windsor Packing to its employees. The employees were advised that the receiver would need a certain number of employees for a time to assist it in winding down operations and liquidating inventory. Of the 85 employees then at work the receiver hired approximately 23 to work in the shutting down of operations. Obviously employees would not accept to work for the insolvent Windsor Packing, and it is common ground that they were then hired by Price Waterhouse as its own employees. It is not disputed that the employees were retained not for the purpose of continuing the operation of the business but for inventory taking, completing work in progress, ensuring the security of the plant and selling the fresh meat that was left. The 23 employees retained were released from their employment by the receiver gradually as those processes unfolded. By the end of October there were no employees left.
The receiver did not observe the terms of the collective agreement for that continued period of employment. It did not apply seniority or other provisions of the agreement in the selection of the employees it offered to retain nor did the receiver observe any of the obligations of the collective agreement with respect to benefits. The employees who were retained were paid the wage rates which they had previously been paid under the collective agreement, but in the submission of counsel for Price Waterhouse that was a business decision entirely in the discretion of the receiver. No union dues was deducted or remitted.
On September 24, 1982, having learned of the receivership established by the National Bank, the Federal Business Development Bank appointed the accounting firm of Touche, Ross Limited as its receiver. Since then the two receivers have cooperated in an attempt to maximize what their respective principals will realize on their security. Initially they attempted to try to sell the business as a going concern, but that attempt met with no success. As a result both banks were put in a position of selling off the assets against which they had security, and that is what ensued. It appears that up to the date of the hearing the Federal Business Development Bank had also attempted without success to sell the land and buildings of the insolvent company.
The final pertinent fact respecting the receivership is that the insolvent company had no liquid assets that the receivers could take over. The net balance of its three bank accounts was an overdraft as of September 21, 1982 when the initial receiver went into possession.
To summarize, Windsor Packing defaulted on its secured obligations to the National Bank and the Federal Business Development Bank. The banks privately appointed Price Waterhouse and Touche, Ross Limited as receiver-managers respectively. Both receivers decided that the business could not be sold as a going concern and opted to realize the banks' securities to the extent that they could against the assets of the insolvent company. Price Waterhouse hired some 23 employees who were retained in diminishing numbers until the plant and premises were entirely mothballed as of the end of October. Price Waterhouse did not observe the terms of the collective agreement either in the selection of which employees would be retained, or in any of their terms and conditions of employment or layoff, save that for convenience it continued to pay them the rates of wages they had been getting under the collective agreement. It did not deduct or remit union dues.
There are two supplementary facts, not necessarily critical to the application or complaint. At the instance of an unsecured creditor a petition in bankruptcy was issued on October 18, 1982 and a subsequent receiving order was made on November 23, 1982. At law, therefore, the Windsor Packing has been a bankrupt corporation since October 18, 1982. It also appears that the banks have instituted court actions against the directors of Windsor Packing.
The union submits that the foregoing facts disclose that there has been the transfer of a business within the meaning of section 63 of the Labour Relations Act. It maintains that when the banks and their receivers took over the assets and undertaking of Windsor Packing, along with the effective control of the labour force of the insolvent, they became successor employers bound not only to honour the continuing obligations under the collective agreement but to make good any undischarged obligations of the insolvent Windsor Packing. To that end it seeks a declaration that the respondents are successor employers within the meaning of section 63 of the Labour Relations Act.
There are two dimensions to the union's complaint under section 89 of the Act. First it submits that if the respondents are successor employers they are under an obligation to pay dues which it is agreed were previously owing to the union and went unpaid by Windsor Packing. They submit that the failure to remit those dues, as well as dues owing for the period of the winding down under the receivers, constitutes an unlawful interference with the administration of a trade union contrary to section 64 of the Act. Alternatively they submit that if none of the respondents are successor employers within the meaning of the Act they are, nevertheless, in violation of section 64 by their failure or refusal in disposing of the assets of the insolvent company to remit to the union dues previously deducted from the wages of employees and held in trust for the union. It submits, in other words, that any monies so deducted never were the assets of Windsor Packing and cannot be dealt with as such by the receivers. In this regard it is not disputed by the parties that the unpaid dues for the period prior to the receivership relate to one month and amount to approximately seventeen hundred dollars.
It is also not disputed that there was no money in the bank accounts of the insolvent from which the receivers could pay the union dues not remitted by Windsor Packing. Counsel for Price Waterhouse submits that the receiver would be in an obligation to pay such funds only if they had been segregated so that they could be traceable as trust funds held for the benefit of another by the insolvent. On the facts that has not occurred.
Counsel for the union submits, nevertheless, that as successor employers under the Act the respondents are responsible for the payment of those dues. Alternatively he submits that even if the respondents are not successor employers they are liable to pay the unpaid dues either out of their own assets or out of the assets realized by the sales of the chattels or land of the insolvent company.
In a number of cases in recent years, labour boards have been required to determine the labour relations consequences of both court appointed receivership and, as in this case, the appointment of a receiver under a private instrument. In Price Waterhouse Ltd., 119791 OLRB Rep. Jan. 50 the Board was called upon, apparently for the first time, to determine whether a receiver-manager assuming control of an insolvent business is a successor employer for the purposes of section 63 of the Act. In that case the Board concluded that no sale had occurred within what was then section 55 of the Act, reasoning as follows at p. 51:

The Board considers that this application has been prematurely brought. In order for a sale of a business within the meaning of Section 55 to occur, it is necessary that there be a disposition from, in this case, the employer that is party to the collective agreement to another person. An examination of the relationship existing between the company and the respondents reveals that this has not yet occurred. What has happened is that a receiver has been appointed to manage the business - so that the Bank which holds a first charge on the assets and undertaking may enforce its security. Although the receiver is carrying on the business for the benefit of the Bank to which it owes a fiduciary duty, its actions are those of the company which retains the legal and equitable ownership of the assets. Under the terms of the debenture constituting the receiver as the agent of the company, the company is "solely responsible for the receiver's acts or defaults and for its remuneration and expenses". In these circumstances, it cannot be said that a disposition within the meaning of Section 55 has occurred.

It should be emphasized that the result of our decision is not that the bargaining rights of the applicant have been lost which was the result in all previous proceedings in which a Section 55 declaration was refused by the Board. As was recognized by counsel for the respondents, the company's obligations both under the Act and the collective agreement were not extinguished by the appointment of the receiver. So long as the business continues to function, those obligations persist. For that reason, the receiver has continued on behalf of the company to honour the collective agreement.

The union submits that this Board should now depart from the approach which it took in the Price Waterhouse Ltd. decision. It submits that the Board should view the appointment of Price Waterhouse as being tantamount to a take-over of a business pursuant to a conditional sales contract. Counsel for the union submits that in effect what transpired between Windsor Packing and the National Bank was a sale of the business conditional on payment of the outstanding loans. He argues that to the extent that a failure of the condition allowed the National Bank to take over the assets and run the business of Windsor Packing it should be viewed as a sale or disposition of the business. He urges the Board to look at the transaction not from the standpoint of commercial law but from the viewpoint of labour relations, with particular emphasis on who has control over the employees. The union stresses that it is not insignificant that the successor right provisions in the Labour Relations Act constitute a distinct departure from the common law jurisprudence. He submits that section 63 rights are not co-extensive with commercial ownership or commercial law concepts and that what may be a sale in the world of commerce is not necessarily what amounts to a sale under the Labour Relations Act. He stresses that under the Act a sale or a transfer of a business may occur where there is something less than the transfer of the legal ownership of property, and that what may be a sale for the purposes of the Labour Relations Act may not be for commercial law purposes.
Counsel for the union accepts that there is no form of bad faith in the insolvency or the receivership. He makes no suggestion that either the insolvent or its creditors constructed this unfortunate financial demise to defeat the union's bargaining rights. He submits, however, that section 63 of the Labour Relations Act should be interpreted and applied so as to protect the collectively bargained rights of employees which would otherwise be truncated by the actions of the banks and receivers.
The union submits that in considering the obligations of a receiver under the Act the Board ought not be deflected from the realities of the transaction by the plea of the receiver that it is the agent of the insolvent company and that obligations should continue to run solely against the insolvent. He reminds the Board that the provision for the appointment of a receiver was put into the security agreements in the interests of both parties, as a boiler plate provision with great commercial law of significance. He maintains that in practical terms the notion that the receiver is the agent of the insolvent company can have little significance for the purposes of the Labour Relations Act. He stresses that when the receiver was appointed the directors and owners Windsor Packing had no real control over the enterprise. The appointment of the receiver at the instance of the bank entirely displaced them. The union asks what kind of agency is established where the agent tells the principal what to do. The banks, through their agents the receivers, instruct or control Windsor Packing in doing those things that are necessary to protect their interests. Windsor Packing does not decide to shut down or to hire or fire employees. All operating decisions are made by the banks through the receivers who exercise complete control over the assets and undertakings of the insolvent company. The union submits that the receivers are the agents of the insolvent company on paper only. In fact, it says, they are not the agents of Windsor Packing, as it is inconsistent with the very notion of agency for the principal to be instructed and directed by the agent rather than vice versa. Counsel for the union submits that the concept of agency is still more of a sham when, as in the instant case, the directors of Windsor Packing are being personally sued by the banks which are instructing the receivers.
The parties addressed the issue of whether the sale of a business for the purposes of the Act is affected by the fact that the receivers decided not to carry on the business. Counsel for the union submits that it is no answer to its application under section 63 of the Act to assert that the business was discontinued. The union bases its rights on the commercial relationship between the banks and the insolvent company and submits that those rights endure and continue to operate through the entire period that the respondent Price Waterhouse hired employees from the bargaining unit to assist in disposing of inventory and assets and closing down the plant. Its counsel points out, moreover, that the decision to close down is not irrevocable. The receivers remain free to re-open the plant at any time and continue it as a going concern. The union argues that whether the receivers transfer the business to a third party, operate it only for the purposes of winding it down or continue to operate it as a going concern, its bargaining rights and the rights of the employees are in no way affected.
Counsel for the union sees no hardship or injustice to the banks if they should be found to be successor employers within the meaning of the Labour Relations Act, in consequence of which they will be liable to the unsatisfied collective agreement obligations of the insolvent Windsor Packing. He maintains that when the banks chose to realize upon their security rather than to either sue and obtain executions for the amounts owing or opt for a petition in bankruptcy they chose a course with both advantages and risks. He submits that if they are to have the advantage of their credit priority based on their security they accept certain risks that go with receivership. In his view if a receiver has the choice of running the business or not, it should be liable to be seen as a transferee of the business for labour law purposes just as it might be for the continued payment of rents, taxes, and utilities obligations. It is agreed the receiver would pay arrears of that kind to protect its principal's security and enable it to keep doing business. The union submits that if a secured creditor decides to exercise the option of realizing on its security it must also accept obligations that are due to the employees of the undertaking.
Both counsels for the respondents submit that the Board should not depart from its past jurisprudence. They express concern that the real purpose of the application and complaint is to put the union in the fortuitous position of realizing what would otherwise be uncollectible claims out of the "deep pocket" of the creditor banks. They emphasize that if the insolvent company had had no secured credit obligations but had merely foundered on its own into general bankruptcy, after winding down and mothballing the plant itself, the union would be out of luck, or, at best, in the same position as all other unsecured creditors. In their view if the realities are to be looked at it is unrealistic to say that the banks or their receivers took over the business in the sense of a transferee under the Labour Relations Act, with a view to continuing a meat packing business and the employment relationships that go with it. They submit that the banks did not want to run a meat packing business or dispose of its assets save for the limited purpose of protecting their loans and realizing as best they could on their security. They maintain that this is not a circumstance in which the banks should be judged either partners or successors to the insolvent company.
Counsel for the respondents submit that there is an important purpose underlying the agency concept recognized by the Board in the Price Waterhouse Ltd. decision. They stress that as of the bankruptcy on October 18, 1982 the corporate identity of Windsor Packing vested in the court appointed trustee in bankruptcy. They submit that as a matter of law with the imposition of the bankruptcy, the insolvent company is in effect gone and that no concept of agency can be argued after that point. From then on the receiver's duty is strictly a fiduciary duty owed to the bank on whose behalf it controls assets. It would appear, in other words, beyond dispute that after the bankruptcy there could be no possibility of the receivers deciding to re-open or carry on the business of Windsor Packing as a going concern. At best, therefore, the receivers were agents of the insolvent company only for a brief period of time between the initial appointment of a receiver on September 21, 1982 and the bankruptcy on October 18, 1982.
Counsel for the receivers raised the fact that the union has filed a grievance against the insolvent company for the payment of its undiseharged obligations under the collective agreement. While they acknowledge that the likelihood of recovery against the bankrupt company is virtually non-existent they submit that the union's plight in that regard is no different than that of other unsecured creditors with whom it must line up in the bankruptcy. They maintain that section 63 of the Act should not be converted into a provision which effectively undoes established commercial law priorities and the rules of recovery in bankruptcy.
The thrust of the submission for the respondent banks and receivers is that the provisions by which they have secured their loans to the insolvent Windsor Packing should be carefully circumscribed to the debtor-creditor relationship that is the essence of the arrangement. They submit that the Board should not lightly dismiss the legally established concept of agency that runs between both the receivers and the banks and the receivers and the insolvent company whose business they administer.
The authorities on the status of receiver-managers for the purposes of labour relations obligations provide considerable guidance to the resolution of this matter. This Board has in the past found that a court appointed receiver-manager may be the employer for the purposes of an application for certification (Mount Citadel Ltd. [1976J OLRB Rep. July 367; Guarantee Trust Company of Canada 47 CLLC ¶16,500.)
Distinctions are made in the cases between court appointed receiver-managers and receivers as well as receiver-managers who are privately appointed. In Uncle Ben's Industries Ltd. [1979J 2 Can. L.R.B.R. 126, the British Columbia Labour Relations Board concluded that a court appointed receiver-manager was a transferee within the meaning of section 53 of the British Columbia Labour Code. In that case the Board stated:

The rationale for the Board's decision in Uncle Ben's Industries Limited is that a court appointed receiver-manager is a transferee of the business within the meaning of section 53 only to the extent that "the business as a going concern has been transferred to him". In that case the Board made it clear that the determination of whether there has been a transfer of the business depends in large measure on its continuation as a going concern by the receiver. At page 138 of the decision the Board stated:

If there had been only a Receiver, who did his best to salvage the assets, but never re-opened the business the "termination" thus caused would have given the union or employees merely the right to line up with ordinary creditors, for the severance pay. But on the day that the Receiver-Manager commences operations, suddenly this less than perfect claim leaps to the fore as a Section 53 claim, and ranks with the new contracts which the Receiver-Manager is now creating.

It would therefore appear that under the British Columbia Labour Code a court appointed receiver-manager may be viewed as a successor if he maintains the business as a going concern. The distinction between court appointed and privately appointed receiver-managers, however, appears to remain significant. The British Columbia Labour Board has recognized the distinction, first touched upon in Mount Cidatel Ltd., by this Board, that the court appointed receiver-manager acts as a principal and not as an agent of the insolvent company. It was on the basis of the agency relationship existing between the privately appointed receiver and the insolvent company that this Board found as it did in Price Waterhouse Ltd., 119791 OLRB Rep. Jan. 50.We concluded in that case that where a receiver-manager assumes control of the business pursuant to a private debenture by the terms of which it was expressly made an agent of the insolvent company a sale or transfer of a business did not occur within the meaning of section 63 of the Labour Relations Act.
A similar conclusion was reached by the Canada Labour Relations Board in Ontario World Air Ltd., [19811 2 Can. L.R.B.R. 405. That case involved an instrument appointed receiver-manager who continued the operation of an insolvent airline with a view to selling the assets and business as a going concern. The receiver-manager refused to pursue negotiations for a new collective agreement which were in progress between the insolvent company and the union on behalf of flight attendants at the time of the appointment. It also declined to honour the collective agreement or, after the appointment of a trustee in bankruptcy, to appoint a nominee to a board of arbitration to deal with grievances based on its default. It appears that in the circumstances of that case that the receiver-manager declined to pay employees' claims arising after its appointment and prior to the bankruptcy. The trustee in bankruptcy took the position that the receiver-manager was personally responsible for unpaid wages in that period. Faced with a bankrupt employer and collective agreement based claims which neither the receiver-manager nor the trustee in bankruptcy would satisfy, the union sought a declaration that either the receiver-manager, the trustee in bankruptcy or the creditor banks were bound by the terms of the collective agreement as successor employers. In declining relief the Canada Board made the following observations:

The Board may sympathize with the desires of the union to have the price of labour extracted in collective bargaining and promised by the receiver-manager recognized in priority to the claims of any other creditor when the estate of the employer is divided. The Board, aware of sound policy reasons to place wage claims in priority over other creditor claims, fully understands the union desire to find a solvent person whom it can hold accountable. (The trustee in bankruptcy calculates known wage claims at S353, 067.0l. For discussion of wage recovery and priority policy, see Owen Grey, Wage Protection: Collection of Wages, Priority of the Wage Claim, Securing the Wage Claim (Labour Canada, 1973) and Innis Christie and Brent Cotter, Employment Law in Canada (1981) Chapter 8.) We may also have strong emotions about the behaviour of a receiver-manager who ignores legitimate interests and legal claims of employees and bargaining agents in the pursuit of financial interests of those who appoint and pay it. We may not equate that with good corporate citizenship, but that is not our concern in these proceedings. We merely endorse what counsel for the receiver-manager recognized — it is the receiver-manager's responsibility to cause the debtor-employer to respect its obligations under the collective agreements.

While the Canada Board concluded that no sale of a business had occurred, it was not in that case asked, as we are, to consider the merits of an unfair labour practice complaint against the receiver. Only one case has been cited to us by the applicant where it was found that a receiver, in circumstances almost identical to the instant case, was a successor employer for the purposes of collective bargaining obligations. In Re St. Louis Bedding Company, (1982) 42 Canadian Bankruptcy Reports, 75 the Quebec Labour Relations Board, through the ruling of a labour commissioner, found that the transfer of a business had taken place. In that case on April 23, 1981 a creditor bank appointed a receiver to take possession of inventories to protect its security as a result of the company's default on its loan. The receiver entered into possession and continued the operations, involving the manufacture of mattresses, from April 24, 1981 to May 29, 1981. It operated the business strictly for the purpose of completing work in progress from raw materials on hand. It appears that the employees were told as of April 23, 1981 that they were working for a new employer and that operations would cease on May 29, 1981. After May 29, production ceased but a number of employees were retained for several more weeks for the purposes of selling off the inventory and winding down the operation. The labour commissioner concluded that for the period of April 21, 1981 to May 29, 1981 the receiver was a successor employer within the meaning of section 45 of the Quebec Labour Code.
The Board concluded that only so long as the receiver continued operations it was a successor employer within the meaning of the Code. Its reasoning, however, was not confined to the rationale in the Uncle Ben's decision of the British Columbia Board. It turned, in part, on the wording of section 45 of the Quebec Labour Code which provides as follows:

The alienation or operation by another in whole or in part of an undertaking otherwise than by judicial sale shall not invalidate any certification granted under this Code, any collective agreement or any proceeding for the securing of certification or for the making or carrying out of a collective agreement.

The labour commissioner found that the receivership fell within the terms of the phrase "operation by another" so as to prevent any invalidation or suspension of collective bargaining rights under the Code. He also concluded that after May 29, when production had ceased, the business had ceased and thereafter there could be no successorship within the meaning of the Code.

It is not necessary for the Board to consider in this case what differences, if any, would flow in law from the appointment of a receiver or receiver-manager pursuant to a court order as contrasted with a private appointment. In this case the receiver-managers for both banks were appointed pursuant to private instruments and we are satisfied that this Board's decision in the earlier Price Waterhouse Ltd., case, cited above, is the correct approach for the purposes of the successorship provisions of the Labour Relations Act. We share the understanding for the difficulties of the union and employees expressed by the Canada Board in Ontario World Air Limited. We can also appreciate the desire of the union to realize its claims out of the more substantial pocket of the banks and receivers. We cannot, however, lose sight of the purpose of the successorship provisions of the Act. Nor can we ignore the economic realities of receivership and bankruptcy when these concepts intersect with labour relations.
In a recent decision this Board was called upon to deal with a related issue under section 1(4) of the Act. In Total Marketing Incorporated, 119831 OLRB Rep. April 616, the Board was asked by a union to declare that the parent company of an insolvent subsidiary with which it had undischarged collective agreement obligations was a related employer for the purposes of section 1(4). The application was brought solely for the purpose of realizing otherwise uncollectable claims against a related company which was solvent. In declining to exercise its discretion to make a section 1(4) declaration the Board made the following comment:

It is clear that [the insolvent employer 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, [19801 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. (See,also, Chandelle Fashions, 19821 OLRB Rep. June 828 at 848-49).

Here we are asked to turn section 63 of the Act into a device for collecting the employer's uncollectable collective agreement debts from its solvent creditors. We see nothing in the cases that have been cited, in the arguments submitted by counsel for the applicant nor in the policy ramifications for collective bargaining to cause us to depart in this case from the approach which we took in the earlier Price Waterhouse Ltd., decision. If the receiver in this case ran the insolvent company's business, assuming that its winding down operation could be so described, the legal interest of the insolvent company never ceased to exist. If, for example, the sale of assets had satisfied the outstanding debt, the business might have been returned as a going concern into the hands of the insolvent company. It would appear to the Board to be unduly artificial to adopt the view of counsel for the applicant that in that case there would first be a transfer of the business to the receiver and then a second transfer back to the original employer. The transfer of a business can have significant impact for notice provisions under the Act, a legality of strikes and bargaining obligations, (see Vaunclair Meats Ltd., [19811 OLRB Rep. Aug. 1186; Comstock Funeral Home Ltd., 119821 OLRB Rep. Oct. 1436; and Biltmore Hats, [19831 OLRB Rep. Jan. 9, affirmed.) The Board should therefore not lightly interpret the concept of transfer or sale in section 63 of the Act in a way that would unduly multiply the number of transfers of a business which might occur.
With one exception, in all of the cases surveyed the labour relations boards in Canada have interpreted their successorship provisions so as to exclude instrument appointed receiver-managers from the definition of successor employers for labour relations purposes. The exception is the St. Louis Bedding Company case, the outcome of which turns on the wording of section 45 of the Quebec Labour Code which expressly includes "operation by another" as a circumstance during which collective bargaining obligations continue. There is no comparable provision in our Act. We are persuaded that the decision of the Board in Price Waterhouse Ltd., [19791 OLRB Rep. Jan. 50 should be followed in the instant case. The receivers in this case were agents of Windsor Packing and the successorship application is therefore misplaced, if not premature. They managed the business for the benefit of Windsor Packing in pursuance of its written authorization in the debenture. We cannot accept the attack on the agency relationship advanced by the union. The debentures were clearly critical for the benefit of the insolvent company. Indeed, it may be safely presumed that the debenture loans were a substantial source of wages and benefits for the employees during Windsor Packing's unprofitable operations, and as such, was an indirect source of union dues for a number of months. For the foregoing reasons the Board does not find that there has been the sale or transfer of a business within the meaning of section 63 of the Labour Relations Act.
We turn to consider the merits of the section 89 complaint. The issue is whether the respondents' receivers have, in their own right, violated section 64 of the Labour Relations Act. That section provides as follows:

No employer of employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administration of a trade union or the representation of employees by a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of his freedom to express his views so long as he does not use coercion, intimidation, threats, promises or undue influence.

Before the Board counsel for Price Waterhouse argued that we could not find that there has been a sale of a business principally on the grounds that the receiver-manager was at all times the agent of Windsor Packing. We have accepted that submission. Having done so, we find it difficult to sustain the further argument advanced by the receiver respecting its obligations under the Labour Relations Act.
It is not disputed that in the period for which it employed some 23 employees from the bargaining unit the respondent Price Waterhouse entirely disregarded the terms of the collective agreement between the complainant and Windsor Packing. While employees were given the same wages as they had under the collective agreement, none of the benefit provisions were observed nor were the seniority, lay-off or other provisions relating to the severance of employment. For the time during which it employed the bargaining unit personnel the receiver either failed or refused to pay any union dues. Although counsel for the receiver did not put it in these terms, it appears on the facts that the receiver based its conduct on the view that the collective bargaining rights of the employees and their union simply ceased upon the private appointment of the receiver.
We know of no authority for that proposition. It is significant that this Board's decision in the earlier Price Waterhouse Ltd., case was predicated on the Board's conclusion that the rights and duties under the collective agreement in that case continued in force during the period for which the instrument appointed receiver operated the business. In that case the Board noted with obvious approval that the receiver, acting as agent of the insolvent employer, had continued to observe all of the terms of the collective agreement. Counsel for the Price Waterhouse advanced no argument to satisfactorily explain to this Board why it was open to the receiver in this case to follow a different course and ignore the collective agreement rights of the employees and their union during the period of winding down. If Windsor Packing had itself decided to sell off its inventory and assets and mothball its facilities it could not be seriously contended that the collective agreement would not continue to operate as long as employees were retained for the purposes of shutting down. We do not see how the legal conclusion is any different simply because the agent of Windsor Packing in the person of a receiver-manager has done the same thing. We are satisfied that both in fact and in law, at least from the time of its appointment under the debenture the receiver Price Waterhouse was a "person acting on behalf of an employer" within the meaning of section 64 of the Labour Relations Act.
It is well established that a person acting on behalf of an employer who violates the Act is liable in his own right, independently of the liability of his principal for his unlawful conduct. By the terms of the debenture Windsor Packing authorized the receiver to operate the business on its behalf, including the authority to wind down or sell it in whole or in part. Even allowing for the interest of the banks being a primary concern, as we have noted the debenture arrangement was plainly in the interest of Windsor Packing. In these circumstances it is difficult to draw any conclusion but that any receiver appointed would be a person acting on behalf of the insolvent employer for the purposes of section 64 of the Labour Relations Act. With the authority to enter into arrangements and make contracts binding on the insolvent company the receiver is plainly acting on its behalf. Significantly, as the Board has stressed, it is not necessary for the person acting on behalf of an employer to act pursuant to its specific instruction for independent liability to attach to the agent for its actions in contravention of the Act. (Securicor investigation and Security Ltd., [19821 [OLRBI Rep. May 759 and see also the subsequent decision of the Board in the same case reported at [19831 OLRB Rep. May)
The refusal of the receiver-manager to recognize the rights of the employees and their union under the Labour Relations Act was complete. It behaved, for all practical purposes, as though the union did not exist and the employees had no statutory or contractual rights that must be respected by anyone in charge of their employer's business. We are therefore compelled to conclude that for the entire period of their employment under Price Waterhouse Ltd. the representation of the employees by the complainant trade union and the administration of the union were interfered with by the respondent Price Waterhouse contrary to section 64 of the Act. If it were necessary to do so we would also conclude that the receiver acted in violation of section 66(b) of the Act to the extent that it effectively imposed conditions of employment the terms of which were in violation of the rights of the employees under the Act and under their collective agreement. As the complaint was limited to section 64, the Board makes no order in respect of the payment of compensation, if any should be owing, to the employees.
The Board has given careful consideration to the submission of counsel for the union that the respondent Price Waterhouse has further violated section 64 of the Act by failing to remit to the union unpaid dues previously owing from Windsor Packing for the period immediately prior to the receivership. The dues in question are monies which were deducted from the wages of employees by Windsor Packing. As they were never the property of the insolvent employer they would have been held in trust for the benefit of the union. The unchallenged evidence, however, is that no specific trust account or trust funds could be identified by the receiver and, indeed, the bank accounts of the company were in a deficit position. Whether the dues deducted by Windsor Packing are impressed with a trust, the value of which can be realized against the assets of the insolvent company, is a matter to be resolved through the avenues of civil litigation available to the union as a claimant in the bankruptcy. The facts do not disclose that the respondent Price Waterhouse has directly or indirectly appropriated for itself or for the bank which appointed it any union dues or trust funds belonging to the union. The Board's remedy in the circumstances does not, therefore, extend to provide recovery of those sums. The union dues which the respondent receiver is required to remit under this order are limited to such dues as it failed to deduct and remit for the period of time during which it became the effective employer on behalf of Windsor Packing.
The Board's findings and order may be summarized as follows:

(1) The Board does not find that there has been the sale or transfer of a business as a result of the private appointment of receiver-managers under the security of either respondent bank. It therefore does not grant a declaration that either Price Waterhouse Ltd. or Touche, Ross Limited or the banks which appointed them are successor employers for the purposes of section 63 of the Act.

(2) The appointment of the receivers did not extinguish the collective agreement obligations of Windsor Packing Company Limited. The respondent receiver Price Waterhouse Ltd. hired employees in the bargaining unit. It did so as agent of the insolvent company, acting on its behalf, within the meaning of section 64 of the Labour Relations Act. It was therefore, under an obligation to honour the terms and conditions of the collective agreement and the rights of the employees and their union under the Act. The receiver's failure to deduct and remit union dues for the period of its agency relationship with Windsor Packing Company Limited is interference with the administration of a trade union in violation of section 64 of the Labour Relations Act. It is also in violation of the rights of its employees to be represented by a trade union.

(3) The respondent Price Waterhouse Ltd. is ordered to pay forthwith all amounts owing in respect of union dues for the period of time for which it acted as employer on behalf of Windsor Packing Company Limited.

In view of the fact that the insolvent Windsor Packing Company Limited has ceased to exist by virtue of the bankruptcy and the employment relationship of the employees in the bargaining unit has been effectively terminated, little purpose would be served by a remedial posting order in the circumstances of this case. Therefore none will be made. We remain ceased of this complaint in the event that the parties are unable to agree on the amount of compensation owing to the trade union.