[1983] OLRB Rep. May 632
2639-82-R Service Employees' Union, Local 183, Applicant, v. Daynes Health Care Limited, Respondent.
BEFORE: R. O. MacDowell, Vice-Chairman, and Board Members B. L. Armstrong and F. W. Murray.
APPEARANCES: Naomi Duguid, Don Burshaw II and Carolyn Shaughnessy for the applicant; K. W. Kort, E. Daynes and P Powers for the respondent.
DECISION OF THE BOARD; May 31, 1983
The name of the respondent is amended to read: "Daynes Health Care Limited".
This is an application under section 63 of the Labour Relations Act for a declaration that the respondent has or will shortly acquire the "business" of Balmoral Lodge Limited.
For reasons which will become apparent infra, the Board did not hear evidence in this matter. Counsel for both parties were content to solicit the Board's opinion on the application of section 63 on the basis of their representations as to what they understood or expected to be the facts surrounding the transaction between Balmoral and the respondent. It was common ground that there has been a sale or transfer of "something" between the two business entities. What remains at issue is whether that transaction can be characterized as a "transfer of a business" within the meaning of section 63 of the Labour Relations Act.
For some years, Balmoral Lodge Limited ("Balmoral") has operated a nursing home known as Balmoral Lodge at 293 London Street in the City of Peterborough. That nursing home is operated pursuant to a licence issued by the Ministry of Health under the authority of the Nursing Homes Act. The licence permits Balmoral to provide care for fifty-one residents. Balmoral's employees are represented by the applicant union.
Earl Daynes, the owner of the respondent company is in the nursing home business and operates several nursing homes around Ontario. He wants to expand into the Peterborough area. In pursuance of that objective, Mr. Daynes entered into certain agreements with Balmoral which were filed with the Board.
The principal document is an agreement of purchase and sale between Mr. Daynes and Balmoral wherein he purports to "purchase the licenced nursing home business and undertaking" of Balmoral. In the portion of the document headed "INTERPRETATIONS", one finds the following agreed definitions:
(a) "LICENCED NURSING HOME BUSINESS" means the 51 bed nursing home business presently located on and in the premises of a building located at 293 London St. Peterborough, Ontario in the
County of Peterborough and known municipally as the BALMORAL LODGE NURSING HOME NURSING HOME.
(b) “UNDERTAKING" means the right to operate the 51 bed licenced nursing home business, granted in the form of a licence issued under the authority of the Ontario Ministry of Health pursuant to the provisions of the Nursing Home Act, 1972 (Ontario).
The offer to purchase is made conditional upon the "written authorization from the Ontario Ministry of Health to move and incorporate the existing licenced nursing home business and undertaking into a proposed new facility now being arranged to be constructed on lands in the County of Peterborough". The agreement does not require the provision of any profit or loss statements or any other statements pertaining to Balmoral's business. In addition, Daynes agreed to purchase certain property owned by Balmoral at 1155 Water Street where a new nursing home building would be constructed.
Although the parties described the transaction as involving the acquisition of Balmoral's licence, and a substantial sum was paid to Balmoral in respect thereto, although it appears that, technically, Balmoral is surrendering its licence and the Ministry of Health is issuing a new one. The mechanics of this process and the business and public policy considerations involved in it were not put before the Board. As we have already noted, the circumstances were dealt with in submissions by counsel for Daynes and the union. Balmoral did not appear, nor did we have the benefit of evidence concerning the deliberations of the Ministry of Health. At the time the application was made the respondent had no licence to operate a nursing home business in Peterborough and was not doing so.
The purchase and sale document was amended three times. On June 2, 1982, Daynes was given further time to arrange satisfactory financing. On October 27, 1982, the parties agreed that Daynes would give back to Balmoral a "second mortgage on the land and buildings to be constructed, a second chattel mortgage, a second assignment of income, and a second assignment of nursing beds, all to be collateral to each other for the balance of the purchase price of land and business...". Balmoral also agreed to postpone its second mortgage on the land to any advances given by any institution for the purpose of financing the construction of the new building. The interest was to run on the second mortgage "from the point in time that physical transfer of patients residing at that time at Balmoral Lodge are moved to the new facility". Finally, on April 20, 1983, Daynes and Balmoral executed another document containing the following:
AND WHEREAS the Parties wish to amend the said Agreement of Purchase and Sale making it clear that the Purchaser was only purchasing the 51 bed nursing home licence, and no other assets of the vendor.
NOW THEREFORE WITNESSETH the mutual convenants and promises herein contained, the Parties hereto agree as follows:
- The Purchaser is purchasing the 51 bed nursing home licence, issued under the authority of the Ontario Ministry of Health, and the Purchaser further agrees to transfer the 51 patients from Balmoral Lodge Nursing Home, which are covered by this licence, to a new building at 1155 Water Street, in the City of Peterborough, in the County of Peterborough, and the Province of Ontario when the Ministry of Health approves the transfer of licence and patients.
It will be observed that this document was executed after the filing of the present application for a declaration that the respondent was a successor employer within the meaning of section 63 of the Labour Relations Act.
In accordance with the agreement of purchase and sale, the land on Water Street was acquired from Balmoral on or about July 15, 1982, and thereafter, Daynes began construction of an entirely new facility which was expected to be ready to receive the fifty-one Balmoral residents on or shortly after the "acquisition of Balmoral's licence" which was to be "transferred" in accordance with the agreement on June 30, 1983. In the meantime, thirty-three of the Balmoral residents remain at Balmoral Lodge while another eighteen have been housed temporarily in a nearby Extendicare facility. It is expected that forty-eight of the fifty-one residents will eventually be transferred to the new building on Water Street which is two or three miles from Balmoral's location.
The new facility will have a capacity of sixty-five beds - that is, in excess of the number of residents permitted by the licence acquired from Balmoral. It is expected that the Ministry of Health will issue a licence for an additional twenty-five residents for a total permitted capacity of seventy-six beds. To accommodate the extra eleven places will require some further construction and renovation which is expected to be completed by the end of August. Mr. Daynes plans to transfer approximately seven employees from his existing business operations to the new nursing home on Water Street which will be known as Riverview Nursing Home. If the respondent were found to be a successor employer, some of these employees might fall within the applicant's bargaining unit. It is intended to fill the rest of the employee complement by hiring from a list of some four hundred applicants for jobs at the Riverview Home. Those individuals would be selected on the basis of their relative experience, skills, and ability. A number of individuals currently working at Balmoral are among these applicants.
After June 30th, Balmoral will no longer be able to operate a nursing home. Its employees have been given notice of their termination in accordance with the requirements of the Employment Standards Act. However, it is not clear what will happen to Balmoral since it is possible that it will remain open, or subsequently reopen in some other capacity providing accommodation for residents of a somewhat different character from that required to be provided under the Nursing Homes Act.
The union and the respondent both acknowledge that, in some sense, this application may be premature because the transaction has not yet closed, the licence to run the Riverview Nursing Home has not been formally acquired, the employee complement has not been settled and none of the residents have actually been transferred. However, both counsel urge the Board to express a preliminary opinion on the question of whether, if the transaction unfolds as it is expected to do, it would amount to a transfer of a business within the meaning of section 63 of the Labour Relations Act. The union takes the position that it would. The respondent asserts the contrary. Both parties point out that the Board's opinion would be helpful to them in planning their affairs. From the union's perspective, it has a number of members who face the prospect of termination in June and who are anxious to know whether their collective agreement rights and hence claim to jobs at Riverview will be preserved. The employer is anxious to ascertain the parameters within which he can establish the employee complement and the terms and conditions of employment of the persons hired to work at Riverview. There is no indication that the employer would abort or alter the form of the transaction depending upon the Board's decision, but it is obviously, and understandably, interested in avoiding any potential liability associated with the legal uncertainty.
We are not unsympathetic to the parties' concerns, but we have concluded that we should not express any opinion or make any determination about the application of section 63 until the transactions said to constitute a transfer of a business have been completed. Any desire to provide guidance to the labour relations community in a difficult area of the law must be tempered by a recognition that preliminary opinions based on hypothetical facts could create as much mischief as they resolve, if not more. Not only would such opinions encourage a rescission or restructuring of transactions to which section 63 might otherwise apply but, in addition, there could be litigation about the effect of the opinion itself and whether the transaction was actually consummated in the form upon which the Board's opinion was based. Since close cases will often turn on subtle shadings of fact, in our view, it would be unwise to render opinions on what will inevitably be less than complete information. In today's volatile business climate there is a real likelihood that various components of "the deal" will change (for example, to accommodate financing or licencing requirements) between its initial conception and its completion, and we are by no means convinced that the injection of a preliminary Board opinion at one stage or another in this process would really facilitate the promotion of orderly collective bargaining or the interests which section 63 was designed to protect. Finally, we are constrained to note that section 63 is not the only provision of the Act which occasionally gives rise to interpretive difficulties. The same could be said of the duty to bargain in good faith, the so-called statutory freeze (see section 79), and certain of the unfair labour practice provisions. It is an unfortunate fact that, like other areas of the law, the law regulating employer-employee relations has become increasingly complex and in many cases there is room for argument about how the law should be interpreted or applied. However, we do not think that the answer to this complexity or to the business planning problems faced by the labour relations community lies in this Board giving preliminary opinions on hypothetical fact situations.
For the foregoing reasons, we have determined that this application must be dismissed as premature. Such dismissal, of course, is without prejudice to either party bringing a fresh application at an appropriate time in the future.