[1984] OLRB Rep. December 1700
1888-84-R International Beverage Dispensers and Bartenders Union, Local 280, Applicant, v. The Last Resort Hotel, Inc carrying on business as Doyles Tavern, Respondent
BEFORE: M. G. Mitchnick, Vice-Chairman, and Board Members J. A. Ronson and C. A. Ballentine.
APPEARANCES: Elizabeth McIntyre, James Jackson and Joe Leithwood for the applicant; John Doyle and Anthony Indovina for the respondent.
DECISION OF THE BOARD; December 21, 1984
1This is an application under section 63 of the Labour Relations Act, alleging that a "sale of a business" has taken place with respect to the tavern located at 2763 Danforth Avenue in Toronto, and formerly known as the "Danforth Hotel". Section 63(1) and (3) provide:
63.-(1) In this section,
(a) "business" includes a part or parts thereof;
(b) "sells" includes leases, transfers and any other manner of disposition, and "sold" and "sale" have corresponding meanings.
(3) Where an employer on behalf of whose employees a trade union or council of trade unions, as the case may be, has been certified as bargaining agent or has given or is entitled to give notice under section 14 or 53, sells his business, the trade union, or council of trade unions continues, until the Board otherwise declares, to be the bargaining agent for the employees of the person to whom the business was sold in the like bargaining unit in that business, and the trade union or council of trade unions is entitled to give to the person to whom the business was sold a written notice of its desire to bargain with a view to making a collective agreement or the renewal, with or without modifications, of the agreement then in operation and such notice has the same effect as a notice under section 14 or 53, as the case requires.
2The Hotel in question was an establishment licensed for the sale of food and alcoholic beverages. The applicant was certified as bargaining agent for the employees of the Hotel in 1973, and its most recent collective agreement with the Hotel expired some time prior to the Hotel being closed in December of 1983. Over the years, the Hotel under prior owners attempted to induce patronage through one form of entertainment or another, varying from standard rock music to country and western, and most recently through the use of what is broadly termed "adult entertainment". This essentially involved the exhibition of male and female nude dancers at the Tavern, and it was the previous owners' failure to comply with the "adult entertainment" by-law in that regard which in the main led to the Tavern's closing.
3The previous owner was Mr. Nick Bruno, or more precisely N. B. Theatrical Agencies Inc., and when his continuing encounters with the law-enforcement authorities led ultimately to the closing of the Hotel, the mortgagee, Mr. Jack Bloom, was forced to enter into possession of the premises to protect his security. Mr. Bloom did not attempt to re-open and operate the Hotel on his own, but rather sought a buyer who might be interested in doing so. Word of the Hotel's availability came to Mr. John Doyle, and he made an offer, (through his company, The Last Resort Hotel Inc.) to purchase the assets under Mr. Bloom's control, which Mr. Bloom accepted. The purchase included the land, chattels, and building of the prior owner, conditional upon approval of the transfer of the owner's liquor licences within a reasonable time. The chattels included tables and chairs, a glass-washing machine, beer fridges, and a stove and other kitchen sundries. By this time the Hotel had been closed for almost six months, and Mr. Doyle entered into an interim agreement to pay rent and operate the Hotel for his own benefit immediately, pending the closing of the ultimate sale. Mr. Doyle also made application to the government for a "convert-to-rental" grant, hoping to ultimately extend the income-producing capacity of the building by renting the rooms above the tavern. Unlike the transfer of the licences, the approval of the "convert-to-rent" grant was not made a condition of the sale.
4Mr. Doyle accordingly went into possession in June, changing the name of the Hotel to the "Video Rock Tavern", and, as the name suggests, changing the form of entertainment to video rock as well. Mr. Doyle carried out repairs and renovations to the premises as he went, and after the purchase-deal closed in August, again changed the Hotel's name to "Doyle's Hotel". Mr. Joseph Leithwood, assistant business agent for Local 780, testified that he has been inside the Hotel on many occasions since 1973, and once since Mr. Doyle took it over, and acknowledged that the Hotel has been cleaned up and was "a lot less seedy" than before. The entertainment was once again country and western, with bands from the Maritime provinces being featured for the purpose of attracting to the Hotel former Maritimers now living in the vicinity of the Hotel (together with other local residents). The Hotel operates with two full-time and two part-time staff, being waitresses and a bartender.
5The respondent argues on these facts that no "sale of a business" can be said to have taken place. The respondent emphasizes the fact that the Danforth Tavern had been closed down for some seven months before the respondent entered the premises, and argues that by that time there was no "business" at the Hotel left to purchase. The respondent, in addition, points to the upgrading it has done to the premises, and the change in the form of entertainment currently being used to attract customers. Finally, the respondent emphasizes its interest in the premises as an investment, assuming the availability of the "convert-to-rental" grant.
6Dealing with the last point first, the Board notes that, whatever other interest the respondent may have in the premises, it is still making use of the premises to operate the business of a tavern, and expects to generate the greater part of its revenue from that source. It is, of course, only the "tavern" aspect of the premises to which the applicant's bargaining rights have application in any event. And with respect to those rights, the Board has, with perhaps one exception only, always attached great weight to the fact particular premises once operated as a "tavern business" continue to be operated as a "tavern business", with or without a hiatus in the operation of the building as such, and with or without a change in the nature of the decor, entertainment or clientelle, so long, at least, as the licence to operate the business itself has in some manner been transferred from the vendor to the purchaser.
7The one exception to the Board's cases in this industry was in the first of the Man of Aran cases, reported at [1973] OLRB Rep. June 313. There the purchasers of the old "Mintz Tavern" converted it from a standard local tavern to an "Irish pub", and the Board came to the conclusion, on application by the employer, that a change in the "character" of the business had taken place, within the meaning of section 6 3(5) of the Act. In succeeding cases, however, the Board explicitly rejected the approach taken in the Man of Aran, case, and stated, for example, in the Winco-Steak'n Burger case, [1974] OLRB Rep. Nov. 788, at paragraph 24:
"The implementation of subsection 5 of section 55 (now 63) involves the revocation of the remedial effects otherwise flowing from the provisions of section 55 of the Act following the sale of a business. Having in mind the fact that subsection 5 runs against the flow of the general intent of the section, the Board takes the view that the words 'substantially different' must be viewed by the Board in the formulation of its opinion as involving a fundamental difference affecting the nature of the work requirements and skills involved in the business to the extent that continued representation by the trade union would be inadequate, inappropriate or unreasonable in all the circumstances of the particular case under review.
(emphasis added)
8In Colonial Tavern, [1978] OLRB Rep. Sept. 806, the basement lounge of the licensed premises was refurbished and converted from a simple "bargain basement" form of beer service to an atmosphere catering to "the double-martini types" (at triple the prices), and the main floor to a "New York bar and grill", in the hopes of attracting the "upper echelon" Yonge Street luncheon traffic. The Board found nonetheless that a "sale of a business" had taken place, and that there had been no "substantial" change in the character of the operation.
9In Katrina's Tavern, [1978] OLRB Rep. Sept. 838, the alleged successor purchased the liquor licence and other assets at a Toronto establishment, and immediately closed it down for a number of months to effect major renovations. In that period of time the premises were converted from a rough-and-tumble establishment catering to "young kids" and motorcycle gangs to a fashionable and sophisticated "gay" bar. Notwithstanding the Board's finding that the purchaser had indeed succeeded in making a "silk purse out of a sow's ear", the Board went to conclude:
"The Board is interested in whether there has been a continuation of the business. Here there was a transfer of the liquor licence, a leasehold interest, various tangible assets, and interests in contracts virtually all of which could and would be used to carry on the business of the sale of food and drink. Therefore, it would seem that there was a continuation of the business in which The Forge was engaged and, unless section 55(5) operates, a sale of a business within the meaning of section 55. The fact that the business was closed for approximately eight months does not affect the conclusion in this case. The Employer here closed to effect repairs and renovations and was prepared to open whenever these were completed. There was still a transfer of assets and most importantly, after this transfer the same sort of business continued to operate from the premises.
The Board then went on to note the rejection of the approach adopted in the earlier Man of Aran case, and found no substantial change in the character of the operation, within the meaning of subsection 5 of the what is now section 63.
10In Cabbagetown Inn, board File No. 2780-80-R, released May 1, 1981, the mortgagees on the property were, as in our own case, forced to go into possession to protect their security and the existing liquor licence. Under the mortgagees, the premises remained closed for some four to five months, eventually re-opening under new owners and a different name. The Board found a "sale", and in particular noted at paragraph 14:
"We are of the opinion that the transaction between Rapaaport and Ruben-stein, the second mortgagees in possession, and the respondent constituted a "sale" by Muckles. The Board has previously found that the interposition of a third party, acting as an agent or conduit is irrelevant so long as a transfer takes place. (See Marvel Jewelry Ltd., [1975] OLRB Rep. Sept. 733.) In the instant case, the mortgagees in possession took steps to ensure that there was no lapse of the liquor license on their entering into possession.
Similarly, in Vivace Tavern Inc., [1982] OLRB Rep. Aug. 1224, the sale of the premises and its licences under power of sale by the solicitors in trust for the mortgagees did not preclude a finding of a "sale". And most recently in Blondie's Tavern, Board File No. 2073-83-R, the former owner defaulted on his mortgage, the tavern closed down, and the mortgagee went into possession. The premises remained closed for some five to six months while the mortgagee sought and completed a suitable sale transaction, after which the tavern re-opened under the new owners and, as usual, a new name. In this case the transfer of the licence by the L.L.B.O. was not made an actual condition of the sale transaction, but was, with the vendors co-operation, accomplished in any event. The Board, on these facts, once again found that a "sale of a business" had occurred.
11The cases cited above leave little room for argument in the present case. With respect to the entertainment and decor of a particular establishment, experience with the industry has shown that "themes" may come and "themes" may go (as in fact has already occurred once within the short period that the present facility has been operated by the respondent), but so long as a transaction has taken place involving the assets (and in particular the licence) essential to carrying on the business of a tavern, the Board will find a "sale". The fact that the present premises have been upgraded is not disputed by the applicant, but neither that, nor the introduction of varying forms of entertainment to attract patronage, can be said to produce a substantial change in the essential character of the business, to the point of rendering the continued representation of the tavern's employees by the applicant in any way inappropriate.
12The Board accordingly declares that a "sale of a business" has taken place to the respondent, within the meaning of section 63(1) of the Act, and that the applicant's bargaining rights continue. The applicant is accordingly entitled to give notice to bargain to the respondent, pursuant to the provisions of section 63(3).