Retail, Wholesale and Department Store Union, Local 414 v. Queensway Foods Ltd., 1984 CanLII 1067

[1984] OLRB Rep. February 358

1867-83-R Retail, Wholesale and Department Store Union, Local 414, Applicant, v. Queensway Foods Ltd., Respondent, v. Group of Employees, Objectors

BEFORE: R. D. Howe, Vice-Chairman, and Board Members F. C. Burnet and B. L. Armstrong.

APPEARANCES: David I. Bloom and Robert McKay for the applicant; J. Paul Wearing and

J. Virgona for the respondent; Bruno H. Kaufinann for the objectors.

DECISION OF R. D. HOWE, VICE-CHAIRMAN, AND BOARD MEMBER F. C. BUR­NET; February 23, 1984

1. This is an application under section 63 of the Labour Relations Act in which the applicant trade union seeks a declaration that the respondent is bound by a collective agree­ment entered into by the applicant and Dominion Stores Limited (referred to in this decision as "Dominion"). The respondent and the objectors oppose the granting of any such declaration.

2. Section 63 of the Act provides, in part, as follows:

63.-(l) 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.

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his busi­ness, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an ap­plication for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application.

(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.

4. In Calmil Enterprises, [1980] OLRB Rep. Apr. 401, the Board described the scope and effect of section 63 (then section 55) as follows:

5. When a business (or a part thereof) is transferred or disposed of, the transferee acquires the business subject to the collective bargaining ob­ligations of the transferor. Section 55 transforms these collective bar­gaining obligations into a form of "vested interest" which becomes rooted in the business entity and, like a charge of property, "runs with the busi­ness." The statute eliminates the labour relations effects of a change of ownership or employer; and effectively abrogates the notion of privity of contract. The purpose of section 55 has been succinctly summarized by the Board in Marvel Jewelry, [19751 OLRB Rep. Sept. 733 at page 735:

"Section 55 recognizes that collective bargaining rights, once at­tained, should have some permanence. Rights created either by the Act, or under collective agreements, are not allowed to evaporate with a change of employer. To provide permanence, the obligations flow­ing from these rights are not confined to a particular employer, but become attached to a business. So long as the business continues to function, the obligations run with that business, regardless of any change of ownership."

13. Section 55 involves two related questions, has there been a sale or transfer of "something" from the predecessor to the successor; and, if there has been, is it all, or part, of a "business" which has been trans­ferred. The first question seldom poses any serious difficulties. The Act contains an extended definition of the term "sale", and the Board has consistently held that the "manner of disposition", or its legal form, are irrelevant, so long as a disposition has, in fact, taken place. More serious analytical problems arise with respect to the second question. There is no statutory definition for the term "business." The Board has been left with the responsibility of fashioning an appropriate definition in partic­ular cases, having regard to the business context, "the mischief' which section 55 was designed to cure, and the basic policies embodied in The Labour Relations Act. A general, and somewhat tentative definition, was suggested by the Board in Raymond Cote, [1968] OLRB Rep. Mar. 1211:

"The meaning to be attached to the word 'business' depends to a great extent on the facts and circumstances in each particular case. It cannot be said that any one facet of an enterprise taken by itself necessarily comprises a business. It has been expressed that a busi­ness is 'the totality of the undertaking.' The physical assets of build­ings, tools and equipment used in a business are not necessarily the undertaking per se but are, along with management and operating personnel and their skills, necessary in the operations to fulfill the obligations undertaken with a hope of producing profit to assume its success. The total of these things along with certain intangibles such as goodwill constitute a business.

14. A section 55 determination is largely a factual question. In Raymond Cote, sup ra, and a number of other cases, the Board has emphasized the importance of the facts: (see, for example: Culverhouse Foods, [1976] OLRB Rep. July 691 at 693; and also Kenmir v. Frizzel, [1968] 1 All E.R. 414 at 418, where a similar view was expressed by Widjery, J.) but it is impossible to abstract, from these cases, any single factor which is always decisive, or any single principle which provides an unequivocal guideline to the way in which the issue will be decided. What makes the problem especially difficult, is that the significance of any particular fact, or aspect of the transaction, may vary with the business context. This difficulty was noted by the Board in Ma gnus Engineering and Construc­tion Ltd., (Board Files 0486-79-R and 0491-79-R; decision released March 13, 1980 — as yet unreported.) At paragraph 26 the Board commented:

"The issue of employer successorship arises out of a seemingly end­less variety of factual settings, with each new case presenting some of the factors considered relevant to the resolution of prior cases while raising other materially altered, entirely omitted, or newly-added facts which arguably should affect the decision of the merits. Much of the confusion which attends successorship results from the facility with which each case can be distinguished on its facts from all former cases; but to dismiss the confusion so lightly would be to disregard the fundamental differences inherent in the various business contexts in which the successorship issue arises. Factors which may be suf­ficient to support a 'sale of a business' finding in one sector of the economy may be insufficient in another. In some industries, a par­ticular configuration of assets — physical plant machinery and equip­ment - may be of paramount importance; while in others it may be patents, 'know-how', technological expertise or managerial skills which will be significant. Some businesses will rely heavily on the goodwill associated with a particular location, company name, prod­uct name or logo; while for other business, these factors will be in­significant. The Labour Relations Act applies equally to primary resource industries, manufacturing, the retail and service sector, the construction industry and certain public services provided by munic­ipalities and local authorities. In each of these sectors the nature of the business organization is different, yet in each case section 55 must be applied in a manner which is sensitive to both the business context and the purpose which the section is intended to accomplish."

An examination of the cases reveals certain themes, or factual pat­terns which, if present in the case under consideration, will strengthen the inference of a section 55 sale; but even these are only indicia. They are not conclusive tests. Even the significance of an apparent continuity of the predecessor's business may be diminished if the as­sets involved in the transfer have a discrete and limited range of uses so that the transferee's use will necessarily be the same as that of the transferor; or, if there are countervailing factors, such as a hiatus be­tween the "demise" of the predecessor and the "birth" of the suc­cessor, or the interposition between the two of a truly independent third party. Such factors weaken the inference of a "section 55 sale" and suggest a transfer only of assets.

See also Vaunclair Meats, [19811 OLRB Rep. May 581, in which the Board wrote:

24. The Board has always recognized that the meaning to be attached to the word "business" depends to a great extent upon the facts and cir­cumstances in each particular case. It cannot be said that any one facet of an enterprise taken by itself comprises the "business". The business is the "totality of the undertaking"~ including: the physical assets, tools and equipment, management and operating personnel, goodwill, and other intangibles. (See Raymond Cote, [1968] OLRB Rep. March 1211.) Thus, in determining whether it is the "business" which has been transferred, the Board has frequently found it useful to consider the extent to which these various elements of the predecessor's business organization have been transferred into the hands of the alleged successor; that is, whether there has been an apparent "continuation of all, or part, of the business — albeit with a change in the nominal owner." Many of these factors which the Board considers were summarized in Culverhouse Foods Lim­ited, [1976] OLRB rep. Nov. 691 (application for judicial review dismissed):

"In each case the decisive question is whether or not there is a con­tinuation of the business ... the factors which might assist the Board in its analysis; among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effec­tively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Addi­tionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the suc­cessor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant considerations, how­ever, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, how­ever, that none of these possible considerations enjoys an independent life of its own; none will necessarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same as it was before, i.e. whether there has been a continuation of the business.

The issue before the Board, of course, remains whether there has been a "transfer of a business" or "part of a business", but it is much easier to make that finding, and to conclude that the collective bargaining re­lationship should be continued, if there is substantial continuity of the other elements of the predecessor's business organization. If the elements formerly used by "A" to carry on business are now in the hands of "B", and are used for the same business purposes, it is difficult to resist the conclusion that there has been some form of transfer "of a business" from "X' to "B". (See also: the remarks of Widgery J. in Kewnmir v. Frizzel et al [1968] 1 All ER 414 — a case arising out of legislation sim­ilar to section 55.)

5. The present case arises in the context of the retail food store sector of the economy. Over the years the Board has had occasion to consider a number of section 63 applications which have arisen in that context. The following passage from More Grocerteria Limited, [19801 OLRB Rep. Apr. 486, collects and reviews many of those decisions:

6. The retail food cases provide a classic illustration of the Board's at­tempt to ground the definition of business to the peculiarities of a par­ticular industry and the policy of the statute in providing some measure of permanence to the collective bargaining process. One of the first cases is Dutch Boy Foods Markets, (1965), 65 CLLC ¶16,051. There the owner of certain premises in Kitchener leased the premises for fifteen (15) years to Carroll's Limited who carried on a grocery business at the location for two years. Carroll's in turn assigned its interest in the lease to Stein­berg's Limited who thereafter carried the same type of business for ap­proximately seven years. In 1964 Kitchener Food signed an offer to purchase all leasehold improvements and fixtures at the subject location conditional on the assignment of the lease between the original owners of the premises and Carroll's Limited. Steinberg's ceased operations De­cember 24, 1964 and, after extensive alterations, Kitchener Food opened for business February 10, 1965. None of the former employees of Stein­berg's were in the employ of Kitchener Food. In finding that Kitchener Food had purchased part of Steinberg's business the Board observed that had Kitchener Food only purchased the contents of the subject premises and moved them into other premises, it would have had no difficulty in finding the transaction was only the sale of assets. But the transaction, in fact, amounted to a disposition of Steinberg's entire operation in the Kitchener area. The Board also noted that the existence of a restrictive covenant by Steinberg's would have conclusively established the sale of a business but the absence of such a covenant does not establish the contrary where the facts of the industry militate otherwise. It then went on to, in effect, find that the somewhat unusual features of the retail food supermarket gave a particular meaning to the terms "business" often coincident with a disposition or relinquishing of the physical premises. In this respect it wrote:

"A retail food supermarket, unlike some other businesses, has no customer orders or lists which can be transferred to a purchaser who intends to carry on the same type of business. By the very nature of a retail food business, with the exception of the name, a vendor has no goodwill which he can effectively give or withhold from a pur­chaser. The success of a food supermarket is dependent, on large measure, upon the support of the people who live in the area in which the store is located. Accordingly, any goodwill consists in the habit of customers of the vendor continuing to patronize the food market located in the same premises. If there was any goodwill to be ac­quired by Kitchener Food it was inherent in the premises themselves in which Steinberg's had carried on the same type of business as that carried on by Kitchener Food. Accordingly, the exemption of good­will from the purchase price, in our opinion, has no real meaning.

Each food supermarket chain endeavours to attract customers on the particular quality of its merchandise. In this connection it features and advertises its own name brand products. Accordingly, it is to be expected that one chain food store would not be interested in ac­quiring the foodstuffs and inventory of another chain food store. This perhaps is particularly true in the instant case, since the evidence is that Steinberg's ceased its operations on the premises in question be­cause it had not proved to be a sufficiently profitable operation to maintain. In our view, the failure of Kitchener Food to purchase the foodstuffs and inventory does not have any significant effect in our determination as to whether there was a sale of a 'business'.

With reference to the argument relating to the lapse of time before Kitchener Food opened its store, we are of the opinion that an anal­ogy cannot be drawn between a retail food business and a manufac­turing operation. In the latter case, if there was a shut down of the operation at the time of a sale to a purchaser who intends to carry on the same type of business, the result generally would be a pro­duction and financial loss to both the vendor and the purchaser. In the former case, however, it is generally necessary to shut down op­erations at the time of a sale in order to give the new owner an op­portunity to make renovations which are in accord with its particular method of merchandising and carrying on business. It also allows time for the new owner to stock the premises with its own foodstuffs and inventory. In the instant case, Kitchener Food acted with all rea­sonable expedition in opening the premises for commercial operations following its acquisition of the premises. In our opinion, the fact that there was a time lapse between the cessation of Steinberg's operations and the commencement of operations by Kitchener Food does not make the transaction any less the sale of a 'business'."

19. Cases confirming these views with similar positive findings of busi­ness sales are Leader's Clover Farms Food Market [19661 OLRB Rep. Nov. 636; L & M Food Markets (Ontario) Limited [19651 OLRB Rep. Sept. 440; Super City Discount Foods Limited [1970] OLRB Rep. April 118; Gordon Markets [1978] OLRB Rep. Dec. 1102. However, it is to be noted that Super City, supra, and the two Gordons Markets cases in­volved non-arm's length transactions where the Board had little difficulty in concluding that inter-corporate group transfers of business activity had occurred.

20. Cases in the retail food industry where the Board has dismissed sec­tion 55 applications include Sunnybrook Food Markets [1966] OLRB Rep. Oct. 53; Sunnybrook Food Market (Keele) Limited [1974] OLRB Rep. Jan. 47; Zehrs Markets Limited [1974] OLRB Rep. Apr. 311; Dominion Stores Limited [19791 OLRB Rep. 626; and Darrigo Consolidated Hold­ings Inc., File No. 0266-79-R decision issued January 15, 1980. In the first Sunnybrook case Steinberg's operated stores in Ajax and Whitby prior to the assignment of its Whitby store lease to the respondent company. At about the time that Steinberg's closed the Whitby store it opened an Oshawa store and the Oshawa and Ajax stores were about five miles (dis­tant) from the former Whitby location. In dismissing the application the Board appears to have been influenced by the fact that Steinberg's and Sunnybrook competed with each other by advertising in the community served by the other. Moreover, at the time Steinberg's closed its Whitby store and opened its Oshawa store, the move was prominently advertised at the Whitby store and customers urged to take their business to the Os­hawa store. Focussing on these facts, the Board at paragraph 9 concluded:

'Having regard to all of the circumstances of the instant case, we conclude that this is not a case (such as the Dutch Boy case was) in which one employer goes out of business and another, purchasing all the substantial assets, opens for business at the same premises. Rather, this is a case in which an employer, changing the location of its business operations within a particular market area, disposes of certain unwanted premises and other assets to a competitor. In arriv­ing at this conclusion, we have had regard, inter alia, to the fact that Steinberg's retained the services of certain of its employees, who were transferred from Whitby to Oshawa. This is consistent with the con­clusion that Steinberg's has not disposed of its business in the market area in question. We would agree with the view expressed by the ma­jority of the Board in the Dutch Boy case that the differences or sim­ilarities in employment forces as between "predecessor" and "successor" employers would not otherwise be relevant to the issue."

Counsel for the applicant submitted that in this case the Board failed to take into account that the definition of "business" includes the disposi­tion of a part of a business and that the case was also incorrect if it stands for the proposition that a business cannot be sold to a competitor. He also submitted that the Board's view of the relevant market area in this case was far too broad. He submitted that the relevant area for a "neigh­bourhood store" should be confined to the immediate vicinity of the store without cogent market evidence to the contrary. While each case must be decided on its own facts and the particular panel hearing the facts is in the best position to make the necessary judgments, we find counsel's ar­gument persuasive. We would decline to follow this case if it stands for the proposition counsel fears its supports. Clearly, an employer in this industry can dispose of a part of its business (and to a competitor) where it is prepared to gamble that a more remote store through widespread advertising can recapture all or part of that which it has ostensibly dis­posed of. Each of the parties to such a transaction is gambling with re­spect to the value of the disposition, but the facts of the case before this panel and our understanding of local patronage weighs against the con­clusion of a mere asset disposition and lease assignment. Without evi­dence to the contrary, we accept counsel's submission that the relevant market of a neighbourhood store should be narrowly defined and the par­ticular facts in this case support this conclusion.

21. In the second Sunnybrook case the "A & P" had the benefit of a ten year lease on certain premises in Brampton together with three five year options for renewal. At the conclusion of the ten year term, "A & P" gave six month's notice to the lessor that it would not be extending the lease. The evidence was that "A & P" had found the premises too small and outmoded; the profit was marginal; and it was negotiating for a replacement outlet in Brampton that was three times as large. "A & P" did not sell its fixtures to the respondent company until some six weeks before it ceased operations in the location fortifying the conclusion that there had been no direct or indirect transfer of the premises by "A & P" through the intermediary of the lessor. The relationship between the lessor and respondent company was therefore independent of "A & P" interests and its business decisions. Indeed, there had been no dis­cussions about the lease between "A & P" and the respondent company and the sale of the fixtures was in no way conditional upon the successful completion of the lease transaction. The Board emphasized all of these factors in dismissing the application and disagreed with the general prop­osition that in the retail food business "the business adheres in the prem­ises." Counsel did not contend that the case was incorrectly decided. Indeed, it shows that there are circumstances where an employer may come to a conclusion that a location is no longer of value to him and unilaterally take steps to cease operations. In such circumstances, the re­sulting disposition of trade fixtures appears just as that. ...

22. Zehrs Markets Limited [19741 OLRB Rep. Apr. 331 is another ex­ample of a situation where the Board concluded that occupation of certain physical premises involved the mere assignment of a lease. This case best illustrates the principle put forward by the applicant's counsel that the passage of time may so dissipate customer patronage that no ongoing business can be said to have been transferred. In that case, Busy B ceased operation in January of 1972 by virtue of an independent business de­cision regardless of the eventual disposition of the subject premises. Al­most one year later Zehrs commenced operations. The hiatus of time weighed against the finding that Busy B had transferred a part of its busi­ness to Zehrs.

23. Dominion Stores Limited [1979] OLRB Rep. July 626 also demon­strates the Board's willingness to find against the sale of a business in appropriate circumstances. In that case Dominion stores operated a store in the immediate vicinity of the acquired premises and its occupation of the acquired premises (formerly occupied by Gordons) was accompanied by a closing of Dominion's original store in the area. This fact, together with a hiatus of five months convinced the Board that Dominion was simply moving its existing premises within the relevant market area and not acquiring the business of another. In doing so, Dominion achieved the elimination of a competitor through the benefit of a non-compete clause but there would appear to have been no evidence that Dominion's purpose was an increase in business by virtue of the operation of that provision. Indeed, the non-competition clause running with the lease ap­pears to have been an incidental benefit in Dominion's independent deal­ings with the lessor. Had Dominion maintained its original store or if the principal purpose of the transaction had been to obtain the benefit of the non-competition clause, the result may well have been different....

24. Finally, in Darrigo Consolidated Holdings mc, (supra) the Board was satisfied that Dominion stores had facilitated the transfer of only a lease to Darrigo and not a business because of a hiatus in business activity of some fourteen (14) months ....

In the More case, the Board found that the respondent had purchased a part of Loblaws' busi­ness by subleasing from Loblaws certain premises in London at which Loblaws had operated a retail food store, and purchasing for $14,000 certain "goods, chattels and effects" which had been used by Loblaws on the premises. More's purchase of those items was conditional on More obtaining the aforementioned sublease. In that case, Loblaws discontinued its op­erations on the premises on December 1, 1979 but thereafter (in order to provide for the local customers while the store was closed) provided free bus service from the premises to a new "super store~', which it had opened two weeks earlier in a location five miles away, until December 19, 1979 when the respondent opened for business at the premises in question. The purchaser acknowledged that the premises constituted a "neighbourhood store" in that it re­lied on local clientele, and also acknowledged that on opening for business, the store was described as "formerly Loblaws" (or words to that effect) in advertisements. Although he owned another retail food store in Stratford, the store in question was Mr. More's sole retail food store in the London area.

6. With those general principles in mind, we will now turn our attention to the facts of the present case. This application pertains to a retail food store at 3671 Dundas Street West, Toronto. Dominion operated a retail food store at that location, originally as a "Dominion Store" and later (from sometime in 1980 until March 26, 1983) as a "Thrift" food store. During its final full financial quarter (December 19, 1982 to March 19, 1983) under the latter name, the store's average weekiy sales were $54,000, with an average of 3,500 customer transactions per week. During that period the store employed approximately nine or ten full-time employees, and four or five part-time employees. Through its "Thrift" operation at that location, Dominion offered customers a very limited grocery line, basic meats, and a relatively small range of produce in a warehouse type store" at which customers bagged their own purchases at the cashiers'counters. It appears that all the Thrift stores have now been closed as part of a change in Dominion's marketing concepts.

7. The applicant has held bargaining rights for a number of years for Dominion em­ployees (including employees at Dominion's "Thrift" stores) in various Ontario municipalities, including Metropolitan Toronto. Its most recent collective agreement with Dominion became effective on October 17, 1982 and will remain in effect until June 21, 1984. It is that agree­ment which the applicant contends is binding upon the respondent by virtue of section 63(2) of the Labour Relations Act.

8. The respondent operates four retail food stores (including the store involved in this application) in Metropolitan Toronto under the name "Bonanza Supermarkets". It also pur­chases and warehouses food for those four Bonanza outlets. The respondent has operated in Metropolitan Toronto since May of 1981. Its president, Joseph Virgona, has over twenty years' experience in the food industry. In his candid and credible testimony before the Board, Mr. Virgona described the respondent's business as "retail food with emphasis in the ethnic com­munities". In order to attract customers from various ethnic communities in Metropolitan Toronto, and in particular from Metro's Italian community, the respondent offers in its four full-service supermarkets a "high range of ethnic lines". For example, in its meat depart­ments, the respondent concentrates on veal, sausages, rabbit, fresh quail, goat meat, lamb, and other types (and cuts) of meat not generally sold by retail chain stores. Similarly wide varieties of ethnic foods are offered in its grocery and produce departments. Much of the re­spondent's $450,000 annual advertising budget is concentrated on commercials aired during Italian programmes broadcast by multicultural radio and television stations in the Metropolitan Toronto area.

9. During late 1982 or early 1983, the respondent began to look for a location in the "Jane — St. Clair area, north of St. Clair", with a view to expanding its business by opening another retail outlet. That area was selected by reason of its high ethnic concentration. The respondent was assisted in its search by F. G. Young Real Estate Limited. In January of 1983, Mr. Virgona visited a number of retail food stores in the respondent's "target area" and in surrounding areas. One of the stores that he entered and observed at that time was the afore­mentioned Thrift store at 3671 Dundas Street West. As a result of observing those retail food stores, Mr. Virgona concluded that the stores operated by Dominion, Safeway, and Miracle Mart in that vicinity were not catering to the ethnic communities. When he visited the store in question in January of 1983, Mr. Virgona was unaware that the store would subsequently be closed by Dominion and thereby become available for rental.

10. As indicated earlier in this decision, Dominion closed its Thrift store at 3671 Dun­das Street West on March 26, 1983. In April of that year, Mr. Virgona learned of the closing through conversations with various food salesmen who call upon him regarding purchases of merchandise by the respondent. Since no suitable location in the "target area" north of St. Clair Avenue had been found, Mr. Virgona instructed F. G. Young Real Estate Limited in May of 1983 to approach Dominion and attempt to negotiate a suitable lease of the 3671 Dundas Street West premises. Negotiations commenced near the end of May and concluded on or about June 28, 1983 with the execution by the respondent and Dominion's property company (DSL Properties Limited) of an offer to lease. (The respondent subsequently executed a formal lease on December 5, 1983, which had not yet been executed by DSL Properties Limited as of February 7, 1984, the date of the Board's hearing of this application.) In addition to a spec­ified annual minimum rent, the leasing arrangements between the respondent and Dominion provide for an additional "percentage rent" calculated as a percentage of revenue from sales. The lease also restricts the respondent to using the leased premises "only for the purpose of a food supermarket, as carried on by the [respondent] in the majority of its other stores in the Municipality of Metropolitan Toronto".

11. After allowing Dominion approximately four or five weeks to remove all remaining equipment and other chattels, the respondent took possession of the premises around the be­ginning of August. All that was left behind by Dominion were two built-in wooden coolers which were impractical to remove. The respondent purchased no equipment, inventory, or other chattels from Dominion. After taking possession of the premises, the respondent spent over $95,000 on leasehold improvements, and over $500,000 to equip the store. Instead of the deep warehouse racks used in the Thrift store, the respondent used normal retail food store shelving to display its grocery merchandise. In contrast to the approximately 1,600 grocery lines of­fered by Thrift at that location, the respondent offered over 6,000. Comparable expansions of merchandise, with emphasis on ethnic foodstuffs, were also effected in the produce and meat departments.

12. The respondent opened its store at the location in question on October 19, 1983. During its first week of operation, the store had almost 10,000 customer transactions totaling over $290,000 in sales. In the period from October 22, 1983 to the end of January of 1984, the store's weekly sales averaged about $183,000, with an average of approximately 8,000 customer transactions per week. Although some of its customers come from a nearby sub­division, others travel a considerable distance to shop there. Having regard to the totality of the evidence, the Board is of the view that the store, as operated by the respondent, cannot accurately be described as a "neighbourhood store" as that term is generally understood in the Board's jurisprudence.

13. There is no evidence that any of the individuals employed by Dominion at the Thrift store as bargaining unit employees or members of management have become employees of the respondent. The Manager of the store in question has been employed by the respondent for about eight years, and was transferred to that store from one of the respondent's other retail outlets. The respondent employs a total workforce of about 68 persons at the store, 36 of whom are full-time employees, and the remainder of whom are part-time employees. The re­spondent does not receive any supplies from Dominion, nor does it have any corporate, fi­nancial, or other connections with Dominion apart from the leasing arrangement described above. Dominion remains a competitor of the respondent and operates two of its own stores within four or five kilometres of the store in question.

14. Section 63(5) of the Act empowers the Board in certain circumstances to terminate a union's bargaining rights if, in the opinion of the Board, the person to whom the business was sold has changed its character so that it is substantially different from the business of the predecessor employer. However, none of the parties to this application contended that sub­section (5) was applicable in the present circumstances, and the evidence would not in any event support a finding of a substantial change in the character of the business. Thus, section 63(5) provides no assistance in deciding the present case.

15. While the Board's jurisprudence referred to earlier in this decision is helpful in a general sense, each case under section 63 of the Act must ultimately turn on its own indi­vidual facts. In this case, some of the facts, when considered in the context of the retail food industry, do tend to point toward a sale of a business within the meaning of section 63. The respondent leased from Dominion premises at 3671 Dundas Street West which had for many years been used as a retail food store by Dominion. The terms of the leasing arrangement restrict the respondent to using the leased premises "only for the purpose of a food super­market". Although Dominion remains a competitor of the respondent in the Metropolitan Toronto area, its two nearest stores are four or five kilometres away, and it is reasonable to infer that at least some of the former customers of the Thrift store now shop at the store which the respondent is operating on those premises. However, a number of other facts militate against finding a sale of a business by Dominion to the respondent in the circumstances of the present case. The Thrift store was closed by Dominion on March 26, 1983 as part of a change in Dominion's marketing concepts. At no time prior to the closing was there any sug­gestion that the respondent might be interested in operating a food store at that location. In­deed, the respondent, which already operated three ethnically oriented supermarkets in Metropolitan Toronto, did not even become aware of that closing until some time in April, and it was not until May that the respondent, having been unable to locate suitable premises in its "target area" north of St. Clair Avenue, instructed its real estate agent to approach Do­minion about the possibility of leasing the premises. Negotiations between Dominion and the respondent (through its independent real estate agent) commenced near the end of May and did not conclude until June 28, 1983. There followed a four or five week period during which Dominion removed all of its remaining equipment and chattels, with the exception of two built-in wooden coolers which it was impractical to remove from the premises. After taking pos­session of the vacant premises around the beginning of August, the respondent spent ap­proximately two and a half months (and approximately $600,000) improving the premises and re-equipping the store. When the respondent's new store opened on October 19, 1983, it drew customers from a wide area, including its ethnic "target area", and enjoyed a sales volume many times greater than that of the Thrift store which had earlier been operated by Dominion at that location. The respondent did not acquire any managerial or other expertise from Do­minion, and it is clear from the evidence as a whole that the respondent's success at that location has been built upon its own entrepreneurial activities, and not upon any measure of "goodwill" derived from the fact that Dominion had operated a retail food store at that lo­cation six and a half months earlier. Thus, on balance, we find that the respondent's business at 3671 Dundas Street West is not a continuum of the business formerly operated by Dominion at that location, but rather is an expansion of the respondent's own pre-existing parallel retail food store business.

16. Therefore, having regard to all of the evidence and the submissions of the parties, the Board finds that although the respondent leased the premises in question from Dominion, that transaction did not constitute a sale of a business by Dominion to the respondent within the meaning of section 63 of the Labour Relations Act.

17. For the foregoing reasons, this application is hereby dismissed.

DECISION OF BOARD MEMBER B. L. ARMSTRONG;

1. I regret that I cannot agree with the decision of the majority. In my view the ex­ecution of a lease by the respondent to operate a retail food outlet formerly operated by Do­minion as a Thrift Store at 3671 Dundas Street West, Toronto, constitutes a "sale of business" within the meaning of section 63 of the Labour Relations Act.

2. The facts are not in dispute. Dominion operated a retail food store at that location, originally as a "Dominion Store" and later (until March 26, 1983) as a Thrift Food Store. It appears that all the Thrift Stores have now been closed as Dominion changes its marketing concept.

3. The applicant has held bargaining rights for a number of years for the employees at Dominion and employees at Dominion Thrift Stores. The most recent collective agreement remains effective until June 21, 1984, and I support the applicant's position that this agree­ment is binding and effective upon the respondent by virtue of section 63(2) of the Labour Relations Act.

4. Joseph Virgona, the president of the respondent, in his testimony described the business as "retail food with emphasis in the ethnic communities", offering over 6,000 lines compared to Thrift Store's 1,600 grocery lines at that location. Although some of the cus­tomers come from the nearby neighbourhood, my colleagues conclude that the store, as op­erated by the respondent, cannot accurately be described as a "neighbourhood store". I take the opposite view. We are unanimous, however, in finding that the increase in lines offered and the variety geared to the ethnic community does not change the nature of the business; it was and still is a food store. Dominion operated a food store for a number of years and three years ago converted to a Thrift Store, a new marketing concept in a food store. Mr. Virgona visited the store in January of 1983 and later learned the store was closed and avail­able for rent. An offer to lease was executed in June of 1983. The respondent reopened the store in October of 1983 with increased weekly sales and the introduction of retail food store shelving to display the grocery merchandise. A formal lease was executed on December 5, 1983, restricting the respondent to using the leased premises "only for the purpose of a food supermarket" with provision for an annual minimum rent and an additional "percentage rent" calculated as a percentage of revenue from sales.

5. It is my position that the changes in merchandise and marketing are not critical, and that the entire transaction must be looked at. The respondent acquired premises that had been used by Dominion as a food store, for the purpose of operating a food store at that lo­cation. Indeed, its lease prevents it from using the premises for any other purpose. That re­striction, together with the fact that the location of a food store is a vital element in the retail food business, leads me to conclude that a sale of a business did take place, and I would so find.