[1984] OLRB Rep. 674
1617-83-R Graphic Communications International Union, Local 211, Applicant, v. W. F. Stevens Reproductions Inc., Respondent v. Thorn Press Limited, Intervener.
BEFORE: Kevin M. Burkett, Alternate Chairman and Board Members W. G. Donnelly and W.F. Rutherford.
APPEARANCES: Norman L. Jesin and John Neilson for the applicant; Lloyd Stevens and William Stevens for the respondent; Michael Gordon and Thomas Rogers for the intervener.
DECISION OF THE BOARD; April 3, 1984
- This is an application filed under section 1(4) of the Labour Relations Act and in the alternative under section 63 of the Act. Section 1(4) of the Act reads:
Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief by way of declaration or otherwise, as it may deem appropriate.
Section 63 of the Act reads in part:
- (1) In this section,
(a) "business" includes a part of 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.
- The material facts before the Board are set out below:
— Thorn Press Limited operating from 135 Railside Road, offers a full range of printing and related services, some of which it supplies itself and some of which it contracts to have performed.
— Prior to 1983 the company operated a lithographic department which employed 12 persons. As of July 1983 about 50% of Thorn's lithographic work was contracted out so that only four persons were employed by Thorn in its lithographic department.
— Thorn Press made a decision on July 19, 1983 to close its lithographic department. Notices of termination were sent to the affected employees to be effective August 19, 1983.
— Mr. William Stevens, a plant manager of a division of Bomac Batten Lithographic, was given notice of termination from Bomac Batten Lithographic when one of its major customers went into production for itself. Mr. Stevens installed equipment for developing lithographic film in his basement and commenced to carry on his own business from that location in early 1983.
— Mr. William Stevens visited MeCutchen Graphics in July, 1983 for the purpose of obtaining advice with respect to the purchase of equipment and was referred to Thorn Press. Mr. Stevens visited Thorn Press for the first time on July 28, 1983 and was advised that Thorn had decided to abandon its lithographic operation and that its lithographic equipment was for sale.
— As a result of discussions which ensued involving the President of Thorn, Mr. William Stevens, and his brother Mr. Lloyd Stevens in early August, 1983 it was agreed that only Mr. William Stevens would supply lithographic work for Thorn. It was agreed that Mr. Stevens would utilize that part of the Thorn premises formerly occupied by Thorn's Lithographic department and that Mr. Stevens would use the Thorn equipment (valued at about $15,000), (Mr. Stevens had equipment of his own valued at about $2,000) and in return for using the premises and equipmeent he would pay a fee of 15% of the labour content (total billing less cost of materials) of his billings. This six-month trial arrangement was to expire at the end of February, 1984.
— W F. Stevens Reproductions Ltd. was established to carry on the lithographic reproduction business of William Stevens, which had commenced earlier. W. F. Stevens Reproductions operates from the Thorn Press premises at 135 Railside and in addition to supplying about 50% of the lithographic reproduction work required by Thorn, services the other customers that it has. When W. F. Stevens Reproductions commenced operation at 135 Railside 80% of its work was done for Thorn. The percentage of work presently performed for Thorn has decreased to 67%.
— Mr. John Burke, a former employee of Thorn, took a small equity position in W. E Stevens Reproduction and together with Mr. W. Stevens and a helper that has recently been hired provides the labour input for W. F. Stevens Reproductions Inc.
— Mr. L. Stevens, the brother of William Stevens, is the controlling shareholder of W. F. Stevens Inc. The minority shareholders are Mr. W. Stevens, his wife and Mr. Burke. Thorn has no interest in W. F. Stevens Inc. and W. F. Stevens Inc. has no interest in Thorn. No one from Thorn holds a management position in W. F. Stevens Reproduction.
— Thorn has four other suppliers of lithographic reproduction work who supply the 50% of its requirements not supplied by W. F. Stevens Reproductions.
The union argues that the essential facts in this matter are no different than those which caused the Board to issue a section 1(4) declaration in Re Don Mills Bindery, [1983] OLRB Rep. Dec. 2008; a case in which the entity which took over Thorn's bindery business was found to be under the control of Thorn. The union maintains that the activities in this case are functionally interdependent and, when reference is had to the percentage of Stevens' business that is performed for Thorn and the fact that it is performed on Thorn's premises using Thorn's equipment on the basis of a verbal arrangement, a finding should be made that the two companies are under common control. Alternatively, the union submits, having regard to the broad definition of the term "disposition" in section 63 of the Act, that a sale of a business within the meaning of that section has taken place.
Stevens disputes that the facts in this matter are on all fours with those relied upon by the Board in Don Mills Bindery, supra. Stevens points to the existence of a pre-existing business with customers of its own and asks the Board to contrast this with the business that was set up in Don Mills Bindery, supra by the manager of Thorn's bindery department for the purpose of performing Thorn's bindery work. Stevens also points to the absence of former Thorne employees, with the exception of Mr. Burke, working for it.
Counsel for Thorn Press also emphasizes the factual distinctions between this case and Don Mills Bindery, supra. He points to the fact that the person who formed Don Mills Bindery was a supervisor of Thorn's while Stevens was already in business before making contact with Thorn and that at the time he did make contact Thorn had already decided to close down its lithographic department. Counsel for Thorn compares the value of the equipment in this case ($15,000) with that in the Don Mills Bindery case, supra ($250,000) and relies on the fact that Mr. Stevens brought equipment of his own, other than that obtained from Thorn. Counsel for Thorn Press argues that even if Thorn had Stevens removed from its premises and took back its equipment Stevens, in contrast to Don Mills Bindery, would continue in business. Counsel for Thorn argues that in these circumstances Thorn is no different than any other customer and is not able to direct the affairs of Stevens. Whereas the arrangement entered into between Thorn and Stevens is one of convenience, counsel for Thorn argues that it does not place Thorn in a position of control as would allow the Board to issue a declaration under section 1(4) of the Act.
Counsel for Thorn argues in the alternative that there has been no disposition within the meaning of section 63 of the Act as would allow the Board to find that the sale of part of Thorn's business to Stevens has occurred. Relying on the ejusdem generis rule of construction, counsel for Thorn argues that the term "disposition" must be read in light of the specific reference to "leases" and "transfers" in the definition of sale in section 63. In the absence of a giving up of control over the premises or the equipment to Stevens, counsel for Thorn argues that the Board must find that there has been no disposition within the meaning of section 63 of the Act and dismiss the application under that section.
The Board has long held that the word "transfers" in section 63 of the Act is to be given a broad signification and that the words "any other manner of disposition" is not to be interpreted ejusdem generis, with the words "leases" or "transfers". In Thorco Manufacturing Ltd. 65 CLLC 16,052 the Board stated:
The word transfers, however, is obviously a term of wide signification and unless restricted by the context is capable of describing a multitude of transactions whether by sale, exchange, gift, trust or otherwise by which property, rights, or interests, etc. are transmitted absolutely, conditionally etc. or by operation of law from one person to another. We are unable to find anything in the language of the section to denote any legislative intention to restrict the meaning of the word transfers to any particular kind of transfer. Also, having regard to the particular language used and the remedial object sought to be attained by and the wide meaning which must be attributed to the preceding word transfers, it is our opinion that the generality of the words any other manner of disposition is not intended to be in any way limited by or interpreted ejusdem generis with the word leases, or transfers. In our opinion, it is more in harmony with the language of and the remedy envisaged by the enactment to interpret the words and any other manner of disposition as an omnibus or saving provision intended to include dispositions of the business or a part or parts thereof by any mode or means whatever which are not appropriately described by the preceding words which state that sells includes leases or transfers.
It is a rudimentary principle applicable to the construction of remedial legislation that, consistent with the language of the enactment, the interpretation which must be adopted is the one which best serves to advance the remedy and to suppress the mischief contemplated by the legislation. (See also section 10 of The Interpretation Act R.S.O. 160 c. 191). Having regard to this principle and to the fact that the language of the section is entirely susceptible of and in agreement with such a meaning, we are impelled to give the section a large and liberal rather than a narrow or restrictive construction.
The language of the section has not changed from 1965 and neither has the interpretation of it enunciated by the Board at that time. The submissions of counsel for Thorn have not persuaded us that we should limit the definition of the term "sale" as he suggests. Given the transfer of the premises, the equipment and that portion of Thorn's lithographic business that was previously done in-house to Stevens and given the rudimentary nature of Stevens' business prior to the transfer of these components of Thorn's lithographic business, we are satisfied that a sale of a part of a business from Thorn to Stevens Reproductions Inc. could be made in this case.
However, the evidence is that the transaction between Thorn Press and Stevens Reproductions has not been finalized and, as the matter now stands, we are also satisfied that Thorn retains effective control over the lithographic business that is being carried on by Stevens Reproductions at this time. In these circumstances it is our view that it is more appropriate to proceed under section 1(4).
We do not dispute that the facts in this case do not coincide in all respects with those relied upon in Re Don Mills Bindery Inc., supra. There was no pre-existing business in that case and the business that was established in that case was owned and operated by an individual who had been employed as a supervisor by Thorn. In this case there is a pre-existing business operated by someone with no prior association with Thorn. The pre-existing business had some equipment of its own (valued at $2,000) in contrast to Don Mills Bindery and that which it obtained from Thorn is valued at $15,000 as compared to the $250,000 of equipment Don Mills obtained from Thorn. The volume of work performed by Stevens for Thorn has decreased from 80% of its total volume of work to about 67% of its total volume of work, whereas the work performed by Don Mills Bindery for Thorn was about 90% of its total volume at the relevant times. Finally, Don Mills Bindery Inc. employed 10 former employees of Thorn while Stevens has employed only one former employee of Thorn and in addition, has hired a helper. However, notwithstanding the factual differences between the two cases, when we look at Stevens' buisiness as it presently exists we are forced to the same conclusion as was reached by the Board in Re Don Mills Bindery, supra.
As in Don Mills Bindery, supra Stevens' business operates out of premises owned by Thorn at the pleasure of Thorn. There is no written lease or other agreement upon which Stevens can rely in occupying these premises against the will of Thorn. The bulk of the equipment used by Stevens is also owned by Thorn and can be taken back without notice. Finally, the bulk of the work performed by Stevens is work emanating from Thorn. The factual differences between this case and Don Mills Bindery Inc., supra, do not change the essential nature of the relationship between Thorn and Stevens. Thorn is not simply a customer of Stevens as is suggested by counsel for Thorn. As we have observed, Thorn supplies Stevens with the bulk of its work and, in addition, has supplied most of the equipment on which that work is done, has allowed Stevens to use its premises to perform this work and can, at its own pleasure send its work elsewhere and direct Stevens to vacate its premises. As in Don Mills Bindery Inc. supra and as in J. H. Normick Inc., [1979] OLRB Rep. Dec. 1176 we are satisfied that Thorn enjoys effective control over the lithographic business of Stevens Reproductions within the meaning of Section 1(4) of the Act. Furthermore, given the nature of Thorn's business which offers a full range of printing and related services including lithographic reproduction services, there can be no dispute that the activities carried out by Stevens and those carried out and provided by Thorn are related activities within the meaning of section 1(4) of the Act.
The remedial purpose of section 1(4) of the Act is dealt with at paragraphs 41 and 42 of The Charmning Hostess case, [1982] OLRB Rep. April 536 as follows:
Because of the amendment to section 1(4) in 1975, it is not necessary that there be shared participation in a common business endeavour or even contemporaneous economic activity. The relationship between the related employer is a functional rather than a temporal one. (For a discussion of the reasons for amendment see: Brant Erecting, ([1980] OLRB Rep. July 945) at paragraphs 13 — 14.) Section 1(4) creates a regime of collective bargaining law which (like section 63), significantly modifies common law notions of "privacy of contract" or "the corporate veil". But while the language of section 1(4) is very broad, the section is not intended to be applied in every case which, in a general sense, meets its statutory criteria. The Board had a discretion concerning the application of section 1(4) and, in the past, it has exercised that discretion carefully in light of the circumstances of particular cases, and labour relations policy considerations.
Section 1(4) does impose some limits on the degree to which an employer can avoid its obligations under a collective agreement by substituting the employees of another employer for its own — even though the arrangement may not have been undertaken for the purpose of subverting bargaining rights (in which case unfair labour practice considerations might also arise). This is especially the case where the functions performed by the employees of the other employer are carried out on the first employer's premises, with the first employer's equipment, in conjunction with the work performed by the first employer's own employees, and subject to the first employer's overall direction and control. In The Great Atlantic and Pacific Company of Canada Limnited [1981] OLRB Rep, March 285, for example, legislation required "A & P" to create a new corporate vehicle to run the pharmacy department which it had established in its larger food stores. There was no anti-union motive, but the separate legal identity of the "drug company" was totally artificial from a collective bargaining point of view. And the Board issued a related employer declaration. The drug company was completely dominated by A & P, and had no business activities apart from it. The fact that the drug company hired employees, paid them and directed them in their daily activities did not obscure the reality of the situation.
In this case, because Thorn enjoys effective control over the related activities carried out by Stevens Reproductions and because these activities, which had previously been carried on by Thorn using bargaining unit employees, are carried out by Stevens on Thorn's premises using Thorn's equipment, it makes eminently good labour relations sense to cut through the arrangement that has been made and to exercise our discretion under section 1(4) of the Act to declare that Thorn Press and Stevens Reproduction Inc. as they presently exist, constitute one employer for the purposes of the Act. Having regard to all of the foregoing we hereby so declare. It follows that so long as this declaration remains in effect the respondent Stevens Reproductions Inc. and Thorn Press Limited are one employer for purposes of the Act.