[1984] OLRB Rep. March 462
1738-83-R Ontario Sheet Metal Workers Conference Sheet Metal Workers International Association, Local 269, Applicants, v. Gerald Davidson Plumbing & Heating Limited 419227 Ontario Limited, Respondents, v. Group of Employees, Objectors
BEFORE: R. O. McDowell, Vice-Chairman, and Board Members F. W. Murray and H. Kobryn.
APPEARANCES: S. B. D. Wahl, L. Lavallee and G. Ward for the applicants; Peter J. Thorup, Ben Ring, Gerry Davidson and J. C. McCelland for the respondents; Philip S. Staddon for the objectors.
DECISION OF THE BOARD; March 20, 1984
- This is an application under section 1(4) of the Labour Relations Act. The applicant union seeks a declaration that the respondent, Gerald Davidson Plumbing & Heating Limited and 419227 Ontario Limited ("the numbered company") are one employer for the purposes of the Act. Section 1(4) reads as follows:
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.
The respondents concede that the prerequisites for a section 1(4) declaration have been met; however, they contend that the Board should exercise its discretion not to make such declaration.
The respondent Gerald Davidson Plumbing & Heating Limited was incorporated in April, 1970 to carry on an oil burner service business. It is owned by Gerald Davidson and his wife Jean, who between them control ninety-nine per cent of the shares. Initially, the business operated out of the Davidson home and employed only Gerald Davidson, his wife, his brother Bill, and one other employee. However, the business prospered, and as the scope of its activities expanded, it required more space and more employees. In 1976, the company moved out of the Davidson home to 20 Young Street in Brighton. In 1979, the company built a building in Brighton which it owns and from which it has since carried on business.
As the company's plumbing and heating business grew, it began to hire more employees and play a more prominent role in the local market. It now has twelve service trucks and twenty-two employees, of whom seventeen (mostly plumbers and sheet metal workers) work in the field. About seventy-five per cent of its work is in the industrial, commercial and institutional sector (ICI) of the construction industry in the Trenton-Belleville-Kingston area. None of its employees is a member of the applicant union, nor has there ever been any attempt by the applicant union to organize them or seek certification as their bargaining agent. At the opening of the hearing, a solicitor for these employees presented a petition on their behalf indicating that they do not want the union to represent them.
In 1979, the company put in a bid for a job at a local Quaker Oats plant but was told that bids could only be accepted from unionized subcontractors. Gerald Davidson concluded that the problem could be resolved by setting up a separate company to undertake those projects which had to be done pursuant to a collective agreement. The numbered company was incorporated for this purpose on June 27, 1979. In July of 1979, the numbered company entered into a voluntary recognition agreement with Local 320 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada ("UX') which had the effect of binding it to the UXs province-wide ICI agreement. The agreement was applied and union members hired at the Quaker Oats job. It is interesting to note, however, that the voluntary recognition agreement with the numbered company includes an express acknowledgement that the UA is aware of the existence of Gerald Davidson Plumbing & Heating Limited and that the recognition agreement does not bind that company, but only the numbered company. In effect, the agreement is a waiver of any rights under section 1(4) of the Act and permits Gerald Davidson to run a related and non-union business.
The Quaker Oats project did not have sufficient sheet metal work to require Davidson to approach the Sheet Metal Workers' union, but the following summer, Gerald Davidson Plumbing & Heating Limited was the successful bidder on a job for Lake Ontario Cement in Picton, Ontario. This project too had to be done exclusively by unionized contractors and there was sufficient sheet metal work involved to require a relationship with the applicant union. Once again, Gerald Davidson sought to establish such relationship through the numbered company so as to preserve the non-union status of his main business. Davidson asked the Local UA business agent to act as go-between and to make arrangements for a meeting with the appropriate officials from the Sheet Metal Workers' union. The meeting was held on August 11, 1980 at a local motel. It was attended by Mr. Davidson, Ben DeBruyn, his site supervisor, and Leo Lavallee, a representative of the applicant union.
What took place at the meeting is a matter of some dispute. The witnesses gave contradictory versions of what was, or was not, said. The result of the meeting was a voluntary recognition agreement between the applicant and the numbered company, however, the witnesses had quite different views as to the intention and scope of that agreement. The union maintains that it was intended to cover all sheet metal work done by Gerald Davidson's business, including the work on "non-union" projects which has traditionally been done by a stable crew of established employees working for Gerald Davidson Plumbing & Heating Limited. Mr. Davidson maintains that the agreement was intended to apply only to the numbered company and to union projects. In both cases, of course, the witnesses were being called upon to reconstruct a conversation which occurred almost three and a half years ago and this, in itself, may explain some of the contradictions in the evidence. One cannot expect an untrained witness to recall with precision events which occurred some years ago and which no one at the time anticipated would be subjected to the scrutiny of a legal proceeding. With the passage of time there is bound to be some distortion attributable to faulty recollection, moreover, human memory tends to be selective, and there is an inevitable tendency to reshape one's recollection of events into the pattern most advantageous to one's own particular position.
Gerald Davidson testified that his purpose in signing the voluntary recognition agreement was to set up a relationship similar to the one which he had with the UA. He was sure that in his conversation with Leo Lavallee, he had distinguished between Gerald Davidson Plumbing & Heating Limited and the numbered company which, at the time, he expected to carry on business under the name of "Gerald Davidson Mechanical Contractors". Mr. Davidson was sure that he had made it clear to Lavallee that there were two separate companies, only one of which would be unionized. He assumed that Lavallee knew about his main business because his company had been established and active in the local market for some years.
Mr. Davidson's testimony is supported by that of Ben DeBruyn, who was present during the meeting and witnessed the execution of the voluntary recognition agreement. DeBruyn was also sure that Davidson had distinguished between his main business, the numbered company and Gerald Davidson Mechanical Contractors. He testified that Davidson explained his intention to keep the two companies separate and did not undertake that all sheet metal work would be done by union members. DeBruyn thought that Lavallee had been told that there were two corporate entities, one of which was Gerald Davidson Plumbing & Heating Limited. DeBruyn was relieved at the time that the whole business would not be unionized because he does not have a sheet metal worker's certificate of qualification which, he thought, was required by all union members. If Davidson's business were totally unionized, DeBruyn might be out of a job. Lavallee told him that he could work as a supervisor on the Lake Ontario Cement project so long as he did not work "at the tools". DeBruyn also confirmed Davidson's recollection that, towards the end of the meeting, Lavallee said words to the effect that "some day you might find it profitable to use all licensed sheet metal workers' union help". Davidson recalls the comment as "maybe some day you will want your other shop with an agreement too
Leo Lavallee denies both statements attributed to him. He maintains that he had no prior knowledge of Davidson's business operations, and Davidson never mentioned that there were two separate companies, one of which was to be union and the other non-union. Lavallee thought there was only one enterprise with the name "Gerald Davidson" and that this was the entity with which he was signing an agreement. He testified that he did not suspect that there was a pre-existing business with an established crew of sheet metal workers who would remain non-union and outside the scope of the agreement. Lavallee told the Board that he did not discover the activities of Gerald Davidson Plumbing & Heating Limited until the spring of 1983, when, by accident, he was inspecting a work site and discovered a Davidson employee who was not a union member. That discovery triggered a series of enquiries culminating in the present application.
Following the execution of the voluntary recognition agreement, Davidson and DeBruyn returned to the company's premises where, in discussion with Mrs. Davidson, they learned that a few days before, the company's solicitors had advised that the name "Gerald Davidson Mechanical Contractors" could not be used. Accordingly, Davidson notified the union of the problem and a new agreement was prepared solely in the name of the numbered company. Pursuant to that agreement (which as in the case of the UA "plugged in" to a province-wide Sheet Metal Workers' ICI agreement) four members were dispatched from the hiring hall and worked intermittently for the numbered company between August 18th and September 10th. The following summer two employees from the union hiring hall were employed between June 30 and July 2, 1981 on a project at Albert College in Belleville. That was the extent of the activities of the numbered company which called for the employment of members of the applicant union. After July of 1981, the numbered company did not bid or receive any new jobs, nor did it have occasion to hire any members of the applicant union. For about two and a half years the numbered company has been inactive, because Gerald Davidson has decided that he does not wish to bid on any more union jobs. Mr. Davidson testified that he had intended to dissolve the company but this proceeding intervened before he got around to doing so. It is apparent, therefore, that the "unionized aspect" of Mr. Davidson's business was a minor and short-lived phenomenon, and unless this Board issues a section 1(4) declaration, the bargaining rights gratuitously created by the voluntary recognition agreement of August 11, 1980 may soon be extinguished.
The union claims that Mr. Davidson intentionally misled Mr. Lavallee into believing that the voluntary recognition agreement applied to his entire business and, in particular, to the employees then and later working for Gerald Davidson Plumbing & Heating Limited. Layallee's evidence was that the latter company had never been mentioned in discussions, and the union argues that Mr. Davidson intentionally misled Mr. Lavallee or allowed him to believe that the entity "Gerald Davidson Mechanical Contractors" was the same thing. Alternatively, the union argues that, in the circumstances, the Board should find that Mr. Davidson really was purporting to bind Gerald Davidson Plumbing & Heating Limited since there was no such thing as "Gerald Davidson Mechanical Contractors" and the numbered company was not added to the agreement until later. The respondent companies argue that there was never any intention to bind both companies to the agreement and any misapprehension on Mr. Lavallee's part stems from faulty recollection or a misunderstanding of what was said to him. Counsel submits that, at most, there was an innocent misrepresentation or a failure of communication. Counsel also points out that, at the time the voluntary recognition was signed, there were about fifteen employees of Gerald Davidson Plumbing & Heating Limited, none of whom were trade union members. At the time the voluntary recognition agreement was entered into, the union didn't represent anyone. In the respondents' submission, to sweep employees into a collective bargaining relationship against their will would be a totally unwarranted extension of the union's bargaining rights, particularly since some of the employees in question were working for Gerald Davidson well before August 11, 1980.
Section 1(4) of the Act is designed to deal with situations where the economic activities giving rise to the employment relationships regulated by the Act are carried on by or through more than one legal entity. Where such legal entities are engaged in related economic activities under common control and direction, the Board is entitled to "pierce the corporate veil" and treat them as one employer for the purposes of the Act. The Legislature has determined that legal form should not dictate (and possibly fragment) the collective bargaining structure; nor should corporate restructuring be permitted to undermine established bargaining rights. Those statutory rights are not treated as co-extensive with the legal framework of the business, and, to this extent, section 1(4) insulates collective bargaining from disruption when an employer changes the number or form of the legal vehicles through which it carries on business. (See generally Industrial Mines Installations Limited, [1972] OLRB Rep. Dec. 1029.) But a section 1(4) declaration is discretionary. It is not intended to be an automatic response in every situation where its statutory preconditions are met. In determining whether that discretion should be exercised, the Board must have regard to both the mischief to which the section was directed, and the particular context under review.
In the present case there is no doubt that the statutory preconditions for section 1(4) are met. The numbered company really has no separate or independent existence. It is little more than a bank account and a payroll mechanism for dealing with the few unionized workers that the company has been called upon to hire from time to time. For example, the Lake Ontario Cement job was bid by Gerald Davidson Plumbing & Heating Limited and there was no assignment of that contract to the numbered company even though it was the numbered company which later hired the sheet metal workers doing the work. The money from the general contractor was paid directly to Gerald Davidson Plumbing & Heating Limited which then transferred sufficient funds to the numbered company's account to meet the payroll. A similar arrangement was applied on the earlier project at Quaker Oats where the numbered company employed members of the UA. On the Albert College project both companies bid (i.e., nominally against each other). Despite the two separate legal vehicles, there is really only one business which Mr. Davidson has artificially divided into a union and non-union aspect. This is precisely the kind of situation where, ordinarily, a section 1(4) declaration would be warranted.
However, there are countervailing considerations. This is not a case in which a unionized firm has spawned a non-union offspring designed to siphon away work from the unionized enterprise to the detriment of the union members working there. There is no interchange of employees between the two firms. There is no common labour force or pool of employees drawn by the two companies in the manner mentioned by the Board in Industrial Mines Installations Limited, supra. In the five years of its existence, the numbered company has done very little work and there is little indication that work opportunities destined for the numbered company have been redirected to Gerald Davidson Plumbing & Heating Limited. The latter company has not been used surreptitiously on unionized job sites to the detriment of the numbered company and its potential employees~ nor has there been any real departure from its established practice of bidding on non-union jobs. It was and continues to be a nonunion contractor with its own field crews, as it has been since 1970.
More important, however, is the fact that at the time of the purported voluntary recognition agreement, the union did not represent any of the employees potentially bound by it — some of whom had been employed by Gerald Davidson Plumbing & Heating Limited for some years. Those employees had no appetite for collective bargaining then and do not want the union now. We see no reason why collective bargaining should be thrust upon them, or why the union's bargaining rights should be thus extended. Indeed, if the agreement had purported to apply to Gerald Davidson Plumbing & Heating Limited and had been challenged, we would be inclined to say that it was void, since the union had no right to represent any of the employees affected at the time the agreement was executed. It was not a "pre-hire" agreement of the kind considered by the Board in Nichols Radtke, [1982] OLRB Rep. July 1028. Even assuming (without finding) that on August 11, 1980 there was a misrepresentation leading to the execution of the voluntary recognition agreement, we still do not think the circumstances of this case warrant a declaration under section 1(4) of the Act. We would not condone such misrepresentation and it might well justify a union withdrawal from that arrangement. But the remedy in the circumstances of this case is not a section 1(4) declaration.
For the foregoing reasons, the application is dismissed.