United Brotherhood of Carpenters and Joiners of America, Local 93 v. Construction P.H. Grager Inc., 1985 CanLII 894

Ontario Labour Relations Board

[1985] OLRB Rep. February 233

0298-84-R; 1698-84-M United Brotherhood of Carpenters and Joiners of America, Local 93, Applicant, v. Construction P.H. Grager Inc., Respondent, v. Labourers' International Union of North America, Local 527, Intervener; Labourers' International Union of North America, Local 527, Applicant, v. Pierre A. Gratton Construction Inc. and/or Construction P.H. Grager Inc., Respondent, v. United Brotherhood of Carpenters and Joiners of America, Local 93, Intervener

BEFORE: M. C. Mitchnick, Vice-Chairman, and Board Members J. A. Ronson and B. L. Armstrong.

APPEARANCES: David Jewett, Wilf Chretien and Wilf Claremont for Carpenters, Local 93; Russel W. Zinn, Pierre A. Gratton and Henri Gervais for the respondents; Mark Zigler and Andre Roy for Labourers' Local 527.

Decision of the Board

February 28, 1985

1. The present matters began with an application for certification filed by the United Brotherhood of Carpenters and Joiners of America, Local 93, with respect to employees of Local 527, resulted in a decision of the Board dated May 16th, 1984 certifying Local 93 as bargaining agent for:

1. all carpenters and carpenters' apprentices in the employ of (Grager) in the industrial, commercial and institutional sector of the construction industry in the Province of Ontario, save and except non-working foremen and persons above the rank of non-working foreman;

2. all carpenters and carpenters' apprentices in the employ of the respondent in the Regional Municipality of Ottawa-Carleton, and the United Counties of Prescott and Russell, excluding the industrial, commercial and institutional sector, save and except non-working foremen and persons above the rank of non-working foreman.

When Labourers' Local 527 learned of this certification, they immediately requested reconsideration of the Board's decision on the basis that they already held bargaining rights for such employees through a prior company, Pierre A. Gratton Construction Inc., being either a "related", or "successor" employer to the present. Local 527 has subsequently filed a section 124 grievance referral with the Board as well.

2. Much of the work in which either of the two companies have employed labourers or carpenters has been formwork, and the Labourers' collective agreement with Pierre A. Gratton Construction Inc. includes in its coverage, amongst other things, the classification of "form-setter". The parties are agreed, therefore, that since the Carpenter's application was brought during the last two months of the Labourers' collective agreement, if the Labourers are correct in either their "related" or "successor" employer allegations, the Carpenter's application for certification in fact becomes a "displacement" application, which would require the holding of a representation vote.

3. A number of difficulties may stand in the way of the Labourers collecting damages in this matter. It is important, however, that the issue of bargaining rights be sorted out as quickly as possible for the benefit of all parties, and to that end the Board has heard the evidence and representation of the parties with respect to the section 63 and 1(4) issues.

4. The bulk of the evidence with respect to sections 63 and 1(4) was given before the Board in uncontradicted fashion by Messrs. Pierre Gratton and Henri Gervais. Those two individuals, together with one Charles Vandal, up until 1979 had worked together as employees for a number of years in a large company by the name of Laflamme. Mr. Gratton is an engineer by profession and advanced to the position of Vice-President and Chief Engineer for Laflamme. Mr. Gervais is a long-time operator of heavy equipment and Mr. Vandal is a supervisor highly skilled in the intricacies of concrete formwork. In 1979 all three left Laflamme to go into business for themselves, and formed a joint venture to build a large bridge in the Province of Quebec. When that project was successfully completed, the three partners agreed to each take their own share of the profits and go their own way. Mr. Gratton formed Pierre A. Gratton Construction Inc., and carried on the business of a general contractor. His expertise and interest has always been in work with a significant concrete-forming component, and his involvement in general has been with the building of bridges, including, as he says, sewer and watermain work, or what he describes as "heavy construction". There was, however, in the years preceding the formation of the second company, Construction P.H. Grager Inc., little bridge work around, and Mr. Gratton had to settle for whatever jobs he was able to successfully bid on involving sewer and watermain installations alone. The one job that he had in Ontario was as a sub-contractor to Greenbelt Construction, who was involved in building a portion of the Transit Way for the Regional Municipality of Ottawa-Carleton. That sub-contract involved the installation of an open-trench sewer culvert, and had a value of approximately one million dollars. Mr. Vandal, whose business since the joint venture was not disclosed by the evidence, helped Mr. Gratton from time to time with the formwork portion of some of his jobs in Quebec, and Mr. Gratton hired him in late 1982 on a full-time basis to act as job superintendent for the Greenbelt contract.

5. The idea to put together the new company came from Henri Gervais. Mr. Gervais was the owner of some heavy construction equipment, and by renting that out, together with himself as operator, has succeeded in accumulating a considerable amount of cash. His efforts in the field of general contracting, however, had been considerably less productive. He had managed to pick up a few small jobs here and there, but of the many jobs of any significant size on which he had bid, he was successful in landing a contract for none. He was aware of the million-dollar Greenbelt contract which his friend Pierre Gratton had been able to obtain on his own, and Mr. Gervais decided that he ought to get himself "an agent". He accordingly went to see Mr. Gratton at his home in February of 1983, and offered to put money into a company that the two of them would go into together. Mr. Gratton's bonding company had been after him for some time to find additional partners for his business, and the offer by Mr. Gervais was, as Mr. Gratton put it, "like money from heaven". He immediately offered to sell Mr. Gervais some shares in his company, even offering to update the company name to Gratton Construction (1983) Inc., to reflect the new participation of Mr. Gervais. Mr. Gervais responded, however, that if it was his money that was going to finance the new operation, that somehow ought to be reflected in the name of the company itself. The two agreed, therefore, to form the name "Grager" for the new company, drawing upon the first three letters of the last name of each of the two partners, and the company was to have a new bank, a new bonding company, and new solicitors. Mr. Gratton then raised the possibly of taking Charles Vandal on permanently to handle the formwork, and it was decided to cut Mr. Vandal in as a 25 per cent partner, in order to give him a more direct interest in the success of the company. This offer failed to lure Mr. Vandal into the fold, however, and the ultimate arrangement between the three was for each of them to be an equal partner in the profits of the new company. Each of the three also drew a salary for his work, and had a veto with respect to the level of salary to be paid to any employee of the company. Mr. Gervais said that he would look after the money as secretary-treasurer, since it was his money, and he told Mr. Gratton that he could be president. It was understood that Mr. Gratton would look after all of the engineering and estimating, and in fact all of the office work in general, and Mr. Gervais would operate the equipment, and assist Mr. Vandal in the supervision of the job sites. The only thing that Mr. Gervais insisted upon was that Mr. Gratton "leave his company on the shelf', and not compete in any way with the new enterprise. Mr. Gervais made a similar commitment, but in the circumstances, that was worth considerably less than the promise coming from Mr. Gratton. As Mr. Gervais put it: "I had the money — I needed his expertise, in bidding jobs, everything involved with the office". "And so", he was asked on cross-examination, "you were investing your money and he was investing his expertise?", to which Mr. Gervais responded: "Yes

6. Because the partners wanted a Quebec licence for their company, the company used Mr. Gratton's home in Alymer, Quebec as its head office, just as Mr. Gratton had with his own company. The telephone number for the company was for a short period also Mr. Gratton's own telephone number, until arrangements were completed to put in a business line for the new company. The company's business line also rings in Mr. Gervais' home when Mr. Gratton does not answer. Mr. Gratton testified that people would sometimes be surprised when they telephoned the number for "Grager", and Mr. Gratton answered the telephone. Mr. Gratton would tell them he was still there, but had closed the old Gratton company and was now under the Grager name. Mr. Gratton reads the Daily Commercial News in search of job opportunities for the company, and prepares all the take-offs for bidding. Then, as Mr. Gervais put it, "the fight begins", as the three partners debate the final amount to be entered in their bid. Mr. Gervais has in fact been issued a special class of shares in recognition of his financing of the company, and is given the power to withdraw his investment (and effectively dissolve the company) any time that the balance sheet of the company shows a deficit of $50,000.00. Mr. Gervais' leasing company also supplies equipment to the new company as required. Any equipment which Mr. Gratton had in Pierre A. Gratton Construction Inc. remains in his garage.

7. Mr. Gervais acknowledged in his evidence that Mr. Gratton was experienced in bidding on Transit Way contracts, although that may have been intended by Mr. Gervais only to indicate that Mr. Gratton was the one experienced in bidding contracts generally. All of the work performed by the new company in Ontario to date, however, has consisted of the building of three bridges, under two separate contracts, for the Transit Way itself. The first job landed by the new company, in fact, involved an extension of the storm sewer culvert which Mr. Gratton had built under Greenbelt in the previous year, and required the building of a streetway over the trench. Mr. Vandal brought with him Mr. Claude Lahaie, the foreman and surveyor from the Greenbelt job (and the 1980 joint venture before that), and one or two of the better "Gratton" employees as well. Other former employees of Pierre A. Gratton Construction Inc. have also heard of the new company's jobs, and applied and been hired from time to time, together with employees not previously known. The new company has now completed the Transit Way contracts it successfully bid on, and currently has no further jobs underway.

8. On the basis of all of the foregoing, Labourers' Local 527 argues that both sections 63 and 1(4) are applicable to extend the bargaining rights which they held to the new company, Construction P.H. Grager Inc. The irony is that, had Mr. Gratton had his way, and Mr. Gervais agreed to Mr. Gratton's initial offer to simply purchase shares in the "Gratton" company that was already there, these proceedings would not have been necessary to continue the Labourers' bargaining rights. The question is whether the effect of what the principal parties have done is the same. It is clear that all partners in "Grager" participate in the critical decisions affecting the company to a degree that substantially dilutes the absolute control which Mr. Gratton formerly enjoyed under "Gratton". Whether, in these circumstances, section 1(4) can be said to apply need not be decided, for it is the opinion of the Board that what has occurred on the facts of this case is a "sale" of Mr. Gratton's general contracting "business" to the new company in which he is a partner, within the meaning of section 63 of the Labour Relations Act.

9. In this case the new company acquired virtually none of the physical assets of Pierre A. Gratton Construction Inc.. As the Board has noted in the past, however, the essence of a "business" in a bid-oriented sector of the construction industry frequently resides in the experience and expertise of its management personnel, rather than, for example, in physical assets such as tools or a specific location. See, e.g., Carroll Electric (1982) Limited, [1982] OLRB Rep. Dec. 1814 at paragraph 11; Jen-ry Utility Contracting, [1984] OLRB Rep. Dec. 1724. And it was precisely these critical elements that Mr. Gervais looked to Mr. Gratton to provide — so much so that he was prepared to offer Mr. Gratton an equal interest in the profit of the company that Mr. Gervais was 100 per cent financing. And, in return, Mr. Gratton had to commit himself to put his own company "on the shelf', and not to compete with the "Grager" company in any way. Mr. Gratton, in other words, agreed for good and valuable consideration to fold the business that he had developed and was operating as Pierre A. Gratton Construction Inc. into the new company incorporated under the name of Construction P.H. Grager Inc.. The choice of name for the new company accurately reflects the "joint venture" aspect of the newly-created organization, but to put that label on the situation does not, in our view, fully answer the question of a "sale". While the roles played by Mr. Gervais and Mr. Vandal in the efficient operation of the new company ought not to be denigrated, neither, on the evidence, had developed a track record as general contractors which would qualify them as an arguable source of the "Grager" work. Combining the dominance, therefore, in "Grager" of the experience and expertise of Mr. Gratton (being the chief assets of Pierre A. Gratton Construction Inc.) in successfully acquiring work, with the agreement of Mr. Gratton to leave Pierre A. Gratton Construction Inc. "on the shelf' and carry on business only as Construction P.H. Grager Inc., the Board does not see this case as a simple "joint venture", in the way in which those words are often used. While, as the Board has stated on numerous occasions, the "related" and successorship provisions of the Act are not designed to multiply the number of discreet business undertakings to which a trade union's bargaining rights attach, it would not seem inappropriate that one or the other of those sections operate to preserve those rights in connection with what we find on the facts is essentially a continuation of the unionized "Gratton" business, at least during the period that "Gratton" itself remains inactive.

10. The employer argues, finally, that the business of the "Gratton" and "Grager" companies was sufficiently different that the Board ought to find no connection under either section 1(4) or 63. The evidence, and particularly that of Mr. Gratton, does not support that however. Common to all of the major jobs that Mr. Gratton has done is a significant element of concrete formwork, his "real love", and he himself acknowledges that sewer and watermain work is a common component of the bridge-building or "heavy construction" work he has always been engaged in. His focus on sewer and watermain work during the period of Pierre A. Gratton Construction Inc. we find to be more a reflection of the specific kinds of jobs available for bid during that period, as Mr. Gratton testified, rather than a different market focus for Mr. Gratton's talents, and the business he was attempting to carry on. And it has, in this regard, not escaped the Board's attention that the first contract obtained by the new company was in fact an extension of the specific Transit Way project worked on by Pierre A. Gratton Construction Inc. in 1983.

11. As noted at the outset, the extension of the Labourers' bargaining rights to Construction P.H. Grager Inc. means, in light of the overlapping work jurisdiction in formwork between members of the Labourers' and Carpenters' Union, that the Carpenters' application for certification is really a "displacement" application. As the parties recognize, therefore, the appropriate disposition of the certification application in such circumstances is to rescind the certificate issued by the Board in its decision of May 16, 1984, and to order a vote. Employees will be asked to choose whether they wish to be represented by Labourers' Local 527 or Carpenters' Local 93 in their employment relations with Construction P.H. Grager Inc.

12. The matter is therefore referred to a Board Officer to meet with the parties in order to make all of the necessary arrangements for the vote which, we find, ought to have been held at the initial stage of these proceedings.