[1986] OLRB Rep. June 720

1000-85-R; 1036-85-R Labourers' International Union of North America, Local 183, Applicant, v. Frank Plastina Investments Ltd. and Sherwood Village Homes Inc., carrying on business under the firm name and style as Grand Valley Homes, Respondents; Labourers' International Union of North America, Local 183, Applicant, v. Frank Plastina Investments Ltd. and Sherwood Village Homes Inc., carrying on business under the firm name and style as Grand Valley Homes, Respondents

BEFORE: R. 0. MacDowell, Vice-Chairman, and Board Members R. J. Gallivan and B. L. Armstrong.

APPEARANCES: L. Steinberg and T. Pinto for the applicant; Donald Francis, Peter Plastina and Frank Plastina for the respondents.

DECISION OF THE BOARD; June 23, 1986

I

1. These are two related applications made, initially, under sections 63 and 1(4) of the Labour Relations Act. At the hearing the union withdrew the assertions based upon section 63. There is a further related application under section 124 of the Act, but the union concedes that if it cannot establish that the respondents are "related employers" within the meaning of section 1(4), the section 124 application will be irrelevant. 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.

2. It is unnecessary to record the troubled history of this proceeding or the parties' relationship. It suffices to say that when the hearing came on for continuation on May 21, 1986, the union and the respondents (now represented by counsel) were able to reach agreement on the facts which, in their view, were sufficient for the Board to determine the section 1(4) issue. Those facts, together with certain collective agreements, are referred to below. If the prose is sometimes less than perfect, it is because the agreed statement of facts was reached late in the day, it is handwritten, and, in part, it is in "point form". Both parties were anxious to make their arguments and conclude the hearing within the time already scheduled.

3. For ease of reference, we will refer to the respondent Frank Plastina Investments Ltd. as "FPI", and the respondent Sherwood Village Homes Inc. as "Sherwood". We should also note that Frank Plastina is Peter Plastina's father and that Frank Plastina Investments Ltd. is bound by a collective agreement between the Ontario Concrete & Drain Contractors Association, on the one hand, and Labourers' International Union of North America, Local 183 and International Union of Operating Engineers, Local 793, on the other. Some of the terms of that collective agreement will be referred to later.

4. With the reservation referred to above, we have tried to adhere to both the sequence and language of the parties' agreed statement of fact.

II- THE AGREED FACTS

5. FPI is a drain and concrete contractor which is one hundred per cent owned by Frank Plastina. Its head office is at 4701 Steeles Avenue. It has a yard and warehouse at 6315 Netherhart Road in Mississauga. Bargaining unit employees [represented by the union] report to 6315 Netherhart Road. Tools, equipment, and supplies are stored at that location. FPI owns a truck with the "FPI" name on its sides. FPI has never acted as a builder.

6. Peter Plastina was hired by FPI as an estimator in the early 1970's. For all intents and purposes, he was also the office manager. As an estimator, he did estimating, quoting, and negotiations for FPI; however, ultimate responsibility rested with Frank Plastina who set unit prices upon which estimates/quotes were based, and who decided which jobs to bid on and accept. Peter Plastina and Frank Plastina negotiated together as part of the negotiating team of the Ontario Concrete & Drain Association on behalf of FPI and the resulting collective agreements were signed by Peter Plastina on behalf of FPI.

7. Sherwood was incorporated for the purpose of a residential project at Highway #10 and Eglinton Avenue. No shareholders contributed any funds to the capitalization of the company. Sherwood has no employees. Peter Plastina's services and those of an on-site supervisor are provided under a "management for fee" contract. All business decisions are made by Peter Plastina himself.

8. The respondents FPI and Sherwood have common premises and offices, use common solicitors (both corporate and for labour relations purposes), have a common bank, and employ the same accountants. Peter Plastina signed all documents in these proceedings on behalf of both FPI and Sherwood. The telegrams (dated January 6th and January 27th, 1986) from FPI, refer to Peter Plastina's inability to attend the Board's hearing. Peter Plastina owns Grand Valley Building Supplies Inc. from which company FPI buys all construction materials. This company, too, is located at 4701 Steeles Avenue, the head office location of FPI which is owned by FPI. Sherwood pays no rent for its use of that location. Any rent paid by Grand Valley Building Supplies to FPI is in the form of a credit against amounts purchased from Grand Valley Building Supplies. The company 4701 Steeles Holdings Inc., owned by Peter Plastina, collects rent for FPI.

9. Peter Plastina abandoned his position at FPI as estimator/office manager in 1981, however, he has been FPI's "secretary" since 1978. In that capacity he continues to oversee the administrative end of FPI's operation and signs contracts on behalf of FPI. The bids themselves are signed by the estimator. Frank Plastina oversees the completion of FPI contracts, including on-site supervision, crew makeup and scheduling. He retains ultimate decision-making authority and would, as necessary, point out problems and direct that corrections be made by employees of other contractors. FPI has employed an estimator since Peter Plastina's change of role in 1981, as well as an office manager, accounts payable clerk, accounts receivable clerk and receptionist. The receptionist answers telephones and provides clerical services for both FPI and Sherwood which have different telephone numbers. The receptionist is an FPI employee. There is no charge to Sherwood for her services. Accounting work done for Sherwood is done by another Peter Plastina company.

10. Peter Plastina went into business as a builder in 1973 - originally with a partner: "Dan Vano Construction Ltd.". Later he engaged in business for himself. He carried on this building business while working for Plastina and Costa (a predecessor to FPI) and for FPI itself. Peter Plastina is responsible for all aspects of his own building projects, including the project undertaken by Sherwood Village. Peter Plastina's building business operates in accordance with the following pattern:

• serviced lots in a subdivision are sought from developers
• a decision is made to purchase a particular group of lots
• a corporation is formed
• financing is arranged
• decisions are made as to the market segment to which the project is to be directed (this governs house design, size and price range)
• an architect is retained
• a sales campaign is undertaken, including an on-site sales pavilion, signs, brochures, and renderings of available models
• commissioned sales agents are retained on site to sell the homes
• an advertising firm is retained to undertake an advertising campaign
• houses are pre-sold (fifty per cent of the homes must be pre-sold before any construction begins)
• a construction schedule is developed on the basis of pre-sales and closing dates
• final working house plans are issued for tender to subcontractors
• all actual construction is subcontracted on the basis of negotiated sub-contracts for such work, services, or supplies as: surveyor, excavation and grading, basement foundation, steel (supplier), window (supplier), lumber (supplier), rough carpentry, trusses, shingles, masonry, concrete and drain, plumbing, electrical, heating, drywall and insulation, flooring, broadloom, kitchen, trim-carpentry, eaves trough and aluminum soffit, and housekeeping.

11. As a drain and concrete contractor, FPI excavates trenches for drain and sanitary lines from each housing lot to main lines, installs drains, and pours basement and garage floors, door sills and porches. FPI was a contractor on the Sherwood project at Highway #10 and Eglinton. The concrete and drain subcontract let by Sherwood to FPI, was let without tender, albeit at fair market value. The contract was signed on behalf of FPI by the estimator and on behalf of Sherwood by Peter Plastina. FPI also provided labour for housecleaning, patching concrete, etc. for which there were extra payments also at fair market value. FPI also provides labour for this purpose to other builders. The Sherwood contract was a small part of FPI's 1985 business. Frank Plastina supervised all employees of FPI when on the site.

12. For the purpose of doing site cleanup work at the Eglinton and Highway 10 project, one employee of FPI was transferred to the payroll of a Peter Plastina company and paid $6.00 per hour. [The precise name of this company is not identified in the agreed facts.] This employee transferred to the Sherwood project, was doing work for Sherwood, but being paid by Peter Plastina. Sherwood itself had no payroll.

III

13. It is not disputed that FPI is bound by the agreement between the applicant union and the Ontario Concrete & Drain Contractors Association. That agreement is interesting because it recognizes that a contractor, ordinarily engaged in concrete and drain work, may also be involved, from time to time, in other kinds of work which could be done by employees supplied by the applicant union. We use the term "supplied" because, in the volatile employment environment of the construction industry, the union is not just the bargaining agent for its members, but can also provide access to employment itself, through the operation of its "hiring hall". The union office keeps a list of available tradesmen; the contractor phones the union office for certain kinds and numbers of workmen; and the crew is then dispatched through the union hiring hall to the job site (see generally: R. M. Hardy and Associates Limited and Teamsters, Local 213, (1977) 2 Can.L.R.B.R. 357). Construction industry collective agreements generally require that when a unionized contractor needs tradesmen, he must go to the union to fulfill his needs. The agreement guarantees access to available work opportunities, and, to this extent, the "hiring hall" provides a kind of job security in the construction industry just as seniority does in an industrial context. The hiring hall and subcontracting provisions would be totally frustrated if an employer could avoid them simply by incorporating another company which is not bound by the terms of the collective agreement (see: Napev Construction Ltd., [1980] OLRB Rep. Feb. 247). The negotiated right of access to arising work opportunities would become entirely illusory.

14. As we have already mentioned, the possibility that a contractor might expand from his usual area of operations into another segment of the construction industry is explicitly recognized by the so-called "cross-over clause" appearing as Article 10.04 of the "Concrete & Drain" collective agreement. If a concrete and drain contractor performs some other kind of work, covered by the union's other collective agreements, he is automatically "plugged in" to those agreements and must apply their terms. The agreements incorporated by reference are: "the roads agreement", "the sewer and watermain agreement", "the heavy engineering agreement", "the [concrete] forming agreement", "the apartment builders agreement", "the utilities agreement", "the house basements agreement", "the house builders agreement", and "the residential housing carpentry agreement". In all of these areas of the construction industry, unskilled and semi-skilled labourers are typically represented by the applicant, and the cross-over clause ensures that whenever an employer needs labourers he must hire the applicant's members.

15. In the instant case, the union asserts that the residential site cleaning work performed by the labourer for Sherwood would fall within the ambit of Schedule "A", item 6 of the "house builders agreement" referred to at Article 10.04 of the concrete and drain agreement. The union's position is that this labourer, engaged in site cleanup, (initially employed and supplied by FPI, but paid by Peter Plastina, or one of his companies), should have been recruited through the hiring hall, and paid in accordance with the terms of the collective agreement. The respondents concede that they are under common control and direction. The respondents' position is that FPI and Sherwood are not involved in "associated activities or businesses" and that, in any case, the Board should exercise its discretion not to declare them to be "one employer".

IV

16. Both parties (albeit for different reasons) referred to an earlier Board decision in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945. We were also referred by the respondents to the Board's decisions in Trans-Nation Incorporated, [1980] OLRB Rep. Dec. 1835, and Arbis Construction Ltd., [1983] OLRB Rep. Dec. 1959. The purpose and effect of section 1(4) of the Act is discussed in a long passage in Brant Erecting and Hoisting, supra, to which we might usefully refer:

Section 1(4) was enacted in 1971 and deals with situations where the economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one legal entity. Where such legal entities carry on related business activities under common control or direction, the Board is empowered to pierce the corporate veil. Section 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure; nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1(4) is similar to that of section [63] which preserves the established bargaining rights and collective agreement when a "business" is transferred from one employer to another. Section [63] has been part of the scheme of the Act since the mid 1960's. Neither remedial provision requires a finding of anti-union animus; their primary application is to bona fide business transactions which incidentally undermine or frustrate established statutory rights. Since the two sections are complementary, it is not unusual, as in the present case, for an applicant to rely on both.

13. Section 1(4) does not require that related business activities under common control or direction be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase "whether or not simultaneously". The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and, business may be effectively transferred from one corporate entity to another, without any of the indicia of a "transfer of a business" which might trigger the application of section [63]. This is especially the case in the construction industry where many of the employers will not have the permanence or investment in fixed plant and equipment characteristic of a manufacturing concern. A small construction company can move from jobsite to jobsite or place to place, assembling tools, equipment and a labour force as required after it has made a successful bid. There may be no established economic organization, labour force or configuration of assets. A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of business between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed there will often be good commercial reasons for doing so unrelated to any express desire to undermine the union's bargaining rights. The earlier company may have run into financial difficulties, or lost its reputation, or there may be legal, accounting or tax advantages in establishing a new vehicle through which the business, or related business activities can be conducted. Again, it is quite possible to do this without a clear and concrete disposition between the two firms so as to call section [63] into play. To ensure that the industrial relations status quo is preserved, the Legislature has provided that where two employers carry on related economic activities, under common control and direction, whether or not simultaneously, they can be treated as one for the purposes of the Act. However, it should be noted that section 1(4) is discretionary. The Board need not make a 1(4) declaration even when the conditions precedent are present; and has not done so, for example, where a trade union is seeking to extend rather than preserve its bargaining rights.

14. A more difficult question is whether Brant Erecting and Hoisting and Provincial Steel can be said to have engaged in "associated or related activities or businesses" since, for practical purposes, Brant Erecting ceased to exist as a going concern prior to the establishment and subsequent incorporation of Provincial Steel. The respondent contends that the two businesses cannot be "related" within the meaning of section 1(4) because they were never engaged in any joint ventures or business endeavours, nor were they carrying on business at the same time. The respondent argues that such overlap as there may have been between the activities of Provincial Steel and Brant Erecting, was solely for the purpose of winding up the latter company, and cannot be regarded as the kind of related activity to which section 1(4) is directed. But for the 1975 amendment to the Act, this argument would have considerable force; but it is now clear that the "associated or related activities or businesses" need not be carried on simultaneously. The amendment extends the ambit of section 1(4) to situations in which one business entity is actively carrying on business and the other is not. It is not necessary to have shared participation in a common business or endeavour or even contemporaneous economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two businesses may be "related" within the meaning of section 1(4) even though their activities are carried on through different or corporate vehicles and are not carried on simultaneously. It is evident that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of "privity of contract" or "the corporate veil".

Section 1(4) shifts the focus from the legal vehicles chosen by entrepreneurs to carry on, expand, or diversify their businesses to the nature and functional coherence of those activities and their relationship to statutory collective bargaining rights. Section 1(4) is most commonly invoked by trade unions to prevent an erosion of bargaining rights when business activities otherwise subject to a collective agreement are undertaken by a new corporate vehicle, however, the section can also be invoked by employers to ensure that a related business is not fragmented for collective bargaining purposes along corporate lines which do not accord with sound industrial relations policy (see Bright Veal Meat Packers Ltd., [1981] OLRB Rep. March 247, and Harwill Originals Ltd., [1982] OLRB Rep. June 875).

17. If the purpose of section 1(4) is to preserve bargaining rights, it may be useful to briefly mention the legal basis for those rights - with particular reference to the construction industry.

18. The initial and primary foundation of a union's bargaining rights is the Board's certification process which requires the union to establish majority support in an appropriate bargaining unit. However, in the construction industry, OLRB certificates are not limited to the particular construction projects, sectors or activities in which the employer is or may be engaged from time to time. Prior to 1978 a Board certificate might be limited to a particular geographic area but it would not be limited by sector. Under the new provincial bargaining scheme, a union is issued one certificate in respect of industrial, commercial and institutional construction, province-wide, and a separate certificate covering all other sectors in the appropriate geographic area. The ICI sector is distinguished for bargaining purposes, but a union's bargaining rights are still not limited to a particular sector. Unless the trade union is prepared to willingly sign a collective agreement restricted to the employer's main activity or the particular sector in which he is engaged, the union will have bargaining rights "across the board." Thus, if the union had recently been certified to represent the employees of FPI, it would have bargaining rights for labourers in all sectors of the construction industry in which they might be employed.

19. In the instant case, of course, the union's bargaining rights for FPI are not rooted in a Board certificate, but rather the collective agreement with the Sewer and Watermain Contractors Association to which FPI is bound but, because of the "crossover clause", that agreement is, in effect, a multi-sector agreement. There is no doubt that if FPI engaged in heavy engineering, road work, house building, etc., the collective agreement would apply to those activities and FPI would be bound to recognize the union's bargaining rights for labourers. The question here is whether Sherwood is under the same obligation.

V

20. Given the remedial thrust of section 1(4) and the broad language chosen by the Legislature ("associated" or "related", "activities" or businesses"), it is apparent that the section was intended to apply to a wide variety of commercial activities, even when an employer's main or principal business concern may be something else. That was the opinion of the Board in Elmont Construction Limited, [1974] OLRB Rep. June 342 (application for judicial review dismissed, sub nomine, Elmont Construct Limited and Bruce Huntley Contracting Limited v. Toronto Building and Construction Trades Council et al., 75 CLLC 14,270), and it is one with which we respectfully agree. The fact is, that a firm engaged in the construction business can, with relative ease, become involved, from time to time, in various sectors, subdivisions, phases, or specialized kinds of construction work, depending largely upon the business opportunities which present themselves, and we do not think we should readily hold that those activities are "unrelated" - particularly if they are being undertaken at the same time and involve common managerial or employee skills. Moreover, while "common control or direction" may be a separate element in the section 1(4) test, it is difficult to say here that the business or activities of Sherwood are unrelated to those of FPI when Peter Plastina plays such a prominent role in both businesses and Sherwood draws so heavily upon elements of FPI's business. This is not a case in which Peter Plastina has struck out on his own and developed his own business entirely independent of that of his father with whom he only has occasional subcontracting relationships. Without at this point repeating the agreed facts, it is apparent that Sherwood and FPI (and indeed the other "Peter Plastina companies") are in a symbiotic relationship. No doubt Sherwood might have been established independently without using the banking facilities, premises, employees etc. of FPI; but the reality here is a family business in which Peter Plastina is intimately involved and of which Sherwood is a related part. The fact that FPI is a sewer and watermain contractor while Sherwood is a builder is not, in our view, significant. Not only are these both parts of the construction industry, but the FPI collective agreement specifically recognizes the possibility of doing that kind of work. This is not the case of a tobacco firm opening a distillery run by a wholly owned subsidiary or a manufacturer of industrial chemicals getting into the restaurant business. In those situations one might sensibly argue that the business activities were not associated or related. Here, it is our opinion that FPI and Sherwood are clearly engaged in associated or related activities or businesses, and we see no reason why we should not so declare.

21. For the foregoing reasons the Board declares that the respondents are one employer for the purposes of the Labour Relations Act.