Ontario Public Service Employees Union v. Daniel Dolan, Henry Wilson and The Crown in Right of Ontario, 1986 CanLII 1567

Ontario Public Service Employees Union v. Daniel Dolan, Henry Wilson and The Crown in Right of Ontario

File No.: 0650-85-R Date: March 21, 1986 Ontario Labour Relations Board

Re: Ontario Public Service Employees Union, Applicant, v. Daniel Dolan, Henry Wilson and The Crown in Right of Ontario, as represented by The Ministry of Natural Resources, Respondents

Before: Owen V. Gray, Vice-Chairman, and Board Members R. J. Gallivan and K. V. Rogers.

Appearances: Linda Rothstein, Mary Rowles and Barbara Linds for the applicant; Dennis W Brown, Linda Kolyn, John R. Read and J. D. Quinn for the respondents.

DECISION OF THE BOARD

1. In late January 1985, the Ontario Ministry of Natural Resources placed an advertisement which read, in part, as follows:

The Ministry of Natural Resources invites tenders for the operation of Fitzroy Provincial Park in 1985.

Fitzroy is a small provincial park adjacent to the village of Fitzroy Harbour on the Ottawa River, in the township of West Carleton. The tender will involve the operation and maintenance of the park which includes selling permits, providing enforcement, maintaining facilities and selling firewood. A tender package containing a prospectus and tender form is available ...

Henry Wilson drew the advertisement to the attention of his friend Daniel Dolan. They picked up a tender package, took the required steps and, as partners, submitted a tender which the Ministry accepted in late April. This led to a formal written contract dated May 29, 1985 between them and the Minister of Natural Resources, pursuant to which they and persons they employed operated Fitzroy Provincial Park in 1985.

2. In the years prior to 1985, Fitzroy Provincial Park was operated by employees of the Ministry of Natural Resources. Those employees were covered by successive collective agreements between Her Majesty The Queen in Right of Ontario ("the Crown") and the Ontario Public Service Employees Union ("OPSEU"), which had the right to represent them under the Crown Employees Collective Bargaining Act, R.S.O. 1980, c. 108. In this proceeding, OPSEU applies for a declaration that the Ministry's transaction with Messrs. Dolan and Wilson constitutes a transfer of undertaking within the meaning of the Successor Rights (Crown Transfers) Act, R.S.O. 1980, c.489, the relevant provisions of which are these:

1.-(l) In this Act,

(a) "bargaining agent" means an employee organization that has representation rights under the Crown Employees Collective Bargaining Act or a trade union or council of trade unions that is certified as a bargaining agent under the Labour Relations Act;

(b) "Board" means the Ontario Labour Relations Board;

(c) "collective agreement" means an agreement in writing between the Crown or an employer and an employee organization, trade union or council of trade unions covering terms and conditions of employment;

(d) "Crown" means Her Majesty in right of Ontario;

(e) "employer" means an employer other than the Crown;

(t) "transfer" means a conveyance, disposition or sale;

(g) "Tribunal" means the Ontario Public Service Labour Relations Tribunal;

(h) "undertaking" means a business, enterprise, institution, program, project, work or a part of any of them.

2.-(l) Where an undertaking is transferred from the Crown to an employer and a bargaining agent has a collective agreement with the Crown in respect of employees employed in the undertaking, the employer is bound by the collective agreement as if a party to the collective agreement until the Board declares otherwise.

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(3) Where an undertaking is transferred from the Crown to an employer and a bargaining agent has been granted representation rights under any Act and has given or is entitled to give written notice of desire to bargain to make or renew a collective agreement in respect of employees employed in the undertaking, the bargaining agent continues, until the Board declares otherwise, to be the bargaining agent in respect of the employees and is entitled to give to the employer written notice of desire to bargain to make or renew, with or without modifications, a collective agreement, as the case requires.

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11.-(i) Where, on an application before the Board under this Act, a question arises as to whether an undertaking has been transferred from the Crown to an employer, the Board shall determine the question and its decision is final and conclusive for the purposes of this Act.

If there has been a transfer of an undertaking, the precise consequences for Dolan and Wilson will depend on whether or not there was a collective agreement covering park employees in effect between OPSEU and the Crown at the time of the transfer. This was a matter of dispute at the time this application was heard, but the parties have agreed that it need not be resolved unless the Board determines that there has been a transfer of undertaking.

3. The "successor rights" consequences of a sale or transfer of a business or involving employers other than the Crown are addressed by what is now section 63 of the Labour Relations Act, R.S.O. 1980, c.228, the corresponding provisions of which are these:

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.

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(12) Where, on any application under this section or in any other proceeding before the Board, a question arises as to whether a business has been sold by one employer to another, the Board shall determine the question and its decision thereon is final and conclusive for the purposes of this Act.

In Marvel Jewelry, [1975] OLRB Rep. Sept. 733, the Board said that section 63

..... 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."

Successor rights provisions have appeared in the Labour Relations Act since 1962. Their legislative history was traced in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193 at paragraphs 21 to 24. In Municipality of Metropolitan Toronto, [1975] OLRB Rep. Oct. 777, the Board found that the successor rights provisions of the Labour Relations Act could not apply to the transfer of an undertaking by the Crown which, as it is not an employer to which that the Labour Relations Act applies, could not be included in the term "employer" appearing in the first lines of each of subsections 2 and 3 of section 63 of the Act. Enacted in 1977, the Successor Rights (Crown Transfers) Act reversed the result in that case by applying provisions modeled on section 63 to transfers to and from the Crown,with such changes as were necessary to accommodate the fact that Crown's labour relations are governed by a different statute administered by a different tribunal.

4. From its form and the context in which it was enacted, it is apparent that the Successor Rights (Crown Transfers) Act was intended to apply at least to circumstances analogous to those in which the Board has found a "sale of business" under section 63 of the Labour Relations Act, and that was the premise of each of the parties' arguments in this case. Despite the different language by which "sale" and "transfer" are defined in these two statuest, the respondents acknowledged that "transfer" as defined in the Successor Rights (Crown Transfers) Act could encompass any transaction which could be described as a "sale" as defined by the Labour Relations Act and interpreted by this Board.

5. The Board's jurisprudence on section 63 (then section 55) was reviewed at length in Metropolitan Parking Inc., supra, where the Board made these observations:

... The Board has always construed the terms "sale" and "business" broadly, in view of the collective bargaining purpose which the concept of successorship was designed to achieve. As the Board noted in Thorco Manufacturing Ltd., 65 CLLC 16,052:

"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. 1960, 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."

Little reliance is placed upon the legal form which a business disposition happens to take as between the old employer and its successor. The important factor, as far as collective bargaining law is concerned, is the relationship between the successor, the employees and the undertaking. Common law or commercial law analogies are of limited usefulness. It was the extension of these principles into the realm of collective bargaining law which gave rise to the successor rights problem in the first place and made remedial legislation necessary. Likewise, the meaning given to the terms "business" or "disposition" in other statutes is of limited assistance in determining their meaning in The Labour Relations Act.

28. A section 55 application really involves two related questions; has there been a "sale" within the extended statutory definition of that term; and does what has been "sold", "transferred" or "disposed of" constitute a "business" or "part of a business". There is seldom any problem with respect to the first question. The Board has consistently followed the approach taken in Thorco, supra:

"According to its strict signification, the term sells is usually taken to describe a transaction involving the disposal of property by one to another in consideration of a sum paid or agreed to be paid by the recipient in money or its equivalent. As used in section 47a, [now section 55] however, the word sells has been given a wide definition which includes lease, transfers and any other manner of disposition of the business or part thereof. In legal parlance the word lease generally denotes a specific kind of contract by which one party, called the lessor, for a consideration in money or its equivalent, confers on another, called the lessee, the exclusive possession of certain property for a period of time.

The word transfers, however, is obviously a term of wide significance 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 interest, 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 or interpreted ejusdem generis with the words 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."

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29. A more difficult question is whether it is the predecessor's "business" which has been transferred and continued by the successor or, alternatively, there has merely been a transfer of assets or other incidental elements of the business. Unlike The Successor Rights (Crown Transfers) Act, The Labour Relations Act does not contain a statutory definition of "business", and it is the Board, therefore, which must develop an appropriate meaning. In Raymond Cote, [1968] OLRB Rep. Mar. 1211 the Board commented:

"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."

while one usually thinks of a business as a profit-making economic activity, the term "business" in The Labour Relations Act cannot be so restricted. The Act also applies to municipalities, public libraries, universities, school boards, hospitals and other non-profit service undertakings which have employees and engage in collective bargaining. The economic activities of these entities are of an entirely different character from those of commercial enterprises, yet the definition of "business" must be broad enough to include them. Even a wholly commercial enterprise will consist of many elements, some of which will be integral, and others merely incidental, to the total undertaking. And, in the case of undertakings in the service sector, "know how", managerial systems and other intangibles are likely to be more important factors in the overall organization than particular physical plant and equipment.

31. In determining whether a "business" has been transferred, the Board has frequently found it useful to consider whether the various elements of the predecessor's business can be traced into the hands of the alleged successor; that is, whether there has been an apparent continuation of the business - albeit with a change in the nominal owner. The Board in Culverhouse Foods Ltd., [1976] OLRB Rep. Nov. 691 (application for judicial review dismissed) commented:

"In each case the decisive question is whether or not there is a continuation of the business ... the cases offer a countless variety of 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 nonexistence 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 [sic] before, i.e. whether there has been a continuation of the business."

The issue before the Board remains whether there has been a "transfer 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 all the other elements of the predecessor's business. If the elements formerly used by "A" to carry on business are now in the hands of "B", and used for the same business purposes, it is difficult to resist the conclusion that there has been some form of transfer from "A" to "B" - albeit complex and indirect, and perhaps even by operation of the law.

32. Of particular significance for a labour relations statute is the continuity of the work performed before and after the transfer, since the trade union is certified to represent certain work groups, the collective agreement regulates the conditions of work for employees in those groups, and the purpose of section 55 is to preserve both the bargaining relationship and the collective agreement. If the work performed subsequent to the transaction is substantially similar to the work performed prior to the transaction, there is normally a strong inference that there has been a transfer of the business within the meaning of section 55. This approach has not only been taken by the Board in a number of cases (see, for example, Culverhouse, supra, and Dennis Moran [1977] OLRB Rep. Apr. 277) but also appears to have been adopted by the British Columbia Supreme Court in R. v. B. C. Labour Relations Board ex parte Lodium Holdings Ltd., 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41. In that case, the Court was considering an application for certiorari in respect of a decision involving what was then the successor rights section of the British Columbia Labour Relations Act (it has since been amended.) At page 52 Dryer, J. characterized the question before the Board as follows:

"One must keep in mind that the problem before the Labour Relations Board was one of labour relations and consequently, though as pointed out above the whole law must be considered, the weight to be assigned various factors and the inferences to be drawn from certain evidentiary facts are not necessarily the same as would be the case if the problem were one of, say, taxation or control of assets. The importance of the 'business' in its labour relations aspect is the jobs it provides for the employees. One factor to be considered therefore, is whether the same or substantially the same jobs are being performed. That depends on a number of factors such as whether the jobs are being performed at the same or substantially the same times and places, in respect of the same or substantially the same goods or services, and for the same or substantially the same customers or patrons, etc. These matters are, in my opinion, more important than the form of transfer." [Emphasis added]

Unless there is a continuation of the work and jobs, it would make little sense to preserve the collective agreement. Accordingly, the continuity of the work done is an important indicium of a transfer of a business.

33. There need not be a transfer of the entire business before section 55 comes into play. The successor rights provisions may also be triggered by the transfer of "part of a business." [See section 55(1).] This language suggests that bargaining rights continue when something considerably less than "the totality of the undertaking" has been transferred. Presumably the Legislature envisaged the preservation of bargaining rights where there is a severance andtransfer of a discrete, cohesive portion of the economic organization or activities which comprise the totality of "the business.

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36. Despite the labour relations focus of the statute "the business" is not synonymous with its employees or their work. In exceptional circumstances the accumulated skills, ability, know how or business contacts of the employee may be so crucial, or irreplaceable, that their loss would mean the demise of all or part of the business as a going concern; but these cases are rare. For the most part, the continued employment of the predecessor's employees is only one factor to be considered. The reason for this is succinctly stated by the Canada Labour Relations Board in N.A.B.E. 7'. v. Radio C.JYC Ltd. et al., (1978) 1 Can. LRBR 565:

"The purpose of the successorship provisions is to preserve bargaining rights in spite of changes in the ownership or control of an enterprise. Bargaining rights are typically granted to a trade union as bargaining agent for a unit of employees of an employer employed in certain classifications or at a certain location, or for all employees with specified exceptions. Bargaining rights do not attach to certain spec~/lc employees as individuals. Therefore, in defining the concept of business for the purpose of successorship, it would be incorrect to focus upon whether certain identifiable persons formerly in the employ of A are now in the employ of B. Furthermore, to focus on that question would invite employers to avoid the successorship provisions by refusing to maintain continuity of the individuals employed. A key to the protecting of bargaining rights must be whether there is continuity in the nature of the work done (i.e. in classifications or job content for which the union was certified) not in the actual persons who perform it ...

But continuity of the work done is not sufficient alone to satisfy section 144. There must be some nexus between two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successorship. There must be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand." [Emphasis added]

A continuity of the work and/or the employees is significant, but it is not always sufficient, to sustain a finding of successorship. This Board adopted a similar view in British American Bank Note Co. Ltd., [1979] OLRB Rep. Feb. 72 - a case which, like the present one, involved the consequences of a loss of a contract:

"There are limits, however, to the extent to which section 55 can be used to preserve collective bargaining rights. It is clear that the provisions of this section do not attach bargaining rights to the work being performed by a business but only to the business itself. While this distinction may not be easy to draw in some cases, it is essential that it be maintained since section 55 cannot be interpreted as guaranteeing to a bargaining agent an absolute right of property in the work performed by its members. Section 55 serves only to preserve bargaining rights that have become attached to a business entity so that when the business entity is transferred, either in whole or in part, those bargaining rights survive and bind the successor employer."

The focus of section 55 is the business entity - the employer's total economic organization -not simply the work which the employees perform.

37. The present case involves a form of subcontracting, and subcontracting arrangements always involve the transfer of work. work or services performed by A's employees within A's own organization are "contracted out" to B, and B uses his own managerial skills, plant, equipment and "know how" to supply to A, for a price, the product, services, facilities or components formerly produced by A's employees. A, therefore, is contracting for the use of B's economic organization in lieu of his own. A is generating a particular demand, or market, for B's product, and it is implicit in the arrangement that, thereafter, the two businesses will remain in a kind of symbiotic relationship, bound together by close economic ties. The continuity of the work, and the preservation of a close economic relationship, between the two parties is implicit in subcontracting and does not, in itself, establish a transfer of all, or part, of a business. If it is clear on the evidence, however, that B is unable to fulfill A's requirements with his existing equipment or organization, and received from A a transfer of capital, assets, equipment, managerial skills, employees or know how, then the transaction no longer looks like a simple contracting out of work. A may not be making use of B's economic organization, rather A may be transferring part of his economic organization to B (and recall that section 55 is triggered by the transfer of "part of a business") or merely permitting B to make use of his (A's) organization while retaining control and direction of the related economic activity. Of course, it is to be expected that when A phases out part of his operation there may be certain equipment or assets which are now surplus and which can be disposed of on the market. These assets may, as a matter of convenience, be purchased by B. None of these factors unequivocably demonstrates or foreclose the application of section 55 (or section 1(4).) If, however, "but for" the transfer of such assets, licences, know how or property interests from A, B would be unable to fulfill the contract, then it is easier to infer a transfer of part of A's business - albeit a part which A no longer wishes to operate itself.

6. The authority of the Minister of Natural Resources to enter into his written contract of May 29, 1985 with Dolan and Wilson (referred to therein as "the Contractor") is not in dispute. Paragraphs 1 and 2 of that contract provide:

1. This Agreement and the attached Schedule A and Appendices, documents A to F, shall form the contract between the parties.

2. The Minister, under the Provincial Parks Act and Regulations attached hereto as Appendix "B", grants to the Contractor the right to occupy and operate Fitzroy Provincial Park as described in Appendix "X' from the 1st day of May, 1985 until the 31st day of October in the year 1985.

Paragraph 12 of the contact gives the Contractor the option of renewing for two successive periods of two years each. Paragraph 6 of Schedule "A" provides:

(6) Delivery of Equipment

(a) The Minister will deliver to the Contractor on May 1st, in each year of the agreement the facilities and equipment listed in Appendix Di all of which shall be in operating condition.

(b) The Minister and the Contractor shall agree in writing to the description and condition of the facilities and equipment listed in Appendix Dl and D2 before the Contractor assumes possession of such facilities and equipment.

(c) The Minister will be responsible for individual repairs of items listed in Appendix D2 costing over $500.00, where repairs are not a result of the Contractor's and/or his/her staff's negligence.

(d) Any facilities or equipment that are replaced, shall be replaced by facilities or equipment supplied or approved by the Minister.

(e) Upon the termination of this contract, the Contractor shall deliver to the Ministry all the facilities and equipment listed in Appendices Dl, D2 and D3 in good operating condition as when supplied to the Contractor, normal wear and tear expected [sic].

Appendices Dl, D2 and D3, are titled and appear to be, respectively, an "Inventory of Park Facilities and Campground Equipment - March 31, 1983", an "Inventory of Park Buildings" showing a total value of nearly $360,000.00 and an "Equipment Inventory" listing office furniture, various hand and power tools, a boat and outboard motor, a tractor/front end loader, a tractor/mower and various other mowing devices with a total stated replacement value of over $47,000.00. The Contractor is obliged by paragraph 7 of the contract to insure all of the equipment and most of the buildings. Paragraph 6 requires the Contractor to provide and pay for all electric power, telephone services, water supply fuel "and all other materials that may be required for the operation of Fitzroy Provincial Park during the term of this Agreement." Paragraph 14 requires that the Contractor carry out equipment and plant maintenance in accordance with instructions set out in an attached Appendix "C" and that the Contractor "at his/her own expense keep and maintain the park, buildings, structures, facilities and equipment therein in a clean, sanitary and safe condition that is satisfactory to the District Manager and in accordance with the said Appendix 'C'."

7. Subparagraph 3(1) of the contract provides:

3. (1) The Minister agrees that the Contractor will retain all revenues generated through the sale of all permits and the operation of Fitzroy Provincial Park.

The prices which may be charged for the use of park facilities are fixed by regulations made under the Provincial Parks Act. Senior citizens and youth groups are entitled to use camping facilities without charge under certain circumstances. Subparagraph 3(2) of the contract provides that the Minister will pay the Contractor a specified fixed monetary "subsidy" in each year of the contract. By subparagraph 3(4) of the contract, the Minister also agrees to "reimburse" the contractor for senior citizen free camping up to a specified maximum dollar amount in each year of the contract. There is no corresponding provision for reimbursement with respect to the exercise by organized youth groups of the privilege of free camping. When his counsel asked him why that would be, Mr. Dolan said he understood this was because "the figures vary too much." In addition to permits, the Contractor can sell firewood (at reasonable prices) and, if they have been approved by the Ministry's Regional Director, park related souvenirs.

8. Paragraphs 10, 11 and 18 of the contract provide:

10. The Minister hereby reserves the right to purchase all stocks and supplies which are the property of the Contractor not including those provided by the Ministry and situate within the park at the original cost price or market value whichever is lesser in the event of termination of this Agreement.

11. The Contractor shall not, without the prior approval in writing of the District Manager, change the nature or extent of services provided under this Agreement and without limiting the generality of the foregoing, and the Contractor shall not, without such consent, place or install or permit to be placed or installed any fixture or equipment in the park.

12. This agreement shall not be assigned or sub-contracted without the consent of the Minister.

The terms of the contract and its incorporated Schedule and Appendices impose a great many restrictions on the use which the Contractor may make of the park and on the manner in which the Contractor can operate the park. Examples of this have already been given. Another is that any advertising done by the Contractor must first be approved by the Ministry. Paragraphs 15 and 19 require the Contractor to fill out and remit a plethora of forms and reports on a regular basis. With respect to the Contractor's employees, paragraphs 8, 9 and 10 of Schedule "A" provide:

(8) Clothing of Contractor and Employees

(a) All gate staff will wear similar beige shirts and dark brown pants while working in the park.

(b) No shorts will be worn at any time and no jeans will be worn by the park wardens or gate attendants.

(c) Only trousers or slacks which are not offensive to the public may be worn by the staff or the Contractor at any time. The Park Warden must wear the official Park Warden's uniform as per uniform policy.

(d) All staff will wear an identification tag with the park name and the staff members name at all times while on duty in the park.

(9) Employee Conduct

(a) The Contractor agrees at the request of the Minister, to forthwith terminate the employment, of any employees whom the Minister considers detrimental to the best interests of the park or the public using the park.

(b) Maintain discipline among his/her employees in keeping with that required of employees of the Ministry.

(10) Special Employment Project Participation

The Contractor agrees at the request of the District Manager, to sponsor Special Employment Projects which will upgrade and improve park facilities.

All projects will be carried out to meet Ministry policy and approval.

Nevertheless, paragraphs 17 and 20 of the contract provide:

17. In the performance of this Agreement, the Contractor shall be an independent contractor and shall not be a servant or agent of the Minister, and the personnel of the Contractor shall be the servants of the Contractor and not the Minister. The Contractor shall employ competent and orderly employees and he/she and his/her employees shall be identified as "Concession Staff" and shall use all courtesy towards members of the public using the park.

18. The Minister shall be under no liability whatsoever to any person, firm or Corporation for any damage to property or injury including death to any person or persons caused by or resulting from the operations of Fitzroy Provincial Park by the Contractor, its servants or agents and the Contractor shall from time to time and at all times hereafter protect and forever save harmless and indemnify Her Majesty the Queen in Right of Ontario, Her Officers, Agents and Servants against any damage, penalty, fine, claim, judgement, cost, expense or charge suffered, assessed, imposed or incurred by Her Majesty the Queen in Right of Ontario, Her Officers, Agents and Servants or any of them arising out of the operation of Fitzroy Provincial Park or the use and occupation of any building or land on which Fitzroy Provincial Park is situate by the Contractor, its servants or agents.

9. Daniel Dolan had never run nor even worked in a provincial park before entering into this transaction with the Minister. His work experience was as a farmer and carpenter's helper. His partner Henry Wilson was a lumber mill employee who on some previous occasion had won a contract to remove garbage from the park. Wilson's wife Christine, however, had been employed as the office clerk at Fitzroy Provincial Park for a number of years. Many of the forms which the contract required Wilson and Dolan to file were the same forms Christine Wilson had worked on as a Ministry employee. Dolan and Wilson hired her to do for them the same sort of work she had done as an employee of the Ministry, and to do their books as well. Richard Kavanaugh had worked for the Ministry in this park for a number of years as park warden. Dolan and Wilson were obliged to employ someone to perform the duties and wear the Ministry-supplied uniform of a park warden, and they hired Richard Kavanaugh. James Wilson (no relation to Henry and Christine) had worked for the Ministry for a number of years doing maintenance work in the park. Dolan and Wilson hired him to do maintenance work in the park. They hired students to do other jobs. One had been employed by the Ministry in the park previously. Dolan and Wilson hired him to perform a security function. The other students they hired performed various sales and cleanup functions.

10. Counsel for the Crown argued that the transaction between the Minister and Messrs. Dolan and Wilson did not effect the transfer of an undertaking but merely "contracted out" the management of an undertaking which remained under the control of the Ministry. Implicit in this argument was the proposition that these two characterizations are mutually exclusive. He submitted that the terms and conditions imposed on the operation of the park went beyond requiring compliance with statutory and regulatory requirements and imposed Ministry policies with respect to a number of matters. The inclusion of such terms, he argued, showed that the Crown had not made a "clear transfer", "wiped its hands", or left the contractor "to do with the undertaking as he wished." This retention of interest and control was, he said~ inconsistent with the notion of "transfer". Counsel for Dolan and Wilson joined in that argument, adding that the transferee of an undertaking receives something which he can sell in turn, while his clients had nothing they were entitled to transfer to anyone else.

11. Counsel for the Crown relied, at least initially, on the Board's decision in Superior Sanitation Services Limited, [1968] OLRB Rep. July 395. There the City of Brantford had "contracted out" the collection of garbage to Superior and, contemporaneously, sold to Superior its nine garbage trucks. The Board in that case came to the conclusion that this was not a sale of business within the meaning of a predecessor of section 63, and said:

4. ... In the circumstances of this case the corporation has not disposed of part of its business but has merely changed its method of carrying on such business by contracting with an agent to perform the tasks which it formerly performed by its own employees.

[emphasis addedi

Counsel urged this method of analysis on us until the emphasized words were drawn to his attention. When asked whether it was his position that Dolan and Wilson were agents of the Crown, he said it was not. Counsel for Dolan and Wilson did not argue that they were agents of the Crown. We note that employees of Crown agencies are treated as Crown employees under the Crown Employees Collective Bargaining Act, R.S.O. 1980, c. 108.

12. Counsel for the Crown also cited Ontario 474619 Ltd., [1981] OLRB Rep. Oct. 1452, in which the union representing the employees of a motel claimed that the respondent company's contract with the motel owner, Hoco Limited, to supply and manage the staff of the motel's newly renovated restaurants effected a sale of business by Hoco to the contractor. The Board described that contract at paragraph S of its decision:

5. ... The respondent specifically agreed to provide all necessary staff including supervisory staff. In return Hoco agreed to pay the respondent the greater of 10% of the gross liquor sales or 49% of the net profit. Even though the management fee was to be in the form of a percentage of either sales or profits, all revenues are received by Hoco and the respondent's management fees are then paid out of those revenues. Hoco is responsible for all other management decisions; it establishes hours, prices and all other policy for the two establishments. It also retains ownership and control of the physical plant, having itself decided upon and paid for all renovations. The respondent, on the other hand, is responsible only for the hiring, firing and discipline of all employees. The respondent pays and supervises the employees. Two or three of the employees who previously worked part-time for Hoco now work for the respondent. All other employees in the Motel continue to be employed by the Motel and are covered by the collective agreement with the applicant union.

After a review of other decisions, including Superior Sanitation Services Ltd., supra, the Board offered this analysis.

22. In the instant case, the payment of the respondent of a percentage of the gross liquor sales or profits is not of itself conclusive that there has been a sale of a business or of part of a business. Provisions of that kind are common in commercial contracts, notably in leases, and do not of themselves evidence the sale of a business. In the instant case the conditioning of the revenues of the respondent on the volume of sales or profits gives it some share in the risk of profit and loss. That is an obvious incentive to better service and could be one of a number of indicia of a joint venture between the respondent and the Motor Hotel for the purposes of section 1(4) of the Act (an issue touched on further below). It does not, of itself, establish that part of a business has been transferred within the meaning of section 63 of the Act.

•0O

24. In this case there has been no transfer of any physical assets, much less the transfer in whole or in part of a "functional economic vehicle". The Hotel is the sole decision maker as to what food and drink will be bought and sold. It alone decides the hours of business and the prices to be charged. The respondent would be powerless to prevent decisions by the Hotel in these areas which could materially affect the volume of sales or profits and thereby reduce or increase its revenues. Like the management company in Metropolitan Parking Inc., the respondent has acquired an obligation to perform services for compensation. It would in our view be out of keeping with business reality and go beyond the contemplation of section 63 of the Act to conclude that by contracting to supply staff to the Motor Hotel's restaurant and disco the respondent has acquired part of a business. To acquire the right to perform services in the restaurant and disco is not to acquire a going concern, in whole or in part. The segment so split off is not a going concern that can stand alone, as contrasted for example with the sale of one of a number of stores in a supermarket chain or the severance of the manufacturing and retailing arms of a previously integrated business. For the foregoing reasons the application must be dismissed.

25. It should be noted that the Board draws no conlusions with respect to what its decision would be if the same facts had been the subject of an application under section 1(4) of the Act (a refinement of the Act which did not exist at the time of the decisions in Thorco and Aircraft Metal). In light of evidence suggesting a relationship in the nature of a joint venture between the Motor Hotel and the respondent, including evidence that the president of the respondent is a director of the company that operates the Motor Hotel, the Board specifically asked counsel for the applicant whether he wished to plead section 1(4) in the alternative. He categorically declined to do so. Since section 1(4) on its face requires some form of application to the Board, we can say nothing more in respect of that alternative.

26. The Board also makes no comment on whether as a matter of law Hoco Ltd. continues to be the employer of the persons employed in the restaurant and disco. We have concluded that there has been no transfer of a business within the meaning of section 63. It may be that there has also been no transfer of the employment relationship having regard to the numerous factors that may bear on the question of who is the true employer (ef. Sutton Place Hotel, [1980] OLRB Rep. Oct. 1538). On the limited evidence placed before the Board by the agreement of the parties, and no argument having been directed to that issue the Board can make no determination in that regard. That issue may, of course, fall to be determined in some further application or at arbitration.

13. In Hamilton Cargo Transit Limited, [1983] OLRB Rep. June 887, the respondent cartage company was placed in receivership by its bankers. The bank and the receiver it had appointed then entered into agreements which are described at paragraph 3 of the Board's decision:

3. By agreement dated November 15, 1982, the Bank covenanted to sell to a third party, Cole Equipment Rental Company Limited, all of the Bank's security interest in what essentially were all of the Hamilton assets of Hamilton Cargo Transit Limited, for the price of $350,000. The transaction was contingent upon a number of matters, including the approval of the Ontario Highway Transport Board of the transfer of the licences, and satisfactory financing arrangements. The agreement contemplated that the Bank would ultimately finance the purchase of the business by Cole Equipment, and if the Bank decided against doing so, Cole Equipment had the option of terminating the agreement. On the same date, the Receiver and the Bank entered into a further agreement with a second company, 268121 Ontario Limited, for that company to operate and manage the business of Hamilton Cargo until completion of the sale transaction contemplated by the first agreement. The purpose of this second agreement was, as the Receiver put it, "to preserve the licences and business of Hamilton Cargo, so that there would be something left to sell at the end"...

The transaction contemplated by the first-mentioned agreement had not been completed when the union representing the cartage company's employees initiated an application under section 63. That application focused on the transaction effected pursuant to the second of the two agreements. As might be expected, the terms of that agreement required that the management company's day-to-day management of the business would be subject to the supervision and control of the receiver. The agreement contained a number of restrictions on the use the management company could make of the assets of the business and the manner in which the business could be conducted. Significantly, however, the agreement provided that the revenues generated by the management company's operation of the business would belong solely to the management company and not to the debtor company or the bank. The management company was required to indemnify the receiver and the bank against operating losses and any other claim or expense incurred during the term of the agreement. The Board observed that:

10. ... it can be seen that, contrary to the situation existing in, for example, the Price-Waterhouse case, any profit from the current operation of the business enures to the benefit of the "Manager". The Bank's sole interest is to have the business preserved in its present form for ultimate sale as a "going concern". Consistent with that, there are certain other limitations on the authority of the Manager...

The whole arrangement, in fact, has far more of the attributes of a "lease", than it does of a "sale" in the ordinary sense. But the definition of a "sale" under the Act is extremely broad, and in fact uses the term "lease" itself...

The very use of the word "lease" in the definition in the Act seems to leave no doubt that the transfer of assets contemplated by the section may be for a limited period only, and that title to the assets need not pass at alt. The inquiry is by no means academic, since an arrangement like the present may continue for months or even years prior to the time that an ultimate sale of the business is completed.

The Board concluded that:

Ii. ... as a matter of law, we find the present arrangement to fall within the definition of a "sale", as that term is used in the Labour Relations Act, and the applicant is entitled to the declaration that it seeks. We find that there has been a "sale" of the "business" of Hamilton Cargo to 268121 Ontario Limited, albeit on a limited-term basis, and with the restrictions necessary to preserve the business "as is". In this particular case the business of the predecessor is, subject to the fixed monthly "user" fee of $500.00, being run solely for the profit of the "Manager". No third party is entitled to do that, under the provisions of section 63, without regard to the relationship existing between the predecessor employer and its Union...

14. The Board's decision in Hamilton Cargo Transit Limited illustrates that a transaction may amount to a sale or transfer of a business or undertaking which gives rise to successor rights even though the transferor does not relinquish its entire interest in the subject matter of the transaction. The respondents concede, as they must, that a lease is a form of "transfer", ''conveyance'' or ''disposition.'' Both a lessee and its lessor have an interest in the subject matter of the lease. A lessor ordinarily imposes substantial restrictions on the use the lessee may make of the leased property, in order to protect its reversionary interest. Lessees are often obliged to maintain the property in accordance with defined standards. It is not at all unusual for a lease to require that the subject property not be assigned or sublet without the lessor's consent. Although the term "lease" is not usually used to describe the disposition of a business, there are dealings with businesses which have the characteristics of a lease. The transaction in Hamilton Cargo Transit Limited, supra, is one example. The Board's decisions in Kem's Masonary, [1964] OLRB Rep. Nov. 382, Don Mills Bindery Inc., [1983] OLRB Rep. Dec. 2008 and W. F. Stevens Reproductions Inc., [1984] OLRB Rep. Apr. 674 involved transactions which were or might have been described as analogous to a "lease" of a business. "Franchise" arrangements may have characteristics analogous to those of a lease. Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214 dealt with the "franchise" of part of a business formerly operated by a corporate relative of the franchisor, a transaction which, the franchisee acknowledged, constituted a sale of business despite the presence of control by the franchisor over the franchised business to an extent which led the Board to declare the parties to constitute one employer for labour relations purposes pursuant to subsection 1(4) of the Labour Relations Act.

15. None of the parties to this proceeding argues that, by the contract in question here, the respondents Dolan and Wilson became mere agents of an employer for whose direct employees the applicant had representation rights, as was the case in Superior Sanitation Services Ltd., supra. The contract here is not just to manage employees, as in Ontario 474619 Ltd., supra. While in Ontario 474619 Ltd., the Board found there had been no transfer of assets of any kind, here the Crown has conveyed to Dolan and Wilson exclusive possession of, and responsibility, for buildings and equipment it values at roughly $400,000.00. While the Crown derives a continuing benefit from the management of the park, Dolan and Wilson are operating the park for their own account. They have assumed the financial risks associated with fluctuations in attendance and changes in the cost of labour and materials. During the term of their contract with the Minister, Dolan and Wilson have been carrying on an undertaking formerly carried on by the Crown in much the same way the Crown did, using the physical assets the Crown used, and employing people to perform jobs similar to those formerly performed by Crown employees. While the undertaking will revert to the Crown when the contract terminates, Dolan and Wilson are in a position analogous to that of a lessee or franchisee of the undertaking during the term of the contract.

16. We conclude that the transaction reflected in the contract of May 29. 1985. effected the "transfer" of an "undertaking" "from the Crown to an employer" within the meaning of section 2 of the Successor Rights (Crown Transfers) Act, and we so declare. We remain seized with this matter in order to deal with any other issue remaining in this application which the parties are now unable to resolve.

ADDENDUM OF BOARD MEMBER R. J. GALLIVAN;

1. In view of the broad way in which the applicable laws are drafted and the practice of the Board to give them a very liberal interpretation, I reluctantly conclude that the majority has come to a decision supportable by law and precedent. Obviously, my agreement is limited to the particular facts of this case. If the Board's decision is not that anticipated by the Ministry of Natural Resources, I would note simply that it is the government of which the Ministry is a part which is responsible both for the law which the Board applied and for the framing of the structure of the agreement it entered into with Messrs. Dolan and Wilson.