Bricklayers, Masons Independent Union of Canada, Local 1 v. Masonry Contractors' Association of Toronto Inc., 1988 CanLII 3781

[1988] OLRB Rep. August 813

0289-87-R Bricklayers, Masons Independent Union of Canada, Local 1, Applicant v. Masonry Contractors' Association of Toronto Inc., Krest Masonry Contracting Limited and 654812 Ontario Limited, carrying on business as Canada Contracting, Respondents

BEFORE: R. 0. MacDowell, Alternate Chair, and Board Members D. A. MacDonald and J. Redshaw.

APPEARANCES: Nelson Roland, Robin MacLean, John Meiorin and Otello Ongaro for the appli­cant; Joe De Caria for the respondent Masonry Contractors' Association of Toronto; James G. Knight and William Jahn for the respondent Krest Masonry Contracting Limited; Rudy A. Bianchi for the respondent 654812 Ontario Limited carrying on business as Canada Contracting.

DECISION OF THE BOARD; August 3, 1988

I

1. The name of one of the respondents is amended to read "654812 Ontario Limited carry­ing on business as Canada Contracting".

2. This is an application under sections 1(4) and 63 of the Labour Relations Act. The rele­vant portions of those sections read as follows:

1.-(4) 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.

63. (1) 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.

The union contends that pursuant to section 1(4), Krest Masonry Contracting Limited ("Krest") and 654812 Ontario Limited, carrying on business as Canada Contracting ("Canada Contracting") should be treated as one employer for the purposes of the Act. Alternatively, the union contends that there has been a sale of "part" of Krest's business to Canada Contracting. The union argues that, in either case, Canada Contracting is bound by the collective agreement which binds Krest.

3. The respondents assert that there has been no "sale" of any part of Krest's business to Canada Contracting, nor are the two companies engaged in related activities or businesses under common control or direction. The respondents further assert that even if the prerequisites for a section 1(4) declaration are met, the Board should exercise its discretion not to make such declara­tion.

4. The hearings in this matter consumed a number of days, and it is neither practical nor necessary to review the totality of the oral and documentary evidence presented to the Board. To the extent that there was a dispute about the facts, we have weighed the evidence taking into account such factors as the demeanour of the witnesses when giving their evidence, the firmness of their recollections, the clarity, consistency, and general plausibility oC their testimony when sub­jected to the test of cross-examination and considered in light of the other evidence presented to the Board, and what seems most probable in all the circumstances.

II

5. Krest is a masonry contractor that has been in business in the Metropolitan Toronto area for many years. William Jahn is the President of Krest as well as a director and major share­holder. The other shareholders and directors of Krest are: Christian Krille, Frank Galati, William Reimer and Doris Kosch, William Jahn's daughter. Until April 1986, Paul DeRose was a director of Krest, and remains a minority shareholder. Mr. DeRose is also a minority shareholder, officer and director of Canada Contracting.

6. Doris Kosch, Mr. Jahn's daughter, has been Krest's office manager for some 18 years. In that capacity she performs a variety of functions which occasionally require her to visit the com­pany's construction sites. She is not engaged directly in construction work or site supervision; but by virtue of her position and experience she is quite knowledgeable about the masonry contracting business.

7. Krest's business involves bricking houses on new residential subdivisions. Krest's princi­pal customer is a residential builder named Lorne Liebel, who runs a firm called Canada Homes. Mr. Liebel and Mr. Jahn have a long-standing commercial and personal relationship. According to Mr. Jahn, virtually all of their business is conducted with a "shake of the hand" and without regard to formal contractual documents.

8. From its inception, Krest has been a unionized business. Krest is bound by a collective agreement with the applicant union through its membership in the Masonry Contractors' Associa­tion of Toronto ("MCAT"). That collective agreement obliges Krest to employ only members of the trade union, and prohibits the subcontracting of work to any employer which does not itself have a collective agreement with the union. Such union security and work protection clauses are quite common in construction industry collective agreements.

9. At the time of the hearings, Krest had a direct work force of about 110 employees. In addition, Krest regularly engages approximately 10 subcontractors each of which, in turn, employs from 10 to 15 workers. Krest is a substantial business enterprise with annual revenues of approxi­mately $12 million. In recent years Krest has grown slowly but steadily. Krest is a prominent mem­ber of MCAT. For a time, Bill Jahn was the president of MCAT.

10. Until the spring of 1986 when he left the company, Paul DeRose was Krest's senior

foreman and site supervisor. DeRose was first approached to become a foreman in 1978 by Doris Kosch, and over the years, he took on increasing responsibilities within the business. Mr. Jahn described him as "my right hand man". By the spring of 1986 Mr. DeRose was a director of Krest and held 6% of Krest's common shares. His share purchase agreement provided that if he left the business his shares would be re-purchased by the other shareholders over a period of 5 years, in blocks of ten shares, for the sum of $66,000.00.

III

11. The numbered company now carrying on business as Canada Contracting was originally incorporated in or about February 1986 by John Kosch, Doris Kosch's husband. The ostensible purpose of the numbered company was to engage in the masonry contracting business - that is the same kind of business in which Krest was successfully engaged, and Mr. Kosch's wife and father-in-law had worked for many years. Mr. Kosch himself had no prior involvement with Krest and no experience whatsoever in the construction industry. He was described by Mr. Jahn as "some kind of scientist".

12. Mr. Jahn testified that he never discussed the activities of the numbered company with his son-in-law and was totally surprised when Mr. Kosch went into the bricklaying business. Doris Kosch testified that she, too, had never discussed her husband's proposed business initiative with him. Both witnesses told the Board that Mr. Kosch launched his fledgling masonry contracting business without any input from them at all - although Mrs. Kosch conceded in cross-examination that her father may have been aware of her husband's intentions.

13. Even in these days of spousal and family independence, that testimony is difficult to accept, given the fact that Mr. Kosch had no knowledge of the business in which he was about to be engaged, while both his wife and father-in-law had considerable experience in precisely that seg­ment of the construction industry. Their testimony is also difficult to square with the fact that the only activity in which the numbered company was actually involved in the spring of 1986 was the bricking of two houses on a Canada Homes site where Krest was engaged to do the brick work, supplied the building materials to the numbered company, and apparently had to do some repairs for work improperly performed. Yet Mr. Jahn testified that he had no knowledge of the presence of Mr. Kosch on one of "his" construction sites, nor did he have any discussion with Lorne Liebel respecting, or to assist, his son-in-law's company. But why would Canada Homes, a large builder then building hundreds of houses, let a contract to the unknown and inexperienced John Kosch to brick only two houses as a non-union broker side by side with Krest - particularly when, as later testimony disclosed, Liebel considered it appropriate to approach Jahn to canvass any concerns about Canada Contracting working on its site when Paul DeRose had taken control of the Canada Contracting business? Is it likely that there would have been no enquiries at all of Mr. Jahn, or that neither Mr. Jahn nor his daughter would have any conversation about his son-in-law's proposed business venture? And, at the relevant time, it was Mrs. Kosch, on behalf of Krest, who was responsible for supervising the invoices for the building materials supplied to her husband's com­pany. In the circumstances it is very difficult to believe that there were no discussions at all between Mr. Jahn and Mr. and Mrs. Kosch about the numbered company.

14. In late 1985 and early 1986 rumours began to circulate that Canada Homes was plan­ning a massive expansion, assembling land to build as many as 5,000 new homes. This prospect presented something of a dilemma for Krest. Krest's existing capacity (i.e. with its then existing labour force of direct employees and subcontractors) could accommodate only about 1800-2000 homes. To remain Canada Homes' principal contractor would require both a significant expansion of its direct or indirect labour force, and virtually a total dedication of all of its resources to build­ing for Canada Homes, to the potential exclusion of other customers. More important, though, in the economic climate of 1986, the expansion of Krest would not be easy. There was a shortage of bricklayers either for direct hire or through engaging unionized subcontractors.

15. To expand its work force and production capacity, Krest would have to recruit quite a number of new employees to its regular work force, who would then be entitled to the wages and working conditions established in the collective agreement. Alternatively, Krest could engage sub­contractors who would likewise be bound to those terms. However, because of its established con­tractual obligations, Krest had no ready access to the pool of non-union workers or subcontractors who might be prepared to work on lesser or less restricted terms thereby decreasing the risk and increasing the profitability of any proposed expansion. Conversely, if Krest could escape the restrictions imposed by the collective agreement, it might well be able to engage employees or sub­contractors to meet Canada Homes' needs without the economic burdens flowing from its estab­lished contractual relationships. The collective agreement was an obstacle to the profitable expan­sion of its business.

16. According to Paul DeRose, in April of 1986 he sought and received permission from his fellow directors to leave Krest and establish his own company. Their "permission" was important because, while Canada Contracting was a nominal non-union competitor of Krest, DeRose contin­ued to work in close cooperation and often in conjunction with Krest on residential projects built by Canada Homes. The understanding was that on a Canada Homes site, Krest would do the higher profit houses while Canada Contracting did the others; and, in any event, Canada Contract­ing undertook to purchase all of its building materials through Krest. That was the condition that Jahn had demanded of Liebel when the latter had asked whether there were any objections to DeRose's presence on a Krest/Canada Homes building site. The actual allocation of work depended upon Canada Homes' schedule of closings.

17. It is important to note that at the time Paul DeRose acqtiired an interest in the num­bered company, it was little more than a corporate shell without reputation, established goodwill, or any other obviously attractive attributes. It had no bank account or accounts receivable. It had no pending contracts or prospective new customers. It had never declared a dividend. It had no equipment or other physical assets. It had no developed expertise even in the line of work in which it had been marginally engaged. It had no employees. There was no economic significance associ­ated with its name. It had previously been conducted solely as a nc'n-union "broker", engaging what Paul DeRose described as a single "shoemaker crew" to brick (rather badly in the result) two houses on a Krest/Canada Homes project. Even that endeavour was a failure because of faulty workmanship. The numbered company had no discernible value other than its association through family ties with Krest.

18. DeRose left Krest, on good terms, at the end of April 1986 to become involved in the numbered company as its sole Director, President and Secretary, replacing John Kosch in these positions. At the same time DeRose ceased to be a director or employee of Krest. However, despite the share repurchase agreement, his block of shares in Krest was not redeemed. Jahn tes­tified that DeRose's shares in Krest had not been repurchased because his financial circumstances were temporarily "tight" as a result of obligations undertaken to build his own house. The situa­tion of the other shareholders/directors of Krest was not canvassed in the evidence. Had the first block of his shares been liquidated in accordance with the terms of the agreement, DeRose would not have needed what he described as "seed money" to get Canada Contracting under way.

19. The "seed money" came from the spouses of the directors of Krest who each put in small sums in return for a block of shares in Canada Contracting issued at a price of $1.00 per share. Maria Galati contributed $400.00 and received a block of 400 common shares. Connie Krille contributed $2500.00 and received in return 2500 common shares. Anna Reimer contributed $1400.00 and received 1400 common shares. John Kosch made no financial contribution but received 900 shares in addition to the 100 shares which he already owned. An entity known as San-mar Sales, which was not then incorporated, contributed $4100.00 and received 4100 common shares. The President and sole director of Sanmar is Margot Jahn, the wife of William Jahn, the President of Krest. Mrs. Jahn has 100 shares in Sanmar issued at a price of $1.00 per share. The minority shareholders in Sanmar are Susan Barton and Karen Florecki with 10 shares each. Ms. Barton and Ms. Florecki are the daughters of William and Margot Jahn. Sanmar Sales has no com­mercial activity other than as a holding company for the shares in Canada Contracting. Paul DeRose contributed $600.00 and received in return 600 common shares in the company.

20. In summary then, the total capital injected into the numbered company was a little under $10,000.00. DeRose owns about 6% of the common shares, as he had done (and still does) in the case of Krest. Control over the numbered company lies in the hands of the spouses of the directors of Krest, and a "control block" (i.e. a little over 51% of the shares) rests in the hands of Mr. Jahn's family members. The majority shareholders play no role in the active running of the company but, by virtue of their holdings, clearly retain legal control over its destiny.

21. In his quest for seed money for his new endeavour, DeRose testified that he never can­vassed any other source of funds (a bank, for example), never even considered going to his fellow directors of Krest and never raised with any of them the proposed investments of their wives. Shortly after leaving Krest, DeRose accompanied the directors of Krest and their spouses to Las Vegas, but he maintained that no business was ever discussed. Nor, according to William Jahn, did he ever discuss with his wife her incorporation of Sanmar Sales as a vehicle for investing in what was (nominally at least) a rival masonry contractor.

22. That testimony, we think, should be placed in the same category as that of Doris Kosch and William Jahn, who with their years of experience in the masonry business claimed that they never discussed John Kosch's abortive attempt to set up his own bricklaying company to do work on a Canada Homes site where Krest itself was doing the brick work and supplying all of the mate­rials both to its own subcontractors and to the new numbered company. Their evidence is simply not plausible.

23. DeRose testified that he approached the Krest directors' wives because he thought that this would guarantee him further financial backup if he needed it, and access to necessary building materials. On the evidence before us that could not occur without drawing upon the trade relations of Krest, one of which was a brick works in which Krest itself had an interest. There is no evidence that the spouses of the Krest directors are wealthy independent investors or entrepreneurs. The evidence regarding Sanmar (as well as the small sums involved) suggests that they are not. In real­ity, DeRose was relying upon the continued support and backing of Krest.

24. For some time Canada Contracting was little more than the shell it had been when first incorporated by John Kosch. It still had no assets, equipment, bank accounts, office space, employees or goodwill, other than the blessing of William Jahn, who was content to let Canada Contracting work side by side with Krest on the Canada Homes sites, bricking the less profitable houses, so long as Krest supplied the building materials (and, as we shall mention below, reaped -albeit indirectly - a significant financial reward). When Canada Contracting needed forklifts, they were rented from Krest with a corresponding "back charge". Krest sold Canada Contracting a pickup truck which, for a time, was that company's only tangible asset. Another useful asset was an office computer/word processor which, once again was purchased from Krest. Krest even pro­vided Canada Contracting with office supplies, and issued invoices for such minor items as stamps, courier services, and jackets, Christmas turkeys, and chocolates for favoured employees and busi­ness contacts. Mrs. Kosch explained that Krest provided these services because DeRose had no line of credit or arrangements with suppliers. DeRose testified that it was convenient to have Krest look after these details. Initially Canada Contracting had no offices of its own, carrying on business with the assistance of a part-time clerk in the offices of Krest's accountants. Canada Contracting is the only entity other than Krest's own subcontractors which is extended such facilities and, even so, it is apparent that the relationship between Krest and Canada Contracting is much closer than its relationship with its other subcontractors.

25. Despite its nominal capitalization and absence of employees or tangible assets, Canada Contracting has been a remarkable success. That success can be traced to several ingredients: the experience and enterprise of Paul DeRose, the ability to work in close cooperation with Krest on Canada Homes' projects, the access to materials, equipment or services provided by Krest but which would not otherwise have been available because DeRose had no credit rating or established relationship with suppliers, and, above all, the fact that Canada Contracting was "non-union" and therefore able to operate and engage subcontractors beyond the ambit and restrictions of the MCAT collective agreement. Canada Contracting could do what Krest could not: engage non­union subcontractors to work on Canada Homes' or other residential projects.

26. Mr. DeRose with considerable ingenuity and zeal has been able to engage quite a num­ber of non-union subcontractors to brick homes for Canada Homes and other residential develop­ers. The builders were promised access to the workers they needed to get the job done in an over­heated residential housing market. The subcontractors and their employees were promised quick and reliable payment for their services - although not necessarily at rates or subject to the same terms as would be prescribed by the MCAT agreement. Operating outside the MCAT agreement, the subcontractors would not have to meet its terms or restrictions, and, operating as a non-union broker, without employees, Canada Contracting could minimize its own obligations.

27. In 1986 Canada Contracting engaged fifteen crews employing between 175 and 200 workers. In 1987 Mr. DeRose was coordinating and supervising the engagement of some twenty-five subcontractors employing 300 to 350 employees. His "gross sales" in 1986 amounted to about $6 million - this we repeat with no real assets, equipment, credit facilities or direct employees. In

1987 his gross sales amounted to some $14 million. However, Canada Contracting does not build anything with its own forces. It is not the direct employer of any bricklayers or other construction workers. Its profit arises from the difference between what it receives from builders for supplying skilled tradesmen and what it pays to the non-union subcontractors for the supply of those trades­men's services. Canada Contracting prospers because it provides a vehicle to tap a source of non­union labour which can often be deployed in conjunction (rather than in competition) with the employees or subcontractors of Krest.

28. The business success of Canada Contracting as a non-union "broker" was immediately translated into a tangible financial return for its shareholders - that is, the spouses of the directors and owners of Krest. For his contribution of a moribund and somewhat tainted corporate shell, John Kosch, with no financial contribution whatsoever, had received by October 1987 the sum of $37,500.00 as a "bonus". Mrs. Reimer, who had contributed $1400.00, received as a bonus $53,000.00. Mrs. Galati who had contributed $400.00 received $15,0('0.00. For Mr. DeRose's con­tribution of $600.00 he took a bonus of $22,500.00 in addition to a salary of $60,000.00 in 1986 and $120,000.00 in 1987. His total 1987 bonus has yet to be determined.

29. Sanmar Sales (Margot Jahn and her two daughters) the biggest shareholder in Canada

Contracting with 4100 shares purchased at a price of $4100.00 in May 1986, had, by October 1987 received bonuses of $142,000.00. Yet, according to William Jahn, the President of Krest, his wife's incredibly successful investment, without any prior experience in the masonry contracting business and without any assistance from him or Krest, was never the subject of any discussion between them at all. That evidence, quite frankly, is simply not credible. If, as Mr. Jahn testified, his per­sonal finances were "tight" and financial difficulties made it impossible for him or Krest to repur­chase even the first $10,000 block of Mr. DeRose's shares in Krest, would he be oblivious or indif­ferent to the $142,000.00 paid to his wife's shell company, which had no other business activities except its investment in Canada Contracting, the company run by a former key man, director, and still shareholder of Krest, and which depended in so many ways upon Krest for its business suc­cess? We do not think so.

IV

30. Section 1(4) of the Act was enacted in 1971. It is designed to deal with situations where the economic activities giving rise to the employment relationships regulated by the Act are carried on via more than one legal entity. Where such legal entities are engaged in related economic activi­ties under common control and direction, the Board is entitled to "pierce the corporate veil" and treat them as one business and one employer for the purposes of the Act. The Legislature has determined that legal form should not dictate (and possibly fragment) an established collective bar­gaining structure; nor should corporate restructuring undermine established bargaining rights. Because of section 1(4), collective bargaining and collective agreement rights are not treated as co­extensive with the legal framework of the business and, to this extent, labour law policy seeks to insulate collective bargaining from disruption should the exigencies of the market prompt the employer to change the number or form of the legal vehicles through which it carries on its busi­ness. Indeed, as a result of a 1975 amendment, section 1(4) does not now require that related busi­ness activities under common control or direction be carried on simultaneously or contemporane­ously. That amendment reflects a legislative recognition that the essential unity and identity of a business (as opposed to its legal envelope) may be preserved even though the legal vehicles through which it may be carried on from time to time may not operate simultaneously.

31. A classic example of the "mischief' to which section 1(4) is directed can be illustrated by the situation considered by the Board in Napev Construction Ltd., [1976] OLRB Rep. Mar. 109, (application for judicial review dismissed May 24, 1977, Ont. Div. Ct., unreported). In that case, Napev, the principal company, was bound to a collective agreement with the Carpenters' union which, for reasons which need not be explored here, Napev found too restrictive. To avoid those contractual obligations the principals of Napev created a new and allegedly independent company named "Vepan" which entered into less onerous commercial and collective bargaining relationships, claiming, when challenged, that by virtue of the common-law principle of "privity of contract" it was not bound by any of the obligations previously undertaken by Napev. It was clear to the Board, however, that Vepan was not a truly independent business, but rather merely a device to avoid the restrictions of the Carpenters' collective agreement. The Board declared that Napev and Vepan were one employer for the purposes of the Act and an application for judicial review to the Divisional Court was dismissed.

32. We do not cite Napev as necessarily representative of the dozens of cases which the Board has considered over the years, nor, in our view, is it necessary, here, to undertake an exhaustive review of those cases. We mention Napev only because it illustrates a recurring problem in the construction industry to which section 1(4) was specifically directed: companies with estab­lished contractual relationships may find it advantageous to "spin off' related but purportedly independent companies which then carry on similar business activities either "non-union" or with more congenial collective bargaining partners.

V

33. In the instant case we have no doubt whatsoever that the requirements for a section 1(4) declaration have been met. Canada Contracting and Krest have been engaged in related business activities and, in practical terms, Canada Contracting remains under the control or direction of Krest - even though we acknowledge that Mr. DeRose has considerable freedom of action to develop the business. It is no accident that the principal shareholders of Canada Contracting just happen to be the spouses of the directors of Krest who have no previous experience in the con­struction business or any actual involvement in the running of Canada Contracting, yet receive remarkable rewards for their passive role. Nor is it merely coincidence that Canada Contracting has, so often, appeared on Krest job sites, working "non-union", bricking the less profitable houses, with materials or other services used, back-charged by and paid to Krest. On the evidence before us it is difficult to resist the conclusion that Canada Contracting is merely an instrument, controlled by Krest, enabling Krest to avoid the restrictions of its collective agreement and prosper from non-union activities. Canada Contracting provided the vehicle to tap a non-union work force, to be employed on less profitable houses but at the same time ensure that the profits generated from that activity flowed back to the principals of Krest. Had Mr. ])eRose sought independent financing (minimal as it was) and incorporated a company clearly independent of Krest, his previ­ous association with that firm, even as a "key man", might not have been very significant. But that is simply not the case here. Canada Contracting is not independent of Krest either legally or func­tionally.

34. On the basis of the evidence before us, we are satisfied that a section 1(4) declaration is warranted. We find that Krest and Canada Contracting are engaged in related businesses or activi­ties under common control or direction. The remaining question on this branch of the case, though, is when that section 1(4) declaration should be effective.

VI

35. The evidence before us establishes that the union was aware of Canada Contracting as early as June of 1986 when it became actively involved in residential projects and the union was conducting a strike. Union business agents approached Mr. DeRose to complain about his pres­ence on construction sites, warning that he would not "get away with it" although little or no effort was made to organize the "non-union" bricklayers working on those sites. Thereafter, there were discussions between the union and various members of MCAT, but no section 1(4) application was made. In other words, the union was well aware, two years ago, that Canada Contracting pre­sented a potential threat to its bargaining rights/work opportunities but chose not to pursue the remedy clearly open to it. Canada Contracting was allowed to develop and grow despite the union's current contention that it was merely a device to develop a non-union arm through the use of subcontractors. Business developed and flourished, contracts were entered into and completed, and relationships were established and terminated, while the union grumbled and complained but made no concrete effort to assert what it now claims are its statutory rights. It is understandable and indeed commendable that the union would seek an informal resolution of its concerns without resort to litigation, but there is also something to be said for the proposition that one should move promptly to assert one's statutory rights under section 1(4). We do not think (as the respondents argue) that a failure to move expeditiously should totally foreclose the applicant from the remedy it seeks, but we are sympathetic to the plea that, if we are disposed to exercise our discretion to make a section 1(4) declaration, it should have either no or limited retrospective effect.

36. In the instant case, the numbered company carrying on business as Canada Contracting has no direct employees. No section 1(4) declaration that we might make would directly affect any employment relationships established since its incorporation in February of 1986. No previously unrepresented employees would be "swept in" to an established bargaining relationship. Further­more, it is not at all clear what the result would have been if the expansion of Krest's business had to rely upon the union as the source of its labour requirements. It is common ground that the union had no unemployed members to send to Krest when it wanted to expand, so that any further requirements would have had to be satisfied through the recruitment of previously non-union workers or the engagement of subcontractors who previously had no union affiliation. That notional "unionized" expansion raises practical, speculative, and analytical problems which would have been entirely avoided if the union had moved quickly once it became aware of the potential erosion of its bargaining rights. We would not then have to speculate, as we now do, about what might have been or what would have been the case had Krest in 1986 expanded its business directly. Accordingly, while we do not fault the union for its efforts at a private resolution of its dispute with Krest, neither do we think it appropriate to give our section 1(4) declaration retro­spective effect to February 1986 when the numbered company first became engaged in the masonry contracting business. In our opinion, an appropriate balance of the competing commercial, collec­tive bargaining, equitable, and practical concerns, can be accommodated if our section 1(4) decla­ration takes effect as of the application date in this matter, and the date after which the respon­dents would have been clearly put on notice that their subsequent business activities might be affected by pending litigation.

VII

37. In view of our declaration that the respondents "Krest" and "Canada Contracting" are one employer for the purposes of the Act, and therefore both bound by the MCAT agreement, we find it unnecessary to consider the applicant's alternative argument that there has been a sale of part of Krest's business to Canada Contracting.