International Union of Bricklayers and Allied Craftsmen, Local 2 v. The Corporation of the City of Etobicoke Public Library Board, 1989 CanLII 2993

[1989] OLRB Rep. September 935

2718-87-R International Union of Bricklayers and Allied Craftsmen, Local 2, Applicant v. The Corporation of the City of Etobicoke Public Library Board, The Corporation of the City of Etobicoke, Respondents

BEFORE: Louisa M. Davie, Vice-Chair, and Board Members D. G. Wozniak and D. A. Patterson.

APPEARANCES: Bernard Fishbein, John Robbins and Louis Ponikvar for the applicant; Nancy A. Eber, Nancy M. Hall and Albert P. Singh for the respondent, The Corporation of the City of Etobicoke Public Library Board; M. P. Moran, L. A. S. Riddell and G. H. Metcalfe for the respondent, The Corporation of the City of Etobicoke.

DECISION OF LOUISA M. DAVIE, VICE-CHAIR AND BOARD MEMBER D. G. WOZNIAK: September 29, 1989

1. This is an application in which it is alleged that there has been a sale of a business from the Corporation of the City of Etobicoke ("the City") to the Corporation of the City of Etobicoke, Public Library Board ("Library Board"), and that the Library Board is the successor employer to the City in accordance with section 63 of the Labour Relations Act ("the Act"). In the alternative, it is alleged that the City and the Library Board carry on associated and related activities or businesses, are under common direction or control, and, for purposes of the Act, ought to be treated as one employer pursuant to section 1(4) of the Act.

2. At the conclusion of the evidence, and before the submissions of the parties, counsel for the applicant, International Union of Bricklayers and Allied Craftsmen, Local 2 ("the Union") indicated that the union would not be making any submissions or assertions in respect of the application filed pursuant to section 63 of the Act. As the union did not pursue that portion of its application, and having regard to the evidence before us, we hereby dismiss the union's application made pursuant to section 63 of the Act.

3. The union was certified as bargaining agent for all bricklayers, bricklayers' apprentices, stonemasons and stonemasons' apprentices in the employ of the City in the industrial, commercial and institutional sector of the construction industry in the Province of Ontario, and in Ontario Labour Relations Board Area No. 8 for all other sectors of the construction industry by certificates dated November 8, 1983. As a result, the City is bound to the collective agreement between the International Union of Bricklayers and Allied Craftsmen and the Masonry Industry Employers Council of Ontario, effective from May 1, 1986 to April 30, 1988 ("the collective agreement").

4. In the fall of 1987, certain construction commenced at a site known as the Elmbrook Park Library in the City of Etobicoke. The union grieved that the City was in violation of the collective agreement because the construction work performed at that site fell within the collective agreement and was not being performed in accordance with the terms of that collective agreement.

That grievance was referred to arbitration before this Board (OLRB File 2367-87-G) and was ultimately adjourned sine die on December 4,1987. This application was filed on January 5, 1988. For purposes of this application the parties have agreed that the "type" of work performed at the Elmbrook Park Library site is the "type" or "kind" of work encompassed in the collective agreement. The parties have not agreed that the work performed at the Elmbrook Park Library was in fact covered by the collective agreement, or was performed in violation of that collective agreement. The resolution of that issue ultimately will have to be determined by the panel of the Board which hears the grievance.

5. The City is a municipal corporation. It carries on the business of a municipal corporation and provides a wide variety of municipal services to residents of the City as permitted or required by the Municipal Act S.O. 1980, c. 302 as amended and various other statutes.

6. The Library Board is also a creature of statute. It was established by By-Law of the Municipal Council of The Corporation of the Township of Etobicoke dated January 10, 1950 (ByLaw 7844). That By-Law was passed pursuant to predecessor legislation to the current Public Libraries Act 1984, 8.0. 1984. c. 57 as amended ("Public Libraries Act"). After the creation of the Borough of Etobicoke, by By-Law dated January 4, 1967, the public libraries established by ByLaw No. 7844 were continued as public libraries of the Borough of Etobicoke and were placed "under the management, regulation and control of the Etobicoke Public Library Board." In accordance with the statutory requirements found in section 3 of the Public Libraries Act, the current Library Board is a corporation known as The Corporation of the City of Etobicoke Public Library Board. Subsection 3 of that section of the Public Libraries Act states:

(3) A public library shall be under the management and control of a board, which is a corporation known as "The (insert name of municipality) Public Library Board".

7. The Library Board is composed of nine members. Pursuant to section 9(3) of the Public Libraries Act, each of those members is appointed by the Municipal Council of the City ("City Council"). Of the nine members so appointed, two are appointed on the recommendation of the Board of Education, while one is appointed on the recommendation of the separate School Board. The Public Libraries Act dictates that a majority of the members of the Library Board cannot also be members of the City Council. Section 10(2) of the Public Libraries Act states:

(2) The appointing council shall not appoint more of its own members to a board than the number that is,

(a) in the case of a public Library Board or union board, one less than a majority of the board.

In the present case, four of the nine members of the Library Board are also members of the City Council. There is no distinction in the roles played between members of the Library Board who are also members of the City Council and the other members of the Library Board. In making appointments to the Library Board, the City Council both advertises for and interviews prospective Board members.

8. The functions of the Library Board are set out in section 20 of the Public Libraries Act as follows:

9. A board,

(a) shall seek to provide, in co-operation with other boards, a comprehensive and efficient public library service that reflects the community's unique needs;

(b) shall seek to provide library services in the French language, where appropriate;

(c) shall operate one or more libraries and ensure that they are conducted in accordance with this Act and the regulations;

(d) may operate special services in connection with a library as it considers necessary;

(e) shall fix the times and places for board meetings and the mode of calling and conducting them, and ensure that full and correct minutes are kept;

(f) shall make an annual report to the Minister and make any other reports required by this Act and the regulations or requested by the Minister from time to time;

(g) shall make provision for insuring the board's real and personal property;

(h) shall take proper security for the treasurer; and

(i) may appoint such committees as it considers expedient.

Apart from the Elmbrook Park Library, the Library Board operates ten libraries and a bookmobile service for shut-ins. Apart from the Elmbrook Park Library, the Library Board owns or leases both the land and buildings required to operate each of these ten libraries. In the case of the Elmbrook Park Library, the land is owned by the City.

9. In order to carry out its function, the Library Board has enacted certain by-laws for the regulation of its business. These indicate that the Library Board has its own corporate seal, its own offices (separate and distinct from the facilities of the City), carries on its own regular and special meetings to carry out its business, has developed rules and regulations in respect of those meetings, elects its own officers, establishes its own committees and task forces, operates its own bank account, and appoints its own Chief Executive Officer and Secretary/Treasurer.

10. The administrative or organizational structure of the Library Board is operated in a manner different and distinct from the administration and organizational structure of the City. The Library Board has its own Personnel Department which carries out all of the personnel functions of the Library Board including the recruitment and hiring of personnel, and the development and general administration of the personnel policies of the Library Board. The personnel policies of the Library Board, including the working conditions, salaries and benefits of employees are approved by the Library Board before implementation. These are distinct from the personnel policies of the City and do not necessarily mirror the policies of the City. For example, the contracts of insurance in respect of employee benefits are entered into by the Library Board and provide for benefits that are different from those provided to the employees of the City. The Library Board is not party to any collective agreement. The employees of the City on the other hand are unionized and are covered by a collective agreement between C.U.P.E. and the City. Employees at the Library Board are members of two staff associations. The Chief Executive Officer of the Library Board meets regularly with each of these two associations to discuss matters relating to terms and conditions of employment.

11. The Library Board also has its own Business Administration Department. This department performs all the accounting functions of the Library Board including its payroll, accounts payable and purchasing. The department is responsible, inter alia, for preparing the operating and capital budgets for the Library Board, preparing its monthly financial statements, and preparation of the annual financial report for the Board's auditors. The auditors of the Library Board are also the auditors for the City. This result is mandated by the provisions of the Public Libraries Act and of the Municipal Act. Save for the common auditors, the day-to-day financial affairs of the Library Board are handled in a manner separate and distinct from the financial affairs and operations of the City. The Board has its own payroll, issues paycheques in its own name, and makes its own remittances to the Receiver General. There is no interchange of employees between the Library Board and the City.

12. The Library Board has its own Purchasing Department which is responsible for the purchasing of all goods and services. The Library Board purchases certain services such as janitorial, landscape, snow removal and security services from outside contractors. It does not purchase any of these services from, or in co-operation with the City. It does not own any equipment or supplies in co-operation with the City. It does not lease any equipment or supplies from the City. The Library Board also operates its own Physical Facilities Department which is responsible for the maintenance for all library property and buildings. The Library Board has its own Publicity and Technical Services Department, has its own computers and operates its own computer programs. The letterhead, colours and logos of the Library Board are different from those of the City.

13. By reason of section 15 of the Public Libraries Act, the Library Board has appointed a Chief Executive Officer who has "general supervision over and direction of the operations of the public library and its staff." Section 15 of the Public Libraries Act states:

15.-(1) A board may appoint and remove such officers and servants as it considers necessary, determine the terms of their employment, fix their remuneration and prescribe their duties.

(2) A board shall appoint a Chief Executive Officer who shall have general supervision over and direction of the operations of the public library and its staff, shall attend all board meetings and shall have the other powers and duties that the board assigns to him or her from time to time.

(3) A board shall appoint a secretary who shall,

(a) conduct the board's official correspondence; and (b) keep minutes of every meeting of the board.

(4) A board shall appoint a Treasurer who shall,

(a) receive and account for all the board's money;

(b) open an account or accounts in the name of the board in a chattered bank, trust company or credit union approved by the board;

(c) deposit all money received on the board's behalf to the credit of that account or accounts; and

(d) disburse the money as the board directs.

(5) The same person may be both the secretary and the treasurer, and the Chief Executive Officer appointed under subsection (2) may be the secretary and may be the treasurer.

The Library Board's own by-laws outline the duties and responsibilities of the Chief Executive Officer, Treasurer and Secretary in a manner similar to, and consistent with these statutory provisions.

14. In the present instance, Mrs. Hall holds all these positions and has done so for nearly a decade. Mrs. Hall obtained this position after responding to an advertisement in the newspaper and attending several interviews. The advertisement had been placed by the Library Board. Mrs. Hall made application to the Library Board, was interviewed by members of the Library Board (who were not then members of City Council) and was subsequently notified by the Library Board that she was the successful candidate. Mrs. Hall's appointment was not placed before, or otherwise approved by City Council although her salary did have to be approved by City Council.

15. Based primarily on the totality of this evidence, counsel on behalf of the Library Board and the City asserted that there is no functional relationship in the day-to-day administration or affairs of the Library Board and the City. It was their submission that, in terms of the primary or principal function of the Library Board, namely the delivery of a "comprehensive and efficient public library service that reflects the community's unique needs", the Library Board was a corporate entity that, in its day-to-day operations, was functionally independent from the City. The thrust of the submissions made on behalf of the City and the Library Board was to the effect that, in respect of the construction of the Elmbrook Park Library, there was no greater functional relationship between the City and the Library Board than there existed in any other aspect of the Library Board's operation. As a result, it was argued that a common employer declaration ought not to be made in the circumstances of this case.

16. Counsel for the applicant disputed that characterization of the facts. The primary focus and thrust of the applicant's case was that in general terms the City and the Library Board were functionally and economically inter-related and integrated. More specifically however, in respect of the construction of the Elmbrook Park Library this functional and economic inter-relationship was so extensive that, in order to preserve the bargaining rights which have been acquired by the applicant, a section 1(4) declaration ought to be made by this Board. The applicant's counsel placed particular emphasis on the economic dependence of the Library Board upon the City both in terms of the Library Board's day-to-day operations, and in respect of the construction of the new library facility at Elmbrook Park.

17. The evidence and submissions of the parties in respect of the economic relationship between the City and the Library Board, both in general terms and in respect of the construction of the Elmbrook Park Library, were extensive and, in view of the respective positions of the parties, require particular attention. That evidence and those submissions must be examined in the context of the statutory framework in which the City and the Library Board exist, namely the Public Libraries Act and the Municipal Act.

18. The relevant provisions of the Public Libraries Act are as follows. Pursuant to section

19 the Library Board may, with the consent of the City Council acquire real property.

19.-(1) A board may, with the consent of the appointing council or, where it is a union board, the consent of a majority of the councils of the municipalities for which it was established,

(a) acquire land required for its purposes by purchase, lease, expropriation or otherwise;

(b) erect, add to or alter buildings;

(c) acquire or erect a building larger than is required for library purposes, and lease any surplus part of the building; and

(d) sell, lease or otherwise dispose of any land or building that is no longer required for the board's purposes.

19. Section 24 imposes upon the Library Board an obligation to submit to the City Council an annual budget. Pursuant to the provisions of that section the budget, (or some portion of it) is approved by the City Council and thereafter the Library Board must spend the monies approved and paid to it by the City Council in accordance with the budget submitted and approved. The Library Board may only spend the money paid to it in a manner different than the budget with the approval of the City Council. (See also section 71(17) of the Municipal Act R.S.O. 1980 chapter 302 as amended).

Pursuant to section 24(7), the annual financial statements of the Library Board must be submitted to City Council and must be audited by an auditor appointed by the City Council under section 88 of the Municipal Act. The evidence in this case indicates that although the auditors for the Library Board are appointed by the City Council, those auditors are paid by the Library Board and report to the Library Board.

20. Section 25 of the Public Libraries Act authorizes the issuance of Municipal debentures for the purpose "of acquiring land, for building, erecting or altering a building or for acquiring books and other things required for a newly established library." That section states:

25.-(1) Subject to the approval of the Ontario Municipal Board, the sums required by a public Library Board or union board for the purposes of acquiring land, for building, erecting or altering a building or for acquiring books and other things required for a newly established library may, on the application of the board, be raised by the issue of municipal debentures.

(2) The board's application shall be made to the council or councils of the municipality or municipalities for which the board was established.

(3) The council or, if more than one, each of the councils, at the first meeting after receiving the application or as soon thereafter as possible, shall consider and approve or disapprove it, and if a vote in any council results in a tie, the application shall be deemed to be disapproved by the council.

(4) If the council, or a majority of the councils where there are more than one approves the application and the Ontario Municipal Board approves it, the council of the municipality or, if more than one, the council of the municipality that has the greatest population shall raise the sum required by the issue of debentures in the manner provided by the Municipal Act, or, if it so desires, the council of any municipality may raise its proportion of the sum required by the issue of its own debentures.

21. In addition to these sections which deal specifically with the economic relationship between the City and the Library Board, the other relevant provisions of the Public Libraries Act are as follows: 23(4)(f) which empowers the Library Board to make rules "regulating all other matters connected with the management of the library and library property."; Section 30 which authorizes the Ministry of Citizenship and Culture to make grants to the Library Board "out of legislative appropriations for library purposes,"; Section 42 which empowers the Ministry of Citizenship and Culture to dissolve the Library Board in which case the assets and liabilities of the dissolved Library Board are "vested in and assumed by the Municipality ..." (section 42(3)).

22. In respect of the debentures issued to build the Elmbrook Park Library, we were referred to certain provisions of the Municipal Act and the Municipality of Metropolitan Toronto Act R.S.O. 1980 chapter 314 as amended. These provisions, and the evidence before us indicate that neither the Library Board nor the City have the requisite authority to raise money through the issuance of municipal debentures. Although the Library Board may request or apply to the Municipality of Metropolitan Toronto, and ultimately to the Ontario Municipal Board, for approval for the issuance of such debentures, the debentures are issued in the name of the Municipality of Metropolitan Toronto. The money so raised or borrowed is "charged back" to the City. In respect of the debentures issued for the construction of the Elmbrook Park Library, the City in turn "charged" its debt charges in respect of the debentures "back" to the budget of the Library Board.

23. The evidence before us indicates that in its day-to-day financial and economic matters, (and leaving aside for the moment the economic or financial aspects relating to the construction of the Elmbrook Park Library) the Library Board operates in a manner consistent with this statutory framework.

24. In excess of 86 percent of the Library Board's operating budget for the 1986 fiscal year came from the City. Approximately 7.5 percent of its revenue that year came from provincial grants, while approximately 4.5 percent was obtained as revenue from such sources as fines, photocopying charges, rental fees, etc. The remaining amount was listed in the budget as "other income". These percentages are typical of the manner in which the Library Board obtains its monies from year to year.

25. In order to acquire the money from the City, for either operating expenses or capital projects, the Library Board must go through a budgetary process. Although we heard much detailed evidence about this budgetary process, for purposes of this application the process may be simplified as follows. Once a year the staff of the Library Board generates its own operating capital budgets. The budget developed by the staff is ultimately placed before, examined and eventually approved by the committee of the whole of the Library Board. After approval by the Library Board, the budgets are submitted to the Treasurer of the City. The budget is then assigned to a controller of the City who, examines and reviews the Library Board's budgets, discusses those budgets with the senior staff of the Library Board, and in particular with Mrs. Hall. That controller ultimately makes recommendations in respect of these budgets to the Budget sub-committee of the Board of Control for the City. This Budget sub-committee then makes its recommendations in respect of the budgets to the Board of Control which, after its examination ultimately makes its recommendations in respect of these budgets to City Council. City Council then either approves or disapproves the budgets of the Library Board which are before it.

26. At the various stages of this budgetary process, the staff of the Library Board, (and particularly Mrs. Hall), have an opportunity to make representations and discuss or debate the budgets and any budgetary concerns with the appropriate individuals. The Library Board need not accept the various recommendations of those city officials who examine the budget and move it along until its ultimate placement before the City Council. A certain amount of lobbying between and amongst the persons involved in the process takes place. That lobbying may include a certain degree of political lobbying. In the end result a number of adjustments, amendments and compromises are made to the budgets initially developed internally by the Library Board before those budgets are ultimately approved by the City Council.

27. Although the budgetary process for both the capital and operating budgets are the same, we note that the budgets do not go through the process simultaneously. We note also that any adjustments to the operating budget made during this process tend to be "bottom-line" only adjustments. Typically, these consist of the Controller, Budget Sub-Committee of the Board of Control, the Board of Control or the City Council itself advising the Library Board that it must reduce its "bottom-line" before the budget will be recommended or approved. The Library Board then makes any appropriate adjustments it feels necessary. Adjustments, changes or amendments to the capital budget on the other hand tend to be much more item specific.

28. On the basis of the facts outlined thus far, counsel for the union submitted that there was common direction and control of the two entities. Counsel asserted that the City had fundamental control in the composition and constitution of the Library Board. The City appoints all members and four of the nine Library Board members are also members of the City Council. Moreover, it was asserted, that the City by reason of the various legislative provisions dictates how the Library Board obtains its funds. Through its involvement with, and control of, the budgetary process the City controls how those funds are spent. The fact that the City does, and by reason of statute must approve both the operating and capital budgets of the Library Board, in essence means that the City controls everything including such essential matters as the number of persons employed and the equipment purchased by the Library Board. Put colloquially, the gist of counsel's submissions in this regard was that, as the City pays the piper, it was the City which chooses the music which the piper plays. The City's control of the "purse strings" amounted to "control" within the meaning of section 1(4) of the Act. The substance of counsel's submissions was that the Public Libraries Act clearly indicated that the Library Board is, to use counsel's terminology, "crucially and fundamentally" dependent on the City for its creation, composition and how it operates. Counsel pointed to the difference between the Library Board and, for example the Board of Education which is comprised of elected, not appointed members, and whose budget must be approved by the City which merely collects the revenue required by the Board of Education through specified local taxes.

29. For their part, counsel on behalf of the Library Board and the City characterized the financial or economic relationship between the City and the Library Board as one compelled by statute. Counsel emphasized that the same statute which mandates this financial relationship also mandates that the management and operations, the "direction or control" (within the meaning of section 1(4) of the Act) of the two entities be separate. Each entity has been recognized by the legislature as a separate corporate entity, managed by its own board (or council). By reason of the legislation, the Library Board does not, and cannot have a majority of its members as members of City Council. Counsel characterized the Library Board as having all of the management control of a person. It was argued that it is the Library Board which "controls" how to spend the money that comes into its possession, subject only to the statutory caveat that, at the beginning of each fiscal year it submits a budget to the City council to indicate how it intends to spend the funds received. Thereafter it spends those funds in compliance with that budget. Counsel describes the various statutory provisions as no more than "safe-guards" or "checks" on public funds with the City, in essence being no more than a "banker". Counsel submitted that the statutory framework must be considered not only in determining whether there is common direction or control of associated or related activities, (which it was submitted there was not) but also when determining whether the Board ought to exercise its discretion and make a common employer declaration in the event we determined that the three preconditions are present in the circumstances of this case.

30. In this regard counsel also referred to an agreed fact amongst the parties that there are a number of municipalities in the Metro area which have collective agreements covering municipal employees and within those same municipalities there are Library Boards which also have separate collective agreements as separate parties and not as part of the municipality. Again we note that although the municipal employees of the City are covered by a collective agreement with C.U.P.E., employees of the Library Board are not unionized. Counsel argued that these circumstances indicate that, in respect of these two respondents and within the labour relations community generally, there has been a recognition that the municipalities and the Library Boards operated within municipalities are separate employers. In essence, counsel argued that this development of separate bargaining structures was the result of the statutory framework which compels that the entities be treated as separate employers each subject to the direction and control of its own Board of Directors or Council and its own management structure.

31. We will address the submissions of counsel in respect of that issue, together with their submissions in respect of the law, after we have examined the facts and circumstances surrounding the construction of the Elmbrook Park Library. In our examination of those facts and circumstances we will also set out the submissions of the parties with regard to the "interpretation" of those facts and circumstances, and the conclusions we ought to reach or the inference which should be made from those facts and circumstances given their surrounding context.

The Elmbrook Park Library

32. Although the evidence discloses that there had been some thought and/or discussion amongst staff and members of the Library Board with regard to establishing a public library in the area west of Highway No. 427 prior to 1983, the starting point for our purposes is 1983. In fact, at least two reports (including a set of planning criteria for branch libraries prepared in April 1981) had been prepared by the library before 1983. In 1983 a report entitled A proposal for the delivery of Public Library Service in the City of Etobicoke west of Highway No. 427 was approved by the Library Board. As a result, in its capital budget request to the City in 1984, the Library Board included a request for funds to construct a free-standing building of 4,000 square feet on half an acre of property in an area north of Rathburn and west of Highway No. 427. Notwithstanding the approval of that capital expenditure by the sub-committee of the Board of Control and the Board of Control itself, when the matter was placed before the City Council, the money required for the construction of such a library was not approved by the City Council. As a result, the proposed library was not constructed.

33. This was only the first hurdle on the road which ultimately led to the construction of a library in the area west of Highway No. 427. Subsequent events showed that there would be a number of other obstacles to overcome before the library was built. We note that, notwithstanding the City's refusal to allocate funds, by motion 84-165 of the Library Board, the Library Board determined:

THAT capital funding for the Neighbourhood Branch, Centennial Park Area, (West of Highway #427/South of Highway #401), as deleted by Council in 1984, be requested in 1985 at an appropriate designated amount to be determined.

From this we can infer that, although the City Council had not approved the funds in 1984, the Library Board intended to ask for the money again in 1985. The concept or idea of a library in the area West Highway No. 427 was therefore not, as least from the perspective at the Library Board, a dead issue. Indeed, on May 8, 1985 a group of citizens from the Eringate area appeared before the Library Board requesting library service in their area.

34. On July 31, 1985 the City clerk wrote a letter to the Director of the Library Board. His letter enclosed a letter from a resident "requesting the establishment of the public library in the Eringate subdivision". In his letter, the City clerk advises the Director that:

This letter was before Council, at its meeting held on July 29th, and was referred to you for a report to the Board of Control. In this regard, Council would like to know the status of the matter, and any detail information you can provide.

• What research has been done by the Board to date.?

• Are you pursuing the use of vacant schools, stores, etc.?

• What alternatives have been investigated.?

• What are the costs involved.?

As a result, the Library Board prepared for the Board of Control a report dated August 16, 1985.

35. Counsel for the Bricklayers submits that these circumstances disclose the involvement of the City at the very beginning of the process which ultimately resulted in the building of the library in Elmbrook Park. Counsel argues that the Elmbrook Park Library was not initiated by the Library Board, but rather came about because the City as a result of a citizen's complaint, "resuscitated" or "breathed life" into a project which it had previously turned down. In support, counsel points to the contents of the letter from the City clerk which in effect says "what are you doing about this". He argues that it is significant that the letter from the City clerk does not merely say "we will now agree a library is needed in the area, here is the necessary funding." Equally significant, counsel suggests, is the response of the Library Board to this request. The Library Board does not in its report to the Board of Control respond that it will build the library, (as it had originally suggested in its request for capital funding to the City in 1984) and request the necessary funds. Rather, the Library Board in its report to the Board of Control merely specifies what steps have been taken to date, outlines the alternatives which have been investigated and the cost associated with those alternatives.

36. For their part, counsel for the respondents argue that this set of facts and circumstances indicate that the concept or idea of the library in the area west of Highway No. 427 originated with the Library Board. It was submitted that the Library Board identified the need for a library in this geographic area, and otherwise laid the ground work and prepared the background material which eventually led to the establishment of a library in this area. Counsel disputes the characterization that the City breathed life into a project which it had previously derailed. It is argued instead that the proper interpretation is that the Library Board, having had an earlier set-back when the City failed to approve the capital expenditure, seized upon a fresh opportunity to push its ideas. Viewed from this perspective, it was argued that if the Library Board did not itself wish to build a library in that area, or if it did not see a need for further library services, the Library Board would merely have responded that it would not build the library. Pursuant to statute, it is the Library Board which is ultimately responsible for providing library services.

37. The report of the Library Board dated August 16, 1985 was considered by the Board of Control at its meeting on August 21, 1985. In its report the Library Board identified six alternatives and provided to the Board of Control the capital costs and operation costs for each of these alternatives. The alternatives range from the construction of a free-standing building on land to be purchased, to the erection of portable structures on a serviced location yet to be acquired. The Library Board concludes the report by stating:

With respect to its Capital Programme for 1986, the Library Board will be giving serious consideration to the two alternatives which will best meet the needs of local residents:

Alternative 1. Free standing building on land to be purchased

Alternative 2. Lease space in a mall or plaza

38. After receipt and consideration of the report, the Board of Control "requested the Library Board to obtain more specific information with regard to provincial grants applicable to library services. When this additional information has been received by the City, a special meeting of the Budget sub-committee will be convened to consider the Library Board's request for a library facility west of Highway 427."

39. Thereafter, at a special meeting at the Library Board held on September 4, 1985, the Library Board determined that it favoured the alternative by which the Library Board would lease space in a plaza or mall for the operation of a library in the area west of Highway No. 427. By letter dated September 5, 1985, the Library Board conveyed to the Secretary of the Board of Control information regarding the availability of provincial grants together with the information that the Library Board "favours Alternative 2 (lease space in a plaza or mall)." That letter concludes with an indication that "the Library Board would appreciate a meeting of the Budget sub-committee as soon as possible and hopes that favourable consideration will be given to this request."

40. A special meeting of the Budget sub-committee was held on September 25, 1985. At the conclusion of their deliberations the Budget Sub-Committee made the following recommendations:

(1) That the City Treasurer determine the financial implications of a 20 year lease on rental property as opposed to constructing a new building.

(2) That the Director of Industrial Development and the Commissioner of Parks and Recreation Services determine if there is any vacant City property west of Highway 427 which would be suitable for a library.

(3) That the City Treasurer and the Library Board review the reserve accounts of the Library Board to ascertain if any funds could be made available for the lease/construction of a building for library purposes.

(4) That the information requested in (1) to (3) and any other information staff may feel is pertinent, be referred to the 1986 Budget Sub-Committee for consideration during its review of Capital requirements for 1986.

These recommendations were subsequently approved by the Board of Control and thereafter by the City Council at its meeting on October 9, 1985. When cross-examined in respect of these circumstances, and in particular when asked why these recommendations concerning the exploration of other alternatives was necessary in view of the fact that the Library Board had already indicated its preference for locating the library in leased space in a mall or plaza, Mrs. Hall responded "I think it's the natural inclination of the sub-committee to explore all alternatives. They weren't satisfied that all alternatives have been pursued. They were particularly concerned with [Alternative] No. 1 [freestanding building]... The long-term implications of Alternative No. 1."

41. Notwithstanding the Library Board's initial preference to locate the library in leased space in a shopping plaza or mall, the library was eventually built as a freestanding structure on park land owned by the City. When asked how that change came about Mrs. Hall indicated that the Library Board began to have second thoughts about the library being located in leased space in a plaza. The plaza in which the Library Board intended to locate the library is across the road from the park where the library was eventually built. The Library Board intended to locate the library in a small addition put on that plaza. Mrs. Hall indicated that when the Library Board had the opportunity to view the plans and drawings for the plaza, the site became less desirable because of certain parking and traffic problems. The Library Board's realization that perhaps the plaza location would not be suitable came at approximately the same time during which City Council requested the City Treasurer to examine the long-term financial implications of the lease versus ownership proposal. The Library Board also considered this data and determined that a freestanding structure located on City property would be preferable. This evidence was not contradicted or challenged. There was evidence to suggest that the Library Board initially favoured the lease option because it was the one which the Library Board perceived as being the option which would be most acceptable to City Council in view of its earlier rejection of the freestanding building. On cross-examination Mrs. Hall did indicate that the City Treasurer had advised her that "it might be appropriate to drop the leasing alternative and in all probability it wouldn't fly." She further testified that the Library Board was more concerned about making sure that approval for the library was granted so that a library was operated in the area. It was less concerned with whether the library was in leased space in a mall, or a free standing building.

42. Based on these facts and circumstances, the respondents assert that it was the Library Board which determined whether to lease or own the property required for the library. Counsel for the union on the other hand points to these facts as indicators of the type and amount of control which the Board of Control and City Council exert upon the Library Board and upon the construction of this library facility. Counsel points to the evidence of Mrs. Hall that the Board of Control was ''not satisfied all alternatives had been pursued.'' It was the Board of Control therefore which required further information. Moreover, the Board of Control and the City Council directed that the additional information which it required before determining how it would proceed came from employees of the City and not employees of the Library Board. Thus, for example, the Board of Control and Council directed the City Treasurer, and not the Library Board, to examine the financial implications of a twenty-year lease on rental property as opposed to constructing a new building. Similarly, the City Treasurer was directed, together with the Library Board, to review the Reserve Accounts of the Library Board to determine if any funds could be made available for this library project. The Director of Industrial Development and the Commission of Parks and Recreation, and not the Library Board, were directed to determine if there was any vacant City property west of Highway No. 427 suitable for the library. Counsel asserts that it is only after the City Treasurer advises against the lease option that the Library Board discontinues to favour the option that it had initially preferred. In reply, counsel for the City submitted that the actions of the City in this respect were no more than the exercise of those duties and responsibilities which the City is required to perform as a watch dog of the "public purse

43. After the City Council meeting, Mrs. Hall discussed with the City Treasurer the availability of funds in the Reserve Accounts of the Library Board. It was agreed that funds for the new library were not available in the Reserve Accounts. In addition, some time in March 1986, Mrs. Hall met with both the Director of Industrial Development and the Commissioner of Parks and Recreation Services to discuss the availability of City owned property. Mrs. Hall and the Director of Industrial Development eliminated all City owned land as being unsuitable. After examining a map of all the parks in the area, Mrs. Hall and members of her staff looked at each of the parks to determine the parks' suitability for a library and, as stated by Mrs. Hall, "... I eventually got back to the Commissioner of Parks that Elmbrook Park was the only suitable park location." The Commissioner agreed with that assessment.

44. Although the Commissioner of Parks agreed that Elmbrook Park was a suitable location for the library, a dispute arose between the Commissioner of Parks and Recreation Services and the Library Board as to where, within the park, the library should be located. For reasons relating to its own planning criteria the Library Board preferred to locate the library in the southeast corner of the park. The Commissioner on the other hand wanted to see the library located in the north-east corner of the park. It required numerous meetings and further reports before that dispute was ultimately resolved. Counsel for the applicant argues that the process by which the south-east corner of the park was eventually determined as a location for the library is instructive to illustrate the type and the degree of control which the City exercises over the Library Board and the ultimate construction of this library. In our view, the exact nature of this dispute or a chronological recitation of the events until the dispute was ultimately resolved is not necessary. Suffice to say that each of the parties marshalled various reports to support or substantiate their position in respect of the optimum location of the library within the park. The Library Board engaged the services of an architectural firm to prepare a report which was then submitted to City Council. That report supported the Library Board's position that the library be located in the south-east corner of Elmbrook Park. Ultimately, on September 2, 1986, the general committee of City Council recommended (in favour of the Library Board's position) that the south-east corner of the park be provided for the library. This recommendation was adopted by the City Council at its meeting on September 8, 1986.

45. Counsel for the respondent asserts that this sequence of events confirm that it was the Library Board which identified the criteria for this site and selected the site on which the library was constructed. Counsel for the applicant on the other hand submits that the sequence of events disclose little more than a "power play" with the City making the ultimate decision as to where the library should be located. Counsel characterized the report from the architectural firm as a means used by the Library Board to back-up its position and convince City Council. Counsel argues this is yet another example of the City's pervasive influence. He submitted that if the Library Board were truly autonomous, the numerous meetings and reports would not have been necessary or relevant.

46. Given the statutory provisions, and in particular section 19 of the Public Libraries Act which empowers the Library Board to acquire land and erect buildings "with the consent of the appointing Council" it is not surprising that the City ultimately determines (to use a somewhat neutral term) the site upon which the library was built. In addition, because the City owns the land upon which the library is to be built, it is not unusual that the City should have some say as to where, upon its property, the building is to be located.

47. Before examining the facts relating to the "construction" aspects of the library including the selection of the architect, the tendering process and the construction contract, we turn briefly to address certain issues which are secondary to the dispute between the parties relating to the construction of the library in the Elmbrook Park. These issues include the lease arrangements between the City and the Library Board in respect of the property, certain By-Law exemptions and matters relating to a waiver of the site-control agreement by the City.

48. Once the Elmbrook Park site had been agreed upon as being the optimum location for the library (although the exact location of the library within the park had not yet been determined) the City made application to the Committee of Adjustment for a variance to allow a library facility in the park. There had been some suggestion that there was a need to rezone the park lands to allow for construction of the proposed library. Although the park lands were zoned in such a manner as would normally allow the construction of libraries in the park, a site specific By-Law exempted certain institutions, including schools and libraries from being erected on that site. The same site specific By-Law on the other hand permitted the erection or construction of "public" buildings. The definition of "public" buildings specified "municipal, provincial or federal government buildings, fire halls, parks and playgrounds, community centre." On July 24, 1986, the Committee of Adjustments determined that a library facility fell within the "public" building exemption and that a zoning variance was therefore not required. Counsel for the applicant argues that it is significant that the City, and not the Library Board makes the application to the Committee of Adjustments. He argues that it is equally significant that the zoning change is not required because the library is a "public" building.

49. The application for site plan approval for the construction of a library facility was made on behalf of the Library Board by the architectural firm which had been engaged by the Library Board. That application for site plan approval was approved by the development committee on January 28, 1987 and adopted by Council (thereby approving the site plan) on February 9, 1987. The approval of the application for site plan's approval stated, inter alia,

THAT an application by the Etobicoke Public Library Board for site plan approval for the construction of a 1-storey library building at the north-west corner of Renforth Drive and Elmbrook Crescent be approved, subject to fulfilment of the following conditions prior to the issuance of a building permit:

1. That the requirement for the signing and registration of a Site Control Agreement be waived.

Counsel for the applicant union addressed the fact that the requirement for the signing and registration of the site control agreement was waived. A site control agreement is usually required. The site control agreement was described as an agreement between the City and the developer about what is built on the site. In cross-examination, when questioned on this matter, Mr. Gillespie, the City Clerk gave various reasons why the site control agreement was waived. Included in those reasons was the fact that City Council felt the agreement was not necessary in view of the fact that it had already seen the site plan. Mr. Gillespie also stated however, that it was not unusual to waive the site control agreement where the City was dealing with an "affiliated" or "local board". We note that the Library Board is a "local board" within the meaning of the Municipal Affairs Act.

50. Counsel for the union submitted that the fact that the City waived the site-control agreement, after receipt of a report by its own Commissioner of Planning, and Mr. Gillespie's answers in cross-examination in respect of this matter are facts which point to the issues of common direction or control and the matter as to whether the respondents are engaged in associated or related activities and the exercise of our discretion.

51. We view as relevant the terms of the construction By-Law passed by the City on May

19, 1987. Mr. Gillespie testified that the construction By-Law is necessary as it authorizes construction upon City owned lands. Such a By-Law is required in all instances where something is to be constructed upon City owned lands notwithstanding the fact that the lands may ultimately be leased by the City to a different entity. Mr. Gillespie further testified that the requirement of a site-control agreement was waived in the circumstances of this case because the City had passed the construction By-Law. The inference we draw from that is that with the construction By-Law in place, a site-control agreement was superfluous. The relevant terms of the construction By-Law are as follows:

THE MUNICIPAL COUNCIL OF THE CORPORATION OF THE CITY OF ETOBICOKE ENACTS THE FOLLOWING:

1. THAT the construction of a library to serve the area west of Highway 427 be authorized at a total estimated cost of $771,250.00, of which amount $408,010.00 is to be debentured, $205,940.00 is to be paid by subsidies and $157,300.00 is to be paid by the 1986 Tax levy, Capital from Levy - Library, Account No. 1321-883-0.

2. THAT the subject library be constructed in accordance with plans, profiles and specifications and such information as may be necessary for the making of a contract for the execution of the work.

3. THAT the work shall be carried on and executed under the superintendence and according to the directions of the Public Library Board of the City of Etobicoke.

4. THAT the Public Library Board of the City of Etobicoke be authorized to cause a contract for the construction of the work to be made and entered into with some person or persons, firm or corporation subject to the approval of this Council to be declared by resolution.

[emphasis added]

52. Mrs. Hall testified that from the perspective of the Library Board the passage of the ByLaw was significant because it permitted the Library Board to call for tenders. We will refer to the terms and significance of the construction By-Law when addressing matters relating to the tendering and funding for the construction of the library.

53. At its November 27, 1986 meeting the Library Board passed the following resolution:

That staff be authorized to proceed with the development of the lease for the property at Elmbrook Park, such lease agreement to be submitted to the Board for approval prior to signature.

Thereafter, following certain correspondence between the property agent of the City and the Deputy Director of the Library Board, a lease was ultimately signed on March 13, 1987. That lease is between the City and the Library Board and contains the following provisions:

2. To have and to hold the Lands (including all buildings, fixtures and improvements from time to time upon or appurtenant to the Lands) for and during an indefinite term to be computed from the day of July 1, 1987, and from thenceforth ensuing and continuing until the earlier of:

a) three (3) years from the date hereof should construction not have been commenced by the Lessee for the erection of a building to be used exclusively as a public library for the general use of the public;

b) any buildings erected upon the Lands cease to be used as a public library by the Lessee;

c) the Lessee ceases to exist as a separate and distinct legal entity and consent is not given by the Lessor to the assumption of the terms and provisions of this Lease by the successor of the Lessee, if any,

but subject to prior termination in the events herein set forth.

3. For the purposes of this Lease, the words "public library" shall be defined to mean a building to be used for the purpose of providing library services to the public in accordance with the Public Libraries Act, SO. 1984, c. 57, as amended, and any successors thereto.

4. Upon the expiration of the term or any permitted period of overholding, or if the Lessor shall become entitled to terminate and shall declare this Lease to be terminated pursuant to any provisions hereof, the Lessee shall surrender to the Lessor the possession of the Lands and all of the fixtures and improvements then erected thereon (all of which shall become the property of the Lessor without any claim by or compensation to the Lessee) and all the rights of the Lessee under this lease Agreement shall terminate (but the Lessee shall notwithstanding such termination be liable to the Lessor for any loss or damage suffered by the Lessor by reason of any default of the Lessee).

The lease is rent free, although it does contain specific provisions which oblige the Library Board, in essence, to pay all operating costs of the property including a five million property insurance policy. In addition to paragraph 4, the lease also contains a provision which specifies in effect that in the event of default, the City may, thirty days after giving the Library Board notice of the default, (and if the default or contingency remains) terminate the lease, re-enter the lands and "repossess and enjoy the lands, the library building and all fixtures and improvements upon the lands."

54. The applicant submits that the facts that the lease is rent free, that the same solicitors acted for both the lessor (the City) and the lessee (the Library Board) without any concern by either party of the possible conflict, point towards the common direction or control of the respondents. In addition, it is argued that this set of circumstances show the two entities to be associated or related in respect of the construction of this library facility. Counsel for the respondents argued that the correspondence between the parties indicated that, in fact, negotiations in respect of the lease did take place before the lease was ultimately executed. It was submitted that those negotiations evidenced the arm's length relationship between the parties. With regard to the matter of the lease being rent free, counsel argued that nothing could be drawn from that fact save that both the City and the Library Board wished to keep the cost of building the library as low as possible. Consistent with that intent was the fact that the library could be built on vacant property already owned by the City without requiring the Library Board to make capital outlays to purchase the land. We note that as a matter of real property law, at the expiration or termination of the lease, the City, as owner of the land becomes owner of the fixtures and improvements then erected on the land. In this sense, the City is the "ultimate owner" of the library.

55. We now turn to examine those circumstances which relate to such pre-construction matters as the selection and engagement of the architect and the tendering of the construction contract, and the letting of the contract to a general contractor. It was submitted by counsel for the applicant union, and disputed by the respondents, that intertwined with those matters, is the issue relating to the funding of the construction of the library. We will examine these matters within the context of the funding and budgetary process which occurred.

56. On or about October 23, 1985, the Library Board submitted its capital budget. In that budget the Library Board states:

The Etobicoke Public Library Board is requesting capital funds in 1986 to provide neighbourhood branch services to the northern sector of the area west to Highway No. 427.

The Library Board does not however indicate the amount of capital funds which it requires but rather provides to the Budget sub-committee the "total capital request" which it requires if the library is to be located in leased space in a plaza ($482,450.00) or if a new, free-standing building were to be constructed ($722,607.00). When the Library Board submitted its capital budget it had not yet been conclusively determined by either the Library Board or the City which of the two options was preferable. Indeed, the capital budget is submitted after the council meeting of October 9, 1985 at which certain recommendations of the Board of Control were approved (see paragraph 40 herein). As a result the capital budget request makes specific reference to those recommendations.

57. In the capital budget the Library Board states that:

The Board has sought professional advice with respect to the costing of the various alternatives. These suggest that the free-standing building may be the more economical option over the long term. The Board, however, looks forward to receiving the report of the City Treasurer on the financing implications of the various options.

As indicated in paragraph 43 herein, at this stage of the process the Library Board was not greatly concerned with whether the library was located in a free-standing building or in leased space in a mall. The Library Board's primary concern was to ensure that the library was approved for the area which the Library Board had identified, in general terms, as the optimum area west of Highway No. 427. As a result, the Library Board was prepared to await the report of the City Treasurer and let the City decide whether the library should be located in leased space or not. Subsequent to the submissions of the capital budget, the Library Board did provide to the Board of Control further information, including the proposed costs of locating the library in surplus space in a school. This alternative was not favoured by the Library Board.

58. At its meeting of February 5, 1986, the Board of Control recommended:

That the 1986 Capital Budget of the Etobicoke Public Library in the amount of $838,340.00, as recommended by the Budget Sub-Committee, be approved.

This recommendation was adopted without amendment by City Council at its meeting on February 10, 1986. It was in the period between October 25, 1985 (when the capital budget was submitted) and February 10, 1986 (when the capital budget was ultimately approved) that Mrs. Hall and the staff of the Library Board met with various City Officials to explore the various options relating to the location of the library. As is evidenced by a report from Mrs. Hall to the Library Board dated March 27, 1986, when the City approved the capital amount of $838,340.00 "it was understood that the library would be located in Elmbrook Park. However, the details of this specific location in the park and ownership of the land remained to be determined."

59. A review of the evidence also discloses that in approving the capital amount, the City also approved what portion of that amount was to be raised by way of debentures. As indicated in paragraph 24, neither the Library Board nor the City has the requisite statutory authority to raise money for the issuance of municipal debentures. In the present circumstances, only the Regional Municipality of Metropolitan Toronto can issue debentures. The issuance of municipal debentures is subject to Ontario Municipal Board approval.

60. By By-Law dated February 10, 1986, City Council authorized the City clerk to "make application to the Municipality of Metropolitan Toronto and the Ontario Municipal Board for approval of these expenditures which are to be debentured." Included in the $8,014,010.00 amount total of "these expenditures" was the amount of $408,010.00 representing that portion of the capital budget of the library which was to be debentured.

61. By Ontario Municipal Board order dated May 7, 1986, the Ontario Municipal Board granted an order approving:

(a) The construction of a Neighbourhood Library Branch West on Renforth Drive, Registered Plan M-1861, Bloc A at an estimated cost of $771,250.00, and

(b) the borrowing of money by way of temporary advances not exceeding in the aggregate such estimated costs pending the sale of debentures, and the issuance of debentures therefor to provide the sum of $408,010.00 by the Municipality of Metropolitan Toronto, chargeable to the applicant corporation.

The "applicant corporation" was the corporation of the City of Etobicoke. The Ontario Municipal Board further ordered "that [the] application be granted and the applicant may proceed with the said undertaking and may pass all requisite by-laws, and the Municipality of Metropolitan Toronto may borrow the money therefor, and may issue debentures therefor in an amount sufficient to provide a sum not exceeding the lesser of the sum of $408,010.00 or the net cost of such undertaking to the applicant, for a term not to exceed ten years."

62. Until the Library Board received approval for its capital budget, it could not go ahead with the project and engage the services of an architect. Once the capital funds were approved, the staff of the Library Board submitted a report dated March 20, 1986 entitled, "Criteria for the selection of an Architect". That list of criteria was then approved by the Library Board. We note that two of the criteria make specific reference to the interaction which the architect will have with the Library Board:

(3) Ability to work with Library staff and a Board (i.e. a management style acceptable to the Etobicoke Public Library Board).

(10) Terms of payment acceptable to the Etobicoke Public Library Board.

There are no criteria which make reference to any interaction which the architect will have with the City.

63. After the selection criteria had been approved the staff of the Library Board developed and subsequently sent to twenty architectural firms a request for proposal. That request for proposal included a service proposal which had been approved by the Library Board. These requests were sent out in May with a deadline for response of June 6, 1986. From there a "short list" of the architectural firms which had submitted a bid was evaluated by staff of the Library Board and presented to the Library Board in a report dated June 26, 1986. Thereafter, the Project Committee of the Library Board visited a number of sites which had been designed by these "short-listed" architectural firms. The Library Board subsequently conducted interviews with each of the short-listed firms and, at a special meeting held on July 10, 1986, the Library Board ultimately selected the firm of Moffet & Duncan, Architects ("Moffet & Duncan"). On August 14, 1986, the Library Board entered into a contract with the architectural firm. There is no evidence that the City was in any way involved in the development of the criteria used to select the architect, the development of the service proposal provided to the architects, the development of the original list and subsequent short-list of architects invited to bid on the project, the interviewing of those architects or the selection of the successful firm. The only caveat to that is that Mrs. Hall did speak to the Commissioner of Parks and Recreation to solicit his opinion about certain work which Moffet & Duncan had performed for the City. She received a positive and satisfactory response. Mrs. Hall indicated, however that this was not a significant factor in the decision to award the contract to Moffet & Duncan.

64. Notwithstanding the apparent absence of involvement by the City, counsel for the Bricklayers pointed to the fact that the contract with the architect was not signed until after City Council, at its meeting on June 27, 1986, passed Resolution No. 288 which stated, inter alia

65. That the Etobicoke Public Library Board be requested to appoint, after receiving the advice of the City solicitor, an architect for the design and construction of the library in Elmbrook Park.

Similarly, at the July 10, 1986 meeting at which the Library Board determined to engage Moffet & Duncan, the Library Board itself passed a resolution which stated inter alia:

86-119 With respect to architectural services for the construction of a branch library west of Highway #427,

(1) THAT the architectural firm of Moffet & Duncan be informed that they are the successful candidate;

(2) THAT the award of the contract be contingent upon receipt of approval of grant funding from the Ministry of Citizenship and Culture;

(3) THAT, subsequent to the receipt of approval of grant funding and with the advice of the City solicitor, staff he authorized to negotiate the most advantageous contract possible for the Etobicoke Public Library Board;

(4) THAT, as the successful candidate, and in accordance with the City of Etobicoke Council Resolution #288 approving with amendment Clause 132 of the Thirteenth Report of the General Committee, Moffet & Duncan be requested to immediately prepare a site study report indicating the optimum location within Elmbrook Park for the new library;

(5) THAT should the approval of grant funding not be forthcoming, payment to the firm of Moffet & Duncan for the completed site study report will be made from the Reserves Account #995 - Consulting Fees.

65. Counsel for the applicant argued that the Library Board did not enter into the contract with the architect until after Council Resolution No. 288 and after the City solicitor had given advice. This, he argued, was another example of the type of control which the City exercised over the construction project. In our view, his submissions in this respect are contrary to the direct and uncontradicted evidence of Mrs. Hall that the Library Board could have and would have (and in the past in fact had) engaged the services of architectural firms without any similar resolution of Council. It is also contrary to the direct evidence of Mrs. Hall that the City solicitor offered no advice to the Library Board regarding the selection of the architect, but merely reviewed the contract which the Library Board was to enter into with the architect once the Library Board indicated it was prepared to sign that contract.

66. The Library Board's contract with the architect is significant however, for a number of other reasons. Chief amongst those reasons is that it sets out the architect's services and clients (the Library Board's) responsibilities in respect of the design and construction of the library to be located in Elmbrook Park. Included in the architect's services relating to the "construction" of the Library is the "bidding and negotiation phase" which specifies that the architect will provide services in respect of the "bid received and reviewed"~ "contract negotiations", and "preparation of contract". The Library Board's responsibilities in respect of this phase are limited to the "bid call". In respect of the administration of the construction contract, (in this case a stipulated price contract subsequently entered into between the Library Board and a general contractor, Lael Construction Co. Ltd.), in addition to certain office functions, the architect is responsible for the following "field functions"; "site meeting, site visits, consultant coordination, contract document interpretation, certificate for payment," and "substantial performance and inspection". The Library on the other hand is responsible for "inspection and testing services." In cross-examination in respect of this matter Mrs. Hall was unable to explain what was meant or included in the Library Board's responsibilities in respect of "inspection and testing". She did testify that, in actual fact, the architect was responsible for the supervision of the work of the contractor and was responsible for ensuring that the materials used in the construction that occurred was what was called for in the contract. She was unable to answer any questions as to whether the inspectors employed by the City of Etobicoke to inspect construction done on behalf of the City, provided similar inspection services to the Library Board. She was not aware as to whether or not the Library Board engaged those City inspectors but stated that she did not direct the inspectors of the City to inspect the construction. Mrs. Hall further testified that after the contract was let to the general contractor, (a matter addressed in some detail below) the City had no further involvement with the project. Finally, the contract with the architect speaks of "negotiations with authorities having jurisdiction" and in this area lists as the client's responsibilities the requirement for "Committee of Adjustments" approval. Although the "client" referred to in the contract is the Library Board, application for approval was made to the Committee of Adjustments by the City.

67. Counsel for the applicant suggests that the fact that the City, and not the client to the contract made application to the Committee of Adjustments, together with Mrs. Halls' lack of knowledge of the various matters that were excluded from the architect's responsibilities were indicative of the fact that it was not the Library Board which was intimately involved in the actual construction of the Elmbrook Park Library. Counsel advised that Mrs. Hall was a librarian and neither she, nor the Library Board were necessarily knowledgeable about matters relating to construction. In particular, he argued that it was inappropriate to rely upon Mrs. Hall's evidence that after the stipulated price contract was signed by the Library Board, the City had no involvement in the construction of the Elmbrook Park Library, when Mrs. Hall was unaware of such basic facts about the contract with the architect as, what was included in the Library Board's and the architect's responsibilities, and who, on behalf of the Library Board, was responsible for the matters listed as client's responsibilities such as the "Inspection and Testing Services".

68. In response, counsel for the respondents argued that the onus was on the applicant, that the contract with the architect merely lists the respective responsibilities of the architect and the client and does not go so far to indicate who in fact performed those matters for which each party was responsible. The respondents contend that no adverse inference could or should be taken from the written contract or from the fact that Mrs. Hall, one or two years after the fact, was unable to recall certain specifics relating to the construction of the library.

69. After the contract was entered into, the architectural firm developed a preliminary design and estimated costs for the Library Board. This preliminary design was approved by the Library Board and was not shown to the City. The estimated costs of the preliminary design however were significantly greater than the capital amount approved by the City in February 1986. As a result, in a report dated February 19, 1987, the Library Board considered various options. These options were:

(a) To "proceed with the tendering phase based on the cost estimate and approach the City for the additional fund required after tender but before the construction contract is awarded",

(b) Redesign the preliminary design to reduce the costs within the budget,

(c) Redesign the preliminary design or exclude certain of its components to reduce the costs to a degree and "make application to the City for the balance of the funds required" and

(d) Redesign the building to bring costs in line with the approved building budget.

70. Some of these options required approval from the Ministry of Citizenship and Culture which had provided certain grant funding for the construction of the library. Rather than request further funding from the City, the Library Board instructed the architect to redesign the building to bring estimated costs in line with the approved building budget. The building was ultimately redesigned and scaled down in size. The estimated costs for the new design were in line with the approved building budget and on July 14, 1987, the Library Board advertised for sealed tenders, on a stipulated sum basis, in the Daily Commercial News.

71. The sealed tenders were opened by the Library Board on July 30, 1987. We note that no one for the City was present at the tender opening. With the exception of one tender, each of the tenders submitted was significantly over the costs estimated by the architect and the building budget approved by the City. The one tender which was not, was that of D. M. Architectural Contracting Limited. After the opening of the tenders however Mr. Diego Monaco, the President of D. M. Architectural Contracting Limited called and requested that his bid be withdrawn because a mathematical error (of $144,000.00) had been made in preparing his bid. This request was confirmed by Mr. Monaco in writing. After receipt of legal advice from its solicitors, and by Resolution 87-154, the Library Board permitted D. M. Architectural Contracting Limited to withdraw its tender. The Library Board's decision to permit the withdrawal of this tender was done without any input from or consultation with the City.

72. In view of the costs overruns (the lowest valid bid being $192,270.00 over the approved budget) the Library Board considered a number of alternatives. These were to cancel the project, an alternative that was in the view of the Board "... not realistic, since the Library Board is committed to providing service to the area." Another alternative considered was to postpone construction for a year, a proposal which could result in the loss of the provincial grant unless the Ministry of Citizenship and Culture agreed to the deferral. This alternative was not favoured by the architect who stated that in his experience to delay the project was "unlikely to produce lower tenders even if the construction industry enters into a semi-depression period as it did in 1981/1982." Two other alternatives considered were to redesign the building yet again, or to seek additional funds to cover the overrun. Within this latter alternative the Library Board identified as possible the following three options:

• request some funds from council

• have the architect suggest items for cost reductions and re-tender with the three lowest bidders

• find some funds internally.

73. As a result of the cost overruns Mrs. Hall met with the City Treasurer to discuss the possibility of receiving additional funds. The City Treasurer opined that additional funds might be forthcoming because of the time which had elapsed since the date the capital budget for the construction of the library had been approved. His view was that given the extreme rise in construction costs there was a fair chance of success for the Library Board to obtain additional funds. Indeed, when the Library Board subsequently placed a formal request for additional funding before the Board of Control and subsequently the City Council, the City Treasurer wrote a report supporting the Library Board's request.

74. After these discussions with the City Treasurer, the Library Board determined to proceed with the project and request further funds from the City. It approved certain deletions/changes proposed by the architects which provided an estimated saving of $50,000.00. Thereafter, it directed the architects to prepare revised tender documents to be provided to the original contractors who submitted the three lowest valid bids. These three contractors submitted their post-tender bids on August 31, 1987. The lowest valid bid as a result of the re-tender was a bid which exceeded the approved budget by $103,260.00.

75. By resolution of the Board, and at a special meeting held on September 10, 1987, the Library Board resolved:

That the construction contract for the Elmbrook Park Library, in the amount of $516,000.00 be awarded to the lowest valid post-tender bidder - Lad Construction Limited-Contingent upon approval by Council of additional funding in the amount of $103,260.00.

76. Thereafter the Library Board made its request for additional funding to the Board of Control. It requested that the shortfall of $103,260.00 be obtained from two sources namely, additional funds from the City and a transfer of funds from the operating budget of the Library. The Library Board wanted and required the approval of the Board of Control and City counsel to transfer $34,387.00 from its 1987 operating budget to the capital project. It also requested additional funds from City Council in the amount of the remaining $68,873.00. Further, in its report to the Board of Control, the Library Board notes that it "is recommending award to the lowest valid bidder (Lael Construction) in the amount of $516,600.00 contingent upon Council approval of additional funding and of the selected contractor (as required by City By-Law)." [Emphasis added]. In support of its request the Board attached a report from the architects which indicated the cost overruns were due to inflationary increases and escalating prices brought about by the construction boom. The City Treasurer also wrote a report in support of the Library Board's request stating that he agreed with the method of funding" and recommending that the City approve the request for additional funding. He recommended that these additional funds be taken from an account of the City used for improvement to City owned property.

77. The Board of Control approved the Library Board's request on September 16, 1987 and recommended to the City Council that the additional funds be approved, that approval be given to transfer funds from the operating expenses to the Capital Project and that "in compliance with the By-Law No. 1987-103, the construction contract for the Elmbrook Park Library in the amount of $516,600.00 be awarded to Lael Construction." Council passed these recommendations on September 21, 1987. On September 22, 1987, the Library Board entered into the standard construction stipulated price contract with Lael Construction Co. Ltd. The price of the contract was $516,600.00. Moffet & Duncan Architects are listed as the "consultant". As its consultant, Moffet & Duncan is the Library Board's representative during the actual construction of the library. There is no evidence that the City had any other or further involvement with the construction of the library after it approved the additional funds on September 21, 1987.

78. The respondents submitted that this evidence discloses that the Library Board retained control of all vital and significant matters relating to the actual construction of the library in Elmbrook Park. In addition to choosing the architect, it was the Library Board and not the City which instructed the architect to redesign the library when the original costs estimates were significantly higher than the approved budget. It was the Library Board which called for tenders in the Daily Commercial News. It was the Library Board which determined to permit D. & M. Architectural Contracting Limited to withdraw its tender. When all tenders were over the approved budget, it was the Library Board which considered various options and determined how it would proceed. Thus, the Library Board determined to request additional funding rather than postpone or cancel the project. That option however was determined after Mrs. Hall, had "tested the waters" with the City Treasurer to determine the feasibility of approaching Council for additional funding. It was also the Library Board which decided to revise the tender documents to reduce the costs, and which asked the three lowest bidders to requote based on the post tender addendum. Similarly, it was the Library Board which made the initial determination as to how to accommodate the shortfall in funds. It was the Library Board which selected Lael as a successful contractor, and it was the Library Board which subsequently entered into the stipulated price contract with that contractor. Counsel reiterated once again that any involvement by the City in any of these matters was purely financial and was as mandated by statute.

79. Counsel for the union on the other hand submitted that the Library Board did not have effective control in respect of the essential matters relating to the construction of the Library. Counsel submitted that Mrs. Hall approached the City Treasurer because the Library Board knew it could not proceed with the project until it had received additional funds from the City. It was only after receiving the City Treasurer's assurances and support that the Library Board decided to request additional funds. As an added measure the Library Board submitted a report of its own architect to convince the City that the additional funds were required. Counsel pointed to the fact that by reason of paragraph 4 of the By-Law referred to in paragraph 52 herein, the general contractor had to be approved by the City before the Library Board could enter into the stipulated price contract. This fact is referred to in several of the Library Board's own exhibits. Similarly, when Council approved the extra funds, it approved only sufficient funds to permit the Library Board to enter into a contract with Lael. Thus, in approving the extra funds, Council was in effect approving the contract being awarded to Lael. Finally, it was argued that in addition to approving the additional funds (which came from the City Account used for improvements to City property) the City also had to approve the internal transfer funds from one budget of the Library Board to another. Counsel stated that the City's involvement was therefore more than merely writing a cheque, rather, it was a fundamental control of the internal finances of the Library Board.

80. Finally, we note that approximately one third of the capital funds required for the construction of the library came by way of grant from the Provincial Government through its Ministry of Citizenship and Culture. These funds were significant to both the City and the Library Board. As indicated in paragraph 40 herein, the City requested the Library Board to obtain more specific information about available applicable grants before the City would consider the Library Board's request for a library facility west of Highway No. 427. Similarly, when all of the tenders were over the approved budget, the Library Board considered, but rejected, the alternative of postponing the project because of the risk that it would lose its provincial grant. The exhibits indicate that had construction not commenced prior to March 31, 1988, the approved provincial grant would no longer have been available.

Decision

81. There are three conditions which must exist before a common employer declaration can be made pursuant to the Board's authority under section 1(4) of the Act. These are:

(a) there must be more than one corporation, firm, individual, association or syndicate involved

(b) these entities must be engaged in associated or related businesses or activities, whether or not simultaneously; and

(c) these entities must be under common control or direction.

Even if these three conditions precedent are present, the Board's authority to grant a common employer declaration is discretionary. Notwithstanding the presence of the three conditions precedent, the Board need not make a section 1(4) declaration.

82. We do not propose to outline the thorough and able submissions of law made by each counsel as to whether the three conditions precedent exist in the circumstances of this case. Our decision turns on whether, in the circumstances, we ought to exercise our discretion in favour of making the common employer declaration. Therefore, assuming without finding that there are two entities, engaged in associated or related activities, which were under common direction or control, we turn to address the matter of our discretion.

83. Counsel for the respondents submitted that this was not an appropriate case in which the Board ought to exercise its discretion. In so doing, counsel for the Library Board pointed to the fact of delay which is often cited in cases where the Board has refused to exercise its discretion. She argued that the Library Board has been in existence since January 1950. The union knew, or should have known of its existence and its relationship to the City especially in circumstances where that relationship is set out, at least in part, by statute. Counsel stated that had the union exercised reasonable diligence it should have known, or have become aware of the relationship between the City and the Library Board, and as result would have, or should have joined the Library Board as a respondent at the time of its application for certification.

84. Counsel for the union submitted that there was no reason why the Board ought not to exercise its discretion in favour of granting a common employer declaration. Counsel stated that the purpose of section 1(4) of the Act was not just to protect against the erosion of bargaining rights acquired, but also to protect bargaining unit work that could and would have been encompassed by the collective agreement but for the presence of the separate entity. In support, counsel referred to the decision of the Board in English & Mould Ltd., [1979] OLRB Rep. Feb. 83, Kustom Insulation Ltd., supra and West York Construction Ltd.,[1978] OLRB Rep. Sept. 879. He argued that, but for this arrangement (the existence of the Library Board) the work would have been covered by the collective agreement which the union has with the City. He characterized the section 1(4) application as no more than an attempt by the union to preserve the bargaining rights it has acquired.

85. Counsel for the respondent City characterized the matter quite differently. He argued that section 1(4) of the Act was strictly "anti-avoidance legislation". It was designed to allow the Board (and parties to applications or complaints before the Board) to identify who the employer is (and consequently who the employees are) in a certification application or complaint. It is also used to prevent employers from circumventing or avoiding the provisions of the Labour Relations Act by merely rearranging the "form" in which the employer carries out its activities. Counsel submitted that section 1(4) was not meant to provide an alternative means by which a trade union becomes certified. It was his position that that was what the union was attempting to do in the present application. He submitted that the applicant was attempting to expand its bargaining rights without going through the normal certification process and that therefore the Board ought not to exercise its discretion in favour of the applicant, but should instead dismiss this application.

86. We find it useful to set out two oft-quoted passages which address both the purpose of section 1(4) and the factors which the Board will consider in the exercise of its discretion. The Board stated in Industrial Mines Installations Limited [1972] OLRB Rep. Dec. 1029:

"Section 1(4) is obviously contemplated to cure the mischief [sic] that results from being unable to properly define and tie down the employment relationship. In many situations where companies have a close relationship an employee may be shifted from one company to another so that his employment relationship, at any given period, is difficult to define in terms of one employer. So too, the number of employees employed by one of those companies at any given time may be impossible to ascertain.

Prior to the enactment of section 1(4), where such situations existed, it was difficult to define the employment relationship and to determine the proper employer for certain purposes under the Act. For example, in certification proceedings it was necessary to determine the proper employer in order to determine whether the union had sufficient membership among the employees to be certified.

Also, in some situations where a union had been granted bargaining rights for the employees of one employer the employees could be shifted to another associated or related employer with the result that the bargaining rights which had been earned by the trade union for the employees was lost.

So too, in the case where associated or related employers joined in a common enterprise and used one work force, which was shifted and transferred from time to time, the certification with respect to one employer only was, in effect, a certification of a segment of the total enterprise, and could seriously impair the totality of the business operations by inhibiting the shifting of employees between union and non-union segments of the enterprise. It was also possible in situations where associated or related companies carried on a single enterprise that employees of the separate legal entities could be represented by different trade unions so as to cause the bargaining rights within the single enterprise to be unduly fragmented. An example of the type of situation where section 1(4) was applied is found in Walters Lithographing Company Limited, et al, [1971] OLRB Rep. 406.

It is in these types of situations that the interests of the parties in having the Board treat separate employers as constituting one employer for the purpose of the Act became apparent, and it is for that reason that section 1(4) was enacted."

87. In Acto Building (Eastern) Limited, [1979] OLRB Rep. June 465 at paragraph 15, the Board stated:

88. In the Industrial-Mine Installations Limited case, [1972] OLRB Rep. Dec. 1029, the Board referred to the purposes of section 1(4) as being generally to avoid the frustration of bargaining rights which have been acquired by a trade union. In the evolution of the exercise of its discretion under section 1(4) the Board has considered the effects of various equities in a given situation. These equities include a consideration of: (1) whether the applicant is attempting to disturb existing bargaining rights; (ii) whether the applicant is attempting to outflank and avoid an application for certification; (iii) whether there are employees whose interest in selecting their own bargaining agent would be interfered with by the application; (iv) whether the application been made [sic] within a reasonable period of time of the knowledge that the two or more respondents are closely related and (v) the presence of a scheme to effectively defeat bargaining rights by transferring work from one respondent to another. See the Elmont Construction Limited case, [1974] OLRB Rep. June 342; the Dominion Stores Limited and Mm-A-Mart Limited case, [1978] OLRB Rep. Nov. 1013; the Harold R. Stark Limited case, [1978] OLRB Rep. Oct. 945; and the West York Construction Limited and Bau Canada Limited case, [1978] OLRB Rep. Sept. 879.

89. The principles and legislative objectives or purposes underlying section 1(4) identified by the Board in these and numerous other decisions may be conveniently summarized as follows:

section 1(4) is designed

(a) to preserve or protect from artificial erosion the bargaining rights of the union,

(b) to create or preserve viable bargaining structures~ and

(c) to ensure direct dealings between a bargaining agent and the entity with real economic power over the employees.

(See also Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214). These principles and purposes have guided the Board in the exercise of its discretion. In our view, the appropriate question to be asked and answered therefore is whether there are any reasons, consistent with the purposes and legislative objectives underlying the statute to make the common employer declaration.

89. In the present instance, we find that this is not a case in which the Board ought to be concerned that there has been a transfer of work to escape the union's bargaining rights. The structure of the City and the Library Board, and their relationship to each other has not been established or set up to erode the union's bargaining rights and in our view does not have such an effect. Rather this relationship is one dictated by statute. The facts before us are radically different from the, "double breasting" cases in the construction industry where the Board has exercised its discretion and has made the common employer declaration. Unlike many cases in which the section 1(4) declaration has been made, in the present circumstances we are not faced with the situation in which entrepreneurs or employers have chosen the legal vehicles with which to carry out certain of their activities. Rather, we are faced with the situation in which the legislature has established the legal vehicles which these entities must use to carry out their activities.

90. One of the "mischiefs" which section 1(4) was designed to avoid was the artificial erosion of the bargaining rights of the union. Such "mischief' is not present in the circumstances of this case. The union has asserted that in the present instance the Library Board is performing work that could have, would have and should have been encompassed by, and performed pursuant to the collective agreement which the applicant has with the City. By reason of the fact of the Library Board's presence and involvement in this construction project, there has been an "erosion~~ of the union's bargaining rights. A section 1(4) declaration is therefore necessary to preserve the applicant's bargaining rights. With this we cannot agree. There is no evidence to suggest that the City, at any time, either before or after certification engaged in the construction of library facilities. There is no evidence to suggest that this is work which had traditionally or would normally have been undertaken by the City. Similarly, in view of the fact that the Library Board was first established in 1950, well before the union acquired its bargaining rights, we are unable to conclude that the present circumstances evolved as a result of any scheme by the City to avoid its collective bargaining relationship with the applicant or to erode the applicant's bargaining rights. The present circumstances are not the result of an attempt to have the Library Board construct libraries which the City is obliged to construct, or which the City would normally have constructed.

91. Neither can it be said that the present circumstances raise a concern about viable bargaining structures which can or ought to be addressed through a common employer declaration. Of significance to our assessment in respect of this objective or purpose for granting a common employer declaration, is the fact that there is no evidence before us to suggest that either the Library Board or the City, is or was, the "employer" of the persons at work on this construction project. The evidence before us merely indicates that the Library Board engaged the services of the general contractor to construct the Elmbrook Park Library. In the present circumstances, that factor standing alone is not sufficient to cause us to conclude that the Library Board, and not the contractors engaged for this construction project, was the "employer" of the construction employees who worked on this construction project. Our use of the word "employer" in this instance refers only to the usual and ordinary meaning of the word as a person with the rights and obligations of an employer under the common law of master and servant. Similarly, we do not view the City's "involvement" in the construction of the Elmbrook Park Library as sufficient to bring it within the parameters of being the "employer" (again in the master/servant sense of the word) of these employees. By reason of statute and the special circumstances relating to these types of municipal activities, the City was a provider of funds. The provision of those funds, in turn, permitted the Library Board to have the Elmbrook Park Library constructed. As neither the Library Board nor the City is the "employer" of the employees engaged upon this construction project, concerns about creating or maintaining viable bargaining structures between the applicant union and the employer of the employees whom it represents do not arise.

92. We wish to emphasize that our determination regarding the "employer" of the employees on this construction project only relates to the issue as to whether, there are any concerns in this case, relating to the creation or preservation of viable bargaining structures which can or should be addressed through a single employer declaration. Our determination in this regard should not be interpreted as an indication that this panel of the Board does not concur with those decisions of the Board which clearly state that a person in a construction industry collective bargaining relationship with a trade union may be an "employer" in the sense in which that word is used in the construction industry provisions of the Act, notwithstanding the fact that such person does not directly employ the employees engaged upon a construction project. In respect of that matter we concur with the decision of the Board in The Municipality of Metropolitan Toronto, [1989] OLRB Rep. March 279 and particularly paragraph 22 of that decision. In the present case, our determination that neither the City nor the Library Board is the "employer" of the employees (in the master/servant sense of the word) goes only toward determining whether there are any concerns about creating or maintaining a viable bargaining structure. In our view a single employer declaration will not address or resolve any problems relating to the viability of the bargaining structure as neither the Library Board nor the City is the "employer (again in the master/servant sense of the word) of the employees working in this construction project. It may be that, although the City is not the "employer" of the employees working on the construction project, its activities or involvement in this construction project nonetheless violate the provisions of the collective agreement to which it is bound. That however is a matter to be determined by the panel of the Board which hears the grievance referred to in paragraph 4. It is not a matter which assists this Board in determining whether, in the present application, a single employer declaration should be granted in order to effect one of the purposes underlying section 1(4), namely to create or preserve a viable bargaining structure.

93. Similarly, no concern about the viability of the bargaining structure arises because two or more entities with separate work forces are carrying on an integrated operation as was the case in Walters Lithograhing Company Limited. Instead, the operations of the City and the Library Board are not integrated and have remained separate and distinct from each other. In this regard we note that although the parties have agreed that the "municipal employees" of the City are covered by a collective agreement with C.U.P.E., there is no evidence or suggestion that this collective agreement has ever been applied to the employees of the Library Board. Indeed, the evidence is to the contrary as employees of the Library Board deal with the Library Board through an employee association.

94. Moreover, this operational approach is consistent with the practice of other municipal and Library Board employers and does not seem to offend the sensibilities of that segment of the labour relations community which has, to date, been involved in the organization of employees within this sector. Although invited to do so, counsel were unable to point to any decision in which the Board had previously dealt with an application (either by way of an application under section 1(4) or an application for certification) involving two municipal employers similar to the present respondents. This is a case of first impression as it would appear that historically the labour relations community has treated entities such as these as separate employers. The present applicant followed a similar course when it acquired its bargaining rights in respect of the employees of the City employed in the construction industry. It also did not name or join the Library Board when it applied for certification. Given the special or unique nature of the municipal sector and the fact that the labour relations community itself has recognized that municipal governments, local boards, agencies, etc. are employers which are treated in a manner which is different than employers engaged in typical "commercial" enterprises, we consider it appropriate that in circumstances such as these the Board also recognize, consider and rely upon the special nature of the municipal sector.

95. At this stage and within the context of the first two purposes underlying section 1(4) to which we have referred, we wish specifically to address counsel's submissions that the Board should not exercise its discretion because of delay. (See paragraph 83.) We do not accept counsel's submissions in this regard. In our view, in circumstances such as the present, we would be imposing an unduly onerous duty upon trade unions to seek out and name in its application for certification each and every entity of a multi-entity such as a municipal corporation. Moreover, in the present case there is no evidence to suggest that the union has been wilfully blind or has sat on its rights. There is no evidence to suggest that since the certification of the union either the City or the Library Board has engaged in the construction of libraries. On the evidence, this is the first occasion when the applicant could reasonably have asserted its bargaining rights as against the Library Board, and it did so promptly. We do not therefore fault the union for not having joined the Library Board as a common respondent employer when it acquired its bargaining rights. Circumstances which may ultimately lead to a Board declaration under section 1(4) may not exist or be readily discernible at the time the union seeks to be certified.

96. In our view, the issue to be resolved however is that, if there was not a readily apparent reason based on the underlying purposes of section 1(4) to cause the applicant to seek a common employer declaration at the time of certification, what change in circumstances has developed to compel a common employer declaration at this point in time? The union asserts that one significant change in circumstances is that the work of constructing the Elmbrook Park Library is work which is covered by the collective agreement which the union has with the City and is work which, although it should have been performed by the City in a manner which complied with the collective agreement, is now being performed by the Library Board in violation of the collective agreement. If that is indeed the case (and we make no finding as to whether or not the work is covered by the collective agreement or was performed in violation of the collective agreement) that is the subject matter of the grievance and can be dealt with in the arbitration of that grievance. On the other hand, if the work is not covered by the collective agreement and/or was not performed in violation of that collective agreement, then there has not been a change of circumstances which should cause this Board to make a common employer declaration at this point in time.

97. Our analysis and reasoning as it relates to the first two stated purposes or objectives underlying a section 1(4) declaration apply equally when we examine the third purpose of that provision namely the purpose of ensuring direct dealings between the union and the entity which the union asserts has real economic power over the employees. Again, for purposes of this application, it is important to remember that the "employees" directly affected by this application, and therefore the employees over whom the City is alleged to exercise real economic power are bricklayers, bricklayers' apprentices, stonemasons and stonemasons' apprentices.

98. In this instance the applicant has argued that the City has the real economic power and therefore a common employer declaration is warranted. It was argued that, in respect of the construction of the Elmbrook Park Library, the City's control and involvement in the capital budget meant that ultimately it was the City which decided that there would be a library, that the library would be built as a free standing structure, how much the construction of the library would cost (thereby also approving who would be the contractor) and the manner in which the funds would be acquired, namely the amount to be debentured and the amount transferred from the operating budget of the library. We do not agree with counsel's characterization of the facts, and find rather that the City's involvement with the construction project was limited to its financial involvement. In this case, financial involvement, standing alone is not determinative and by itself does not warrant the exercise of our discretion in favour of making the common employer declaration. Generally, in those cases where the Board has granted a common employer declaration because financial "control" existed, inevitably a number of other factors were present as well. Such other factors include an attempt to avoid the bargaining relationship or a significant and direct impact on or interference with matters relating to either the operations or labour relations of the entity. In those instances the Board may issue a section 1(4) declaration to in effect "bring the ghost to the bargaining table". In this present case however, notwithstanding the financial arrangements which exist between the Library Board and the City such factors are not present. There is no evidence to indicate this arrangement was designed to avoid the bargaining relationship which the City has with the union. Similarly, there is no evidence which points to a direct impact on, or interference with matters relating to the overall construction or the labour relations aspects of the construction of the Elmbrook Park Library. Again we note that our determination in this matter relates only to the issue as to whether a common employer declaration should be granted in the circumstances of this case. We make no determination as to whether the activities of the City or its "involvement" in the construction of the Elmbrook Park Library violate the provisions of the collective agreement to which the City is bound. That is a matter to be determined by the Board which hears the grievance if the grievance proceeds to arbitration. We have determined only that the activities or involvement of the City with the affairs of the Library Board or the construction of the Elmbrook Park Library do not warrant the granting of a common employer declaration.

99. On balance and after a review of all the evidence we are satisfied that in the circumstances of this case the City did no more than what it was statutorily obliged to do under the Public Libraries Act namely, provide the funds, "consent" to the acquisition of land and the erection of the library (section 19(1)) and "approve" the issuance of debentures (section 25). In carrying out its statutory duties and responsibilities the City did not so involve itself in the construction of the Elmbrook Park Library, as to warrant the making of a common employer declaration. We therefore dismiss the application made pursuant to section 1(4) of the Act. In our view granting a common employer declaration in these circumstances would not be consistent with the purposes or rationale underlying that section of the Act.

DECISION OF BOARD MEMBER D. A. PATTERSON; September 29, 1989

1. I dissent from the majority decision of the Board in Board File 2718-87-R. I believe the majority decision is wrong in exercising its discretion in not declaring the Corporation of the City of Etobicoke Public Library Board and the Corporation of the City of Etobicoke a related employer under common control or direction pursuant to Section 1(4) of the OLR Act.

2. The facts in this case are not in dispute, it is the conclusions drawn by the majority in respect of those facts which is in dispute. The majority has chosen not to exercise the discretionary power the Board has pursuant to Section 1(4), notwithstanding the fact that they are prepared to assume that the facts and circumstances of this case meet the preconditions to a Section 1(4) declaration.

In my view it is those very same facts which compel the Board to exercise its discretion under the Act and declare the parties a related employer. It is my position in my dissent that there were and are persons in the employ of the City who not only knew they were bound to a collective bargaining agreement with the applicant but had an obligation to any of its configurations within the boundaries of the City of Etobicoke to inform any such configuration or entity that the City was bound to a collective agreement with the applicant especially when an executive decision was made by the City to build any new structure, in this case a free standing Library. The City, I believe, should have informed the Library Board and its CEO Mrs. Hall of this contractual obligation and binding agreement with the Bricklayers Union.

3. The facts on control take a number of configurations which are pertinent to why I came to the conclusion I did.

(a) The Library Board was brought into existence by virtue of a by-law --#7844, dated January 10, 1950 -- under the old Municipal Council of the Corporation of the Township of Etobicoke. It was re-passed on January 4, 1967 by the new Borough of Etobicoke pursuant to the Public Libraries Act. By statute, the Library Board became a Corporation: The Corporation of the City of Etobicoke Public Library Board. Prior to any of this the Library was run directly by the City, the services provided today are no different then they were when the City controlled it directly. The Library provides a service to the people of Etobicoke.

(b) City Council appoints, interviews, advertises for Library Board Members. In fact, four (4) Members of Council sit on the Library Board. I maintain the direct interests of City Council are served by the members appointed.

(c) Mrs. Nancy Hall, the Library Board's CEO, Secretary and Treasurer, although hired by the Library Board, has her salary approved by City Council. In this respect economic independence for this issue does not rest in the hands of the Library Board.

(d) The Library Board must submit to the City its annual budget. It must spend the monies approved and paid to it by the City Council. The Library Board staff develop the Board's annual budget, which is put in front of the Committee of the whole of the Library Board. After approval by the Library Board, the budget is submitted to the City Treasurer, who in turn assigns it to a Controller of the City. The Controller recommends to the Budget Subcommittee of the Board of Control of the City, who in turn recommends to City Council who in turn approves or disapproves the Budget. (see below)

(e) The Auditors who act on behalf of the Library Board also act on behalf of the City. The pulse of the Library Board is never out of reach of City Council.

(f) For example in 1986, the Library Board's operating budget, broken down, drew its monies from a number of source:

86.0% from the City 7.5% from Provincial Grants 4.5% from Fines, Rental Fees, Photocopying, etc. 2.0% from other Income

(g) The Library Board by consent of the City can acquire real property. Currently, the Library Board has 10 other libraries under its control. The City does not own that land. The Elmbrook Library is located on City land.

The monies needed to acquire real property, buildings or erecting buildings is raised by issue of Municipal Debentures.

Mrs. Hall's evidence was that originally the Library Board went to the City with a proposal to build a new library back in 1984, that proposal was turned down. The Library Board was asked by the City Clerk, after a citizen's letter was brought before Council, to prepare a report for Council, an update on facilities to serve in the Eringate Subdivision. The Library Board did send a report back to City Council August 21, 1985, it proposed a number of alternatives to the Board of Control. There were 2 serious alternatives: (1) a free standing building, (2) leased space. The Board of Control then asked the Library Board to further consider funding etc. and came back to the Board of Control with further recommendations.

The Library Board, September 5, 1985, conveyed to the Secretary of the Board of Control that they, the Library Board, favoured leased space over new construction. A special meeting of the Budget Subcommittee was held September 25, 1985 and recommendations were made following their meeting.

The Budget Subcommittee of the Board of Control on September 25, 1985, directly intervened in the affairs of the Library Board and thereby affected its ability to make the decisions normally made by the Library Board and which City Council had empowered the Library Board to make. The Library Board already owned land where 10 libraries were located. Instead, the City Treasurer was to determine the implications of leased property versus the construction of new property, the Director of Industrial Development and the Commissioner of Parks and Recreation Services were to determine if any vacant City property was suitable for a new library building. Also, the City Treasurer was to meet the Library Board to see if funds were available for the lease/construction of a building for library purposes. These recommendations became directives when approved by Board of Control and City Council October 9, 1985. The City implicated itself by giving direction to the Library Board in this instance. In essences the City was "calling the shots" from this point forward to the actual construction of the free standing structure. The City made an executive decision to build a free standing structure, the Library Board concurred with that decision.

(h) The City raised the money for this free standing structure by the issuance of Municipal Debentures. The method employed to raise the necessary funds was to make application to the largest municipality for the debentures, in this case the Municipality of Metropolitan Toronto. Metropolitan Toronto charges the money borrowed back to the City. The City in turn charges the debt charges back to the Budget of the Library Board.

(i) The lawyers acting on behalf of the City also act on behalf of the Library Board.

(j) The land on which the Elmbrook Library was to be built is owned by the City. The lease under which the Library functions is rent free. In the event the Library Board Corporation is dissolved by City Council, the City assumed all responsibility for assets and liabilities.

These facts 3(a) to 3(j) collectively, I believe, are strong evidence of the various kinds of control the City exerted over the Library Board. Despite Mrs. Hall's evidence, which I believe to be very credible, regarding the Library's abilities to make decisions in determining the Elmbrook Park Library were made directly by the City or its agents. Once the executive decision on the Elmbrook Library was made and the funding arranged and the site picked out, the remaining responsibilities were given to Mrs. Hall and the Library Board. The City took a more hands-off attitude towards the Elmbrook Library. The City in the final analysis "still pays the bills" and answers to its citizens who requested the Library services.

These facts highlight the reasons as to why the Board should exercise its discretion and grant the Section 1(4) declaration requested by the applicant.

4. In paragraph 89 of the decision, the majority cited Acto Building (Eastern) Limited (1979 OLRB Rep. June 465; at paragraph 15, the Board stated:

5. In the Industrial-Mine Installations Limited case, [1972] OLRB Rep. Dec. 1029, the Board referred to the purposes of section 1(4) as being generally to avoid the frustration of bargaining rights which have been acquired by a trade union. In the evolution of the exercise of its discretion under section 1(4) the Board has considered the effects of various equities in a given situation. These equities include a consideration of: (i) whether the applicant is attempting to disturb existing bargaining rights; (ii) whether the applicant is attempting to outflank and avoid an application for certification; (iii) whether there are employees whose interest in selecting their own bargaining agent would be interfered with by the application; (iv) whether the application been made [sic] within a reasonable period of time of the knowledge that the two or more respondents are closely related and (v) the presence of a scheme to effectively defeat bargaining rights by transferring work form one respondent to another. See The Elmont Construction Limited case, [1974] OLRB Rep. Nov. 1013; the Harold R. Stark Limited case, [1978] OLRB Rep. Oct,. 945; and the West York Construction Limited and Bau Canada Limited case, [1978] OLRB Rep. Sept. 879.

I feel this jurisprudence is directly on the mark as it applies to this case. I feel the actions of the City and the knowledge that its employees and representatives had concerning the contractual obligations the city was bound by, puts the circumstances of this case in line with the policy considerations set out in that case.

I certainly didn't expect Mrs. Hall, the Library Board Council Members and staff of the Library Board to be aware of any contractual obligations the city entered into with any Union especially in the construction trades. At the same time I do not accept the fact that the Treasurer, Controller, Council, Board of Control, lawyers, auditors were not aware of their contractual obligations especially when it comes to building a free standing structure such as the Elmbrook Library.

These guardians of the City's interests are paid, elected and responsible to know what the City's contractual obligations are to whatever Union was certified by the OLRB to have those rights.

5. The second part of this case is the Board's discretion to exercise its discretionary powers under the Act to make the 1(4) declaration. I would have made that declaration., The majority chose not to.

My reasons for making the declaration makes good labour relations sense and fall in line with what I believe the preamble to the Act embodies to foster and promote good industrial relations. I do not believe the Bricklayers application is an attempt to expand their bargaining rights, or force themselves on employees as their bargaining agent, since this was new construction. I believe the Union is attempting to maintain its status for its members. As I wrote above, the Elmbrook Library was new construction, work for which the applicant was certified and held a collective agreement. This type of work is the work the applicant's members were certified to do; this work was denied, with the denial a "lost opportunity" to them. The Board should exercise its discretion to prevent any employer from attempting to avoid its contractual and legal obligations. This case is such an example where the Board should exercise that discretion to protect the bargaining rights the Act bestowed on the applicant.

Exercising that discretion would accomplish exactly what the legislature envisioned when Section 1(4) was passed into law. It puts both parties on a level playing field -- fairly.

6. I maintain the City had ultimate control over the affairs of the Library Board as well as

over the project, Elmbrook Library. It had the responsibility to inform Mrs. Hall, the Library Board, of their contractual obligations to the Bricklayers Union, and secondly, to direct the Library Board to build the Elmbrook Library in accordance with those contractual obligations.

The City and/or its employees chose not to do any of the above, thereby eroding the bargaining rights of the Union.

7. In conclusion, I would have found the City and Library Board to be under common control or direction for purposes of the Section 1(4) application by the union and exercised my discretion in making such declaration.