Salaried Employees Alliance ComDev v. Senstar Corporation, 1989 CanLII 3016

Ontario Labour Relations Board

[1989] OLRB Rep. November 1159

1055-89-R Salaried Employees Alliance ComDev, Applicant v. Senstar Corporation, Respondent

BEFORE: Owen V. Gray, Vice-Chair, and Board Members W. H. Wightman and P. V. Grasso.

APPEARANCES: Sherry Liang and Felicity Wormleighton for Salaried Employees Alliance Coin­Dev; Russel W. Zinn and William Steadman for Senstar Corporation.

DECISION OF THE BOARD; November 27, 1989

1In this application, Salaried Employees Alliance ComDev ("SEAC") alleges that there has been a sale of business by Computing Devices Company ("ComDev") to Senstar Corporation ("Senstar") to which section 63 of the Labour Relations Act ("the Act") applies, and asks for a declaration that Senstar is bound by a collective agreement between SEAC and ComDev which was in effect at the time of the alleged sale.

2Senstar opposes the application on three grounds:

(a) that there has not been a sale of business within the meaning of section 63 of the Act;

(b) that SEAC does not have the constitutional authority to take employees of Senstar into its membership or did not have such authority at the time of the alleged sale; and,

(c) that the geographic scope of the bargaining rights SEAC has under its collective agreement with ComDev does not extend those to Senstar's location.

If there had been a sale of business and those employed by Senstar in that business fall within the geographic scope of the applicant's bargaining rights, the parties agree that those employees have been intermingled with those employed by Senstar in its pre-existing business, and that a representation vote should be conducted to determine under subsection 63(6) whether the applicant should continue to represent all such employees of Senstar as otherwise fall within the grammatical scope of its bargaining rights.

3ComDev is a division of Control Data Canada Ltd., which is a subsidiary of or otherwise related to Control Data Corporation. ComDev is engaged in research, development and manufacturing of electronics and computer products and systems targeted primarily to military markets. It has carried on this business in the Ottawa area for a number of years. At the time of the alleged sale, ComDev was internally organized into a number of business areas, each of which was treated as a profit and loss centre. One of those areas was the surveillance systems division. At the time of the alleged sale, that division had two departments. One of those, the security systems department, was the focus of the transaction which is alleged to have been a "sale of business" within the meaning of section 63 of the Act.

4ComDev's security systems department was primarily involved in the engineering development of intrusion detection systems based on "ported" or "leaky" coaxial cable technology, in which cables buried below or suspended above the ground's surface can be used to detect proximate motion by electro-magnetic means. This "leaky co-ax" technology had been the subject of research and development by ComDev for a number of years at the time of the alleged sale.

5In the period 1980-81, ComDev gave some consideration to forming or participating in or encouraging the formation of a separate corporation to exploit the potential application of "leaky co-ax" technology to security products in non-military markets. Senstar Corporation was incorporated in October 1981 by four former employees of ComDev, three of whom had been involved in the development of perimeter security systems using the leaky co-ax technology, for the purpose of developing and selling in perimeter security systems employing that technology. Senstar says this was with the blessing of ComDev. If it was, that blessing had its limits.

6In 1984, ComDev commenced an action in the Federal Court of Canada alleging that Senstar had infringed its patent on perimeter surveillance systems using leaky coaxial cables. Senstar and ComDev were by then in active competition in the supply of such products. The patent litigation seriously threatened Senstar's ability to carry on business. A trial judgement favouring ComDev issued on March 2, 1989. Senstar appealed. Before the appeal had been dealt with, ComDev and Senstar entered into a settlement of their dispute, pursuant to which Senstar was to purchase the patent in dispute and the other assets used by ComDev in the research, development, marketing and production of security systems. SEAC alleges that that transaction, which closed on August 2, 1989, constituted a "sale" of a "business" within the meaning of section 63 of the Act.

7Subsections 1 and 2 of section 63 of the Act provide as follows:

63. (1) In this section,

(a) "business" includes a part or parts thereof;

(b) "sells" includes leases, transfers and any other manner of disposition and "sold" and "sale" have corresponding meanings.

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application.

8The respondent concedes that the transaction between it and ComDev involved a "sale". It denies that a "business" was sold. The Act does not define "business"; it has fallen to the Board to give that word meaning in a number of cases. Both parties referred to the Board's decision in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193. That decision contains a number of useful observations, including these:

30. A business is a combination of physical assets and human initiative. In a sense, it is more than the sum of its parts. It is a dynamic activity, a "going concern", something which is "carried on." A business is an organization about which one has a sense of life, movement and vigour. It is for this reason that one can meaningfully ascribe organic qualities to it. However intangible this dynamic quality, it is what distinguishes a "business" from an idle collection of assets. This notion is implicit in the remarks of Widjery, J., in Kenmir v. Frizzell et al, [1968] 1 All E.R. 414 - a case arising out of legislation similar to section 55. At page 418 the learned judge commented:

"In deciding whether a transaction amounted to the transfer of a business, regard must be had to its substance rather than its form, and consideration must be given to the whole of the circumstances, weighing the factors which point in one direction against those which point in another. In the end, the vital consideration is whether the effect of the transaction was to put the transferee in possession of a going concern, the activities of which he would carry on without interruption. Many factors may be relevant to this decision though few will be conclusive in themselves. Thus, if the new employer carries on business in the same manner as before, this will point to the existence of a transfer, but the converse is not necessarily true, because a transfer may be completed even though the transferee does not choose to avail himself of all the rights which he acquires thereunder. Similarly, an express assignment of goodwill is strong evidence of a transfer of the business, but the absence of such an assignment is not conclusive if the transferee has effectively deprived himself of the power to compete. The absence of an assignment of premises, stock-in-trade or outstanding contracts will likewise not be conclusive, if the particular circumstances of the transferee nevertheless enable him to carry on substantially the same business as before."

[Emphasis added]

Widjery, J. took the same approach as that adopted by this Board, concentrating on substance rather than form, and stressing the importance of considering the transaction in its totality. The vital consideration for both Widjery, J. and the Board is whether the transferee has acquired from the transferor a functional economic vehicle.

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

"In each case the decisive question is whether or not there is a continuation of the business ... the cases offer a countless variety of factors which might assist the Board in its analysis; among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or nonexistence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life of its own; none will necessarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same as it was [sic] before, i.e. whether there has been a continuation of the business."

The issue before the Board remains whether there has been a "transfer of a business"; but it is much easier to make that finding, and to conclude that the collective bargaining relationship should be continued, if there is substantial continuity of all the other elements of the predecessor's business. If the elements formerly used by "A" to carry on business are now in the hands of "B", and used for the same business purposes, it is difficult to resist the conclusion that there has been some form of transfer from "A" to "B" - albeit complex and indirect, and perhaps even by operation of the law.

32. Of particular significance for a labour relations statute is the continuity of the work performed before and after the transfer, since the trade union is certified to represent certain work groups, the collective agreement regulates the conditions of work for employees in those groups, and the purpose of section 55 is to preserve both the bargaining relationship and the collective agreement. If the work performed subsequent to the transaction is substantially similar to the work performed prior to the transaction, there is normally a strong inference that there has been a transfer of the business within the meaning of section 55. This approach has not only been taken by the Board in a number of cases (see, for example, Culverhouse, supra, and Dennis Moran [1977] OLRB Rep. Apr. 277) but also appears to have been adopted by the British Columbia Supreme Court in R. v. B.C. Labour Relations Board ex pane Lodum Holdings Ltd., (1969), 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41. In that case, the Court was considering an application for certiorari in respect of a decision involving what was then the successor rights section of the British Columbia Labour Relations Act (it has since been amended.) At page 52 Dryer, J. characterized the question before the Board as follows:

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

[Emphasis added]

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

33. There need not be a transfer of the entire business before section 55 comes into play. The successor rights provisions may also be triggered by the transfer of "part of a business." [See section 55(1).] This language suggests that bargaining rights continue when something considerably less than "the totality of the undertaking" has been transferred. Presumably the Legislature envisaged the preservation of bargaining rights where there is a severance and transfer of a discrete, cohesive portion of the economic organization or activities which comprise the totality of "the business." The Board has found a transfer of "part of a business", where one of a chain of retail stores has been sold to a competitor (Supercity Discount Foods, [1979] OLRB Rep. Apr. 119; Lablaws Croceterias Ltd., [1973] OLRB Rep. Jan. 73); where there is a transfer of the right and means to produce one of the products formerly produced by the predecessor's business; (Canac Shock Absorbers, [1973] OLRB Rep. Oct. 508); where there was a transfer of certain milk delivery routes in a particular geographic area (Borden Co. Ltd., [1970] OLRB Rep. Jan. 12~), and where there was a transfer of the oil burner installation and service branch of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Ltd., [1971] OLRB Rep. May 515.) In each of these cases the Board found that the predecessor had transferred a coherent and severable part of its economic organization - managerial or employee skills, plant equipment, "know how" and goodwill - thereby allowing the successor to serve the market formerly served by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms of employment, together with the union's right to bargain about them, were preserved. The part of the predecessor's business which it no longer wished to continue provided the business opportunity which the successor was able to pursue to its own advantage. It was otherwise in Woodway Structural Components, [1971] OLRB Rep. Nov. 732, Canada Cement LaFarge Ltd., [1975] OLRB Rep. Dec. 905, and Dufferin Steel, [1976] OLRB Rep. Mar. 81. In these cases there was a significant change in the character of the work, product or market so that the Board concluded that what had been transferred was not the predecessor's business. The successor had merely incorporated incidental elements of that business into his own economic organization - even though each of the elements acquired could previously be found in the predecessor's business organization and, in that sense, were "part" or the predecessor's business. What was transferred lacked that dynamic quality which distinguishes an idle collection of surplus assets from an active, severable and coherent part of a going concern.

34. This distinction is easily stated, but the problem is, and always has been, to draw the line between a transfer of a "business", or "a part of a business" and the transfer of "incidental" assets or items. In case after case the line has been drawn, but no single litmus test has ever emerged. Essentially the decision is a factual one, and it is impossible to abstract from the cases any single factor which is always decisive, or any principle so clear and explicit that it provides an unequivocal guideline for the way in which the issue will be decided.

9The agreement of August 2, 1989 between ComDev and Senstar ("the sale agreement") itself describes their transaction as a "transfer" of a "business". The following recital appears on the first page of the main body of the agreement:

INTRODUCTION

Seller desires to transfer, and Buyer desires to acquire the business, as a going concern, and the assets, subject to certain liabilities, of Seller's Business (as defined below), all upon the terms and conditions set forth below.

Article 1.05 of the sale agreement provides that

"Business" shall mean the Security Systems operations, consisting of the design, manufacture and sale of personnel-intrusion detection systems and products based on ported coaxial cable technology, coupled wave device technology and video motion technology, at Seller's Computing Devices Division, and shall include, without limitation, the following product lines-- GUIDAR, PCCS, SPIR, TOPLINE, REPELS, and DAVID. The "Business" shall also be deemed to include the following programs--Landslide Detection System, and Tactical VHS Surveillance Rada ("TVSR").

By article 2.01 of the sale agreement, ComDev agreed to sell and Senstar agreed to buy "all of Sellers rights, immediately prior to the Closing, in the Purchased Assets." Article 1.20 of the sale agreement defines the "Purchased Assets" as:

(a) All assets (other than the Excluded Assets) reflected on the June Balance Sheet, subject to additions and deletions in the ordinary course of business; and

(b) Except to the extent identified as Excluded Assets, all of the assets of Seller which relate principally to, or are used principally in connection with, the Business including, without limitation, the following:

(i) the "Contracts", which shall include, except as otherwise provided to the contrary in this Agreement, all contracts, agreements, contract rights, license agreements, leases, selling agent agreements, purchase and sales orders and other executory commitments, oral or written, provided that "Contracts" shall not include: (A) existing contracts with the United States Air Force through Canadian Commercial Corporation relating to "PCC5", and (B) intracompany/intercompany agreements or obligations within or between Seller and its Affiliates, and (C) Contract number 08164 with Mosler Inc., contract number 7265-0033 with Saudia Development Maintenance Co. Ltd. and contract number A734773 with Johnson Controls International Inc., all relating to the Peace Shield Project and referred to collectively as the "Peace Shield Contracts";

(ii) the "Inventory", which shall include all tangible personal property normally included in inventory;

(iii) the "intellectual Property", which shall include patents, patent applications, copyrights, copyright applications, mask works, mask work registrations, inventions, technology, know-how, trademarks, trademark applications, service marks, tradenames and logos, corporate names, trade secrets or other proprietary rights, technical notes, lab notes, industrial design applications, rights to products under development, and computer software (transferred with source code and available documentation for software owned by Seller);

(iv) the "Personal Property", which shall include all machinery, parts, equipment, supplies, furniture, computer hardware, automobiles and vehicles and other tangible personal property;

(v) accounts receivable;

(vi) the "Records", which shall include originals or duplicate copies of all books of account, general ledgers, sales invoices, accounts payable and payroll records, customer lists, supplier lists, reports, correspondence, sales and promotional literature, engineering lab books production records, inventory and sale records; and

(vii) goodwill of the Business, together with the exclusive right of Buyer to represent itself as carrying on the Business in continuation of and in succession to Seller and the rights to use any words indicating that the Business is so carried on.

By article 2.04 of the sale agreement, Senstar agreed to assume certain liabilities ComDev had incurred in relation to "the Business

10Article 6.01 of the sale agreement required that the parties enter into a separate personnel agreement, pursuant to which employees of "the Business" were to be offered employment by Senstar effective on the closing date, at compensation levels at least comparable to those in effect immediately prior to that date. Senstar also agreed to credit transferred employees with all years of service with ComDev and its affiliates and to assume ComDev's liability and responsibility with respect to unpaid vacation pay, workers compensation claims and other employment related matters. Pursuant to the personnel agreement, Senstar offered employment to 40 ComDev employees. 37 accepted.

11Article 6.04 of the sale agreement made it a condition of closing that both Control Data Canada, Ltd. and Control Data Corporation enter into a non-competition agreement. The terms of that agreement require that neither ComDev nor Control Data Corporation shall compete with Senstar by researching, designing, developing, manufacturing or selling personnel-intrusion detection products, systems or technology to customers any where in the world for a period of seven years after the closing date.

12The sale agreement called for a payment by Senstar to ComDev of $5,860,000.00, which was allocated among the purchased assets in the manner set out in this schedule to the agreement:

COMUPTING DEVICES COMPANY

SALE OF SECURITY SYSTEMS OPERATION

ALLOCATION OF PURCHASE PRICE AMONG THE ASSETS

Receivables $ 288,000 Inventory 1,909,000

Fixed Assets

Equipment &

Cable Manufacturing Equipment 767,000

Patents 2,196,000

Goodwill _________________

$5,860,000

13Prior to the sale, the manufacturing in quantity of devices developed by ComDev's security systems department had been performed by ComDev's manufacturing division, which was also involved in the manufacturing of other ComDev products. The agreement between ComDev and Senstar excludes from the sale "all fixed assets used in manufacturing except (i) as provided in Section 6.03 of this Agreement and (ii) manufacturing equipment used principally in the Business . The thrust of the evidence is that few of the assets which had been used by ComDev to manufacture security systems in quantity could have been said to have been used principally for that purpose. As a result, Senstar did not acquire those items in this transaction.

14Counsel for Senstar argues that without a manufacturing capability, the bundle of assets transferred by the sale agreement did not constitute a viable commercial operation and, hence, did not constitute a "business" within the meaning of section 63. There is no evidence or suggestion, however, that the equipment necessary to manufacture the ComDev products is particularly hard to obtain nor, indeed, that there would be any difficulty in contracting out the manufacture of these products. Counsel for the respondent acknowledges that the patents and technical expertise transferred by the agreement were the essential elements of the commercial activity which centred on ComDev's security systems products. We are not persuaded that the exclusion from the sale of manufacturing equipment not unique to the production of these products in any way detracts from the otherwise very strong character of the transaction as a "sale of business" within the meaning of section 63 of the Act.

15The respondent's other main argument was that what might otherwise appear to be a sale of part of ComDev's business to Senstar should not be so characterized when the assets purchased were intended to be and came to be used by Senstar in its own similar, pre-existing business. Reference was made to paragraph 19 and following of the Board's decision in Grand Valley Ready Mixed Concrete Supply Limited, [1981] OLRB Rep. June 663. In that decision, and in other decisions referred to in it, the Board found that a sale or transfer of physical assets only between two employer engaged in similar businesses did not constitute a sale of part of the sellers business within the meaning of section 63 when the assets sold were peripheral or incidental to the seller's business and there was no accompanying transfer of customer lists, accounts receivable, sales contracts or goodwill and no undertaking by the vendor not to compete with the purchaser. The situations dealt with in those decisions are clearly distinguishable from this one. The transaction here does include a transfer of customer lists, accounts receivable, sales contracts and goodwill, as well as an undertaking by the vendor and its corporate relative not to compete with the purchaser in the market formerly served by the "Business" which was the subject of the sale agreement. Senstar sought both to protect and enlarge its business by obtaining as a going concern and continuing ComDev's similar business. In so far as it was feasible to do so, the transaction contemplated Senstar's stepping into the shoes of ComDev in ComDev's relationship with its existing customers. It naturally planned to rationalize the two operations and integrate the ComDev product lines with its own, and the evidence is that this is being done.

16That this sort of situation can involve a sale of business to which subsection 2 or 3 of section 63 would otherwise be applicable is apparent from the language of subsection 6 of section 63, which provides that:

(6) Notwithstanding subsections (2) and (3), where a business was sold to a person who carries on one or more other businesses and a trade union or council of trade unions is the bargaining agent of the employees in any of the businesses and such person intermingles the employees of one of the business with those of another of the businesses, the Board may, upon the application of any person, trade union or council of trade unions concerned,

(a) declare that the person to whom the business was sold is no longer bound by the collective agreement referred to in subsection (2);

(b) determine whether the employees concerned constitute one or more appropriate bargaining units;

(c) declare which trade union, trade unions or council of trade unions, if any shall be the bargaining agent or agents for the employees in such unit or units; and

(d) amend, to such extent as the Board considers necessary, any certificate issued to any trade union or council of trade unions or any bargaining unit defined in any collective agreement.

Subsection 6 recognizes that the purchaser of a business may have a pre-existing business. Subsection 2 or 3 of section 63 will preserve bargaining rights with respect to those employees of the successor who are employed by it in the business it purchased by the predecessor. These are to be distinguished from persons employed by the successor in its pre-existing business. The focus is not on whether any particular employee of the successor was previously employed by the predecessor, it is on identifying the business in which the successor employs the employee. When an employer purchases a competitor's business and integrates that business with a similar pre-existing business, those employed in the purchased business may become so intermingled with those engaged in the pre-existing business that the distinction contemplated by subsection 2 and 3 of section 63 becomes difficult or impossible to maintain. Subsection 6 was intended to deal with that sort of situation.

The fact that the predecessor's business is so similar to the purchaser's pre-existing business as to make it hard to distinguish the two after the alleged sale is no basis for a conclusion that there has been no sale of the predecessor's business to the successor.

17We are satisfied that the transaction between ComDev and Senstar was a sale of a business within the meaning of subsection 2 of section 63 of the Act. We turn, then, to the question whether the bargaining rights preserved by that section can extend to any of those now employed by Senstar.

18When the sale occurred, ComDev and SEAC were parties to a collective agreement ("the SEAC/ComDev agreement") with effect from November 1, 1987 to October 31, 1989. Articles 2:01 and 2:04 of the agreement provided:

ARTICLE 2- RECOGNITION

2.01 The Company recognizes the "Salaried Employees Alliance of ComDev" as the sole Collective Bargaining Agent for those employees who are based in the greater Ottawa Area, who are covered by job descriptions for the following classifications:

PROFESSIONAL TECHNICAL

Junior Engineer

Intermediate Engineer

Engineer

Senior Engineer

PROFESSIONAL ADMINISTRATIVE

Junior Contract Administrator

Intermediate Contract Administrator

Contract Administrator

Senior Contract Administrator

Junior Program Analyst

Intermediate Program Analyst

Program Analyst

Senior Program Analyst

Junior Programmer

Programmer

Programmer/Analyst

Systems Analyst

Intermediate Procedures Analyst

Technical Support Analyst

Data Base Analyst

Junior Estimator

Intermediate Estimator

Estimator

Senior Estimator

Excluding all employees who are:

(a) Classified as Field Representatives

(b) Classified in other job classifications not represented by SEAC defined above, except in accordance with 2:04 below.

(c) Employees hired specifically for assignment to sites not controlled by the Company.

2:04 Any additions to Company job classifications where the work is covered by Article 2:01 or changes to the list of job classifications in Article 2:01 or the work being performed therein, shall be mutually agreed to by both parties. In the event the parties cannot reach mutual agreement, the dispute will be subject to the grievance and arbitration procedure. Copies of any new job titles or job descriptions, if any, will be provided to SEAC for its use.

[emphasis added]

The respondent's facilities are located at Carp, Ontario, in the Township of West Carleton. The respondent contends that Carp does not fall within "the greater Ottawa Area" and that, therefore, it has no employees to whom bargaining rights preserved by subsection 2 of section 63 might extend. Counsel initially argued that this is a sufficient basis for dismissal of the application. He acknowledged, however, that the question whether the applicant has bargaining rights for employees of the respondent "based in the greater Ottawa Area" might not be necessarily turn on whether there were any such employees at the time of the application. The question of the geographic scope of the bargaining rights preserved by section 63(2) does, however, go to whether there has been intermingling within the meaning of subsection 63(6) and to the formulation of a voting constituency for the purpose of any representation vote conducted pursuant to that subsection.

19The phrase "the greater Ottawa Area" is not a legal term of art. The City of Ottawa is a legal entity. Carp is not in the City of Ottawa, nor is Bells Corners, the location of the main facilities of ComDev to which the SEAC/ComDev agreement clearly was intended to and did apply. Carp and the Township of West Carleton do fall within the Regional Municipality of Ottawa-Carleton, which was established by statute several years before ComDev and SEAC entered into their first collective agreement in 1975. Counsel for the respondent argues that if the parties to that agreement had intended to cover the Regional Municipality of Ottawa-Carleton, they would have used those words. The National Capital Act, R.S.C. 1985, c. N-4, established and continues a National Capital Region which takes in portions of Ontario and Quebec, including the City of Ottawa and Bells Corners but excluding Carp. Counsel noted that "National Capital Region" had been substituted for "greater Ottawa area" in post-sale notions between SEAC and ComDev, and argued that this was the most sensible interpretation of "greater Ottawa area". Counsel for the respondent also referred to the 1988/89 edition of a commercial publication entitled "Greater Ottawa City Directory", which covers the City of Ottawa as well as Vanier, Rockcliffe Park and those portions of Gloucester and Nepean adjacent to the City of Ottawa. Bells Corners is in Nepean.

20We were provided with two maps from which the relative positions of Carp, Bells Corners, the City of Ottawa and other relevant locations may be ascertained. Counsel for the respondent also asked that we "take a view" of Bells Corners, Carp and the intervening rural countryside. We declined his request. We understood from the witnesses that Carp and a good deal of the country side between it and Bells Corners is rural in nature. It did not appear to us that taking a view of that countryside would assist us in understanding what SEAC and ComDev might have meant by the words "in the greater Ottawa area" when they first agreed to the use of those words in 1975.

21The applicant called two witnesses who had been involved in the negotiation of the first agreement between SEAC and ComDev in 1975. Edward R. Barrett had acted in those negotiations as Director of Industrial Relations for ComDev. Graham Wright had been one of SEAC's representatives in those original negotiations. Both witnesses agreed that during those negotiations there were no discussions between the parties about the precise geographic boundaries of "the greater Ottawa Area".

22Both parties had been aware in 1975 that ComDev owned a facility in Stittsville, Ontario at which engineers had been employed until one or two years previously. Mr. Wright testified that in discussions among themselves at the time, the SEAC negotiating team had concluded that "the greater Ottawa Area" included Stittsville. They saw the phrase "the greater Ottawa Area" as distinguishing Control Data's ComDev operations in the Ottawa area from other Control Data operations like those in Mississauga, Ontario. Mr. Wright said his personal understanding was that anything within commuting distance of Ottawa would be covered, but acknowledged that there was no specific discussion of this at the bargaining table.

23Mr. Barrett testified that in agreeing to the phrase "the greater Ottawa Area", he and ComDev would certainly have had Stittsville in mind, as the company had property there. He noted that prior to 1975 the company had also had operations in the "east end of Ottawa" farther to the east of Bells Corners than Stittsville was to the west. He observed that ComDev's business involved light manufacturing which could easily be set up in any space. He felt the phrase "the greater Ottawa Area" would certainly have been thought to extend to include locations as far from Bells Corners as Stittsville and Carp.

24When it negotiated its first collective agreement with SEAC, ComDev was already party to a collective bargaining relationship with another trade union called the Employee Association Computing Devices Company. Counsel for the respondent put before us the recognition clauses from various of the collective agreements between ComDev and that Employee Association. The agreement covering the period December 1, 1961 to November 30, 1962 covered "Employees in its number one and two plants located at Bells Corners, Township of Nepean, Ontario." The recognition clauses in the two agreements covering the period December 1, 1962 to September 30, 1966 used the language just quoted and added to it the words "and also at the Aerophysics Range near Stittsville, Ontario." The agreement covering the period October 1, 1966 to September 30, 1968 recognized the Association as collective bargaining agent "for those employees located in plants or sites controlled by the company in the greater Ottawa area and Stittsville, Ontario." We were not provided with a copy of the collective agreement in effect in 1975, but the most recent collective agreement between ComDev and the Employees Association uses the same language as appears in the 1966-68 agreement.

25Counsel for the respondent invites us to conclude from this that "the greater Ottawa area" must have been something which excluded Stittsville. He established by his cross-examination of them that both Mr. Barrett and Mr. Wright would have had some awareness in 1975 of the collective agreement then in effect between ComDev and the Employees Association when they negotiated the first SEAC collective agreement. He asked Mr. Barrett whether the Employee Association agreement had served as a model for the negotiations with SEAC. Mr. Barrett said it had not. Counsel for the respondent did not put the language of the contemporaneous Employees Association agreement to either Mr. Barrett or Mr. Wright. They were not asked how they could have felt the words "the greater Ottawa area" included Stittsville in the face of the language used in the Employee Association agreement. They were thus deprived of the opportunity to answer an argument which challenged the reasonableness of their understanding of the language they had used, and the Board was deprived of the benefit of whatever answer they might have given had counsel put to them the point he later argued to us. In the circumstances, we do not think that the language used in the Employee Association agreements can weigh in favour of any particular interpretation of the language of the first agreement between SEAC and ComDev.

26While the meaning of the words "the greater Ottawa Area" was never the subject of explicit agreement or discussion between SEAC and ComDev at the bargaining table, it is apparent that neither party intended SEAC's bargaining rights to be limited to the particular location at which ComDev then employed persons in the job classifications referred to in the recognition clause. Both parties contemplated the possibility that ComDev might in future employ persons in such job classifications as far from Ottawa as Stittsville. The fact that they used the vague phrase "greater Ottawa Area" rather than a well defined one like "Regional Municipality of Ottawa-Carleton" or "Township of Nepean" suggests that neither party was particularly concerned to place precise geographic limits on the scope of SEAC's bargaining rights.

27Counsel for the respondent argued that the scope should be limited to urban or built-up areas by way of analogy with the commercial directory to which he drew our attention. We do not accept that argument. There is no evidence that such a directory existed or was known to or referred to by SEAC and ComDev in 1975. Moreover, the directory uses the word "City" in its title; the parties to the SEAC/ComDev agreement did not use the word "City" or any other language limiting the phrase "greater Ottawa Area" to the urban or built-up area around the City of Ottawa.

28We also reject the suggestion that the amendment SEAC and ComDev made to their recognition clause after the sale can be of any assistance in interpreting the unamended clause. The respective understandings of SEAC and ComDev of the meaning of the phrase "the greater Ottawa Area" would only be one of several factors which might have influenced their agreement to adopt a more certain description of their agreement's geographic scope.

29From the maps with which we were provided, it appears that Stittsville and Carp are roughly (within 10 to 15 per cent) the same distance "as the crow flies" from the Parliament buildings in Ottawa, although Carp is noticeably farther than Stittsville by road. In all the circumstances, we are satisfied that the parties to the original SEAC/ComDev agreement intended the words "in the greater Ottawa area" to be interpreted liberally, and that on an appropriately liberal interpretation "the greater Ottawa area; includes Carp, Ontario.

30Prior to July 19, 1989, the constitution of SEAC only contemplated membership by employees of ComDev. When it became apparent that some of the employees it represented were to become employees of Senstar, it was proposed that the constitution be amended to permit membership by employees of companies other than ComDev. Amendment is provided for in Article 10 of SEAC's constitution:

ARTICLE 10, AMENDEMENTS TO CONSTITUTION AND BY-LAWS

(a) Proposed amendments to this constitution and By-Laws must be submitted in writing to the Secretary. The proposed change must be posted prior to a general meeting for at least 10 working days.

(b) Ratification of any such change shall be either by:

(i) A vote at a meeting where a least 50% of the membership cast ballots which are not abstentions or spoiled

(ii) Where the conditions of (i) above are not met, a ballot will be held on Company premises.

(c) Ratification will be by a two thirds majority vote under the conditions outlined in para (b).

A general meeting of members was called for July 27, 1989, to consider the proposed amendment to the constitution's membership provision. Less than half of the total membership attended. The amendment was then the subject of a ballot held on the company's premises. The ballots were counted sometime on or after August 4, 1989. 123 of the ballots cast favoured the amendment; 18 ballots opposed it.

31It is common ground that notice of the general membership meeting was given only 10 calendar days prior to the date on which it was held. The respondent challenged the applicant to prove that notice of the proposed constitutional amendment had been given at least 10 working days prior to the meeting, as required by the applicant's constitution. The applicant rose to the challenge. Francis Worinleighton testified that she posted a document containing the text of the proposed amendment at least 10 working days prior to the general membership meeting at which it was considered. She could not be sure whether it was posted exactly 10 days prior. She remembers thinking she had made the deadline without much time to spare. In cross-examination, she acknowledged that a copy of the notice in her possession bore a note in her handwriting indicating that it had been posted on July 16, less than 10 working days prior to the meeting. Ms. Worinleighton testified that she put that note on the document some time after the meeting was held and that it was clearly inaccurate, as the July 16th had been a Sunday and she had never been at work on a Sunday.

32Counsel for the respondent invited us to conclude that the notice requirement of the applicant's constitution had not been complied with in the attempt to amend it so as to permit membership by employees of companies other than ComDev. As a result, he argued, employees of Senstar were not eligible for membership in SEAC. Even if the amendment had been effective, he argued, it had only become effective sometime after August 2, 1989, SO that employees of Senstar had not been eligible for membership in SEAC on the day of sale of business occurred. Counsel for the respondent argues that section 63 should not be so interpreted as to give a trade union bargaining rights for employees for whom it could not be certified.

33Counsel for the respondent is inviting us to read into section 63 words which are simply not there. Section 63 says that a trade union will continue to have bargaining rights for employees in a particular business even if the identity of their employer changes. The section does not say that this is so only when the trade union can show that it could have been certified to represent the employees of the successor in the sold business. One of the main points of the section is that a trade union should not have to satisfy the certification requirements of the Act in those circumstances. Even if the proposition advanced by counsel for the respondent could somehow be read into section 63, it is by no means clear that the unamended provisions of the SEAC constitution would have stood in the way of its being certified, bearing in mind the deeming provisions of clause 1(1)(l) and subsection 103(4) of the Act.

34It is noteworthy that no employee affected by this application complains about the state of SEAC's membership requirements, nor is there any evidence that any member of SEAC challenges the validity of the proceedings which its Executive says resulted in the amendment of the membership provisions of its constitution. It might be argued that the failure to give a full 10 working days notice of the proposed amendment part of the general meeting called to consider would not be a substantial defect when it is not claimed that a vote conducted at that meeting brought the amendment into effect. In any event, while the evidence of compliance with the notice provisions is less than overwhelming, there is no evidence to refute it. If the question whether there has been compliance is relevant to the outcome of this application, we are prepared to find that there was such compliance.

35Accordingly, we find that the transaction between ComDev and Senstar which closed on August 2, 1989 was a sale of business to which subsection 63(2) of the Act applies. From and after that date, therefore, Senstar was bound by the collective agreement between SEAC and ComDev as though it had been a party thereto. Having regard to the agreement of the parties, we find that Senstar has intermingled employees in the business it purchased with employees in the business it was carrying on at the time of the purchase. The employees concerned constitute a single appropriate bargaining unit in which we direct that a representation vote be conducted. The voting constituency for the purpose of that representation vote shall consist of

all employees of the respondent based in the greater Ottawa Area, who are covered by job descriptions for the following classifications:

PROFESSIONAL TECHNICAL

Junior Engineer

Intermediate Engineer

Engineer

Senior Engineer

PROFESSIONAL ADMINISTRATIVE

Junior Contract Administrator

Intermediate Contract Administrator

Contract Administrator

Senior Contract Administrator

Junior Program Analyst

Intermediate Program Analyst

Program Analyst

Senior Program Analyst

Junior Programmer

Programmer

Programmer/Analyst

Systems Analyst

Intermediate Procedures Analyst

Technical Support Analyst

Data Base Analyst

Junior Estimator

Intermediate Estimator

Estimator

Senior Estimator

Excluding all employees who are:

(a) Classified as Field Representatives

(b) Classified in other job classifications not represented by SEAC defined above, except in accordance with 2:04 below of the collective agreement between Computing Devices Company and The Salaried Employees Alliance of ComDev dated November 24, 1987.

(c) Employees hired specifically for assignment to sites not controlled by the Company.

For purposes of clarity, the phrase "the greater Ottawa area" includes the respondent's existing facilities in Carp, Ontario.

36All those employed in by the respondent in the voting constituency on the date of this decision who are so employed when the vote is conducted will be eligible to vote. Voters will be asked whether or not they wish to be represented by the applicant in their employment relations with the respondent.

37Unless the parties agree on the substitution of some other phrase for the phrase "in the greater Ottawa area", the words we have used to describe the voting constituency will be the words used to describe the appropriate bargaining unit in any declaration under subparagraph 63(6)(c) following the conduct of the vote.

38We direct that the parties meet with a Labour Relations Officer to be assigned by the Board's Manager Field Services, at a place and time appointed by that Labour Relations Officer, to discuss arrangements for the conduct of the vote we have directed.