Ontario Labour Relations Board
File No.: 0749-88-R Citation: [1989] OLRB Rep. January 66
Applicant: United Brotherhood of Carpenters and Joiners of America Local 27 Respondents: Widcor Limited and Green-King Ltd.
Before: Louisa M. Davie, Vice-Chair, and Board Members W. N. Fraser and P. V. Grasso.
Decision of the Board: January 31, 1989
DECISION OF THE BOARD
1In the decision of the Board dated November 4, 1988, we rendered a "bottom line" decision in this matter and indicated that our reasons for that decision would follow. In the decision we declared that, "for purposes of the Labour Relations Act, and only in those instances where Widcor Limited and Green-King Ltd. together engage in the constructing, altering, decorating, repairing or demolishing buildings, structures, roads, sewers, water or gas mains, pipelines, tunnels, bridges, canals or other works, they shall together be treated as constituting one employer". We now provide our reasons for making such declaration.
2Green-King Ltd. ("Green-King") was incorporated in December 1982. Its only officer and sole shareholder is Mr. Ian Barclay. From the time of its incorporation until mid 1985, Green-King Ltd. was in the construction business. The construction projects of Green-King were in Florida. Green-King was not engaged in the construction industry in Canada during this period of time.
3From May 1986 to April 15, 1988, Mr. Ian Barclay was employed as a construction manager by the respondent Widcor Limited ("Widcor") then known as Wharton Industrial Developments Ltd. During this period of time when Mr. Barclay was so employed, Green-King was essentially dormant and was not engaged in the construction industry in Canada or anywhere else. As construction manager for Widcor Mr. Barclay was responsible for the day to day management and all aspects of the construction business of Widcor. His responsibilities included preparation of the budget estimates, negotiations of most of the subcontracts, and responsibility for administration in the field.
4Widcor is a multi-faceted company which was incorporated approximately twenty years ago. Its sole shareholder is Robert E. Wharton. The President of Widcor is Ms. Kari Adams who is also a director of the company. Mr. Wharton is the Chairman of the company and is also a director of the company. Other than as referred to herein there is no relationship, contractual or otherwise, between the owners, shareholders and directors of Green-King and Widcor. In respect of the construction business of Widcor, we note that Mr. Wharton's involvement in that aspect of the business varied and was somewhat dependent on his own personal interest in the construction project.
5Until recently Widcor was engaged primarily in the construction of industrial and commercial projects. Widcor's original business was limited to construction and some land development. In recent years however, the company went into the hotel business. By the spring of 1988 the company owned the Wharton Hotel in London, Ontario, the Ramada Hotel near the airport in Toronto, and the Renaissance Hotel in Scarborough.
6While employed as Construction Manager for Widcor, Mr. Barclay had responsibility for the construction of the Wharton Hotel in London, Ontario. He was originally and primarily employed to oversee that construction project. Widcor was also engaged in a number of other construction projects including the Dixie Road Auto Campus upon which work commenced in the winter of 1986. It is the construction of a Chrysler car dealership at the Dixie Road Auto Campus which gave rise to the filing of this application.
7The Dixie Road Auto Campus site was a concept developed by Mr. Robert Wharton. He assembled the required land upon which a number of auto dealerships have been built. The Auto Campus concept may be likened to a retail shopping mall. It is a one-stop automobile "mall" where consumers can shop and compare the various products of the automobile market. The Dixie Road Auto Campus currently consist of six-car dealerships - Toyota, Honda, Nissan, Mazda, General Motors and Chrysler. With the exception of the land upon which the General Motors dealership was built, Widcor owns the land and premises of the dealerships and has entered into long term, twenty-year leases with the owners of those car dealerships. The General Motors site has been subdivided from the remainder of the land and is owned by General Motors. Prior to the events which gave rise to this application, Widcor designed and built each of the dealerships. With respect to the Honda, Toyota, Mazda, and Nissan dealerships, Widcor built the dealerships as owner/landlord of the land and the building. With respect to the General Motors dealership, although Widcor is not the owner or landlord of the building which houses the G.M. dealership, Widcor did design and construct the dealership on a "construction management" basis. At the time of the circumstances relevant to our determination, work had been substantially completed on the first four dealerships namely Honda, Mazda, Nissan and Toyota. Work had been commenced and was still on progress at the General Motors dealership site. Prior to the termination of his employment with Widcor Mr. Barclay's responsibilities as construction manager included responsibility for this Auto Campus project. There remains space for one, and perhaps two car dealerships on the remainder of the Dixie Auto Campus property. Mr. Wharton has had some preliminary discussions with Ford about a car dealership at that site. At the time of the hearing any details of such a dealership were far from being finalized. In addition, Widcor also owns a four-acre site on the south side of the Auto Campus. The property is currently zoned for commercial use and is not zoned for a car dealership.
8In the early months of 1988, for reasons irrelevant to our determination, Mr. Wharton determined that Widcor ought to divest itself of most of its holdings and should cease to do any direct construction work. Subsequently, Widcor sold the three hotels it owned and wound up its construction operations.
9At the time Mr. Wharton made this decision, Widcor was in the midst of negotiating with Chrysler Canada to build and lease to Chrysler a car dealership at the Dixie Auto Campus. Mr. Barclay was advised by Mr. Wharton of his intentions to sell and wind up Widcor's operations, and presumably gave some thought about the effect those plans would have upon his own continued employment. Mr. Barclay decided that he was interested in reactivating his construction business and continue to work in the construction industry on his own behalf. While still an employee of Widcor he negotiated with, and subsequently entered into a lump sum or stipulated price contract to build the Chrysler dealership with Widcor. That contract is dated March 25, 1988. Mr. Barclay's verbal tender to Mr. Wharton was made on March 10, 1988 approximately a month before the termination of Mr. Barclay's employment. Work actually commenced on the site on May 9, 1988.
10In his testimony Mr. Wharton listed some immediate benefits to Widcor in agreeing to have Mr. Barclay and/or Green-King construct the Chrysler dealership on a stipulated price contract basis. According to Mr. Wharton, Mr. Barclay was familiar with the site and the type of building which was to be constructed. Mr. Wharton indicated that car dealerships are a somewhat specialised type of building. One can readily see that by entering into the contract with Green-King, Widcor could ensure that the building which it would ultimately own was constructed with some expertise and experience by someone familiar not only with the construction of car dealerships in general, but someone who had particular and specific expertise and experience with the Dixie Auto Campus. The idea of having Mr. Barclay nearby in the event that there was any problem or issue that arose in respect of the five other dealership was also specifically referred to as a benefit to Widcor by Mr. Wharton. Mr. Wharton was also pleased that by entering into this arrangement, Widcor could act "solely as a developer". In this way it would avoid the risks of, or exposure to, construction cost overruns. According to Mr. Wharton, the price Widcor quoted to Chrysler, was the price Widcor itself paid to Green-King. Finally, Mr. Wharton testified that the arrangement also permitted him to avoid any liability that might occur if he were to terminate the employment of Mr. Barclay as a result of Widcor's decision to divest itself of its construction business.
11At present Widcor is concentrating its efforts in continuing its Real Estate Development business. Although Widcor is not presently engaged in the construction industry, Mr. Wharton testified that Widcor could recommence its construction business at some point in the future if circumstances dictated. According to Mr. Wharton, Widcor continues to have that option available.
12We now turn to examine the relationship, contractual and otherwise between and amongst Widcor and Green-King and Chrysler in respect of the Chrysler dealership at the Dixie Auto Campus.
13In 1987, Widcor initially entered into negotiations with American Motors Corporation ("A.M.C.") in respect of what later came to be known as the Chrysler dealership site. At that time, certain preliminary proposals were made, there was some negotiation back and forth between Widcor and A.M.C. but eventually an A.M.C. dealership on that site was "shelved". In the early months of 1988, however, (and after Chrysler had purchased A.M.C.), the thought of a Chrysler Jeep/Eagle dealership at the Auto Campus was revived. Actual negotiations in respect of the site proceeded quickly once the matter was reactivated.
14On February 2,1988, Mr. Ronald Carter, architect, made a preliminary presentation and presented a set of drawings to representatives of Chrysler Canada Ltd. Mr. Carter was described by Mr. Barclay as the "in-house" architect for Widcor. Mr. Carter was not an employee of Widcor. He did however, maintain his offices at Widcor's Head Office for two years and, according to Mr. Wharton, acted primarily as the company's consultant. Widcor was the primary source of Mr. Carter's work. In the spring of 1988 Mr. Carter established his own offices at another location. Mr. Carter had been the architect who had designed the other auto dealerships at the Dixie Auto Campus. On February 2, 1988 when he made his presentation to Chrysler Canada Ltd., Mr. Carter presented "the set of drawings prepared for Nissan as an example of what will be prepared for Jeep/Eagle". Neither Mr. Wharton nor Mr. Barclay attended this meeting at which the design of the building to be constructed was discussed. Mr. Barclay did however receive a copy of the minutes of that meeting. The concluding item of those minutes is as follows:
Schedule
Will begin working drawings immediately and be completed end of March.
Anticipate site plan approval application end of February.
Anticipate constructions starting at end of May, with seven months construction time.
Suggest November occupancy.
There is further correspondence including a letter dated February 12, 1988 between the Chrysler Canada representative and Mr. Carter in respect of the design. Thereafter, Mr. Carter designed the building. Suffice it, to say that by March 15, 1988, he had designed the building, and had submitted the architect's drawings A1-2, A2-2 and A3-2 to Chrysler. These drawings were to Chrysler's specifications.
15Widcor eventually entered into a construction contract and lease agreement with Chrysler. That contract was not formally concluded until some time after May 5,1988 (as evidenced by a letter dated May 5, 1988 from Mr. Barclay to Mr. Wharton). According to Mr. Wharton, the construction contract between Chrysler and Widcor was "mirrored" on the construction contract between Green-King and Widcor. Green-King did not enter into any contractual relationship with Chrysler directly. The stipulated price contract dated March 25, 1988 between Green-King and Widcor is for a price of one million fifty-nine thousand four hundred and fifty-three dollars ($ 1,059,453.00). The contract includes the March 15, 1988 drawings prepared by Mr. Carter and notes:
"subsequent drawings shall reflect the intent of the drawings and specifications noted above. Architectural, site-grading, site-servicing and land-scaping drawings shall be undertaken by Ronald H. Carter, Architect. Structural, mechanical and electrical drawings shall be undertaken by Green-King".
From the totality of the evidence we conclude that the contract price of $1,059,453.00 was agreed upon at a time when the structural, mechanical and electrical drawings (each one a significant cost item in the total contract price) had not yet been prepared by Green-King or anyone else.
16Mr. Barclay testified that he arrived at the contract price he quoted to Widcor in the following manner. He examined the preliminary drawings of Mr. Carter and procured as many sub-trade prices as possible. He compared those prices with his own estimates. For those items for which he could not obtain any quotes from sub-contractors, Mr. Barclay calculated the cost of materials and estimated the cost of labour. For example, because structural drawings had not yet been completed, Mr. Barclay obtained a "pounds per square foot" figure from the structural engineers, took that to a steel manufacturing company and obtained the cost for Joists and structural steel. He estimated the costs of such general overhead requirements as trailer, telephone, salary to superintendent, rental of small tools, etc. Mr. Barclay estimated the cost of the jobs non-productive, on site overhead and made calculated estimates on certain other matters such as land-scaping and sewers and watermain. After he completed his calculations Mr. Barclay presented Mr. Wharton with his calculation of the cost required to complete the Chrysler dealership. He calculated the cost to be $1,009,453.00. Thereafter, and to quote Mr. Barclay, "from that [we] negotiated a fee on top" which ultimately was $50,000.00. In calculating the $1,009,453.00 cost of the building Mr. Barclay used the same or similar structure, methodology or sources as he did in calculating the cost of building the five car dealerships which already formed part of the Dixie Auto Campus.
17The contract price of $1,059,453.00 with Green-King, (or generally the cost of constructing the premises of the other five car dealerships already on site) was significant to Widcor. It is the price of the land together with the price of the improvements to the land (building, services, etc.) which essentially determines the rate of rent to be paid by the lessee (in this case Chrysler) to the landlord/owner (Widcor). In respect of the Chrysler dealership site, Widcor wanted a return rate capped at 10 percent i.e. the rent was to be fixed at 10 percent of the total of the fixed value of the land and building. Mr. Wharton testified that he did not enter into the contract with Green-King until Widcor had a firm commitment (including the commitment to lease at a specified rent) from Chrysler. That commitment was made some time prior to March 22, 1988 (as is evidenced by Mr. Wharton's letter to Chrysler Canada confirming the lease rate for the initial five year period of the lease). From the totality of the evidence we conclude that Widcor would not have entered into the contract with Green-King in the amount specified, but for the agreement that it was able to reach with Chrysler in respect of the terms of the lease. Similarly, Widcor would not have entered into the construction and lease agreement with Chrysler but for the price of the construction contract it was able to negotiate with Green-King.
18In explaining these various arrangements Mr. Wharton described his roles as an "investor/developer" but stated that the "real negotiations on the specifications of the building was done with me as go-between Chrysler and Green-King". As noted, there is no direct construction contract between Chrysler and Green-King. In order to deal with the possibility that extra construction costs might be incurred, including costs incurred as a result of changes requested by Chrysler, Mr. Barclay and Mr. Wharton inserted the following clause in their contract.
Appendix B
Any changes to be approved and paid directly by Chrysler to the contractor.
Wharton Industrial Developments will not be responsible for any additional costs for any reason as the project is a total turn key project.
There is no evidence or suggestion that a similar provision is to be found in the contract between Widcor and Chrysler. In fact, Chrysler has made certain separate arrangements with Green-King in respect of some minor matters not included in the contracts between Chrysler and Widcor or between Widcor and Green-King. Apart from these minor matters however, if Green-King's construction costs were less than or greater than the $1,059,453.00 quoted to Widcor, any loss or profit would lie with Green-King. Mr. Barclay had also prepared the construction costs estimates of the buildings in respect of the other five dealerships at the Auto Campus. It was Mr. Barclay's estimates which Widcor used to negotiate the lease with the owners of those dealerships. In those instances however, if Mr. Barclay had somehow miscalculated the cost of the building, the financial loss or profit caused by such miscalculations (both in terms of the immediate loss of profit on the building and the long term loss or profit from the lease arrangement) would be born by Widcor.
19The actual construction of the Chrysler dealership was done by subcontractors who entered into subcontract agreements with Green-King. In addition to Mr. Barclay, the only other employees employed by Green-King are Mr. Barclay's two sons and a superintendent. Mr. Barclay's wife performs a book-keeping functions for Green-King. There is no evidence that, with the exception of Mr. Barclay himself, any of these persons had previously been employed by Widcor.
20We heard a significant amount of evidence in respect of the subcontrators engaged in the construction of the Chrysler dealership, and the subcontractors engaged in constructing the other 5 dealerships. On the Chrysler site, Green-King engaged a number of subcontractors some of whom had previously acted as subcontractors to Widcor in respect of one or more of the other dealerships which had already been built on the auto campus. The sub-contractors engaged by Widcor to complete certain types of work at the other 5 dealerships varied from dealership to dealership. For example, OPEC Drywall was a subcontractor for the drywall work for the Chrysler dealership. That company was also the drywall subcontractor for the Honda dealership but was not engaged as a drywall subcontractor for any of the other dealerships. Similarly, Plan Electric was the electrical subcontractor engaged in the Chrysler dealership. That company also did some electrical work as a subcontractor to Widcor in respect of the Mazda and Toyota dealership. In the circumstances of this case we attach no great significance to the fact that some of the subcontractors engaged by Green-King had previously acted as subcontractors to Widcor. The nature of the general contracting business is such that work is subcontracted. There are a certain number of general contractors and a certain number of subcontractors in the construction industry. Some of these general contractors and subcontractors have developed specific expertise in certain types of construction. In the circumstances of this case there is nothing unusual or sinister in the fact that two general contractors engaged the same subcontractors on different occasions. That set of circumstances appears to be almost inevitable. We do concur however with the observation made by applicant's counsel in argument that Mr. Barclay had available the existing structure and existing organization, both in the sense of his own expertise and the existence of the subcontractors who had performed or were still performing work at the other 5 dealerships at the Dixie Auto Campus, when he tendered his oral bid to Widcor. As noted earlier, Mr. Barclay's duties as Construction Manager for Widcor included the negotiations with subcontractors.
21As work progressed, Green-King made regular, monthly applications for payments for work completed to date to Widcor. The architect would certify the amount to which Green-King was entitled. Widcor paid the amount certified by the architect. With the exception of a ten thousand dollar differential on the last and final request for payment, the architect always certified the amount shown as due by Green-King. The architect who completed these certificates for payment was Ronald H. Carter, the architect who had designed the building and the person who was described as "in-house" architect for Widcor.
22Notwithstanding the fact that the value of the contract was substantial, Green-King did not obtain, and Widcor did not require it to obtain, any bond to ensure performance. Mr. Wharton explained this by stating that he knew that Green-King as a "reconstituted" company which had not been operative for some time, could not obtain the necessary bonding for a project of this size. Mr. Wharton knew Mr. Barclay and had an "understanding" with Mr. Barclay that he, Mr. Wharton, could review Green-King's records to ensure that proper payments had been made to the subcontractors on site "at any time", and before Widcor would issue a cheque for any specific draw. This safeguard, together with the requirement that payment was made only after the architect had certified the work had been completed was sufficient for Widcor's purposes. Mr. Wharton felt that as he himself was familiar with the construction industry he was not in any exceptional jeopardy. In response to a question as to what he would do if Green-King, for any reason, could not complete project, Mr. Wharton indicated he would either do it himself or use someone else to complete. Mr. Wharton did in fact avail himself of the opportunity to examine Green-King's records to ensure that payment to the subcontractors had been made.
23Before examining the applicable law we note the following additional facts. As between Widcor and Green-King there are no common principals, shareholders or directors. There are no common logos, nor is there any evidence that the solicitors, accountants, banks or bookkeeping or office personnel are common to both companies. The exception to this of course is Mr. Barclay. The companies do not share the premises nor is there a common telephone. Green-King's Head Office is at Suite 9, 1200 Aerowood Drive, Mississauga, Ontario. Although that property is owned by Widcor, Green-King has subleased its portion of the premises from 3-L Sound Reinforcement Ltd., a company unrelated to either Widcor or Green-King. Widcor's Head Office is at suite 50, 1200 Aerowood Drive, Mississauga. Green-King does not now and has not in the past owned or otherwise obtained any of the assets formerly owned or used by Widcor.
24On the other hand, each of the two respondents was, at the relevant time acting as a general contractor in the construction industry. Each operated primarily through the use of subcontractors. The work performed by the employees of the respondents is similar and requires similar skills. Green-King has not engaged in any construction projects in Canada other than the Chrysler dealership. It has not bid upon any other projects and its sole source of work to date has been Widcor. Finally, we note that at the relevant time control over labour relations for Widcor rested with Mr. Barclay. While employed at Widcor, Mr. Barclay was the person who, in fact, directed the activities which gave rise to employment and who on, December 22, 1987 and on February 16, 1988 signed, on behalf of the employer, certain minutes of settlement between the applicant and Widcor's predecessor (Wharton Industrial Developments Ltd.). We further observe that in the latter minutes of settlement the respondent employer (Widcor) agrees that (a) it is bound to the carpenters' provincial ICI collective agreement, (b) that collective agreement applies to the Dixie Auto Campus site and (c) the employer (Widcor Limited) "shall abide by the collective agreement in respect of all work performed in the future".
25Within this factual framework we now turn to examine the law. A leading case which outlines both the purpose and effect of section 1(4) which is particularly applicable to the construction industry continues to be Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 where the Board stated:
Section 1(4) was enacted in 1971 and deals with situations where the economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one legal entity. Where such legal entities carry on related business activities under common control or direction, the Board is empowered to pierce the corporate veil. Section 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure; nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1(4) is similar to that of section [63] which preserves the established bargaining rights and collective agreement when a "business" is transferred from one employer to another. Section [63] has been part of the scheme of the Act since the mid 1960's. Neither remedial provision requires a finding of anti-union animus; their primary application is to bona fide business transactions which incidentally undermine or frustrate established statutory rights. Since the two sections are complementary, it is not unusual, as in the present case, for an applicant to rely on both.
Section 1(4) does not require that related business activities under common control or direction be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase 'whether or not simultaneously". The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and, business may be effectively transferred from one corporate entity to another, without any of the indicia of a "transfer of a business" which might trigger the application of section [631. This is especially the case in the construction industry where many of the employers will not have the permanence or investment in fixed plant and equipment characteristic of a manufacturing concern. A small construction company can move from job site to job site or place to place, assembling tools, equipment and a labour force as required after it has made a successful bid. There may be no established economic organization, labour force or configuration of assets. A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of business between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. Similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed there will often be good commercial reasons for doing so unrelated to any express desire to undermine the union's bargaining rights. The earlier company may have run into financial difficulties, or lost its reputation, or there may be legal, accounting or tax advantages in establishing a new vehicle through which the business, or related business activities can be conducted. Again, it is quite possible to do this without a clear and concrete disposition between the two firms so as to call section [631 into play. To ensure that the industrial relations status quo is preserved, the Legislature has provided that where two employers carry on related economic activities, under common control and direction, whether or not simultaneously, they can be treated as one for the purposes of the Act. However, it should be noted that section 1(4) is discretionary. The Board need not make a 1(4) declaration even when the conditions precedent are present; and has not done so, for example, where a trade union is seeking to extend rather than preserve its bargaining rights.
A more difficult question is whether Brant Erecting and Hoisting and Provincial Steel can be said to have engaged in "associated or related activities or businesses" since, for practical purposes, Brant Erecting ceased to exist as a going concern prior to the establishment and subsequent incorporation of Provincial Steel. The respondent contends that the two businesses cannot be "related" within the meaning of section 1(4) because they were never engaged in any joint ventures or business endeavours, nor were they carrying on business at the same time. The respondent argues that such overlap as there may have been between the activities of Provincial Steel and Brant Erecting, was solely for the purpose of winding up the latter company, and cannot be regarded as the kind of related activity to which section 1(4) is directed. But for the 1975 amendment to the Act, this argument would have considerable force; but it is now clear that the "associated or related activities or businesses" need not be carried on simultaneously. The amendment extends the ambit of section 1(4) to situations in which one business entity is actively carrying on business and the other is not. It is not necessary to have shared participation in a common business or endeavour or even contemporaneous economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two businesses may be "related" within the meaning of section 1(4) even though their activities are carried on through different or corporate vehicles and are not carried on simultaneously. It is evident that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of 'privity of contract" or "the corporate veil".
26There are three conditions to be met before a common employer declaration can be made:
(a) There must be more than one corporation, firm or individual association or syndicate involved.
(b) These entities must be engaged in associated or related business activities, and
(c) These entities must be under common control or direction.
27In the circumstances of this case the first two criteria are easily identifiable. There are two corporate entities, Green-King and Widcor. Those corporate entities are carrying on associated or related activities within the broad meaning of those terms as defined in Brant Erecting and Hoisting, supra, at paragraph 15. Each corporate entity was a general contractor in the construction industry. Each performs some work directly with its own employees while at the same time contracting out certain other work. In addition, there is the functional interdependence which exist between the two entities in respect of the Chrysler dealership. Widcor as owner/developer of the land and owner/landlord of the dealership has entered into a construction and lease arrangement with Chrysler which obliges Widcor to build a specific type of dealership to Chrysler's specifications. Widcor has determined to build that dealership using a particular type of arrangement, namely the construction services of Green-King. The activities carried on by the two respondents with respect to the Chrysler site are complementary and there is a "symbiotic" relationship between the two business entities (see Metropolitan Parking, [1979] OLRB Rep. Dec. 1193).
28The more difficult question is whether the two respondents are under common direction or control. The two companies are owned separately. Although there are no common directors, officers or shareholders, there are a number of factors which point to a common or joint direction or control. Any one of these factors standing alone or in isolation might have been insufficient to establish the third condition precedent to a section 1(4) declaration. Their cumulative effect, examined in the context of the total relationship however, has caused us to conclude that the applicant union has established sufficient common direction or control for the Board to make a declaration pursuant to section 1(4).
29First, we note that entities can be under common control or direction without sharing common owners, shareholders, directors and officers. Notwithstanding the absence of such indicia, the Board will examine the contractual and economic arrangement between the two entities to see if these indicate functional interdependence sufficient to show two entities are under common control or direction. Thus, in Donald A. Foley, [1980] OLRIB Rep. April 436, the Board stated at page 443:
But section 1(4) both allows and requires the Board to examine the degree of functional interdependence which exist between business entities so it must also look at the contractual and economic arrangements between them, and, in fact, at all elements of interdependence.
(See also Brantwood Manor Nursing Homes Limited, [1986] OLRB Rep. Jan. 9 at paragraph 104, Kennedy Lodge Inc., [1984] OLRB Rep. Jul. 931 at paragraph 53).
30Secondly, the Board has held that common direction or control can be found where two independently owned entities share in a commercial venture. In this regard we note the decision of the Board in J.D.S. Investments Limited, [1981] OLRB Rep. Mar. 294 where the Board stated at page 296:
- The respondents contend that the two firms are not under common control or direction, and in this regard rely on the fact that Martin Ross Construction and J.D.S. Investments Limited have no common shareholders or officers. Although the existence or non-existence of common shareholders and officers is certainly an important factor in deciding whether or not two firms are under common control or direction, the Board has indicated that it is not necessarily the determining factor and that the Board will also consider who, in fact, directs the activities which give rise to employment. See: Evans-Kennedy Construction Limited [1979] OLRB Rep. May 388 and Donald A. Foley Limited, [1980] OLRB Rep. April 436.
In that case the manner in which the two business entities shared responsibility for the construction of the project, and in particular the manner in which one entity supplied expertise to the other, led the Board to conclude that the entities were under common control or direction.
31Similarly, we note the number of cases in which the Board has accepted that, in appropriate circumstances, section 1(4) may be broad enough to encompass subcontracting arrangements. For example in Federated Building Maintenance Co. Ltd., [1985] OLRB Rep. Nov. 1585, the Board did not issue a section 1(4) declaration but did state at page 1594:
- We accept the union's proposition that section 1(4) may be broad enough to cover some of subcontracting arrangements - especially those which do not involve "contracting out" but which might more appropriately be described as 'contracting in" or "labour only" subcontracting. Where "A" enters into a relationship with "B" whereby "B" comes into "A's" premises to perform functions to "A's" detailed specifications which were or might be undertaken by "A's" own employees, there will inevitably be something of a "symbiotic relationship" between the two business entities. Their activities will be complementary. They will necessarily be "related" in a general sense, and efficiency will usually require that there be some degree of co-ordination. Moreover, the more closely the purchaser of employee services controls when, where, how, by whom, and at what price the employee services are provided, the more the activities will appear to be under joint control or direction. If at the same time, the subcontractor is effectively dominated by the purchaser or it appears that the notion of a subcontract was introduced to provide a separate non-union corporate vehicle which permits the purchaser to have the same work performed in much the same way as before, but beyond the ambit of its collective agreement, the Board may well find that a section 1(4) declaration is warranted.
(For similar observations see also, The Charming Hostess Inc., [1982] OLRB Rep. April 536, Donald A. Foley Limited, supra, J. H. Normick Inc., [1979] OLRB Rep. Dec. 1176, Ontario 474619 Ltd.,[1981] OLRB Rep. Oct. 1452). The particular facts and circumstances of the subcontracting arrangement are obviously crucial to such a determination. For example, subject to the provisions of the collective agreement, an employer may subcontract work. Such a subcontract must be bona fide and to a truly independent business entity. An employer cannot, through the use of a subcontracting arrangement, in effect subcontract to itself by entering into a subcontract arrangement with a company which it controls or directs.
32Finally, in determining whether there is common direction or control, a number of cases have focused on who, in fact directs or controls the activities which give rise to employment. (See for example Donald A. Foley, supra, J. D. S. Investments Ltd., supra, Evans Kennedy Construction [1979] OLRB Rep. May 388, United Shelters Limited, [1981] OLRB Rep. June 796, J. H. Normick Inc., supra, Penka Carpentry Ltd. [1985] OLRB Rep. May 711).
33In the circumstances of this case, we find the cumulative effect of the following factors to point to common direction or control. Mr. Barclay bid upon and entered into the stipulated price contract on behalf of Green-King while he was still employed as a construction manager of Widcor. Certainly, from a labour relations perspective, the relationship of master and servant is one in which there is an element of control by one party in relation to the other. As construction manager, Mr. Barclay's duties included estimating the cost of construction (a figure of great significance to Widcor Limited as it would ultimately be a major component of the equation used to determine the rent to be paid) and the selection of subcontractors. Mr. Barclay performed those same duties for Green-King. In a bid oriented sector of the construction industry, the essence of the "business" frequently resides in the experience and expertise of its management personnel. In the broad sense, those expert and experienced management personnel control or direct the company, and in particular control or direct the activities which give rise to employment. Tendering projects, supervising work in the field, negotiating subcontracts are highly significant aspects of a general contracting company and often point to who has control or direction of the company and its employees. In the circumstance of this case, that control or direction was common to both Green-King and Widcor by reason of the presence of Mr. Barclay. The common management, the inter-relationship of operations and the centralized control of labour relations, (once again in the person of Mr. Barclay who for example executed minutes of settlement of two matters brought before the Labour Relations Board on behalf of Widcor and who supervised the work performed in the field for both Widcor Limited and Green-King) are factors which point to common or joint direction or control. (See Frank Plastina Investments Ltd., [1986] OLRB Rep. June 720, Evans Kennedy Construction Ltd., [1979] OLRB Rep. May 388, United Shelters Ltd., [1981] OLRB Rep. Jun. 796, Colt Contracting Co. Ltd. unreported Board file No. 2550-84-R decision dated November 13, 1986, and Penka Construction, supra).
34We find that, from the moment that Widcor had its architect present proposals to Chrysler in respect of the dealership, Widcor continued to have some control over the project in the sense of what was going to be built and how and when it was going to be built. After having entered into the contract, Green-King and Widcor continued to have ongoing discussions about matters relating to the construction of the building. That type of "control" is not unusual when one remembers that, as owner of the property, Widcor would receive the benefit of the construction. Standing alone that type of input or "control" is generally insufficient to support a section 1(4) declaration. In this instance however, Widcor as owner/developer was not simply a purchaser of construction services, and Mr. Barclay, through Green-King was not simply a general contractor who happened to successfully bid upon a project. Widcor was intimately connected and involved in the negotiations in respect of the manner and type of construction which ultimately occurred through Green-King. Its involvement extended so far that it entered into its own construction contract with Chrysler "mirrored" on the contract it had with Green-King. In effect, Widcor was able to have the Chrysler car dealership built in much the same way and manner that it itself had constructed the other five car dealerships. Through its commercial contract with Green-King, Widcor's affairs were structured differently, but the infrastructure which led to the construction of the Chrysler dealership by and large remained the same as the infrastructure which led to the construction to the other five dealerships. Mr. Barclay as construction manager for Widcor had developed for Widcor, and in determining the amount of his own bid was able to use for the benefit of Green-King, the existing organizational structure i.e. a list of subcontractors, subcontracting prices which had been tendered in the other dealerships built, the manner of construction of the other dealerships, etc. In this respect Mr. Barclay's source of information cannot be characterized as the independent expertise of a new contractor.
35We note also that the lack of bonding on the project, although not in and of itself unusual or a factor which, standing alone would lead to a section 1(4) direction, in this instance Green-King granted Widcor the right to examine Green-King's books to ensure Green-King had met its own contractual obligations. This right was in fact exercised by Widcor. In a true arm's length owner/general contractor relationship, one would not normally expect the general contractor to provide access to its books to an owner/client which had engaged its services.
36In addition to these various factors which point to common or joint direction or control we also considered the fact that Green-King has not engaged in any other construction projects. It has not tendered any other projects and its sole source of work to date has been Widcor and the Chrysler dealership. For its part Widcor did not seek any other tenders in respect of the Chrysler dealership.
37As to whether we ought to exercise our discretion in the circumstances of this case, we note that Widcor is bound to the Carpenters' Provincial ICI collective agreement. It acquired certain work covered by that collective agreement. Pursuant to that collective agreement it is obliged to have that work performed by members of the applicant. Indeed, in paragraph 4 of the minutes of settlement entered into on February 16th, Widcor specifically acknowledged that that collective agreement applied to the Dixie Auto Campus site and that it, Widcor would "abide by the collective agreement in respect of all work performed in the future" in respect of the Dixie Auto Campus. The contractual arrangement which Widcor had with Green-King can, and does lead to the erosion of the union's bargaining rights. Work to which the applicant's collective agreement with Widcor Limited applies, has been transferred by Widcor to Green-King, a company not in a contractual relationship with the applicant.
38On the other hand, in exercising our discretion, we were mindful of the fact that at present, Widcor no longer engages in the construction industry and has no present intention of reactivating its construction business. Mr. Barclay, faced with the loss of employment as a result of Widcor's winding down of its construction operations had a right to seize upon that opportunity to re-establish Green-King in the construction business. Had Mr. Barclay merely activated Green-King and gone out to bid as a truly independent general contractor on any other projects, without assistance, help or any support from Widcor, it is possible that a section 1(4) declaration would not have issued. It is the specific and somewhat unusual circumstances which surrounded the construction of the Chrysler dealership at the Dixie Auto Campus which caused us to determine that there was common direction or control. Absent those factors, a section 1(4) declaration may not have issued.
39The making of a section 1(4) declaration has the effect of treating two corporate entities as constituting one employer for purposes of the Act. A section 1(4) declaration without qualification therefore would have the effect that the applicant union has bargaining rights for both Green-King and Widcor. Both will be bound by the provincial ICI collective agreement and as one employer, presumably each would be liable for any violations of that collective agreement or any violations of the Labour Relations Act. This would be so regardless of the fact that perhaps, in fact, only one legal entity was the "culprit" who violated the collective agreement or the Act. That result normally flows quite logically from a finding that two separate legal entities are under common direction or control. Where, as here however, the common direction or control comes from a unique set of circumstances relating specifically to the construction of a car dealership at the Dixie auto campus, and not from such traditional indicia as common directors, common shareholders, common officers, etc., the aforementioned results appear to be somewhat less logical. At present Widcor does not operate a business in the construction industry. It is a land developer and is in the midst of "setting up some money market and bond market operations." In the present circumstances it would be anomalous if, by reason of Widcor's construction venture in respect of the Chrysler dealership, Widcor is indefinitely responsible or accountable for the ongoing construction business of the general contractor which it engaged on that project. Obviously, and as acknowledged by Mr. Wharton, if at some time in the future Widcor itself again operates a business in the construction industry, Widcor continues to be bound to recognize the bargaining rights which the applicant trade union has acquired, and continues to be bound to any collective agreement then in force. Conversely, as Widcor has no other direction or control in respect of Green-King's construction business (other than the specific, joint direction or control that it shared with Green-King in respect of the construction of the Chrysler dealership), then although the section 1(4) declaration is intended to, and has the effect of protecting the bargaining rights which the union has acquired in respect of Widcor, the section 1(4) declaration also has the effect of extending those bargaining rights to encompass Green-King wherever and whenever it operates in the construction industry. In the circumstances of this case that result appeared to the Board to be equally incongruous. As the Board has broad discretion and remedial powers (as specifically noted in the concluding words of section 1(4) which grants the Board the power to "grant such relief, by way of declaration or otherwise, as it may deem appropriate") during the course of argument, we suggested to the parties that an appropriate declaration to be made was a declaration limited to protecting the applicant's bargaining rights to those instances where Green-King and Widcor together engage in working in the construction industry as ultimately set out in our decision of November 4, 1988. Counsel for the union and Mr. Wharton on behalf of Widcor both indicated that they would have "no problem" with the Board making such a declaration. Mr. Barclay did not comment on the matter.
40For all of these reasons we rendered our written decision on November 4, 1988.