Ontario Labour Relations Board
[1989] OLRB Rep. April 384
2367-88-R Labourers' International Union of North America, Local 607, Applicant v. Stebill Limited, Hemmin Mine Service Limited, Respondents
BEFORE: Ken Petrysh en, Vice-Chair, and Board Members J. Lear and S. Weslak.
APPEARANCES: L. Steinberg and P. Harris for the applicant; Gregory R. Birston and Julius Felkai for the respondents.
DECISION OF THE BOARD; April 28, 1989
Decision
The Board has before it two related applications, one made under section 63 and the other under section 1(4) of the Labour Relations Act. At the beginning of his argument, counsel for the applicant advised the Board that his client no longer intended to pursue the application under section 63 of the Act. Accordingly, the application under section 63 of the Act alleging a sale of a business between the two respondents is hereby dismissed. The Board is left then with the application by Labourers' International Union of North America, Local 607 ("Local 607") which alleges that Stebill Limited ("Stebill") and Hemmin Mine Service Limited ("Hemmin") constitute one employer for the purposes of the Act.
Counsel for the respondents admitted at the outset that Stebill and Hemmin are under common control and direction. Mr. J. Felkai is the sole Officer and President of Stebill and he controls and directs Hemmin. Given the agreement of the parties on the issue of common control and direction, the Board is left to determine whether Stebill and Hemmin are engaged in associated or related activities or businesses and whether it should exercise its discretion to grant Local 607 the remedies it seeks. Felkai was the only witness to give evidence. In making its factual determinations, the Board has reviewed all of the oral and documentary evidence in addition to the parties' submissions relating thereto.
Between 1972 and 1980, Felkai owned and operated J. Felkai Construction Limited in the Sudbury area. This company did concrete and service work for the mining industry and it went into receivership in approximately 1980. From 1980 until 1984, Felkai worked as an employee for contractors who were involved in concrete and service work in the Sudbury area. Stebill was incorporated in December 1983 and in May 1984, Felkai moved to Heron Bay in order to obtain concrete and forming work for Stebill in the Hemlo area. Stebill did obtain such work and it employed persons, including construction labourers, from July 1984 until December 1984. A significant amount of the work it obtained during this period came from Ball Brothers Ltd. Since the latter company is a unionized contractor, Stebill signed a voluntary recognition agreement on August 2, 1984 with the Labourers covering “construction labourers, cement finishers and waterproofers” employed by Stebill.
The thrust of Felkai's evidence regarding Stebill was to demonstrate that Stebill was created in order to engage in large concrete jobs. Felkai testified that Stebill performed five jobs during the approximately six months it was in operation and all of the jobs were bid jobs. In other words, they were jobs for which Stebill competed with other contractors and which required some planning, particularly with respect to the labour requirements on each job. The two largest jobs Stebill obtained were from Ball Brothers Ltd. One job was pouring concrete floors for an administration building owned by Noranda and the other involved the pouring of a foundation for the mill area at the Lac Minerals site. These jobs required Stebill to complete its work within a specific time frame and required approximately eight to ten labourers. Stebill also performed three smaller jobs for Teck Corona. Stebill poured a small concrete slab for a foundation for a gatehouse. As part of a water supply system, it built three concrete piers. Stebill was also involved in filling in a 4' X 6' hole with concrete once certain piping had been installed. The sales journal for Stebill discloses that Stebill performed work for two other customers. These jobs were small and the customers, although not the mining companies in the area, were customers involved in servicing the mines. The sales journal for Stebill also discloses that work in addition to the contract with Ball Brothers Ltd., particularly on the Lac Minerals job, was performed by Stebill. Felkai indicated that smaller jobs consisting of work that "fell through the cracks" would arise and Stebill would perform the work and issue invoices for it.
It became apparent to Felkai that most of the sizeable concrete construction work had been completed at the mine sites and that Stebill was not in a position to compete in this field with the big firms. He observed that there was however a considerable amount of what he described as service work available. This work involved any number of smaller jobs including clean-up work and smaller concrete jobs. The larger contractors were not interested in performing this type of work for a number of reasons not here relevant. Felkai incorporated Hemmin in November 1984 for the purposes of performing these smaller jobs for the mining companies. Hemmin began to operate at the beginning of 1985. None of Stebill's equipment was transferred to Hemmin nor did any of the employees who had worked for Stebill perform work for Hernmin. Hemmin has not bid on any job. Stebill has been dormant since the end of 1984.
A summary of the work orders of Hemmin was provided to the Board covering the years 1985 to 1989. We do not propose to set out in much detail the work performed by Hemmin in its first year of operation. During that year, Hemmin was engaged for the most part by Teck Corona in the performance of small jobs. In fact, for approximately eighteen months, Felkai would go to the Teck Corona site in the morning every day except Sunday in order to obtain some work for Hemmin. Hemmin agreed to an hourly rate with Teck Corona which approved time sheets for the work performed. Some of the equipment it utilized in the performance of the small jobs was shovels and concrete finishing tools. It is clear that in 1985 Hemmin was quite prepared to perform any work it was offered. It did a lot of work which was in the nature of clean-up work. It also did a significant amount of construction work involving concrete and other types of construction which normally is performed by construction labourers. For instance, in 1985, Hemmin installed a number of concrete pads for foundations, concrete curbs in the mill area and repaired concrete floors in the Teck Corona dry.
By the end of 1985, Hemmin began to work underground. Felkai estimates that at least by 1989, 90% of the volume of work performed by Hemmin was underground. Whereas in 1985 Hemmin had approximately four or five employees, it now employs over ninety people, most of whom work underground. The employees who work underground are not engaged in production mining. Rather, they are involved in building items such as lunchrooms, retaining walls, powder magazines and ventilation bulkheads. They are also involved in a lot of clean-up work underground. Hemmin now utilizes employees who normally work underground to perform the work that it is able to secure on the surface. If a surface job required one or two days of pouring concrete, Hemmin would bring up the men it required to the surface to perform the work. Hemmin also has three employees who are engaged in maintaining certain apartment buildings for the benefit of the mining companies.
Again, we do not propose to detail all of the surface work performed by Hemmin between 1986 and 1989. It primarily worked for the mining companies but it also performed work for private individuals and other companies. The nature of the surface work it performed for the mining companies during this period is similar to the sort of work it performed in 1985. In other words, it performed clean-up work as well as construction work of various sorts including concrete work. One of the most significant projects Hemmin undertook was for Lac Minerals in the latter part of 1988. Lac Minerals had contracted with Dineen Construction to perform certain work relating to the construction of a surface crusher system that involved two buildings, a crusher building and a screening plant. For(reasons not here relevant, Dineen was unable to complete the job to Lac Minerals' satisfaction and Hemmin was requested to take over the job. Hemmin reluctantly agreed to do some of the work at an hourly rate. Since Dineen had finished only part of a pour, Hemmin attempted to complete the concrete work. Due to the cold weather, Hemmin was forced to leave the project and it is not expected that Hemmin will complete the job. This job for Lac Minerals was a fairly large job and the kind of job Stebill would have performed if it was still operating.
Counsel for the respondents began his submissions by again admitting that Stebill and Hemmin are two separate entities under common control and direction. Counsel submitted that the evidence did not support the conclusion that Stebill and Hemmin carry on associated or related activities or businesses. In this regard, counsel noted that Stebill engaged only in concrete construction on a bid system basis. In counsel's view, Hemmin will do anything and the nature of the work it performs is considerably different from the work performed by Stebill. Counsel noted that Hemmin does not bid on jobs and the largest portion of its work is underground requiring the use of employee skills considerably different from the skills required of Stebill's employees. In counsel's view, the work performed by Stebill and Hemmin are sufficiently different that the Board should conclude that they do not carry on associated or related activities. Counsel also maintained that the Board should not exercise its discretion to grant Local 607 the relief it requests given the circumstances in this case.
Counsel for Local 607 noted during his submissions that Local 607 was not taking the position that it had rights to bargain for those engaged by Hemmin in underground work. The essence of Local 607's argument is that although Hemmin does much more work of a different nature than Stebill performed, nonetheless a portion of its work is construction work of the type performed by labourers. Counsel noted that a lot of the surface construction work Hemmin performs relates to cleaning construction sites and concrete work. Counsel submitted that Hemmin will perform whatever work it can obtain and made particular reference to the Lac Minerals job. It was argued that the fact that Hemmin took over this job from Dineen is an example of the similar nature of the work engaged in by Hemmin and Stebill.
The following paragraphs in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 set out the purpose and effect of section 1(4) of the Labour Relations Act.
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 nights. 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 bonafide 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 on contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase ~whether on 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 [63]. 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 jobsite to jobsite on 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 on 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 businesses 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 nights. The earlier company may have nun into financial difficulties, or lost its reputation, on 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 clean and concrete disposition between the two firms so as to call section [63] 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 on 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 on business endeavouns. 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 on related activities on 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 contemporaneously economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses on activities are related" on 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 on 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 "pnivity of contract" on "the corporate veil".
The following comment in Frank Plastina Investments Ltd., [1986] OLRB Rep. June 720 is also worth noting:
Given the remedial thrust of section 1(4) and the broad language chosen by the Legislature ('associated" or "related". "activities" or "businesses"), it is apparent that the section was intended to apply to a wide variety of commercial activities, even when an employer's main on principal business concern may be something else. That was the opinion of the Board in Elmont Construction Limited, [1974] OLRB Rep. June 342 (application for judicial review dismissed. sub nomine, Elmont Construct Limited and Bruce Huntley Contracnng Limited v. Toronto Building and Construction Trades Council et at, 75 CLLC 14,270), and it is one with which we respectfully agree. The fact is, that a firm engaged in the construction business can, with relative ease, become involved, from time to time, in various sectors, subdivisions, phases, on specialized kinds of construction work, depending largely upon the business opportunities which present themselves, and we do not think we should readily hold that those activities are "unrelated" - particularly if they are being undertaken at the same time and involve common managerial or employee skills.
Stebill was a company engaged in performing construction work, almost exclusively concrete work on a bid basis primarily for the mining industry in the Hemlo area. It performed a small amount of its work for customers other than the mines located in the area. Although Felkai may have initially intended Stebill to engage in only larger concrete jobs, it is clear that Stebill was prepared to perform smaller jobs as well. In this regard, we are referring to the work Stebill did for Teck Corona, as well as the extra works it performed on certain contracts, particularly on the Lac Minerals job.
The evidence discloses that Hemmin started as a company with a small work force performing small jobs essentially for the mining industry and has developed into a fairly large operation. The majority of its work is performed underground and Local 607 has indicated that it is not claiming that this work be performed by its members. Hemmin is also engaged in maintaining residential facilities for mining companies. It is clear that the scope of the work performed by Hemmin is much broader than the work Stebill performed. Hemmin will perform whatever work it is able to obtain. It primarily services the mining industry but it has performed work for individuals and for companies other than the mining companies. Although the scope of its operation is broader than that of the short-lived Stebill, Hemmin does engage in work in the construction industry, including a significant portion of this work being concrete work. If one compares the work of Stebill and the surface work of Hemmin, one can only conclude that there is between them a considerable amount of similarity. Both engaged in construction activity involving concrete work. Stebill did perform some smaller concrete construction work while a significant portion of Hemmin's surface work is work of this type. Hemmin is also prepared to and did perform a larger construction project when it undertook to complete a stage of the Lac Minerals project relating to the crusher building and the screening plant. It is not surprising given the expertise of Felkai that Stebill and Hemmin would be engaged to some extent in work of a similar type. In reaching our conclusion regarding the work performed by Stebill and the surface work performed by Hemmin, the Board has considered the submissions of counsel for the respondents to the effect that the work is unrelated since Stebill bid for the work, could plan its activities and encountered time constraints whereas Hem-mm's surface work generally arises on a day-to-day basis, has to be performed on a semi-urgent basis and is not bid on. In our view, these differences, although not irrelevant, would not lead one to conclude that the activities of the two respondents are unrelated. In determining whether activities are related, the Board primarily gives weight to the nature of the work being performed and the skills utilized by employees performing the work. In this case, Stebill and Hemmin both engaged in construction concrete work which construction labourers play a role in performing.
In determining whether entities are engaged in related activities, the Board has not concluded that the activities of the two entities must be identical. As noted earlier, the scope of the work engaged in by Hemmin is much broader than the work Stebill performed. But to the extent that Hemmin is engaged in construction work on the surface, especially when that work is concrete work, Hemmin is engaged in activities which are related to the activities of Stebill. The fact that Hemmin is engaging in very broad activities, some of which might be unrelated to the activities of Stebill, should not alter the way in which one characterizes those activities of Hemmin which are similar to those of Stebill. The mischief to which section 1(4) is directed requires such an approach in interpreting the words ~related activities".
For the above reasons, the Board is satisfied on the evidence before it that Stebill and Hemmin are engaged in associated or related activities or businesses. The Board has considered the submissions of counsel for the respondents which were directed to persuading us that the Board should not exercise its discretion in favour of Local 607. The Board is satisfied that this is an appropriate case for it to exercise its discretion by granting Local 607 the relief it seeks. It is appropriate that the bargaining rights which Local 607 has for construction labourers for Stebill should be preserved when Hemmin is engaged in related construction activities requiring the employment of construction labourers. Accordingly, the Board hereby declares that Stebill and Hemmin constitute one employer for the purposes of the Labour Relations Act and that Stebill and Hemmin are bound to the collective agreement between the Employer Bargaining Agency - Labourers' and Labourers' International Union of North America and Labourers' ][nternational Union of North America, Ontario Provincial District Council.
Subsequent to the hearing in this matter, counsel for Local 607 wrote to the Board in order to draw the panel's attention to Warren Steeplejacks Limited, Warren Mechanical Limited, Blastico Corporation. This decision was issued on March 15, 1989 and subsequent to the conclusion of the hearing in this matter. Counsel for the respondents took the position that the Board should not consider the case. We do not propose to set out the submissions of both counsel contained in their letters filed with the Board subsequent to the hearing. The Board simply notes that the conclusions it has made in this case were made without considering the Board's decision in Warren Steeplejacks Limited, Warren Mechanical Limited, Blastico Corporation.