[1990] OLRB Rep. March 358

1870-89-R; 1871-89-R Labourers' International Union of North America, Local 506, Applicant v. Yola Construction Ltd. and K & Z Construction Ltd., Respon­dents; International Union of Bricklayers and Allied Craftsmen, Local 2, Appli­cant v. Yola Construction Ltd. and K & Z Construction Ltd., Respondents

BEFORE: Robert Herman, Vice-Chair, and Board Members P. V. Grasso and R. W. Pirrie.

APPEARANCES: Elizabeth Mitchell, Manuel Silva and John Robbins for the applicants; Walter Thornton and J. Bukala for the respondent Yola Construction Ltd.

DECISION OF R. HERMAN, VICE-CHAIR, AND BOARD MEMBER, R. W. PIRRIE; March 19, 1990

1. These two proceedings are applications brought pursuant to the provisions of sections 1(4) and 63 of the Labour Relations Act, on behalf of Labourers' Local 506 and Bricklayers Local 2 respectively. K & Z Construction Ltd. did not participate in these proceedings.

2. The facts were not substantially in dispute. The respondent Yola Construction agrees that K & Z Construction Ltd. and Yola Construction Ltd. were carrying on associated or related activities, within the meaning of section 1(4) of the Act. The respondent did not dispute that the Board could assume that Mr. Bukala, the key person involved in both companies, had exercised control and direction over the affairs of K & Z Construction, within the meaning of section 1(4). It disputes whether he exercised the necessary control or direction over Yola, and in any event argues that the Board ought not to exercise its discretion to make a declaration under section 1(4).

3. Janusz Bukala arrived in Canada on January 27, 1987. He had no craft or trade skills nor experience in any aspect of the construction industry. His formal training had been in chemis­try. He was unable initially to secure employment. As luck would have it, he went fishing with his brother, who had been living in Canada for some time, and on that fishing trip met Zdzislaw ("Jason") Krawczyk. At that time, Mr. Krawczyk had already registered the name K & Z Construction Ltd., based upon the initials of his name. K & Z was created to work on masonry and bricklaying projects.

4. Mr. Krawczyk was a journeyman bricklayer, and had experience in that part of the con­struction industry in Ontario. Through discussions between Mr. Krawczyk and Mr. Bukala, Mr. Bukala became a fifty per cent owner in K & Z Construction Ltd., largely because Mr. Bukala's brother invested $10,000.00 in K & Z. Around March 30, 1987, K & Z was officially incorporated, with Mr. Bukala as Vice-President and Mr. Krawczyk as President. It is Mr. Bukala's involvement in both K & Z and Yola which gives rise to the instant proceedings.

5. K & Z obtained its first job around May, 1987. From that time until some time in the fall of 1987, Mr. Bukala's duties and responsibilities consisted mainly of acting as a general con­struction labourer on the job sites, pitching in where necessary. As he had no particular skills, there was little else he could do on site. Although Mr. Bukala did sign some contracts on behalf of K & Z, in his capacity as Vice-President, he was not involved in any meaningful sense in the bid­ding on those contracts. To the contrary, Mr. Krawczyk was responsible for doing the estimating, bidding and tendering, obtaining the contracts, and the hiring and firing of employees. It was Mr. Krawczyk who understood the technical aspects of the business and who had expertise in the brick­laying business. Many of the tenders were submitted by Mr. Krawczyk without consultation with Mr. Bukala.

6. Beginning sometime in the fall of 1987, Mr. Bukala reduced the time he spent on site, and began to work more out of the office, along with his wife. Together, he and his wife were responsible for typing invoices and other documents and forwarding them to the appropriate per­sons. Where the information to be set out in those documents or invoices was not obvious (for example, payroll amounts, bidding details or amounts), this information was supplied by Mr. Krawczyk. Mr. Bukala and his wife essentially performed clerical tasks in the office. Mr. Bukala was also responsible for collection of debts or obligations owed to the company, and dealing with suppliers.

7. The company did not prosper. Around July, 1987, it was becoming apparent that K & Z did not have enough qualified bricklayers to properly fulfill their contract obligations. In order to remedy this, at Mr. Krawczyk's invitation and request, Bricklayers Local 2 signed up the employ­ees of K & Z. K & Z then signed a collective agreement, both Mr. Krawczyk and Mr. Bukala sign­ing the agreement on behalf of K & Z. Shortly thereafter, a collective agreement was also signed with Labourers' Local 506. Notwithstanding its newly acquired obligations to remit union dues and other moneys to the applicants, K & Z failed to forward the appropriate remittances. Meetings took place during October and December of 1987 between Mr. Bukala and union personnel over the failure to pay the requisite remittances. On December 21, 1987, a grievance was filed with respect to these delinquent payments.

8. Also around this time, K & Z had successfully bid on and received a job for West York Construction Limited. As was customary, Mr. Krawczyk had provided the information for the bid to Mr. Bukala, who in turn had submitted the bid to West York. Towards the end of January, 1988, after K & Z had begun working on the West York project, Mr. Bukala realized that his part­ner had seriously underquoted on the West York project, and K & Z stood to lose several hundred thousand dollars on the job. This was a loss the company would not likely survive. Meetings were held with K & Z debtors and creditors, including the unions, to discuss possible responses to this problem. Mr. Kunst, of West York Construction, participated in these meetings and to ensure that the bricklaying and masonry on the project was properly completed, he advised that West York would be willing to assume the financial obligations of K & Z provided certain conditions were met. One of those conditions was that both Mr. Bukala and Mr. Krawczyk cease active participa­tion in the West York project; in effect, that K & Z no longer would be responsible for the work. The conditions were agreed to amongst all concerned, and from the end of January, 1988, K & Z ceased in any practical sense to participate in the West York project. Because of the serious under-bidding on the project by Mr. Krawczyk, and concerns generally with his partner and the prognosis for K & Z, Mr. Bukala decided he should look towards breaking up the K & Z partnership. K & Z did not work on any projects after the end of January, 1988, although it was not formally wound up or otherwise terminated.

9. The applicant unions still had not received the proper remittance funds and took vari­ous steps to secure payment. Pursuant to a grievance with K & Z, filed under section 124 of the Act, K & Z and Bricklayers Local 2 reached a settlement on February 15, 1988, in which K & Z agreed to pay $15,000.00. Only $5,000.00 of that money was ever paid. On March 8, 1988, pursu­ant to a grievance with West York dated February 26, 1988, Labourers' Local 506 reached a settle­ment with West York that included the following:

(1) West York agrees to take full financial responsibility for monies owed by K & Z Con­struction to its employees and/or to Local 506 for wages, benefits, union dues and other items covered by the Labourers' Provincial Agreement.

(2) Local 506 agrees to pursue K & Z Construction for the money allegedly owed and invoke this agreement only in the event that the union is unable to recover any of the above mentioned monies for violation of said agreement by K & Z.

10. Neither applicant has yet been paid the full amount owed by K & Z.

11. After the end of January, 1988, when K & Z stopped operating, Mr. Krawczyk declared personal bankruptcy. He subsequently started up a new company, also performing masonry and bricklaying work. Mr. Bukala has no connection or interaction with this new company. Most of K & Z's equipment was seized by creditors. However, one mixer was bought for cash by Mr. Bukala, and one forklift which Mr. Bukala owned and had rented to K & Z remained with Mr. Bukala. Both the forklift and the mixer are now rented by Mr. Bukala to Yola Construction. One truck was bought by Mr. Krawczyk.

12. We turn now to Yola. While K & Z was rising and failing, Mr. Jessie Materski was involved in his own business in the masonry and bricklaying sector. In January, 1987 (before Mr. Bukala arrived in Canada), Mr. Materski approached two individuals, Andrew Areiszewski and Arthur Kostrzewa, to form a partnership in order to do bricklaying and masonry work. All three had previously worked in the construction sector or had construction experience as bricklayers or welders. The three of them became equal partners, although only Mr. Materski injected any money into the business. They named their company Monika Construction. Monika was incorpo­rated in May or June 1987, with the three partners becoming shareholders.

13. Monika operated until approximately April 1988. Mr. Bukala had no involvement with Monika and for most of this period he was helping to run K & Z, a competitor. There is no sugges­tion Mr. Bukala even knew that Monika existed. Although Monika was doing relatively well, Mr. Materski and Mr. Areiszewski had become dissatisfied with their third partner, Mr. Kostrzewa.

They felt that he had been taking jobs privately, to the detriment of the company. Mr. Materski and Mr. Areiszewski therefore decided that they would no longer be partners with Mr. Kostrzewa. At the same time, Mr. Areiszewski was also unhappy being part owner and decided he would rather be working as an employee for the business. This left only Mr. Materski as owner, and he felt he could not run the company alone. For approximately two to three weeks in April 1988, Monika stopped operating while Mr. Materski looked for a new partner. One of the major prob­lems Mr. Materski had experienced with Monika, apart from the problems with his former partner, was that none of the three partners spoke English sufficiently well to represent Monika with respect to the outside world. Mr. Materski felt this had been a deficiency in the company and had cost it work opportunities. He was intent that the new partner could represent their company inso­far as English speaking skills were concerned. He also wanted any new partner to be trustworthy and honest.

14. Mr. Materski learned from Mr. Areiszewski that Mr. Bukala was in Canada and had been working in the masonry area. Mr. Materski and Mr. Bukala had been friends in Poland for many years, before Mr. Materski came to Canada. K & Z had stopped operating two months ear­her and Mr. Bukala was job hunting, outside the construction field. Mr. Materski phoned Mr. Bukala and renewed acquaintances and suggested that they get together to discuss going into a business together. Mr. Materski was not concerned that Mr. Bukala did not know the masonry or bricklaying business and had no particular expertise in it as Mr. Materski possessed the requisite skills and contacts. Mr. Bukala's English was quite good and he was an old friend who would be honest and hardworking. Yola Construction was formed, as a partnership between Materski and Bukala.

15. The financing for the new company was obtained by Mr. Materski investing $37,000.00, and Mr. Bukala's brother investing approximately $30,000.00. The money invested by Mr. Buka­la's brother was secured against the shares of Yola and the brother received fifteen per cent inter­est on it. Yola officially began in April, 1988, with the head office listed as Mr. Bukala's residence. Although Yola began as a partnership, in order to secure additional financing and on the advice of its lawyer Yola incorporated almost a year later, around February, 1989, with Mr. Bukala becom­ing President and owner of 49% of the shares, and Mr. Materski becoming Vice-President and owner of 51% of the shares. Mr. Bukala was made President on the advice of Yola's lawyer, who suggested that the individual who spoke English should be given the title of President.

16. Returning to April and May 1988, when Yola began, most of the initial work force of Yola had worked for Monika. Only one individual who had been an employee for K & Z ended up working for Yola. There is no evidence as to how he came to work for Yola. The key employees of Yola, its crew chiefs, had all previously worked for Materski's first company, Monika, and simply continued working for Yola. Sometime in the latter part of 1988 or the early part of 1989, Yola res­tructured its workforce. Its crew chiefs formed their own companies, and these companies were hired as independent subcontractors rather than employees by Yola. The former crew chiefs, as heads of each of these subcontracting companies, were responsible for hiring their own crews, supervising them, and paying them. Yola retained responsibility for pricing the contract, bidding on it, hiring the independent subcontractors, and paying on a piece- work basis the appropriate amounts to each subcontractor. Yola throughout this period continued to get customers or jobs as it always had, largely through word of mouth and through builders seeing Yola's work on site and asking Yola to bid on a project. None of the customers of Yola had previously been customers of K & Z. The only equipment Yola used which had been used by K & Z was the forklift Mr. Bukala owned, and the mixer which Mr. Bukala had bought from K & Z, both of which he now rented to Yola.

17. Mr. Materski had the expertise and practical experience in the masonry and bricklaying business and he therefore was responsible for hiring, firing, supervising on site, estimating and bid­ding upon jobs, reading plans, and in short, any aspect that involved the relevant construction or trade expertise. Though no longer a part owner, Mr. Areiszewski also participated in some of these decisions. Mr. Bukala remained unable to read plans or assist in preparation of the tender, nor could he do bricklaying or masonry. Mr. Bukala received information from Mr. Materski as to what the bid should be along with any conditions that were to be attached to the bid. Mr. Bukala then had the bid typed up and he signed it on behalf of Yola. As the individual with the English speaking skills, Mr. Bukala then met with the builder to discuss matters, where necessary. If the discussion concerned anything of a technical matter, Mr. Bukala would have to ask Mr. Materski for the answer. All the information required for payroll purposes was provided by Mr. Materski, including the hours worked and the amounts of pay for each employee or subcontractor. Mr. Bukala, along with his wife, recorded the payroll information and performed the office clerical functions, including preparing the payroll and writing and signing cheques. Mr. Bukala was responsible for dealing with suppliers and collecting money owed to Yola. Periodically, Mr. Bukala would visit the job sites to deliver or pick up things. Yola engaged the services of the same accountant, a friend of Mr. Bukala's, who had worked for K & Z.

18. Based on these facts, the applicants argue that a transfer of a business within the mean­ing of section 63 has occurred, or alternatively, that K & Z and Yola ought to be declared a single employer for purposes of the Act pursuant to the provisions of subsection 1(4).

19. The relevant parts of section 63 and subsection 1(4) of the Act read 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.

(3) Where an employer on behalf of whose employees a trade union or council of trade unions, as the case may be, has been certified as bargaining agent or has given or is entitled to give notice under section 14 or 53, sells his business, the trade union, or council of trade unions con­tinues, until the Board otherwise declares, to be the bargaining agent for the employees of the person to whom the business was sold in the like bargaining unit in that business, and the trade union or council of trade unions is entitled to give to the person to whom the business was sold a written notice of its desire to bargain with a view to making a collective agreement or the renewal, with or without modifications, of the agreement then in operation and such notice has the same effect as a notice under section 14 or 53, as the case requires.

1. (4) Where, in the opinion of the Board, associated or related activities or businesses are car­ried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions con­cerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.

20. We are satisfied that no sale or transfer of a business has taken place. As the Board stated in Rivard Mechanical, [1981] OLRB Rep. May 550:

13. In the construction industry, much of the 'goodwill' associated with a particular business is personal to the key man in the organization. As Mr. Lusk of Costain testified, any contract which his company lets is valid only so long as the original contractor continues to perform the work; the contract is not "his" to transfer or assign. In the present case all of the managerial know-how, expertise and trade reputation which Jean-Guy Rivard brought to the business of J.G. Rivard Limited disappeared when Jean-Guy went out of the business. This does not mean. of course, that other individuals in the organization necessarily start out "from scratch" when they make the decision to go out on their own; often, as here, they can and will rely on exposure and on contacts that they have made while working in a subordinate position in the industry. Even if, as argued by the applicant, the group led by Michel Rivard did not take all of the steps to set up their own business until they had some form of commitment from Costain to provide some work, this is not an uncommon occurrence amongst individuals contemplating such a move, and falls short of the sort of continuity necessary to find a "sale of a business" from J.G. Rivard Limited to the fledgling group. While the case of Aircraft Metal Specialists Limited [1970] OLRB Rep. Sept. 702, involved some change in the nature of the business. There a group of employees, including the individual who was the President and General Manager of the company going out of business, purchased from the predecessor (Field Aviation) certain of its equipment, leased the same premises, and did, on their own, solicit and obtain former cus­tomers of Field. The Board stated that there was "not a continuum between Field and Aircraft in the sense contemplated by the Act". Here Jean-Guy did, as one would expect, "put in a good word" with Costain for his brother and former employees, but clearly no arrangement or commitment was arrived at with Costain, and that was in no way a condition of Jean-Guy's decision to discontinue business on his own.

14. The significance of the "key man" to a construction contracting business does not mean that there can never be a "sale of a business" when the original principal sells out (compare Ma gnus Engineering, [19801 OLRB Rep. March 366). It does require, however, a careful analysis of what constituted the "functional economic vehicle" of the predecessor. Certainly the four unwanted trucks leased by Michel fall well short of meeting that definition, and lack that "dy­namic quality" necessary to the finding of "a business". The looseness of the arrangements in transferring the trucks over the first couple of weeks, while being painted, is not surprising (given the relationship between the parties) and their use over this period appeared to be confi­ned to the job-site of Costain, who was fully aware of the organizational changes that had occurred. The new group moved to their own location some 15 miles away (not an irrelevant factor in the residential servicing field), essentially purchased their own equipment, and received no work either through or from Jean-Guy Rivard or his company. The new company is financed solely by a line of personal credit arranged by Michel Rivard with his bank, and Jean-Guy Rivard has no part in that arrangement. Nor does there appear to have been any trading on the name or reputation of J.G. Rivard Limited, apart from, as noted before, any contacts made in the ordinary course of employment with that company. The result in this case ought not to turn solely on the fact that Michel is the brother of Jean-Guy, and that the name "Rivard" continues to be used by the new company. The Board accepts the testimony that people in the industry who were familiar with J.G. Rivard Limited would also have been aware, or been made aware, that Jean-Guy Rivard had gone out of business, and that Michel now was in business of his own. The case of BR. Rousseau Plumbing, Board File No. 1463-80-R, released January 19, 1981, (unreported) involved another of the unionized plumbing contractors in the Ottawa area which went out of business at this time, and represents an interesting parallel to the present case. There also it was the brother of the principal of the predecessor company who spun out in busi­ness on his own. The application was brought solely on the basis of section 1(4) of the Act, but some of the Board's comments are applicable to section [63] as well. In particular, the Board noted in connection with the use of the family name, at paragraph 10:

With respect to the fourth criterion, that of representation to the public as a single enterprise, 446073 Ontario Inc. trades as Rousseau Plumbing and Heating. The Board not, however, that this is Gerald Rousseau's family name and a name that he is proud of and wants to continue working with in the Ottawa area. However, there has been no attempt to represent to the public that B.R. Rousseau Plumbing [the predecessor] and 446073 Ontario Inc. trading as Rousseau Plumbing and Heating are the same company. These two companies operated from different addresses; never shared the same telephone number; operated out of different premises and 446073 Ontario Inc. has adopted colours for its trucks which are quite different from the col­ours used by B.R. Rousseau Plumbing on its trucks. On this basis the Board finds that there has been no representation to the public that the two respondents are a single enterprise.

15. Both of these cases may be distinguished from that of Base Electric Limited, [1978] OLRB Rep. Feb. 140, where the four brothers making up the predecessor company, the Board found, shared the responsibility for the management and goodwill of the company, and, upon separa­tion, divided up amongst themselves all of the remaining assets, work-in-progress, and warranty work of the company. The present case, in fact, is much closer to Ralph Ford Electric, [1974] OLRB Rep. June 388. There an individual in a managerial capacity saw his employer being unionized and decided that he would be better off competing on his own on a non-union basis. When he left he took four other employees opposed to the union, the office secretary, and two trucks plus a quantity of electrical components and work shacks purchased from the predecessor company. He then proceeded to obtain by bid the electrical contracts on the house-building project on which the predecessor company, while he was employed, had begun to work. The Board found no sale of a business to have taken place, within the meaning of The Labour Rela­tions Act.

21. It cannot be said that any part of the business, or the "functional economic vehicle" of the predecessor, has been transferred in any sense from K & Z to Yola. Mr. Bukala did rent his mixer and fork lift to Yola. Nevertheless, no assets (or anything else) of significance were transfer­red between the two companies. All that occurred was that Mr. Bukala and his wife began to work for Yola. Neither brought with them any part of the masonry or bricklaying business of K & Z. They brought with them their integrity, industry, typing skills and ability to speak English. The workforces were almost entirely different and the customers were different. We are satisfied that no part of the business was transferred within the meaning of section 63 and the applications as they relate to section 63 are dismissed.

22. Turning to section 1(4), we might usefully set out the following comments from prior decisions of the Board. In Brant Erecting and Hoisting, [1980] OLRB Rep. July 945, the Board wrote as follows:

12. . . 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 55 which pre­serves the established bargaining rights and collective agreement when a "business" is transfer­red from one employer to another. Section 55 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.

13. 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 55. 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 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 55 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.

23. In Jen-Ry Utility Contracting Company Limited [1984] OLRB Rep. Dec. 1724, the Board wrote:

16. All of these cases make it clear that the test for "control" under section 1(4) of this Act envi­sions the ultimate power to "call the shots" where necessary, as counsel for the respondent put it, with respect to the labour relations of the two enterprises, and not simply the authority and responsibility to direct the activities of employees in the field. Were it otherwise, a totally inde­pendent and established company hiring the manager of field services from another company would inevitably find itself in the position of being a "related employer" for the purposes of the Labour Relations Act. Rather, we accept the submission of the respondent that the section con­templates a point of central decision-making control with the ultimate power to, for example, say "yes" or “no" to a wage proposal from the union for both entities. Such power, as the Board cases show, may come simply from the legal relationship between the two entities, (e.g. Great Atlantic & Pacific Company Limited, A & P Drug Mart Limited, [1981] OLRB Rep. March 285) or from a total lack of independence in practical or economic terms, (e.g. I. H. Normick, Foley, supra, and even Brant Erecting & Hoisting, [1980] OLRB Rep. July 945,) or it may come from a combination of the two, (Kennedy Lodge, supra, Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214).

And see Etobicoke Public Library Board [1989] OLRB Rep. Sept. 935, at paragraphs 86-98, for a discussion of the circumstances in which the Board will not exercise its discretion to make a decla­ration, even though the statutory conditions precedent are present.

24. It is common ground that two of the three pre-conditions for the exercise of our discre­tion pursuant to section 1(4) of the Act are met. Two or more entities are involved, K & Z and Yola, and it is conceded that associated or related activities are being carried on by those two enti­ties. Although the respondent acknowledged that Mr. Bukala was involved in the control or direc­tion of K & Z, it disputes that his participation in Yola amounted to control or direction within the meaning of section 1(4). For purposes of our decision, we will assume, without finding, that Mr. Bukala exercises sufficient control or direction with respect to the affairs of Yola such that we can say the two companies were under common control or direction.

25. Mr. Bukala was an owner and officer of K & Z, and when K & Z ceased, he became an owner and officer of Yola. Through his involvement in each (we have assumed) there was exer­cised common control or direction. Nevertheless we decline to make the requested direction. In our view, the effect of such a direction would be to extend, rather than preserve, the bargaining rights of the applicants.

26. The applicants obtained bargaining rights for K & Z when K & Z invited them to orga­nize its work force. Mr. Bukala was an owner and officer of that company. However, that company ceased to operate as an active business. No part of the reason for its ceasing was a desire to avoid dealing with the unions. When K & Z was conducting business and when the applicants obtained bargaining rights for K & Z, Monika was itself operating as a completely independent and uncon­nected company in the same field. It had its own employee workforce and separate customers. Monika was then a company owned and run by Mr. Materski and two other partners. Because Mr. Materski and Mr. Areiszewski wanted to drop the third partner, they looked for a new individual to help continue their business. The business of Monika continued as it always had, essentially on the same basis it always had, albeit with a change in the identity of two of the owners. Mr. Areisz­ewski stopped being an owner, as he preferred being only an employee, although he continued to assist somewhat in the running of the business. Mr. Kostrzewa was no longer an owner. Mr. Bukala became an owner. The corporate restructuring of Monika was accomplished through the creation of Yola and the business itself continued as it always had. The two to three week interval between the end of Monika, as the corporate entity, and the beginning of Yola, was merely a hia­tus in the operation of the same business. The change in ownership and change in name was not accompanied by any meaningful change in the nature or operation of the business.

27. Mr. Bukala had already ceased his involvement with K & Z and that company was no longer functionally operating. This is not a situation where the owner of a unionized company sets up a non-unionized company to engage in the same business; rather, Mr. Bukala became a part owner of and joined the existing business already owned and operated by Mr. Materski. No mean­ingful part of K & Z's business or expertise joined Yola with Mr. Bukala's 49% ownership interest or other involvement. Mr. Bukala's skills and expertise were not such that it can be reasonably said that he brought with him any part of the K & Z business when he became an owner and officer of Yola. To the contrary, the business of Yola was founded upon the expertise and knowledge of Mr. Materski and his crew chiefs. Mr. Bukala brought with him his personal English skills, his honesty, his integrity, and his willingness to work hard. These are of course valuable, perhaps indispens­able, assets, but they are not the attributes, knowledge, or skills that lead us to conclude that Mr. Bukala was a "key man" and brought with him some part of K & Z's business, or to conclude that the applicants' bargaining rights should encompass Yola.

28. Here the only interaction or commonality between companies is the ownership interest of Mr. Bukala, who is an owner in one company (that has ceased to operate) and who obtained an ownership interest in an existing business. This ownership interest in Yola was not accompanied by an expertise in the business nor by active participation that would qualify Mr. Bukala as a "key man". In Jen-Ry Utility Contracting Company Limited the Board said (at paragraph 16 therein, supra): "Were it otherwise, a totally independent and established company hiring the manager of field services from another company would inevitably find itself in the position of being a "related employer" for purposes of the Labour Relations Act." Here, were it otherwise, a totally indepen­dent and established company which hired a person (with no special expertise in the company's field) to perform clerical and administrative duties, and which gave the individual a significant minority ownership interest, would find itself a "related employer". If Mr. Bukala was not a part owner of Yola, there would be no question that the application should fail. The applicants empha­sized the significance of this ownership interest. We cannot see why his being given a 49% share­holder interest in the circumstances before us should lead to a different result. Mr. Bukala's ownership does not change his essential role nor the very limited resources or aspects he brought from K & Z, nor the fact that Yola was already an existing business.

29. To grant a declaration would inappropriately extend the bargaining rights of the appli­cants to another employer. It would deprive the employees of Monika, most of whom continued working for Yola, from having a say in their representation by a bargaining agent. A declaration would extend the applicants' bargaining rights at the cost of ignoring the wishes of those employ­ees. It is unfortunate that the applicants were unable to collect the funds owed to them by K & Z, but this fact is not justification for making an otherwise inappropriate declaration. As the Board concluded in Termarg Food Services Limited [1985] OLRB Rep. March 516, section 1(4) is not to be utilized solely as a means of collecting from a "deep pocket". In this respect, we note the settle­ment with West York Construction, in which Labourers Local 506 agreed to pursue K & Z for the moneys owed before seeking to recover from West York. It may well be that this proceeding is merely a necessary step before approaching West York.

30. In the result, these applications are dismissed.

DECISION OF BOARD MEMBER PAT V. GRASSO; March 19, 1990

1. This is an application under section 1(4) and 63 of the Labour Relations Act whereby the applicants claim that:

6. A sale of a business did take place, or alternatively, the Respondents should be treated as constituting one employer for the purposes of the Act in that, at all mate­rial times, they were carrying on associated or related activities or businesses under common control or direction within the meaning of section 1(4) of the Labour Rela­tions Act.

7. As a result, Yola Construction Ltd. and K & Z Construction Ltd. or the Respon­dents, as one employer by virtue of section 1(4) of the Act, are bound by the Collec­tive Agreement entered into between the Employer Bargaining Agency and the Lab­ourers' International Union of North America and Labourers' international Union of North America, Ontario Provincial District Council effective May 1st, 1988 until April 30th 1990 ("the Collective Agreement").

8. A change in the character of the business so that it is substantially different from the business of the predecessor employer has not taken place.

9. An intermingling of employees of one business with employees of another business represented by a trade union has not taken place.

10. The Applicant makes the following request (state nature of relief claimed):

(a) If it is found that a sale of a business has taken place, as aforesaid, the Applicant requests that the Board declare Yola Construction Ltd. and K & Z Construction Ltd. bound by the Collective Agreement referred to in paragraph 7 hereof;

(b) If it is found that a sale of a business has not taken place, as aforesaid, the Applicant requests that the Board:

(i) declare that the respondents be treated as constituting one employer for the purposes of the Labour Relations Act in that, at all material times, they were carrying on associated or related businesses or activities under com­mon direction and control within the meaning of Section 1(4) of the Act;

(ii) declare that the Respondents as a single employer under Section 1(4) of the Act are bound by the Collective Agreement referred to in paragraph 7 hereof;

(iii) order that the Respondents as a single employer under Section 1(4) of the Act, forthwith apply the full terms and conditions of the Collective Agree­ment referred to in paragraph 7 hereof to all work performed by the Respondents;

………such further and other relief as may be appropriate in the circumstances.

2. I concur with the decision of the majority with reference to the disposition of the application under section 63 of the Labour Relations Act.

3. I dissent from the majority decision with respect to the application under section 1(4) of the Labour Relations Act.

4. Just prior to the formation of Yola Construction Mr. Bukala had been part owner of K & Z Construction and Mr. Materski had been part owner of Monika Construction. K & Z stopped operating in January 1988 because it went bankrupt and Monika stopped operating in April 1988 because of problems he was having with his partners. One of the major problems Materski had was that none of the partners spoke English well enough to properly represent Monika to the public and this may have cost them some work opportunities. Materski testified that a new partner would have to be one who spoke English well in order to represent the company in public.

5. It appears to me that when Yola Construction was formed by Mr. Bukala and Mr. Materski each brought with them some expertise. On one hand, Materski brought with him the practice of experience in the masonry business, he had the responsibility for hiring, supervising, bidding on jobs and other relevant work. He was secretary of Yola and owned 51% of the com­pany. On the other hand, Bukala brought with him the skills that Materski was looking for in order to make Yola a successful business. Bukala made sure that all the bids were properly typed and signed by him on behalf of Yola. Mr. Bukala would meet with builders to discuss any problem that may come up, he would prepare the payroll for the employees, was responsible for dealing with suppliers, ordering material, collecting monies owed to the company and preparing and signing cheques. Bukala along with his wife did all the administration work in the office. Bukala was presi­dent of Yola and owned 49% of the company. Along with the above duties and responsibilities Mr. Bukala brought with him from K & Z, his wife, a friend "bricklayer" (no name given), the service of the same accountant, a forklift and mixer. The fact that the forklift and mixer were rented to Yola, I attach no significance to it.

6. Based on all the evidence and submission of the parties, I would have exercised our dis­cretion and issue a declaration that K & Z Construction Ltd. and Yola Construction Ltd. were a related employer under common control or direction pursuant to section 1(4) of the Labour Relations Act. As a consequence of this decision Yola Construction Ltd. must abide by the terms of the collective agreements.