International Association of Bridge, Structural and Ornamental Ironworkers, Local 721 v. Landmark Contracting Ltd., 1990 CanLII 5810

[1990] OLRB Rep. June 660

1041-89-R; 0717-89-G; 1502-89-G International Association of Bridge, Structural and Ornamental Ironworkers, Local 721, Applicant v. Landmark Contracting Ltd. and Landmark Structures (Ontario) Ltd., Respondents; International Association of Bridge, Structural and Ornamental Iron Workers, Local Union 721, Applicant v. Landmark Contracting Limited, Respondent; International Association of Bridge, Structural and Ornamental Iron Workers, Local Union 721, Applicant v. Landmark Contracting Limited and Landmark Structures (Ontario) Ltd., Respondents

BEFORE: Inge M. Stamp, Vice-Chair, and Board Members D. A. MacDonald and C. A. Ballentine.

APPEARANCES: Peter L Waldmann, Tony Almeida and Christine O'Neill for the applicant; Carl Peterson and Doug Lamon for the respondents.

DECISION OF INGE M. STAMP, VICE-CHAIR, AND BOARD MEMBER D. A. MacDONALD; June 27, 1990

1. These are two referrals of grievances to arbitration pursuant to section 124 of the Labour Relations Act. Related to the section 124 referrals is an application pursuant to section 1(4) of the Act.

2. At the outset, counsel for the respondents agreed to the pre-conditions required for a section 1(4) declaration. Both companies are under common direction and control. Counsel for the respondents submits that a section 1(4) declaration is not appropriate in the circumstances of this case and that the Board, in the exercise of its discretion, should dismiss the section 1(4) application.

3. Counsel for the respondents further submits that the work referred to in the grievances is not in the ICI sector but in the sewer and watermain sector.

4. Doug Lamon testified on behalf of the respondents and Tony Almeida and Enrique Alves gave evidence on behalf of the applicant.

5. Doug Lamon testified with respect to the history of the two companies. Lamon worked for W. A. MacDougall on one of the largest sewage treatment plants built in Canada. After MacDougall went out of business, Lamon together with two other persons, incorporated Environmental Technical Services Inc. ("E.T.S. Inc.") in February 1972. The three principals were A. McKinlay, President, K. Gordon, Treasurer and D. Lamon, Secretary. E.T.S. Inc. built sewage water treatment plants. In September of 1989 the E.T.S. Inc. charter was surrendered.

6. On March 30, 1976 E.T.S. Towers Inc. ("E.T.S. Towers") was incorporated to build water storage tanks.

7. At the time of incorporating E.T.S. Towers, there was only one other company (Chicago, Bridge & Iron) specializing in the construction of water storage tanks. This company built almost all the water storage tanks in Ontario and Canada. The water storage tank designed and built by E.T.S. Towers is radically different. It consists of an elevated water storage tank made of steel with a concrete sub-structure. At the present time there are three companies using this system, namely Chicago, Bridge & Iron, the respondent and KWI, a company started by a former employee. E.T.S. Towers' crews did all of the work except electrical and the painting of the tank, which was sub-contracted. The steel erection and field welding is also sub-contracted. The E.T.S. Towers' crew consists of four to six men, depending on the size of the tower. The crew work together doing the formwork, cement finishing, tying-in the reinforcing steel and mechanical work.

8. E.T.S. Towers also builds steel stand pipes. The walls are structural steel, concrete base with the water storage part as a steel cylinder sitting on the base or on the ground.

9. The purchasers of elevated water storage tanks are various municipalities throughout the province of Ontario. These are all publicly tendered and advertised in the Daily Commercial News. There are two to three companies who bid on this work, including the respondent.

10. By February of 1977 there were only two partners left. The third partner, Gordon, had been bought out. By the early 1980's E.T.S. Inc. and E.T.S. Towers were experiencing financial difficulties. The decision was made to shut down E.T.S. Inc. and Lamon bought out the remaining partner, McKinlay. Previous to that Lamon had been mainly responsible for the water storage tanks end of the business. In his testimony he stated, "My partner McKinlay had served the same role in general construction. After the buy-out, I cleaned up E.T.S. Inc. and ran Towers". Around the mid 1980's, Lamon "put everything to bed". The general business climate got better and Lamon decided to go back into the general contracting field. In 1985 Lamon Ltd. became Landmark Contracting Ltd. ("Landmark Contracting"), with Lamon and Piendle as co-officers and shareholders. Piendle handles the field work and is the general superintendent of Landmark Contracting Ltd. Doug Lamon is involved in Landmark Contracting in a financial role, cost control and revtew.

11. After E.T.S. Inc. was shut down (in September of 1989) Doug Lamon phased out all of the companies which had other partners, out of a concern of possible liabilities incurred by the former partners. Doug Lamon phased out E.T.S. Inc. E.T.S. Towers became Landmark Structures (Ontario) Ltd. ("Landmark Structures") on March 10, 1987. The head office remained the same.

12. Exhibit 8 is a list of water storage tank contracts completed by Landmark Structures for the years 1987, 1988 and 1989. One of the contracts is for the Township of Hornepayne dated August 10, 1987. This contract is identified as Project No. 7-0619, Contract 1, and describes the work as "construction of elevated water storage facilities and booster pumping station". Exhibit 10 is a list of projects completed by Landmark Contracting Limited from 1985 to 1989. This list includes underground reservoirs, sewage treatment plants, pump stations and water treatment plant and granular storage silos. One of the contracts is for the Township of Hornepayne dated October 28, 1988 and is identified as Project No. 7-0619 (the same number as above for Landmark Structures), Contract 3, and describes the work as "construction of water pumping stations".

13. Some of the bid documents show the old name "E.T.S. Towers mc". This was done in error and "Landmark Structures (Ontario)" was inserted in its place. These projects were highly visible, with the water tank at Virgil reaching 190 feet. Other elevated water storage tanks built by the respondent varied in height from 100-150 feet. Parry Sound and Trenton were visible from the highways nearby. The successful bidder was announced in the trade publication DCN. The raising of the steel sections generally receive some local media attention.

14. In January of 1981 Water & Pollution Control published a colour photograph and an article which read as follows:

New water tanks have pleasing

aesthetics and functional design

A new design for elevated storage tanks has been developed by ETS. Towers Inc. of Hamilton, Ont. It has now passed the prototype stage and has become a new, acceptable addition to existing designs.

Tanks ranging in size from 250,000 to 750,000 gallons have been built or are under construction by this company in eight locations throughout Ontario. The company's goal in the development of this new design was a product which competes aesthetically with the popular spheroid tanks with the price of the less popular but more economical multi-legged structures.

The E.T.S. structure is composed of three elements: a concrete shaft, a steel tank and a highly engineered connection between the first two elements. Materials are used to their best advantage, concrete in the mainly compressive member or shaft, steel in the mainly tensile and water retaining member or tank. The end product seems to be an ideal combination of engineering integrity, aesthetics and economy.

The economical use of materials is complemented by the inherent stability of the support shaft which offers particular advantage in bad ground conditions and earthquake zones. In addition, the company employs a unique and revolutionary construction system to minimize erection costs. The composite nature of the structure offers long term advantages from the maintenance aspect also, eliminating costly re-paint of the support and supplying an above-ground, totally enclosed valve chamber within the support column.

15. Doug Lamon testified that Landmark Contracting has never bid on or built an elevated storage tank. E.T.S. Towers or Landmark Structures has not bid on or built any storage silos.

16. The unique design and construction method was developed by the respondent, including the design and building of a crane support and modifications to a standard crane. The respondent designed a specialized hydraulic drive for the crane. The forms used for the dome's formwork are built in the respondent's shop using fibreglass. Doug Lamon holds patents for its construction system and design. This system was used in the two projects that are the subject of the grievances.

17. The crew working for Landmark Structures Ltd./E.T.S. Towers Inc. are made up as follows:

Hugh Tuttenham — Carpenter - 5 years with the respondent Ken Sacco — Carpenter — 10 years with the respondent Harold Gottwald — Hoistman — 10 years with the respondent Dave Russell — Labourer — 10 years with the respondent Bob Greenaway — Labourer — 10 years with the respondent.

18. Doug Lamon described the difference in terms of constructing a silo compared to an elevated water tank. The silo at 48 feet is considerably lower than the tanks which are between 100-150 feet. Silos require tensile forces not necessary in water tanks, post tensioning, mesh for crack control and reinforcing steel. Openings have to be included for delivery of material and for small machinery at the base, i.e., hoppers and conveyors.

19. On July 22, 1987 Lou Zych signed a voluntary recognition agreement (Exhibit 14) between Landmark Contracting Limited and the International Association of Bridge, Structural and Ornamental Iron Workers, which read as follows:

VOLUNTARY RECOGNITION AND ACKNOWLEDGEMENT

The undersigned Employer hereby voluntarily recognizes the International Association of Bridge, Structural and Ornamental Iron Workers and the Ironworkers District Council of Ontario, Local Unions 700, 721, 736, 759, 765, and 786 in the Province of Ontario as the exclusive bargaining agent for all Rodmen in the employ of the Employer in the Province of Ontario.

The undersigned Employer also acknowledges that by reason of the recognition it is bound by the Collective Agreement between the Rodmen Employer Bargaining Agency, consisting of:

The Industrial Contractors Association of Canada

The Labour Relations Bureau of the Ontario General Contractors Assoc.

The Reinforcing Steel Institutes of Ontario

The International Association of Bridge, Structural and Ornamental Ironworkers District Council, Local Unions 700, 721, 736, 759, 765 and 786 of the Province of Ontario.

Dated this 22nd day of July 1987

Landmark Contracting Limited

Company Name

494 Wentworth St. N., Hamilton, Ont. L8L 5W9

Company Address and Telephone Number

"Lou Zych"

Signature of Company Representative

The Union accepts the recognition herein and acknowledges that the Employer is bound by the aforementioned Collective Agreement.

Dated this 2nd day of July, 1987

International Association of Bridget Structural and Ornamental Iron Workers

"Illegible" "L. Baillie" Local Union 700 Local Union 759 "Antonio Almeida" "Illegible" Local Union 721 Local Union 765 "Illegible" "Illegible" Local Union 736 Local Union 786

20. Lou Zych has been with the respondents for 13 years and is the second most senior employee. He was on the E.T.S. Tower payroll and is now paid by Landmark Structures. His time is charged out to whatever company he works for. Zych handles most problems, but if he feels that D. Lamon should get involved he gets in touch with him. When Zych signed the voluntary recognition agreement (Exhibit 14) on behalf of Landmark Contracting on July 22, 1987, Landmark Structures had been incorporated since March 1987. Landmark Structures was working on the Trenton job (Exhibit 8), an elevated water tank. At that time, Zych was on E.T.S. Towers' payroll along with other office staff. Their time was then back-charged to the applicable company.

21. The five persons in the crew referred to earlier in paragraph 17 worked at both the Ashbridges Bay and the Barrie water storage tank jobs. They were paid by Landmark Structures and the jobs are Landmark Structures projects (see Exhibit 8). The crew are members of various construction unions. Gottwald belongs to the hoisting engineers (Operating Engineers) Union; Sacco is a member of the Carpenters Union; Greenaway and Russell belong to the Labourers Union. Tuttenham apparently belonged to the Carpenters Union in another province.

22. Because of the general contracting nature of the business, the number of employees of Landmark Contracting fluctuates considerably from 12 permanent employees up to between 30-40 in total depending on the stage the job is at. These employees are paid by Landmark Contracting and shown as employees of Landmark Contracting. According to Doug Lamon, Contracting employees do not work for Landmark Structures.

23. The welding of steel was sub-contracted on the Ashbridges Bay job. At Barrie, the steel was sub-contracted to Landmark Steel Ltd. for the steel erection and welding. Landmark Steel has a province-wide agreement with the Boilermakers. Doug Lamon is a fifty per cent owner in that entity. The work done by Landmark Steel does not involve any rod or wire mesh work.

24. At the time the voluntary recognition agreement was signed, there were ironworkers working at the Aurora storage silos. Doug Lamon agreed that at the relevant time there were members of the bargaining unit working under the collective agreement for Landmark Contracting.

25. At the pump station in Holtyre (Exhibit 10) Landmark Contracting sub-contracted the rod work to a union firm. The same was done in Mono Mills and Richmond Hill. The Board has not been provided with the names of these sub-contractors. The only projects Landmark Structures (Ontario) Ltd. worked on in Local 721's jurisdiction were those of Ashbridges Bay and Barne, which are the subject of the two section 124's. The work was performed by a composite crew crossing jurisdictional lines, except for the hoisting engineer.

26. Both the Aurora Silo and the water storage tanks use a "jump form system". The Aurora Silo also included some "hand set" areas.

27. Lamon testified that neither Landmark Structures nor E.T.S. Towers has ever been bound to the Labourers or Carpenters agreement.

28. Landmark Structures is bound to the hoisting agreement with the Operating Engineers. Landmark Contracting is bound to the Carpenters and Labourers agreement.

29. Antonio Almeida, the Business Agent of Local 721, testified that Landmark Contracting telephoned the union hall for a job in Aurora requiring rodmen to place rebar. The union sent two men. They quit and Landmark Contracting requested replacements and the union sent Henry (Enrique) Alves. In response to Alves' question of whether Landmark Contracting was bound to a collective agreement, Almeida checked the applicant's records. When Almeida discovered that Landmark Contracting was not bound by their agreement, he called L. Zych and explained that in order for the union to dispatch members to Landmark the company would have to sign a voluntary recognition agreement. Zych indicated that this was no problem and that he was quite happy with the work performed by Alves. Zych's secretary typed in the name and date and Zych signed five copies, one for each local of the applicant in the province of Ontario.

30. The subject of Landmark Structures did not come up and Almeida did not recall seeing any signs of any other company name. The only thing discussed was the job in Aurora. While driving along the Gardiner Expressway, Almeida came across a project using reinforcing concrete. On investigating the site, he found a trailer with the name Landmark Structures on it. Almeida obtained a telephone number from one of the persons on the site but did not speak to anyone else as they were working 75 feet up. The telephone number and the address were the same for Landmark Structures and Landmark Contracting. Almeida then filed a grievance. Through discussions at the Ashbridges Bay site with members of other trades, Almeida discovered the Barrie project and filed a second grievance.

31. At the Barrie site there was a handwritten notice with the name of the company on it. Almeida went to the top of the tower and talked to the employees. They told him they belonged to a number of different unions. Almeida described the work functions which he observed at Barrie and Aurora. Almeida stated that the work performed on silos, smoke stacks or water towers is all the same; it is all done by composite crews under the same system. There may be different designs but when it comes to "jumping forms" and pouring concrete, it is all the same work. According to Almeida, composite crews are permissible under the international agreements, "it is all reinforcing concrete". The Aurora job had a large percentage of reinforcing bars and welded wire mesh.

Argument

32. The respondents' argument covers two main areas:

1. Whether or not there has been an erosion of bargaining rights or scheme requiring the Board to exercise its extraordinary remedial powers under section 1(4).

2. Whether the applicant delayed and "sat" on his rights.

The respondents admitted they met all the pre-conditions for a section 1(4) declaration under common direction and control, associated or related activities or businesses. All the decisions deal with whether or not the Board should exercise its discretion. Counsel for the respondents cited paragraphs 16 and 17 of Capricorn Acoustics & Drywall Ltd., [1986] OLRB Rep. 308, which read as follows:

16. The criteria used by the Board in determining whether to exercise that discretion were set out in John Hayman and Sons Co. Ltd., [1984] OLRB Rep. June 822 at 827-28:

"(1) whether the applicant is seeking to acquire bargaining rights by means of section 1(4) in order to avoid the certification procedures of the Act;

(2) whether a declaration would disturb existing bargaining rights;

(3) whether a declaration would interfere with the interests and rights of employees to select their own bargaining representative or to remain unrepresented;

(4) whether the application has been made within a reasonable time after the applicant became, or with reasonable diligence, should have become aware that the two or more entities were closely related; and

(5) whether a scheme exists which would effectively defeat bargaining rights by transferring work from one related entity to another."

17. In Donald A. Foley Ltd.,[1980] OLRB Rep. April 436, the Board stated:

"One of the significant purposes of section 1(4) is to guard against the dilution or undermining of bargaining rights already obtained such, for example, as occurs when work is diverted from a unionized employer to an associated, newly created nonunion one as in Evans-Kennedy Construction Limited, [1979] OLRB Rep. May 388; or when there is a risk or threat that bargaining rights may be eroded, as in West York Construction Limited, [1978] OLRB Rep. Sept. 879. For a more detailed review of the purpose of section 1(4), however, see Industrial Mine Installations Limited, [1972] OLRB Rep. Oct. 1029 at paragraphs 9 to 13 inclusive."

33. The respondents cited paragraph 12 of Capricorn, supra, with respect to the applicant's onus to adduce evidence and to bring forward a rationale in terms of labour relations policy and consistent with the Board's jurisprudence in order to convince the Board to exercise its discretion in these circumstances.

34. Counsel submits that it is important to look at this case in light of the purpose of section 1(4). The commercial and legal realities are consistent. In July 1987 when the applicant and the ABA entered into the voluntary recognition agreement they inherited a well-established commercial structure which had been in place since 1976. As of 1976 there was a well-established system whereby E.T.S. Inc. performed general contracting work, performing items such as sewer and watermain plants, pump stations, jobs like the ones set out in Exhibit 10 now performed by Landmark Contracting. At no time did Landmark Contracting or E.T.S. Inc. construct an elevated water storage tank.

35. The commercial activity which the union found in 1987 included E.T.S. Towers, which since 1976 has built 11 water storage tanks under the name of E.T.S. Towers and from March 1987 to the present time under the name Landmark Structures (Ontario) Ltd. The change in March 1987 was a name change only. The commercial activity continued without any change. Landmark Contracting had been around since the 1970's and Landmark Towers had been around for over 11 years. That was the commercial reality in place when Landmark signed the voluntary recognition agreement. There has been no alteration in the legal form since July 1987. There has been no transfer of work from one legal entity to another. There has been no spin-off of a non-union company after the union acquired bargaining rights performing certain kinds of jobs. There are two well-defined commercial activities. The trade union's bargaining rights attach to a well-defined commercial activity. They do not attach to the other well-defined commercial activity, that being E.T.S. Towers Inc./Landmark Structures performing work on water tanks. This is a specialized industry and has only a couple of companies building these types of structures. These are unique structures and are clearly recognizable as water towers. This case involves a very narrow scope of work. The legal and commercial form remained static over a long period of time without any evidence that they would change or any reason for them to change.

36. Counsel submits that for the following reasons this is exactly the situation where the Board should exercise its discretion:

1. The applicant is attempting to acquire through the back door what it has not acquired through the front door.

2. Landmark Structures is not bound to any other union with respect to ironworkers' work.

3. What is at issue here is the rights of the employees of Landmark Structures and previous to that E.T.S. Towers Inc. for ten to thirteen years. (See para. 16 of Joe Franze Concrete Ltd., [1983] OLRB Rep. Dec. 631.) Landmark Structures does not have a collective agreement with any trade union except the hoisting engineer.

4. The applicant should have brought this application before doing so in 1989.

5. There is no scheme to defeat bargaining rights by transferring work from one related entity to another. In fact, the way the union came on the scene crystallizes a corporate set-up that as long as it remains the same there is no scheme. This is not a case where the respondents have set up a new entity to siphon off work or set up a sub-contract or front man. There is no situation here where Landmark Contracting is transferring work to Landmark Structures. Landmark Contracting or E.T.S. Inc. has never performed and has no intention of performing elevated water storage tanks.

6. There is of course nothing to prevent the applicant from bringing an application if Landmark Structures was to stray away from only doing elevated water storage tanks. It would be easy to detect.

37. Counsel submits that section 1(4) is not meant to be a substitute for an application for certification. The evidence is clear. What is important is whether there was an established company in place when the union acquired bargaining rights as in John Hayman & Sons, supra; Bramalea Carpentry Associates, [1981] OLRB Rep. July 844 or Gerald Davidson Plumbing & Heating Limited, [1984] OLRB Rep. 462. This case is in the mainstream of the Board's jurisprudence, not in the grey areas. It is a much stronger case than Capricorn, supra, where the Board dismissed the application. Counsel referred the Board to paragraph 15 of the decision in Bramalea Carpentry, supra, which states:

38. In a number of cases the Board has observed that section 1(4) is designed to preserve rather than extend bargaining rights. It is not to be used as a substitute for certification. (See: Farquhar Construction Ltd. [1978] OLRB Rep. Oct. 914 and cases cited therein; H. Allaire & Sons Co. Ltd. [1974] OLRB Rep. July 457; Inducon Construction [1975] OLRB Rep. Apr. 399; and, most recently W.M.I. Waste Management [1981] OLRB Rep. March 409.) In our view, that is precisely what the union is trying to do in this case, where there was an established business and employee complement predating the bargaining relationship, and no evidence of a concrete erosion of the union's bargaining rights. Accordingly, the Board is not prepared to exercise its discretion to issue a section 1(4) declaration. If the union wishes to acquire bargaining rights for the Pinehurst employees, it will be necessary to enrol them into membership, and apply for certification.

In support of its position the respondents cited a number of cases including Mandic Bros. Drywall and Const. Ltd., [1982] OLRB Rep. May 693; Joe Franze Concrete Ltd., supra; Gerald Davidson Plumbing & Heating Limited, supra; John Hayman & Sons, supra; Miracle Feeds, [1985] OLRB Rep. Sept. 1390; Steve's Sheet Metal Company, [1985] OLRB Rep. Dec. 1804; Etobicoke Public Library Board, [1989] OLRB Rep. Sept. 935.

38. Counsel submits that there is no evidence of erosion of the applicant's bargaining rights. The status quo has been followed since 1976 before the Ironworkers were involved and has been religiously followed up to this point in time.

39. The second part of the respondents' submissions deal with delay. Counsel cited paragraph 12 of W. M. I. Waste Management of Canada Inc., supra, which states:

40. In our view that argument cannot succeed. A party requesting the Board to exercise its discretion to provide the extraordinary benefit of a declaration under section 1(4) has, at the very least, an onus to call affirmative evidence to explain an obvious failure to assert Its rights for a substantial number of years. It is well settled that delay by a union may preclude it from pleading the benefit of section 1(4) of the Act. (Ellwall & Sons Construction Ltd., [1978] OLRB Rep. June 535). Moreover, in any case, the Board should not permit section 1(4) applications to disturb established bargaining structures (Crown Cork & Seal, [1978] OLRB Rep. Sept. 809).

Since the signing of the voluntary recognition agreement in July 1987 a number of water towers have been built by Landmark Structures until July 1989 when this complaint was filed. In two years, ten of these structures have been built. They are hard to miss. There are public tenders reported in the trade publication, Daily Commercial News. There is no evidence as to why the application was not brought sooner.

40. There is absolutely no evidence in light of the decision in W. M. I. Waste Management, supra, as to why there are two years between the voluntary recognition agreement and the filing of this application. The respondents cited a number of cases where the Board declined to exercise its discretion to make the section 1(4) declaration where there were delays from eight months to three years. Counsel submits that the test is whether the applicant knew or ought to have known. Paragraph 16 of Capricorn, supra, states:

41. The criteria used by the Board in determining whether to exercise that discretion were set out in John Hayman and Sons Co. Ltd., [1984] OLRB Rep. June 822 at 827-28:

(4) whether the application has been made within a reasonable time after the applicant became, or with reasonable diligence, should have become aware that the two or more entities were closely related;……

Counsel submits that towers built by Landmark Structures are high profile buildings and Landmark used the same name in its sister company.

41. Because of the mandatory province-wide scheme the applicant cannot say that because the towers were not in the jurisdiction of Local 721 it did not know about them. The provincial scheme under section 144 contemplates that Local 721 applies on behalf of all affiliated bargaining agencies and will include all employees bound by a provincial agreement. The respondents request the Board to dismiss the application on the basis of delay as well as lack of mischief.

42. Counsel for the applicant submits that the situation with respect to delay and due diligence is very different in the obligation it puts on a local union. The two projects put up by Landmark Structures in Local 721's jurisdiction are both subjects of the section 124 referral of grievance. Local 721 should not be prejudiced by the action of other locals. Paragraph 23 of The Great Atlantic & Pacific Company of Canada Limited, [1981] OLRB Rep. March 285 sets out the test as follows:

23.... There may be no legal requirement for a company to advise a trade union about a related company which might affect the union's bargaining rights, and there may be no requirement that a company which intends to rely upon "the corporate veil" as a defence to a grievance should disclose that defence, however, it is inconsistent, in our view, for a company to take the position that the union "ought to have known" of these matters, when in response to the grievance, the Company itself did not clearly notify the union of the facts. Indeed, the presence in the Act of section 1(5) [creating an onus upon the respondents to reveal the corporate connection between them] suggests a legislative recognition that an applicant trade union generally will not be aware of the business or corporate relationships between the allegedly related businesses. In view of this explicit legislative direction, we do not think that we should adopt an unduly high standard of "due diligence", or readily apply such concept to bar a union which had no actual knowledge of the basis on which a section 1(4) application might be made. It will be noted that section 1(4) itself does not expressly contemplate any such bar.

Counsel for the applicant submits that the Board recognizes that unions have limited resources. Almeida was the one that signed this agreement and went out to Hamilton to negotiate with Zych. The Board should note that Zych did not testify. When Almeida went to sign the voluntary recognition agreement he was not aware of any other company; the sign on the door only indicated "Landmark". There was no discussion about any other company or the fact that Landmark Contracting was not the entire entity. There is nothing in the facts here which would suggest anything other than that the applicant Local 721 has found out and complained about every project in its area.

43. It is the applicant's position that with respect to the exercise of the Board's discretion, this case falls into the grey area to the extent that one case can indicate labour relations in the construction industry. The Board must consider the obligation of an employer if it is a multi-entity and wants to avoid a section 1(4) declaration, if there is a factual obligation on them to do what was done in Gerald Davidson, supra. If one is aware a double-breasted situation exists one must make it clear.

44. Counsel for the applicant submits that there are significant facts which the Board should consider. Initially, the elevated water structures had a limited liability so that if there was any litigation or claims because of design problems, claims would not end up hitting the other assets of the entity. That is the only reason for the two companies - to protect limited liability and to protect the design. The fact that the purpose of these two companies is only for limited liability is not relevant to the labour relations integrity of the entity. It does not matter that the sole rationale bears no impact and is irrelevant for labour relations purposes.

45. Lamon's evidence about the creation of the Landmark corporate vehicles was that he needed to have a clean break with those old companies because they had some debt problems. The employer has control of whatever corporate vehicle it sets up and which in this case is unrelated to labour relations. The applicant is not suggesting that there is an anti-union animus in how they arrange their corporate structure. Where they do make a deliberate clean break the applicant contends they cannot say at the same time that "even though we have made a clean break we are relying on the history of a long-time business practice of separate companies". At the time of signing the voluntary recognition agreement, Landmark Structures was only in existence for a few months.

46. The exhibits filed by the respondents only reflect those documents the respondent chose to bring. Exhibits 8 to 10 are the only contracts involving those two companies. Exhibit 10 goes back to 1985 and Exhibit 8 only goes back to 1987. There is another exhibit in which the respondent describes every contract back to the founding of E.T.S. Towers as being a contract of Landmark Structures, but that requires one to accept that it was a straight continuation of the business when Lamon's evidence is that it was a clean break. Another company, Landmark Ltd., was incorporated on January 14, 1976 about six to eight weeks before E.T.S. Towers Inc. The respondents' position is that it is a predecessor to the Landmark Structures. Counsel submits that section 1(4) does not allow a company to take advantage of what it can create itself but works the other way around. A union finds what the company has done.

47. The two companies may well be different in terms of some narrow aspects. It does not matter that one only builds water storage tanks and the other builds pumping stations, inground reserves etc. Section 1(4) focuses on the labour relations integrity, not the design distinction. For the purpose of labour relations, there is no difference. In addition, counsel submits that there is evidence that Landmark Structures is building something other than elevated water towers. We have the contracts the respondent chose to produce. Two of the contracts from Hornepayne dated August 10, 1987 and October 28, 1988 relate to the same project. If Landmark Structures has done anything other than elevated water towers the respondent's case "goes down the tubes".

48. Both of these companies do the same work, construction of storage tanks and pumping stations. The only difference is the design factor. They have the same market. They deal with the same customers. Silos are built the same way as elevated towers. There was a cross-over of pay cheques as Zych was on the payroll of Landmark Structures. The employees were paid by Landmark Structures, and the factor which above all distinguishes this case from all the other cases is that this is a case where the work forces are intermingled.

49. The critical part is Lamon' s evidence regarding those five employees he could remember who had 5-10 years' service with the respondent between them. All of these people were paid by Landmark Structures and employed by Landmark Contracting. All of them worked on the Aurora site which led to the voluntary recognition agreement. Landmark Structures has a collective agreement with the hoisting engineers. Landmark Contracting has agreements with Rodmen and Labourers and are presumably paying according to the agreements. One day the five employees worked for Landmark Structures and another day for Landmark Contracting. The actual way of working was with a composite crew. All of those people were doing ironworkers' work for both companies as part of a composite crew. When the cheques came from Landmark Structures the employees viewed Landmark Structures as being the true employer. Counsel submits that in Capricorn, supra, and John Hayman & Sons, supra, the Board has gone too far because of the fundamental principle of sections 1(4) and 63 which distinguishes them from section 89 requiring an anti-union animus. Paragraph 12 of Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 deals with this head on:

50. ... 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. 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 mow 63] which preserves the established bargaining rights and collective agreement when a "business" is transferred from one employer to another. Section 55 mow 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.

51. The five factors set out in John Hayman & Sons, supra, and referred to in Capricorn, supra, are not carved in stone and the Board should not take a mathematical approach when the fundamental right is to protect the integrity of labour relations. It is not the union's obligation to establish all five criteria. The absence of the last factor, "(5) Whether a scheme exists which would effectively defeat bargaining rights by transferring work from one related entity to another", does not militate against the discretion. If the absence of anti-union animus is a factor for not exercising the discretion then the Board would come into conflict with its decision in Brant, supra, that section 1(4) does not require anti-union animus. It is a question of whether there is a serious risk that the bargaining rights will be or could be defeated.

52. With respect to onus, the employer has the onus of evidence under section 1(5) although the applicant retains the onus of persuasion. It becomes critical when there are no facts before the Board to allow it to exercise its discretion. The implication is that subject to countervailing considerations, they should be treated as a single employer because it makes sense for labour relations' purposes to treat them as a single employer. If there are no countervailing factors, the onus to prove a negative can be very slight. The obverse of the following statement in paragraph 21 of]. H. Normick Inc., [1979] OLRB Rep. 1177: "If the scheme of the Act would be better served or the collective bargaining structures placed on a sounder footing by refusing to make a section 1(4) declaration the Board will exercise its discretion accordingly" is clearly equally true.

53. Counsel for the applicant submits that all the other cases cited by the respondent refer to various factors. But the Board must return to first principles. The point of the Labour Relations Act is for labour relations' integrity. In John Hayman & Sons, sup ra; Capricorn, supra; and Gerald Davidson, supra, a non-union entity was set up to take advantage of non-union work. Paragraph 20 of Frank Plastina Investments Ltd., [1986] OLRB Rep. June 720 is applicable to the facts in this case. The cases say one should look at the fundamental labour relations' purpose.

54. In summary, the applicant submits that there was no delay. The union caught the respondent in each project in its area. The company's sign only stated "Landmark". There is no evidence that the union was apprised that the entity it was dealing with was double-breasted. Landmark Structures had only been incorporated a few months earlier. There is a factual obligation on the company to make it clear that there is more than one entity as in Gerald Davidson, supra. It is impossible for the union to know unless it is told. The company can say "we will sign" but it will not apply to the other entity. The only factor for the two companies was to have limited liability in case one of the towers fell over. This is not relevant to countervailing considerations. The other piece of evidence particularly indicative is that we do not have all the contracts but only the ones the respondent brought. There is no countervailing reason why the entity should have Landmark Structures carved out. There is no reason why the existing bargaining rights should not apply to the entire entity. This would create a much more sensible situation, so that when the Carpenters and Labourers go back and forth between those companies they also take their rodmen with them. The distinction in design and the liability issue is not relevant.

Decision

54. The applicant is concerned with the protection of its bargaining rights obtained by the voluntary recognition agreement signed by Landmark Contracting. There is no evidence before the Board that there has been any erosion of bargaining rights from the date of signing the voluntary recognition agreement in March of 1987 to the section 1(4) application date in July of 1989. Exhibit 8 shows that one contract with Landmark Structures for elevated water storage facilities includes a "booster and pumping station" in August of 1987. Exhibit 10 for the same project shows a contract with Landmark Contracting for "construction of water pumping stations" in October of 1988.

55. Section 1(4) is not intended to expand a union's bargaining rights but rather to protect those rights from erosion. There is no evidence that the applicant's members were transferred from Landmark Contracting to Landmark Structures. The evidence with respect to "employee intermingling" refers to Mr. Zych, who is clearly management, and persons who would not be in the applicant's bargaining unit. In any event, such intermingling appears to be primarily from the un-organized entity to Landmark Contracting which is bound by a number of construction agreements, including the applicant's. The evidence does not support a finding that the respondents are engaged in a scheme to shift construction work from Landmark Contracting to Landmark Structures. In fact there is no suggestion by anyone that the existence of parallel operations was for anything other than for bona fide business reasons. These entities existed some years before the union entered into the picture.

56. Accordingly, in all the circumstances of this case, the Board declines to declare that Landmark Contracting Ltd. and Landmark Structures (Ontario) Ltd. be treated as one employer for the purposes of the Labour Relations Act. However, should the respondent companies change the operation of their businesses in such a way as to erode the applicant's bargaining rights with respect to Landmark Contracting, the applicant could bring a fresh section 1(4) application as soon as it became aware of the changed circumstances.

57. Having regard to the above, the section 124 referrals of grievances in Board File Nos.

1502-89-G and 0717-89-G are hereby dismissed.

DECISION OF C. A. BALLENTINE; June 27, 1990

1. I respectfully dissent from the majority decision.

2. Based on the evidence and the submissions of the applicant, in the circumstances of this case I would have made the declaration that the respondents are one employer for the purposes of the Labour Relations Act, and bound to the applicant's collective agreement.