Ontario Nurses' Association v. Kitchener-Waterloo Hospital, 1991 CanLII 6016

Ontario Nurses' Association v. Kitchener-Waterloo Hospital

[1991] OLRB Rep. October 1130

0913-89-U; 0914-89-R Ontario Nurses' Association, Complainant/Applicant v. Kitchener-Waterloo Hospital, Respondent v. Group of Employees, Objectors

BEFORE: Robert Herman, Vice-Chair, and Board Members J. A. Ronson and C. McDonald.

APPEARANCES: David Nicholson, Donna Hicks, Lynelle Purdy, N. Eveleigh for the applicant; T. F. Stone, Don McCroom, Judith Skelton Green, Len Kurt for the respondent; T. J. Billo, Doris Harper, Myrna Logan for the objectors.

DECISION OF R. HERMAN, VICE-CHAIR, AND BOARD MEMBER, C. McDONALD; October 15, 1991

1. File 0914-89-R is an application pursuant to section 63 of the Labour Relations Act. File No. 0913-89-U is a related complaint under section 89 of the Act.

2. Two hospitals in the Kitchener-Waterloo area negotiated a rationalization plan (the "Plan") whereby certain services previously offered by both would only be offered in the future by one or the other of the hospitals. Part of the Plan included provisions whereby the paediatrics and obstetrics services that had previously been offered at both hospitals would no longer be provided at St. Mary's General Hospital ("St. Mary's"), and only Kitchener-Waterloo Hospital ("Kitchener-Waterloo" or "The Hospital") would continue to provide such services. This "rationalization" of services would cause the paediatrics and obstetrics units at Kitchener-Waterloo Hospital to expand and would require additional nurses in those units. The applicant Ontario Nurses Association ("O.N.A.") has bargaining rights at St. Mary's representing both a full-time and a part-time bargaining unit of nurses. The nurses at Kitchener-Waterloo are unrepresented. The applicant applied under section 63 and 89 of the Act, alleging that the rationalization of services involving the "transfer" of the paediatrics and obstetrics services to Kitchener-Waterloo, around July 1, 1989, was a "sale" within the meaning of section 63, and alleging that the details of the rationalization Plan and decisions with respect to its implementation were based in part on a scheme by the respondent Kitchener-Waterloo to structure the transaction so that it would not look like a sale or transfer within the meaning of section 63, thereby wrongly attempting to undermine the bargaining rights of the applicant and the rights of nurses that it represents at St. Mary's. O.N.A. argues that a "transfer" of the paediatrics and obstetrics units from St. Mary's to Kitchener-Waterloo has occurred and that the St. Mary's nurses in these units were wrongfully deprived of their preferential rights to secure positions in the paediatrics and obstetrics units at Kitchener-Waterloo.

3. The applications were filed on July 7, 1989. The first day of hearing was August 21, 1989. At the request of the parties, the hearing dates were set in accordance with their schedules and on their agreement. The applications took approximately fifteen hearing days, concluding on April 2, 1991. The Board heard evidence from only two witnesses. Called on behalf of the Hospital was Judith Skelton-Green, the Vice-President of Patient Services at Kitchener-Waterloo. She was on the witness stand for nine days of hearing, and was subject to cross-examination for all nine of those days. Because of the hearing schedule, those nine days stretched from March, 1990 until October, 1990. At the conclusion of her evidence, the applicant agreed that the Hospital had discharged its onus pursuant to section 63(13) of the Act. The only other witness was Doris Harper, a part-time nurse in the paediatrics department at Kitchener-Waterloo, and one of the representatives of those nurses at Kitchener-Waterloo who participated in this proceeding in opposition to the application. O.N.A. called no evidence.

Evidentiary Matters

4. There were a number of matters dealt with by the Board during the hearings, a few of which we set out here. The section 63 application alleges that a "transfer" occurred with respect to the rationalization of the obstetrics and paediatrics departments from St. Mary's to Kitchener-Waterloo. But the changes in these two departments were only some of the changes resulting from and forming part of the Plan. The Board therefore heard evidence about the entire realignment or rationalization of services.

5. There was a dispute over production of documents in possession of the Hospital. At the time the dispute arose, the Board was hearing only the section 63 application (in a subsequent decision dated August 13, 1990 the Board, by majority decision, ruled that the section 89 complaint would be heard together with the section 63 application). A few background facts are necessary to understand the dispute and the Board's ruling. The rationalization Plan was drawn up and approved in early May, 1989. This Plan consisted only of the general outlines of the realignment agreed to between the two hospitals. After the adoption of the Plan, its details and implementation terms and timetable remained to be worked out. Kitchener-Waterloo accomplished this by establishing committees, or by utilizing existing ones, which would discuss the myriad details of the realignment, make decisions or recommendations as to the appropriate steps to take, and monitor and evaluate the continuing execution of the changes and operation of the expanded or changed services. The actual implementation took place in phases or steps over many months following the adoption in May of the rationalization Plan. The applicant sought production of Minutes of meetings at which matters concerning the implementation of the rationalization Plan were discussed. The majority of the Board ruled, Board Member Ronson dissenting, that the documents were arguably relevant, since they dealt with the details of and the actual implementation of the rationalization Plan reached on May 9,1989. In the majority's view, the events that had occurred after the adoption of the plan on May 9, 1989 were relevant, since they dealt with how the rationalization, part of which was asserted to be a section 63 transfer, actually had occurred. The Plan was only an agreement describing the general parameters of the changes. In assessing whether a "transfer" had occurred, it was relevant to lead evidence of the actual changes, quite apart from the document containing the outline. ONA asserted that a sale occurred when the actual changes were implemented, around July, 1989. Since these facts were at the least arguably relevant under section 63, the applicant was entitled to see the Minutes containing this evidence. Accordingly, the majority of the Board directed that the documents were to be disclosed to the applicant.

6. Board Member Ronson would not have directed disclosure of the documents, since in his view they were arguably relevant only to the section 89 complaint, which was not at that time being heard by the Board. In his view, the section 63 transaction alleged was the rationalization Plan of May 9, 1989, and only documents concerning that particular plan were arguably relevant. To admit or direct disclosure of the documents sought by the applicant would be to allow the applicant to engage in a fishing expedition, in support of its unfair labour practice complaint. Minutes of meetings dealing with the implementation of the decision made on May 9, 1989, would not, in Board Member Ronson's opinion, assist the Board in concluding whether a sale had taken place as of May 9, 1989.

7. After the Hospital had produced the documents as directed, it objected to any of them being entered in evidence, on the grounds that they were not arguably relevant. For similar reasons as expressed in the direction to produce the documents, the majority of the Board ruled that the documents were admissible as they were arguably relevant. The transaction in question was not only the Plan agreed to as of May 9, 1989, nor did that document fully describe it. Many matters which were arguably relevant to whether a "sale" had occurred remained to be decided by the hospitals; for example, the timetable of when the various services would be stopped at particular hospitals, the question of whether employees should "transfer" or not, the question of whether equipment would move from one hospital to the other, the question of when patients would be moved or redirected from one hospital to the other. All these questions were resolved only after the adoption of the general Plan in May, 1989. The answers to these questions were clearly relevant to understanding the details and nature of the actual transaction that ultimately occurred.

8. During cross-examination by counsel for O.N.A. of Ms. Skelton-Green, the parties agreed to defer certain evidence. They agreed that the Board should determine whether a "sale" had occurred, and the consequential issues, such as questions of intermingling, the appropriate bargaining unit, the voting constituency, and whether to direct a vote. However, they also agreed that evidence of whether any particular St. Mary's nurse had suffered a loss, and if so, the quantum thereof, ought to be deferred, until necessary, with the Board remaining seized. More specifically, the questions of heads of loss and quantum referred to in paragraphs 8, 9 and 10 of the "Remedies" part of the complaint were to be deferred, except for the question of whether any St. Mary's nurses should be "reinstated" to Kitchener-Waterloo, either because of a finding that a "sale" had occurred or because the Hospital had committed an unfair labour practice. The Board accepted their agreement to defer certain evidence and to remain seized thereof.

9. At the conclusion of the evidence, the parties were agreed that final submissions should be in writing. The proceedings were adjourned for written submissions on that basis. Upon receipt of the written submissions, however, it appeared that perhaps the parties were not of the same view as to the terms of the deferral of evidence. Accordingly, one further hearing date took place, at which the parties addressed the question of the nature and effect of their previous agreement to defer the evidence, and of the Board's endorsement of their agreement.

10. The parties in the result were in agreement that the Board had before it all the evidence upon which it was to decide whether or not a sale had occurred, and if so, the consequential issues: for example, if intermingling had occurred, what the result of such intermingling ought to be, including the questions of the appropriate bargaining unit and voting constituency, if any. The parties agreed that the Board was to remain seized with respect to the remedies part of the union's application, and as to whether any loss had been incurred by St. Mary's nurses, and if so, the quantum of loss. The Board was to decide, on the evidence before it, whether to order the reinstatement of St. Mary's nurses to the Kitchener-Waterloo obstetrics and paediatrics departments. In effect, the parties agreed to defer evidence concerning type and quantum of loss with respect to the section 89 complaint, but not with respect to the section 63 issues to be decided. The parties were further agreed that the deferral of evidence agreement included evidence with respect to, for example, whether any of the St. Mary's nurses had moved from the full-time bargaining unit to the part-time bargaining unit at St. Mary's, whether any of them had suffered reduced hours, or whether any of them had quit because they did not want to work in other than the obstetric or paediatric services at St. Mary's, as a result of the rationalization. The parties also agreed that no nurse at St. Mary's had been laid off, in the sense of having lost a job and being out on the street, as a result of the rationalization.

THE FACTS

11. Kitchener-Waterloo Hospital and St. Mary's General Hospital are the two major hospitals in the Kitchener-Waterloo region. Both institutions have for many years provided a wide range of hospital services to the communities which they serve. For over ten years, the two hospitals have been engaged in discussions regarding the duplication of certain of their hospital services, and attempts to more efficiently rationalize the services they provide. Indeed, prior to the rationalization Plan in question, a number of previous plans of rationalization or realignment had been jointly agreed to by the two hospitals. The most recent, in October, 1987, had been submitted, as required, to the Ministry of Health for its approval.

12. The hospitals co-operated in other respects as well. Medical privileges were granted to doctors for both institutions. When doctors applied for privileges at either hospital, they were automatically considered for privileges at both institutions, by a Joint Credentials Committee. Similarly, when a doctor resigned his or her privileges, the Joint Credentials Committee usually received the resignation request, and usually applied the resignation to both hospitals. It was a notification of future resignation by certain of these doctors that prompted the instant rationalization Plan. The Ministry of Health had not responded to the October, 1987 realignment scheme agreed to between the hospitals. The obstetricians had become increasingly frustrated with this state of limbo, and were discussing unilateral action to force a response. Kitchener-Waterloo was also experiencing serious budget problems. On April 17, 1989, for reasons unrelated to the subsequently agreed to rationalization scheme, Kitchener-Waterloo made the decision to close 43 beds in its gynecological and medical-surgical units, with the result that approximately 51 registered nurses in those services were to be laid off. Around the same time, the obstetricians, who had privileges at both hospitals, announced that they would be withdrawing their services from the St. Mary's obstetrics department, effective July 1, 1989.

13. Kitchener-Waterloo had to contend with both these problems simultaneously. News of the pending withdrawal of services by the obstetricians was the impetus for the two hospitals to devise a new realignment plan. The hospitals engaged in a period of frantic activity, holding meetings and discussions in an effort to arrive at a mutually acceptable realignment plan, one that would respond to the needs of the hospitals and the decision of the obstetricians to withdraw their services, while at the same time would likely be approved, as required, by the District Health Council and the Ministry of Health. During this period, on April 21, 1989, Kitchener-Waterloo senior staff met with the nurses in its gynecological and medical-surgical units, to respond to their concerns about the layoffs. Participants at the meeting were also aware of the drive to formulate a rationalization plan between the two hospitals. There was general discussion with the nurses about the nature of the bed closings and the number of the expected layoffs. The Hospital told the nurses that it would try to take care of them. Management was questioned about the rights of the nurses who were going to be laid off if a rationalization plan was subsequently adopted. The nurses were told that they would be entitled to bid on new positions, subject to existing policies. They were not advised that they would be given preferential treatment over nurses affected by the realignment scheme.

14. During the first week of May, 1989, the two hospitals continued their joint discussions, under the auspices of the District Health Council, and they arrived at a mutually acceptable rationalization Plan. Several principles directed the hospitals and the District Health Council in the development of this Plan. Because of the nature of funding in the hospital sector (at that time), it was clear that the Ministry of Health would not approve any plan that involved any increase in the total hospital beds in the community, nor any plan that involved extra financial commitments on the Ministry's behalf to either of the hospitals. On May 9, 1989, the two hospitals and the District Health Council signed their respective agreement to a Plan to realign services between the two hospitals. It was this Plan that was the foundation of the transaction alleged to have been a "transfer" within the meaning of section 63.

15. The Plan itself described the strategic direction of the hospitals and the District Health Council, and explained the urgency of the current dilemma. It noted the resignations submitted by the obstetricians from the medical staff of St. Mary's, and the need to more efficiently rationalize hospital services. It also provided the overall structure of the realignment scheme. As the Plan stated:

PLAN

On July, 1, 1989 or as soon as possible:

KWH will provide all obstetric, gynaecology, paediatric and otolaryngological (ENT.) programs.

SMGH will provide a comparable amount of additional medical programs including rheumatology, endocrinology, acute care geriatric medicine; and surgical programs including ophthalmology, orthopaedics, general, urology, vascular and plastics.

All parties to this agreement support the fact that neither hospital will be adversely affected, financially or otherwise, by this service realignment. We encourage all parties including the Ministry of Health to implement this plan accordingly.

A previous study by the Waterloo and Wellington-Dufferin District Health Councils indicated a need for an additional CT. scanner. Therefore, as part of this service realignment and as soon as possible, SMGH will purchase a C.T. scanner to provide proper service support to the medical and surgical programs offered by SMGH. Specific access arrangements will be developed to ensure access by Cambridge and Wellington County.

KWH will make available the space on 7ABC providing a much improved environment for dialysis services.

Ambulance-hospital interface will a facilitated in the Kitchener Hospital Centre by a central bed registry (trial in place). By 1990 the Waterloo Region District Health Council, together with KWH and SMGH, will present to the Ministry of Health an assessment of each hospital's physical plant requirements based on this service realignment.

CONCLUSION

Overall, there will be no reduction in service to the community nor will increased operating dollars be requested by either hospital. Patient throughput will be maximized by emphasizing more surgery on an out-patient, day surgery and reduced length of stay basis. Programs in acute care medicine will be supported by an ambulatory and outpatient emphasis. To minimize extended lengths of stay, other hospitals will offer transitional care programs.

Trustees will continue to support policies and practices which minimize length of stay and manage human and fixed resources to contribute to effective patient outcome and throughput. This realignment of services will be monitored so that backlogs or excessive service volumes do not develop in either hospital.

Both KWH and SMGH and the Waterloo Region District Health Council give assent to this plan.

All parties indicated below encourage timely consideration and support from the Minister of Health in order to proceed with implementation and further collaboration with community-based services as soon as possible.

16. On May 15, 1989, this Plan was approved by the Ministry of Health. As noted, the applicant alleges that the subsequent transfer of obstetrics and paediatrics at or around July 1, 1989 from St. Mary's to Kitchener-Waterloo constituted a sale within the meaning of section 63 of the Act. As can be seen however, the Plan reflected far more than the decision that obstetrics and paediatrics would no longer be performed at St. Mary's but only at Kitchener-Waterloo, as of July 1, 1989. Many of the services that were to be provided under the Plan by only one of the hospitals, were then being provided by both institutions, including obstetrics and paediatrics. The avoidance of such duplication, and the financial and practical inefficiencies that resulted, was one goal of the Plan.

17. As of May 15, 1989 there were 143 nurses working in the obstetrics and paediatric departments of Kitchener-Waterloo. This figure includes full-time, part-time, and casual nurses. Of those nurses, 103 worked in obstetrics, and 40 in the paediatrics department. If the full-time, part-time, and casual nursing positions were converted into the equivalent of full-time positions, there would have been approximately 68 full-time nursing positions in the two units in question before rationalization was implemented. Jumping ahead, after the rationalization was fully implemented with respect to these two departments, there were 217 nurses or nursing positions in obstetrics and paediatrics, the equivalent of approximately 154 full-time positions. As a result of

the realignment, there were ultimately 74 newly-created positions in the obstetrics and paediatrics departments at Kitchener-Waterloo, combining full-time, part-time, and casual positions.

18. Shortly after the Plan was approved by the Ministry, the District Health Council set up a joint committee to work out the details with respect to the implementation of the Plan, and to monitor and supervise it.

19. No decisions had been taken by the hospitals with respect to how to staff the newly-created positions at either hospital. Since services were moving in both directions as part of the realignment changes, staff might be moving from either hospital to the other. Although no final decision had been made, as of May 18, 1989, Kitchener-Waterloo believed that the nurses from St. Mary's obstetrics and paediatrics departments, both of which were to be closed, should be transferred over to Kitchener-Waterloo, with their seniority protected in some fashion. Kitchener-Waterloo's inclination was that nurses in the units affected in both hospitals should be considered in one personnel pool, each maintaining their respective individual seniority, and the Hospital filling the newly-created positions from within that pool. The Hospital was motivated by two concerns in favouring such a transfer arrangement. First, consistent with its practices and policies in previous experiences, it wanted to find jobs for the 51 surplus nurses who were to be laid off because of the bed closures in its gynaecological and medical-surgical units. Second, it wanted to fill the 74 newly created positions with the nurses most able to immediately step in and perform the work. On average, it was clear that the St. Mary's nurses, who were working there in the obstetrics and paediatrics units, would have more of the specific skills needed and would be better able to quickly work in similar units at Kitchener-Waterloo than the laid off Kitchener-Waterloo medical and surgical nurses. Not only would the St. Mary's nurses possess greater experience and skills in the relevant area, they would be able to begin work with less training and therefore less expense to Kitchener-Waterloo.

20. By May 23, 1989, Kitchener-Waterloo had decided to purchase as much of the equipment from the St. Mary's obstetrics and paediatrics services as was feasible.

21. In all these circumstances, we conclude that the Hospital (until subsequently learning of O.N.A.'s position that it would pursue successor rights) favoured filling the newly-created positions with the most skilled nurses. It had met with the medical and surgical nurses who were to be laid off, but had not promised them preferential hiring over any St. Mary's nurses. It had a practice of filling positions with the most skilled nurses. The St. Mary's obstetrics and paediatrics nurses were generally the most skilled of the two competing groups. Such a preference was reasonable~ given the shortness of the time-table in which to plan and implement the significant changes, the financial costs of any such change, the difficult budgetary position that Kitchener-Waterloo was in at the time, and the fact that they wanted to serve the patient community as effectively and as professionally as possible. In those circumstances, it would hardly be surprising that Kitchener-Waterloo favoured an arrangement whereby it could arrange for the more skilled St. Mary's obstetrics and paediatric nurses to work in the expanded services at Kitchener-Waterloo.

22. On May 23, 1989, Kitchener-Waterloo learned from some of its own nurses and from Marie Askin, the Vice President-Nursing at St. Mary's, that O.N.A. was intent upon pursuing successor rights under the Labour Relations Act with respect to the transaction. Ms. Skelton-Green became quite concerned. The obstetrics and paediatrics departments were, as of that date, scheduled to be moved over by July 1, 1989, and she felt that there was no room in the time-table to negotiate an agreement with O.N.A. As well, she testified that she had no real understanding of what "successor rights" meant under the Labour Relations Act. The next day, May 24, 1989, she phoned the legal department of the Ontario Hospital Association ("O.H.A."), to ask them about

the meaning of O.N.A.'s claim that it would pursue successor rights, and what successor rights might mean, if O.N.A. were successful. Although the O.H.A. had published a guide covering related circumstances, Ms. Skelton-Green was told that the guide would not be particularly helpful. She was told, however, that successor rights would mean that the collective agreement would come along with any nurses from St. Mary's who came over to Kitchener-Waterloo. She could not recall whom she had spoken to at the Ontario Hospital Association. As a result of this conversation, and given her limited understanding of "successor rights", Ms. Skelton-Green assumed that if any St. Mary's nurses were hired to work in the Kitchener-Waterloo obstetrics and paediatrics departments, they would continue to be represented by O.N.A. and the terms of its collective agreement would apply to them, while any Kitchener-Waterloo nurses working in the same department, and performing indistinguishable work, would not be represented by O.N.A. nor have the collective agreement apply to them.

23. On May 25, 1989, a meeting was held at Kitchener-Waterloo of the Special Nursing Administration Group, to discuss, amongst other things, the rationalization. Ms. Skelton-Green advised the group that in 1986 the Ontario Hospital Association had drafted a model transfer agreement, however, it had never been tested in a situation where unionized employees were transferring to a non-unionized hospital, which was the situation at hand. The Minutes of this meeting reflect what occurred and read, in part, as follows: "initially it appeared that we should get busy and negotiate an employee transfer agreement between the two hospitals. There is, however, a catch - because St. Mary's General Hospital's R.N.'s are represented by O.N.A., there would be a third party to the agreement - the union may seek 'successor rights', so that the staff that comes from St. Mary's General Hospital to Kitchener-Waterloo will continue to be O.N.A. members. A further complication is that we still have obligations to our own staff displaced by the June 1 bed closures..."

24. The meeting group considered three possible options for treatment of the staff. First, have no transfer agreement at all, but give first priority to the new jobs to the Kitchener-Waterloo staff, and then consider the St. Mary's staff along with others as new hires: second, have an arrangement where the openings would be advertised at St. Mary's and St. Mary's would receive some preferred status along with Kitchener-Waterloo nurses; third, simply proceed with the transfer agreement and deal with possible consequences if and when they arise. Kitchener-Waterloo realized that the second and third options, whereby some preference be given to St. Mary's nurses, were best from the perspective of filling the new jobs with those with the best nursing skills for the positions. At the hearings, Ms. Skelton-Green testified that the Hospital's policy, when filling positions with internal candidates, was that experience and skill were the priorities, and seniority was determinative only if all other factors were equal.

25. Nevertheless, some time between the meeting of May 25, 1989, and the end of that month, Kitchener-Waterloo made the decision that no transfers would take place. That decision was made by Al Collins, the President of Kitchener-Waterloo Hospital, solely on the recommendation of Ms. Skelton-Green, and it was based upon the reasons she provided to Collins. Collins did not testify. Ms. Skelton-Green recommended to Collins that the displaced Kitchener-Waterloo staff be given preferential treatment, and that postings would first be done on an internal basis. After all the displaced Kitchener-Waterloo nurses had had an opportunity to bid for and fill the newly-created positions, and any resulting vacant positions because of a successful bid, then the remaining vacancies would be opened up to both St. Mary's nurses and others in the community on an equal new hire basis; that is, she recommended that any St. Mary's nurse in the obstetrics or paediatrics departments was to be treated exactly the same as a nurse with no connection to either hospital, applying as a new hire.

26. Ms. Skelton-Green testified that she recommended this approach for several reasons. Ultimately, she had decided that the laid off Kitchener-Waterloo nurses should have first priority, irrespective of other factors. First, as a matter of conscience, she felt that Kitchener-Waterloo ought to protect its own staff. Second, it had become clear, contrary to her prior belief, that a movement of staff in both directions would not occur initially. During the ongoing discussions, the two hospitals had agreed to a time-table for the transfer of the various services. Although Kitchener-Waterloo had sought to delay the transfer of certain services beyond the following dates, it was ultimately agreed that obstetrics would close at St. Mary's as of July 1, paediatrics as of August 1, and gynaecology as of September 1. Though different services would be moving to St. Mary's from Kitchener-Waterloo, St. Mary's first had to substantially renovate its physical facilities. It became apparent that although Kitchener-Waterloo would need additional nurses relatively quickly as a result of the realignment, St. Mary's would not be in a position to require or accept further nurses for quite some time. There would not therefore be any concurrent exchange of nurses, as earlier believed. Third, posting the newly-created positions internally first was consistent with past practice and policies of the Hospital. Fourth, at the April 21, 1989 meeting with the nurses from the medical and surgical units who were to be laid off, the Hospital had advised them that they would have an opportunity to apply for the newly-created positions. Although she testified that these four were the only reasons for her decision not to have a transfer arrangement of some sort, Ms. Skelton-Green acknowledged that, from Kitchener-Waterloo's perspective, to transfer any of the St. Mary's nurses over, given the timing, would have made things extremely difficult, for the Hospital would have to negotiate with O.N.A. over how to treat those nurses. It was neither feasible nor practical to engage in such negotiations given the transfer date. She had concluded that any St. Mary's nurses who came over to Kitchener-Waterloo on a transfer basis (that is, with some seniority recognized) would continue to be represented by O.N.A. and covered by a collective agreement, leading to significant administrative difficulties, as the Hospital would then have nurses working side by side, some of whom were covered by a collective agreement and some of whom were not.

27. On June 1, 1989, the Hospital closed the 43 beds in its gynaecological and medical-surgical units. Some time shortly after June 1, 1989, Collins decided that none of the equipment from the obstetrics and paediatrics departments of St. Mary's would be purchased by the Hospital, contrary to the earlier decision to purchase as much as possible. Ms. Skelton-Green testified that the biomedical technicians at Kitchener-Waterloo had advised Collins that it did not make sense to buy any of the equipment, since it was old and unsuited in the long run to Kitchener-Waterloo's needs.

28. On June 2, 1989, O.N.A. wrote to President Collins, asking that the parties meet in order to discuss the transfer. On June 9, 1989, Collins responded, indicating that there was no need for the parties to meet, as there were no transfers of personnel from St. Mary's to Kitchener-Waterloo, and each hospital was to look after its own nurses.

29. During this period and throughout the following months, the hospitals continued to co-ordinate their efforts and to deal jointly with a wide variety of questions arising from the rationalization. Through joint committee participation and decision making, the parties continued to deal with the timing of the move, equipment issues, the details of the movement of patients, and indeed with respect to all matters except, apparently, the treatment of staffing questions. On that issue, except with respect to the timing of when any of the St. Mary's nurses who had been hired by Kitchener-Waterloo might be released from their St. Mary's obligations and move over to Kitchener-Waterloo, the two hospitals agreed to deal independently with their own staffing concerns. On June 19, 1989, the newly-created positions in obstetrics and paediatrics were posted internally at Kitchener-Waterloo. When all the positions were internally filled, the result was that no Kitchener-Waterloo nurse, who would have been laid off because of the bed closures in gynaecology and medical- surgical, in fact was laid off.

30. In early July, 1989, the staff in the obstetrics department at Kitchener-Waterloo were expressing their concern to management because of the quality of the nursing care in the obstetrics department. More specifically, the staff were requesting that more nurses who had worked in the St. Mary's obstetrics department be hired, as they were more qualified to work and could immediately step in and provide the needed level of service. Staff requested that any restrictions on transfers from St. Mary's be reduced, for quality of care reasons. The Hospital maintained its position that all nurses from outside Kitchener-Waterloo be treated as new hires.

31. After the internal postings and rebound openings were filled by Kitchener-Waterloo nurses, there remained 33 positions open in the obstetrics and paediatrics services. Those positions were then advertised to the general community. St. Mary's nurses were free to apply, but along with other nurses in the general community, as new hires. Ms. Skelton-Green testified that there were only two reasons why it was decided, after giving preference to the Kitchener-Waterloo nurses, to treat the St. Mary's nurses as new hires. First, she took this position because she felt that other nurses in the community (that is, those unconnected to either hospital) would object to preferential treatment afforded to the St. Mary's nurses. Second, she remained concerned, because of budgetary problems at Kitchener-Waterloo, that there might be layoffs in the future and she wanted to continue to protect the Kitchener-Waterloo nurses. If St. Mary's nurses were to work at Kitchener-Waterloo, with their seniority protected, this might result in her view in the future layoffs of Kitchener-Waterloo nurses. Ms. Skelton-Green testified that a concern over potential successor rights, or an application asserting such rights by O.N.A., formed no part of the reason for this decision. When the remaining 33 positions were advertised, 42 nurses from the St. Mary's obstetrics and paediatric services applied and were interviewed. All 42 were offered positions before any unconnected nurse and 27 of the 42 nurses accepted the offers. Most of those 27 were hired into areas where they had been working previously. These 27 did not require specific training, but only a general orientation to Kitchener-Waterloo hospital. It is clear that the time and expense of training or orienting the 27 St. Mary's nurses was significantly less than was required to train the Kitchener-Waterloo nurses who posted into the newly-created positions. The parties agreed that some of the 42 nurses who had applied for jobs, but did not accept the offers, did not do so because it would have resulted in lower wages or reduced or different hours, given that they were being hired as new hires. The 27 nurses from St. Mary's who did accept did not all come over to Kitchener-Waterloo until early September, 1989.

32. As of the beginning of September, 1989, when the hirings were complete, Kitchener-Waterloo employed approximately 807 nurses, both full-time and part-time. Of those, 156 were in the obstetrics department and 57 were in the paediatrics department, for a total of 213 in the two departments in question. Four vacancies remained in the two departments, bringing the total nurses at complement, to 217. Of the 213 then in the departments, 19 had been hired into the obstetrics department from St. Mary's nurses, and 8 had been hired into the paediatrics department from St. Mary's, yielding the 27 nurses who in the result had been hired from the St. Mary's obstetrics and paediatrics departments.

THE DECISION

33. The applicant asserts that a sale within the meaning of section 63 has occurred, through the transfer of the obstetrics and paediatrics departments from St. Mary's to Kitchener-Waterloo. If the Board should determine that a sale has occurred, it is common ground that intermingling within the meaning of section 63(6) has occurred. The applicant further asserts that Kitchener-Waterloo breached sections 50, 64, 66, and 67 of the Act in its treatment of the St. Mary's nurses, and in its refusal to offer any of them employment on a transfer basis. In its final submissions, the applicant indicated that it was no longer relying upon alleged breaches of sections 70 and 72 of the Act.

34. The relevant sections of the Act are as follows:

35. (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.

(4) Where a business was sold to a person and a trade union or council of trade unions was the bargaining agent of any of the employees in such business or a trade union or council of trade unions is the bargaining agent of the employees in any business carried on by the person to whom the business was sold, and,

(a) any question arises as to what constitutes the like bargaining unit referred to in subsection (3); or

(b) any person, trade union or council of trade unions claims that, by virtue of the operation of subsection (2) or (3), a conflict exists between the bargaining rights of the trade union or council of trade unions that represented the employees of the predecessor employer and the trade union or council of trade unions that represent the employees of the person to whom the business was sold,

the Board may, upon the application of any person, trade union or council of trade unions concerned,

(c) define the composition of the like bargaining unit referred to in subsection (3) with such modification, if any, as the Board considers necessary; and

(d) amend, to such extent as the Board considers necessary, any bargaining unit in any certificate issued to any trade union or any bargaining unit

defined in any collective agreement.

(5) The Board may, upon the application of any person, trade union or council of trade unions concerned, made within sixty days after the successor employer referred to in subsection (2) becomes bound by the collective agreement, or within sixty days after the trade union or council of trade unions has given a notice under subsection (3), terminate the bargaining rights of the trade union or council of trade unions bound by the collective agreement or that has given notice, as the case may be, if, in the opinion of the Board, the person to whom the business was sold has changed its character so that it is substantially different from the business of the predecessor employer.

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

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

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

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

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

(7) Where a trade union or council of trade unions is declared to be the bargaining agent under subsection (6) and it is not already bound by a collective agreement with with respect to the employees for whom it is declared to be the bargaining agent, it is entitled to give to the employer a written notice of its desire to bargain with a view to making a collective agreement, and such notice has the same effect as a notice under section 14.

(8) Before disposing of any application under this section, the Board may make such inquiry, may require the production of such evidence and the doing of such things, or may hold such representation votes as it considers appropriate.

(9) Where an application is made under this section, an employer is not required, notwithstanding that a notice has been given by a trade union or council of trade unions, to bargain with that trade union or council of trade unions concerning the employees to whom the application relates until the Board has disposed of the application and has declared which trade union or council of trade unions, if any, has the right to bargain with the employer on behalf of the employees concerned in the application.

(10) For the purposes of sections 5, 57, 59, 61 and 123, a notice given by a trade union or council of trade unions under subsection (3) or a declaration made by the Board under subsection (6) has the same effect as a certification under section 7.

(11) Where one or more municipalities as defined in the Municipal Affairs Act is erected into another municipality, the two or more such municipalities are amalgamated, united or otherwise joined together, or all or part of one such municipality is annexed, attached or added to another such municipality, the employees of the municipalities concerned shall be deemed to have been intermingled, and

(a) the Board may exercise the like powers as it may exercise under subsections (6) and (8) with respect to the sale of a business under this section;

(b) the new or enlarged municipality has the like rights and obligations as a person to whom a business is sold under this section and who intermingles the employees of one of his businesses with those of another of his businesses; and

(c) any trade union or council of trade unions concerned has the like rights and obligations as it would have in the the case of the intermingling of employees in two or more businesses under this section.

(12) Where, on any application under this section or in any other proceeding before the Board, a question arises as to whether a business has been sold by one employer to another, the Board shall determine the question and its decision thereon is final and conclusive for the purposes of this Act.

(13) Where, on an application under this section, a trade union alleges that the sale of a business has occurred, the respondents to the application shall adduce at the hearing all facts within their knowledge that are material to the allegation.

50. A collective agreement is, subject to and for the purposes of this Act, binding upon the employer and upon the trade union that is a party to the agreement whether or not the trade union is certified and upon the employees in the bargaining unit defined in the agreement.

51. No employer or employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administration of a trade union or the representation of employees by a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of his freedom to express his views so long as he does not use coercion, intimidation, threats, promises or undue influence.

52. No employer, employers' organization or person acting on behalf of an employer or an employers' organization,

(a) shall refuse to employ or to continue to employ a person, or discriminate against a person in regard to employment or any term or condition of employment because the person was or is a member of a trade union or was or is exercising any other rights under this Act;

(b) shall impose any condition in a contract of employment or propose the imposition of any condition in a contract of employment that seeks to restrain an employee or a person seeking employment from becoming a member of a trade union or exercising any other rights under this Act; or

(c) shall seek by threat of dismissal, or by any other kind of threat, or by the imposition of a pecuniary or other penalty, or by any other means to compel an employee to become or refrain from becoming or to continue to be or to cease to be a member or officer or representative of a trade union or to cease to exercise any other rights under this Act.

67.-(1) No employer, employers' organization or person acting on behalf of an employer or an employers' organization shall, so long as a trade union continues to be entitled to represent the employees in a bargaining unit, bargaining with or enter into a collective agreement with any person or another trade union or a council of trade unions on behalf of or purporting, designed or intended to be binding upon the employees in the bargaining unit or any of them.

(2) No trade union, council of trade unions or person acting on behalf of a trade union or council of trade unions shall, so long as another trade union continues to be entitled to represent the employees in a bargaining unit, bargain with or enter into a collective agreement with an employer or an employers' organization on behalf of or purporting, designed or intended to be binding upon the employees in the bargaining unit or any of them.

35. Over the years, the Board has on numerous occasions remarked upon the purpose and effect of section 63 of the Act. In Metropolitan Parking Inc. [1979] OLRB Rep. Dec. 1193, the Board wrote, in part, as follows:

36. ... When a business (or a part thereof) is transferred, or disposed of, the transferee acquires the business subject to the collective bargaining obligations of the transferor, the union retains bargaining rights for the employees in a "like unit" to that which existed prior to the transfer, and the transferee must continue to apply the collective agreement (if any) to the unit until the Board otherwise declares. Since the bargaining structure inherited from the predecessor may be inappropriate, or create conflicts with the successor's pre-existing bargaining obligations, the Board is empowered to define and, if necessary, restructure the unit to suit the new circumstances. Likewise, if the successor employer significantly alters the character of the business, or intermingles the employees of the purchased business with those in its existing operation, the Board may redefine the bargaining structure or determine whether the union's bargaining rights should be continued (section 63(4)-(6)). However, until the Board otherwise declares, the transferee stands in the shoes of his predecessor with respect to established bargaining rights.

37. In the absence of a successor rights provision any change in the legal entity constituting the employer would destroy subsisting bargaining rights, whether they flow from certification or derive from a collective agreement with the predecessor employer. Incorporation of the business, its transfer to other individuals, or a change in a partnership, would all effect a change in "the employer" even where the plant equipment, products and work force remain substantially the same. The employees might find themselves working at the same plant, at the same machine, under the same working conditions, with the same supervision, doing exactly the same job as before, but as a result of a transfer (of which they may not even be aware) their collective bargaining rights and their collective agreement would disappear. Section [63] avoids this destruction of bargaining rights and prevents a dislocation of the collective bargaining status quo by transforming the institutional rights of the union and the individual rights of the employees, (both of which are grounded upon the statute) into a form of "vested interest" which becomes rooted in the business entity, and like a charge on property, "runs with the business." In Marvel Jewelry, 11975] OLRB Rep. Sept. 733 the Board described the effect of section [63] as follows:

“Section [63] recognizes that collective bargaining rights, once attained, should have some permanence. Rights created either by the Act, or under collective agreements, are not allowed to evaporate with a change of employer. To provide permanence, the obligations flowing from these rights are not confined to a particular employer, but become attached to a business, so long as the business continues to function, the obligations run with that business, regardless of any change of ownership."

20. The concept of successorship is an attempt to balance the interests and expectations of parties in the industrial community and preserve both collective bargaining stability and industrial peace. The employer retains his freedom to dispose of all or part of his business; but it is recognized that one cannot realistically expect that the interest of employees will be at the forefront of his negotiations. On the other hand, his employees may have recently struggled to become organized or to achieve a collective agreement. They expect that their statutory right to bargain collectively and their negotiated conditions of employment will have some permanence. Their expectations would be frustrated if a transfer of the business terminated both. Of course, the transfer of the business is not the only occurrence which could frustrate employee expectations. A re-organization of the production process, the introduction of "job destroying" technological change or a geographic move beyond the scope of the collective agreement will also materially change the industrial relations status quo. A business transfer, however, involves a new employer and raises legal problems of an entirely different order which cannot easily be accommodated in a bilateral bargaining process. It is to these problems that section [63] is addressed.

21. The "successor rights issue" is not a new one in Ontario. It was discussed by this Board in a number of early cases, (see, for example: New Method Laundry and Dry Cleaners, 57 CLLC ¶16,199; and Brantford Product Co. Ltd., 61 CLLC ¶16,193); and was considered by both the Legislature's Select Committee on Labour Relations (1957-1958) and by H. Carl Goldenberg, Q.C. in his Report of the Royal Commission on Labour Management Relations in the Construction Industry, (Queen's Printer, Toronto, 1962, at pp.44-47.) The Select committee's recommendation provides a useful description of the kind of situation to which section [63] gives rise:

“It is the recommendation of the Committee that where -

1. A Trade Union has been certified as the bargaining unit [sic] for the employees of an employer, or

2. Where an employer has entered into a collective agreement with a union, and where in either instance the facts establish that the plant, property, equipment, products and working force remain virtually unchanged as a result of the sale or other transfer-in-law of the business of the employer and no essential attribute of the employment relationship has been changed as a result of the sale or other transfer-in-law, the certification and consequent obligation should continue or the collective agreement should continue to be binding, as the case may be notwithstanding the change in legal ownership of the business enterprise."'

3. The first successor rights provisions were enacted by The Labour Relations Amendment Act, 1961, SO. 1961-62, c.68. These were in all material respects similar to the present section [63], but the legislation was never proclaimed. When it was re-introduced as The Labour Relations Amendment Act, 1962, SO. 1962-63, c. 70, there was a significant change. The subsection ensuring a "flow through" of the collective agreement [now section 63(2)] was omitted. The implication is that the Legislature intended only to preserve bargaining rights; it was not concerned with preserving the attributes of the employment relationship embodied in the employees' collective agreement. The successor employer remained free to negotiate his own bargain.

4. In 1970 the Legislature significantly expanded the effect of the successor rights section by reintroducing the subsection preserving the collective agreement [now section 63(2).] This amendment abrogated the notion of privity of contract, and provided that the successor would be bound by the predecessor's collective agreement. It is now up to a prospective transferee to investigate the terms of the bargain which the predecessor has made, and to see that this is taken into account in the transaction by which it acquires the business. It might also be noted that the amendment was part of a remedial package which contained section 1(4) of the Act - a section which, like section [63], prevents legal form or commercial law conceptions from dictating collective bargaining results. Section 1(4) provides:

"Where, in the opinion of the Board, associated or related activities or business are carried on, whether or not simultaneously, by or through more than one corporation, individual, form, 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 relief, by way of declaration or otherwise, as it may deem appropriate."

Both section [63] and section 1(4) recognize that a "business" is not a precise legal concept, but rather an economic activity which can be conducted through a variety of legal vehicles or arrangements. It is this economic activity which gives rise to the employer-employee relationships regulated by the Act.

27. The task of the Board in any particular case is to determine whether there has been a "transfer" or "disposition" of a "business" within the meaning of section [63] of the Act; and, if necessary, to sort out conflicting bargaining rights or problems of bargaining structure. Following the decision of the Court of Appeal in R. ex rel Kitchener Food Market Ltd., et al., (1966), 1965 CanLII 165 (ON HCJ), 54 D.L.R. (2d) 219, and the enactment of what is now section [63], the Board's decisions in this regard have become "final and conclusive for the purposes of the Act." It is the Board, therefore, which must give a meaning to the statute which will effect the legislative intention. The Board has always construed the terms "sale" and "business" broadly, in view of the collective bargaining purpose which the concept of successorship was designed to achieve. As the Board noted in Thorco Manufacturing Ltd., 65 CLLC ¶16,052:

"It is a rudimentary principle applicable to the construction of remedial legislation that, consistent with the language of the enactment, the interpretation which must be adopted is the one which best serves to advance the remedy and to suppress the mischief contemplated by the legislation. (See also section 10 of The Interpretation Act, R.5.O. 1960, c. 191). Having regard to this principle and to the fact that the language of the section is entirely susceptible of and in agreement with such a meaning, we are impelled to give the section a large and liberal rather than a narrow or restrictive construction."

Little reliance is placed upon the legal form which a business disposition happens to take as between the old employer and its successor. The important factor, as far as collective bargaining law is concerned, is the relationship between the successor, the employees and the undertaking. Common law or commercial law analogies are of limited usefulness. It was the extension of these principles into the realm of collective bargaining law which gave rise to the successor rights problem in the first place and made remedial legislation necessary. Likewise, the meaning given to the terms "business" or "disposition" in other statutes is of limited assistance in determining their meaning in The Labour Relations Act.

28. A section [63] application really involves two related questions: has there been a 'sale" within the extended statutory definition of that term; and does what has been "sold", "transferred" or "disposed of' constitute a "business" or "part of a business". There is seldom any problem with respect to the first question. The Board has consistently followed the approach taken in Thorco, supra:

"According to its strict signification, the term sells is usually akin to describe a transaction involving the disposal of property by one to another in consideration of a sum paid or agreed to be paid by the recipient in money or its equivalent. As used in section [63] however, the word sells has been given a wide definition which includes lease, transfers and any other manner of disposition of the business or part thereof. In legal parlance the word lease generally denotes a specific kind of contract by which one party, called the lessor, for a consideration in money or its equivalent, confers on another, called the lessee, the exclusive possession of certain property for a period of time.

The word transfers, however, is obviously a term of wide significance and unless restricted by the context is capable of describing a multitude of transactions whether by sale, exchange gift, trust or otherwise by which property, rights, or interest, etc. are transmitted absolutely, conditionally etc. or by operation of law from one person to another. We are unable to find anything in the language of the section to denote any legislative intention to restrict the meaning of the word transfers to any particular kind of transfer. Also, having regard to the particular language used and the remedial object sought to be attained by and the wide meaning which must be attributed to the preceding word transfers, it is our opinion that the generality of the words 'any other manner of disposition' is not intended to be in any way limited or interpreted ejusdem generis with the words leases or transfers. In our opinion, it is more in harmony with the language of and the remedy envisaged by the enactment to interpret the words 'and any other manner of disposition' as an omnibus or saving provision intended to include dispositions of the business or a part or parts thereof by any mode or means whatever which are not appropriately described by the preceding words which state that sells includes leases or transfers."

The Board has found a transfer of a business, through a "chain" transaction, or sequence of sales (Culverhouse Foods Ltd., [1976] OLRB Rep. Nov. 691; Trenton Riverside Dairies, [1964] OLRB Rep. May 72), a corporate reorganization and merger, (Eaton Yale Ltd., [1971] OLRB Rep. Oct. 667; Westeel-Rosco Ltd., [1966] OLRB Rep. Dec. 718) and through the offices of a receiver where "the business" has been transferred as a going concern (Marvel Jewellery Ltd., [1975] OLRB Rep. Sept. 733; Field-Price Ltd., [1973] OLRB Rep. Oct. 543; Parnel Foods Ltd., [19711 OLRB Rep. Nov. 715.) The manner of disposition is irrelevant so long as a transfer has, in fact, taken place. The interposition of a third party, acting as an agent or conduit, does not affect the result.

29. A more difficult question is whether it is the predecessor's "business" which has been transferred and continued by the successor or, alternatively, there has merely been a transfer of assets or other incidental elements of the business. Unlike The Successor Rights (Crown Transfers) Act, The Labour Relations Act does not contain a statutory definition of "business", and it is the Board, therefore, which must develop an appropriate meaning. In Raymond Cote, [1968] OLRB Rep. Mar. 1211 the Board commented:

"The meaning to be attached to the word 'business' depends to a great extent on the facts and circumstances in each particular case. It cannot be said that any one facet of an enterprise akin by itself necessarily comprises a business. It has been expressed that a business is 'the totality of the undertaking.' The physical assets of buildings, tools and equipment used in a business are not necessarily the undertaking per se but are, along with management and operating personnel and their skills, necessary in the operations to fulfill the obligations undertaken with a hope of producing profit to assume its success. The total of these things along with certain intangibles such as goodwill constitute a business."

While one usually thinks of a business as a profit-making economic activity, the term "business" in The Labour Relations Act cannot be so restricted. The Act also applies to municipalities, public libraries, universities, school boards, hospitals and other non-profit service undertakings which have employees and engage in collective bargaining. The economic activities of these entities are of an entirely different character from those of commercial enterprises, yet the definition of "business" must be broad enough to include them. Even a wholly commercial enterprise will consist of many elements, some of which will be integral, and others merely incidental, to the total undertaking. And, in the case of undertakings in the service sector, "know how", managerial systems and other intangibles are likely to be more important factors in the overall organization than particular physical plant and equipment.

32. Of particular significance for a labour relations statute is the continuity of the work performed before and after the transfer, since the trade union is certified to represent certain work groups, the collective agreement regulates the conditions of work for employees in those groups, and the purpose of section [63] is to preserve both the bargaining relationship and the collective agreement. If the work performed subsequent to the transaction is substantially similar to the work performed prior to the transaction, there is normally a strong inference that there has been a transfer of the business within the meaning of section [63]. This approach has not only been taken by the Board in a number of cases (see, for example, Culverhouse, supra and Dennis Moran [1977] OLRB Rep. Apr. 277) but also appears to have been adopted by the British Columbia Supreme Court in R. v. B. C. Labour Relations Board ex parte Lodum Holdings Ltd., (1969), 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41. In that case, the Court was considering an application for certiorari in respect of a decision involving what was then the successor rights section of the British Columbia Labour Relations Act (it has since been amended.) At page 52 Dryer, J. characterized the question before the Board as follows:

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

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

33. There need not be a transfer of the entire business before section [63] comes not play. The successor rights provisions may also be triggered by the transfer of "part of a business." [See section [631(1).] This language suggests that bargaining rights continue when something considerably less than "the totality of the undertaking" has been transferred. Presumably the Legislature envisaged the preservation of bargaining rights where there is a severance and transfer of a discrete, cohesive portion of the economic organization or activities which comprise the totality of "the business". The Board has found a transfer of 'part of a business", where one of a chain of retail stores has been sold to a competitor (Supercity Discount Foods, [1979] OLRB Rep. Apr. 119; Loblaws Groceterias Ltd., [1973] OLRB Rep. Jan. 73); where there is a transfer of the right and means to produce one of the products formerly produced by the predecessor's business; (Canac Shock Absorbers, [1973] OLRB Rep. Oct. 508); where there was a transfer of certain milk delivery routes in a particular geographic area (Borden Co. Ltd., [1970] OLRB Rep. Jan. 1244), and where there was a transfer of the oil burner installation and service branch of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Ltd., [1971] OLRB Rep. May 515.) In each of these cases the Board found that the predecessor had transferred a coherent and severable part of its economic organization - managerial or employee skills, plant, equipment, "know how" and goodwill - thereby allowing the successor to serve the market formerly served by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms of employment, together with the union's right to bargain about them, were preserved. The part of the predecessor's business which it no longer wished to continue provided the business opportunity which the successor was able to pursue to its own advantage. It was otherwise in Woodway Structural Components, [1971] OLRB Rep. Nov. 732, Canada Cement LaFarge Ltd., [1975] OLRB Rep. Dec. 905, and Dufferin Steel, [1976] OLRB Rep. Mar. 81. In these cases there was a significant change in the character of the work, product or market so that the Board concluded that what had been transferred was not the predecessor's business. The successor had merely incorporated incidental elements of that business into his own economic organization - even though each of the elements acquired could previously be found in the predecessor's business organization and, in that sense, were '~part" of the predecessor's business. What was transferred lacked that dynamic quality which distinguishes an idle collection of surplus assets from an active, severable and coherent part of a going concern.

34. Despite the labour relations focus of the statute "the business" is not synonymous with its employees or their work. In exceptional circumstances the accumulated skills, ability, know how or business contacts of the employee may be so crucial, or irreplaceable, that their loss would mean the demise of all or part of the business as a going concern; but these cases are rare. For the most part, the continued employment of the predecessor's employees is only one factor to be considered. The reason for this is succinctly stated by the Canada Labour Relations Board in NA BE Tv. Radio CJYC Ltd. et al, (1978)1 Can LRBR 565.

"The purpose of the successorship provisions is to preserve bargaining rights in spite of changes in the ownership or control of an enterprise. Bargaining rights are typically granted to a trade union as bargaining gent for a unit of employees of an employer employed in certain classifications or at a certain location, or for all employees with specified exceptions. Bargaining rights do not attach to certain specific employees as individuals. Therefore, in defining the concept of business for the purpose of successorship, it would be incorrect to focus upon whether certain identifiable persons formerly in the employ of A are now in the employ of B. Furthermore, to focus on that question would invite employers to avoid the successorship provisions by refusing to maintain continuity of the individuals employed. A key to the protecting of bargaining rights must be whether there is continuity in the nature of the work done (i.e. in classifications or job content for which the union was certified) not in the actual persons who perform it...

But continuity of the work done is not sufficient alone to satisfy section 144. There must be some nexus between two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successorship. There must be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand.

A continuity of the work and/or the employees is significant, but it is not always sufficient, to sustain a finding of successorship. This Board adopted a similar view in British American Bank Note Co. Ltd., [1979] OLRB Rep. Feb. 72 - a case which, like the present one, involved the consequences of a loss of a contract:

"There are limits, however, to the extent to which section [63] can be used to preserve collective bargaining rights. It is clear that the provisions of this section do not attach bargaining rights to the work being performed by a business but only to the business itself. While this distinction may not be easy to draw in some cases, it is essential that it be maintained since section [63] cannot be interpreted as guaranteeing to a bargaining agent an absolute right of property in the work performed by its members. Section [63] serves only to preserve bargaining rights that have become attached to a business entity so that when that business entity is transferred, either in whole or in part, those bargaining rights survive and bind the successor employer."

The focus of section [63] is the business entity - the employer's total economic organization - not simply the work which the employees perform.

36. With these general observations in mind, we turn to consider some of the Board's jurisprudence in the health care sector. In Thunder Bay Ambulance Services Inc. [1978] OLRB Rep. May 467, the application involved an alleged "sale" of an ambulance service in a municipality. Prior to the sale, two separate ambulance services had operated in the municipality in question, each one operated by a different hospital in the area. The applicant union had collective agreements with respect to employees involved in both ambulance services. The hospitals decided to discontinue their respective ambulance services, for economic reasons, and a public request was made for proposals to operate an ambulance service in the municipal area. The alleged successor was the successful applicant for the ambulance service. Licences to operate ambulance services were then issued by a branch of the Ministry of Health. The two hospitals had each been required to hold a licence for the period during which they carried on their ambulance services. The successful bidder, Thunder Bay Ambulance Services Inc., was granted a new licence by the Ministry of Health to operate its service. The Board concluded that a "sale" within the meaning of section 63 of the Act had occurred. In so ruling, the Board commented as follows:

37. This case requires a careful analysis because of the complicating factor of third party involvement. The Ministry of Health, although neither the predecessor nor successor employer, owned the assets which were necessary to the ambulance service provided by both the alleged predecessor and successor and licensed and regulated the alleged predecessor as it does the successor. The Ministry is also the source of the cash flow as it provided and continues to provide funds on a monthly basis in an amount agreed between the operator of the ambulance service and itself. These funds are the only source of revenue for the operator of the ambulance service. The integral involvement of the Ministry must be taken into account in considering the nature of the alleged predecessor's business and more importantly, in determining whether or not there has been the transfer of that "business" or the establishment of a parallel or similar business.

38. That part of the predecessor's business which is at issue can best be described as the management and operation of a group of assets owned by the Ministry of Health, for the purpose of providing ambulance service in the Municipality of Thunder Bay. The alleged successor manages and operates these same assets for the same purpose and therefore its business can be described in identical terms. This similarity of description, however, does not necessarily establish a "continuum" of the predecessor's business. In the absence of any direct contact between predecessor and successor, in the absence of the successor purchasing anything from the predecessor, and in the absence of the predecessor receiving any consideration from the alleged successor, it might be said that the predecessor employer did not sell or transfer its business but rather that it went out of business and a different, albeit parallel business, took its place. In the context of a regulated monopoly, the lack of hiatus and the similarity of function cannot be the overriding considerations. The issue must be determined on the basis of what, if anything, was transferred to the alleged successor.

39. In a strict commercial or corporate sense, it is clear that there has been no transfer between the predecessor hospitals and the respondent as would constitute a sale. Indeed, the predecessors had no assets, inventories (other than sheets, towels and other toiletries), accounts receivable or customer lists which could have been transferred and they were prohibited by law from transferring their licences to operate. The predecessors depended upon the maintenance of their relationship with the Ministry and not on customer goodwill. As discussed in para. 13 herein however, the Board must look beyond the form of the transaction in determining if there has been a ~'sale of a business" within the meaning of Section [63] of the Act. Notwithstanding the absence of contact between the hospitals and the Thunder Bay Ambulance Service, and notwithstanding the lack of consideration given and received between the two, the Board is satisfied that the essential elements of the predecessors' businesses were transferred to Thunder Bay Ambulance Services Inc. so as to constitute the sale of a business within the meaning of Section [63] of the Act.

40. In the view of the Board, the two essential elements of the predecessors' businesses were transferred to the alleged successor. Firstly, the exclusive use of the assets owned by the Ministry of Health was transferred. Although the same licence or piece of paper was not transferred between the two, the Board has no hesitation in finding that the exclusive entitlement, as embodied in a Ministry of Health Licence, was transferred. Secondly, the predecessors' management and organization in the person of Mr. Rudyke, and the predecessors' employees were also transferred. The predecessors' ambulance operations were largely managerial and organizational in nature and it follows that the transfer of managerial skills, albeit through a request for proposal system and competition, and the continuation of identical job functions filled by the same persons as were employed by the predecessors must weigh heavily with the Board.

41. In Parkwood Hospital [1980] OLRB Rep. May 759, the Board had to consider whether there had been a sale of part of a business from one hospital to another. In concluding that a sale had occurred, the Board wrote as follows:

42. The respondent Ontario Nurses Association was the bargaining agent for full-time and part-time nurses employed by Victoria, inter alia in the transferred facilities. There were two separate bargaining units - one for full-time employees, and one for part-time employees. There is a subsisting collective agreement with respect to the full-time unit. The agreement respecting the part-time unit was being renegotiated at the time of the transfer. On the basis of the evidence before us we have no hesitation in concluding that there has been a "sale" of "part of Victoria’s business" from Victoria to Parkwood. The term “business" in section [63], is used in a general sense, and extends to the activities of hospitals, universities, Boards of Education, municipal corporations and other service undertakings which are subject to The Labour Relations Act. There is really no doubt that within this context, "part of the business of Victoria", (i.e. the care of certain patients and the means to provide that care), has been transferred to Parkwood. There remains the question of the desirability of continuing the union's bargaining rights within the bargaining structure established by the predecessor.

43. The approach which the Board takes in circumstances such as those presently before us, is as set out in City of Peterborough, [1979] OLRB Rep. Feb. 133 at p. 134;

"The consistent point of departure in the decisions of the Board in applications under section [63] of the Act is a recognition that the primary purpose of the section is the preservation of employees' bargaining rights upon the transfer of a business. The section protects employees of a transferred undertaking against automatically losing their union or seeing their bargaining rights transferred to a bargaining agent not of their choosing. Thus while the remedial scope of the section allows the Board to engage in an assessment of what is the appropriate bargaining unit the criteria to be applied are not identical to those which obtain in an application for certification of previously unrepresented employees. While the Board may have regard to all of the criteria that apply to that determination in certification proceedings it must also, having regard to the purpose of section [63], seek to balance the interests of the employees of the transferred undertaking and their union with the interest of both the employer purchasing the undertaking as well as the interests of that employer's existing employees and their union. In the fashioning or amending of bargaining units under section [63] of the Act the Board must give effect to existing bargaining rights to the extent that those rights can be reasonably accommodated within the new employer's administrative structures. (Oshawa Wholesale Ltd. [1965] OLRB Rep. Feb. 504; The Corp. of the City of Kitchener [1973] OLRB Rep. June 306; Yarntex Perth, Division of Yarntex Corporation Ltd. [1975] OLRB Rep. Feb. 137). A particular concern in the determination of bargaining units under section [63] of The Labour Relations Act is that existing bargaining structures not lightly be interfered with. The Board recognizes the value of a bargaining unit that has developed through a succession of collective agreements. A bargaining structure with some substantial history to it often indicates a sound bargaining relationship. More often than not it has evolved through increased communication and has come to reflect a workable pattern of mutual expectations between union and employer. Since the promotion of sound collective bargaining relationships is what the Labour Relations Act is all about, the Board is understandably reluctant to dismantle a bargaining structure that has withstood the test of time."

Similar views are expressed in Loblaws Groceterias Co. Ltd. [1973] OLRB ep. Jan. 73 where the Board preserved a union's bargaining rights in a single retail store and declined to redefine the bargaining unit to include all stores in the municipal areas as it would have done had the union applied for certification for that one store. The Board emphasized that the purpose of section [63] is to preserve bargaining rights, and that in order to do so it may be necessary to continue a bargaining structure which might not have been considered "appropriate" if the union had applied for it on an application for certification. In the present case of course, a full-time, and part-time unit at the Westminster site would probably have been considered appropriate even on an application for certification. The general practice of the Board has been to allow employees at each existing location, to select a bargaining agent of their own choice (see, for example: Extendicare Board File 1585-77-R; decision released February 10, 1978 - unreported).

38. And in Caressant Care Nursing Home of Canada Ltd. [1984] OLRB Rep. Aug. 1060, the Board commented as follows:

39. In dealing with the main issues before the Board, in terms of a "sale of a business", and its consequences, two factors stand out in significance for the Board. The first is the fact that Caressant Care engaged in a transaction whereby it purchased the government-restricted right of Romi Nursing Home Ltd. to operate the 75 nursing-care beds formerly at Willson. That is of particular significance in light of the Board's decision in Riverview Manor [1983] OLRB Rep. Sept. 1564. But a second key circumstance not to be lost sight of, at least in assessing the consequences of any "sale", is the fact that the beds formerly operated under the collective agreement at Willson came to occupy only a portion of the new Nursing and Rest Home opened in St. Thomas by Caressant Care, and that Caressant Care's presence in the Nursing Home business in the City of St. Thomas itself was firmly established prior to its entering into negotiations for the right to operate the additional beds which came available through the tender invitation of Price Waterhouse.

40. In the Riverview Manor case, supra, the operator of Balmoral Nursing Home in Peterborough also was in financial trouble and having difficulty meeting the standards of the Ministry, and ultimately "sold" its licence and some vacant land it held in Peterborough to Daynes Health Care Ltd. an established Nursing Home operator located elsewhere in the Province. Daynes then built a new facility on the land it acquired, and used it to operate the beds formerly under licence to Balmoral. The Board, relying principally on the "transfer" of the licence, found that a "sale" of Balmoral's "business" had taken place.

41. While it is true that the same kind of detailed evidence of the Ministry was not placed before the Board in Riverview, there is nothing in that decision which now suggests that the Board in any way misconceived the nature of the transaction before it. The Board, in finding a "sale of a business" in that decision appears to have focused on the importance of the licence, owing to the limited availability of such licences in a given geographic area, and the evidence before the Board in this case only tends to confirm that thinking. In terms of both this and counsel's second point, concerning the weight the Board should be giving to the "entrepreneurial" interest in this case, it might be noted that much of the analysis in Riverview, in applying a "balancing of interests" test, is not entirely consistent with the way "sale of business" cases have been analyzed in the past. Rather, the Board has generally focused on such questions as whether enough of the essential components of the business of the vendor can be traced into the hands of the purchaser as to cause the Board to find that it is in fact the same business, as opposed to a parallel business of a similar nature established by the purchaser; or, in other words, whether the purchaser's business can be said to "take its life" from that of the vendor. See, e.g. Thunder Bay Ambulance [1978] OLRB Rep. May, 467 at ¶13; Gordons Market, [1978] OLRB Rep. July 630, at ¶17; and more generally, Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193; Tatham Company Limited, [1980] OLRB Rep. March 366. The Board in the concluding paragraphs of the Riverview case, in fact, returns to the more typical kind of analysis seen in these cases, and it is really on that basis that the Riverview case appears to be decided. At paragraph 38, the Board winds up as follows:

Applying section 63 to the unregulated private sector, the Board has consistently ruled that a successor who acquires all or most of a predecessor's assets and its customers, also inherits a trade union and any collective agreement. The same criteria ought to be applied to the case at hand, and lead us to the conclusion that a business has been sold. As to customers, the vast majority of the former residents of Balmoral Lodge are now residing at Riverview Manor. That is not surprising. An employer who gives up a licence or government contract, voluntarily or otherwise, can no longer service its former clientele. Along with the licence or contract, the successor often receives a captive market that is free of competition, not only from the predecessor, but also from others who lack the necessary authorization to carry on business. River-view obtained two major assets from Balmoral, the licence and the land. The transfer of the licence is particularly significant, because it led most Balmoral residents to move to Riverview Manor. (Both parties to the transaction contemplated residents would move from one home to the other, as evidenced by the contract that ties the date from which interest funds to the transfer of patients.) In this sense, the licence is of the essence of the business.

20. There was not, in the present case, the transfer of any land by the insolvent company Caressant Care, but as the underlined portion of Riverview makes clear, it is the licence that is the essence of the Nursing Home business. It is interesting to note, in that regard, that Caressant Care initially tendered 1.17 million dollars for all of the assets of Romi (building and land included), and then offered $907,000 for the licence alone. The Board is satisfied, therefore, that the transaction between Romi (through Price-Waterhouse) and Caressant Care whereby Romi surrendered its licence and Caressant Care acquired an equivalent one, constituted a "sale of a business", within the meaning of section 63 of the Labour Relations Act.

21. Has part of the business of St. Mary's been transferred to Kitchener-Waterloo? For many years, the two hospitals had co-ordinated their efforts, in attempts to come up with a method and a plan for rationalizing their services, thereby decreasing their respective costs and better serving the community. Together the hospitals planned and adopted the realignment scheme. The Plan called for certain services to be discontinued at each hospital, and in response, to be expanded at the other hospital. The result of the changes was that neither hospital would be adversely affected, financially or otherwise, and that the exchange of services would be comparable. These decisions were jointly made. The hospitals realized that the closing of the obstetrics and paediatrics services at St. Mary's would lead directly to a substantial increase in the use of these services at Kitchener-Waterloo. In turn, Kitchener-Waterloo was able to provide these additional services because the hospitals agreed that Kitchener-Waterloo would no longer have to provide other services it had been providing before the realignment. St. Mary's had agreed to expand these other services. The hospitals jointly, through the auspices of the District Health Council, sought and obtained the approval of the Ministry of Health, as required by law. This approval was akin to a licence to execute the realignment scheme. Without Ministry approval, the hospitals could not legally have made the changes envisaged in the Plan. Indeed, the failure to secure such approval had led in the past to plans languishing unexecuted. The Ministry in effect licenced the hospitals to engage in the planned changes, including the transfer of the obstetrics and paediatrics departments from St. Mary's to Kitchener-Waterloo. With this official approval in hand, the hospitals together, over many months, decided upon the numerous details of the realignment and implemented the changes. They agreed for example, to the time-tables for transferring patients, for closing services, and, where applicable, for releasing staff from St. Mary's who had been hired to work in the obstetrics and paediatrics services at Kitchener-Waterloo.

22. When the entire transaction is considered, we are satisfied that what occurred was a "transfer" or "sale" within the meaning of section 63, of part of the business of St. Mary's to Kitchener-Waterloo. Several factors are significant. The Ministry was concerned, as were the hospitals themselves, that the services provided to the community at large not change in any respect, in terms of total beds or provision of particular services. Similarly, the Ministry was concerned that the total financial costs not change, or at least not increase. Predicated upon these concerns, the Ministry gave its consent to the realignment. As in the health care sector cases referred to above, the third party involvement of the Ministry, with the requirement that its official approval be obtained, distinguishes this scenario from many other section 63 contexts. Here, the legal entitlement to provide the obstetrics and paediatrics services was, in party transferred, through the mechanism of approval by the Ministry, from St. Mary's to Kitchener-Waterloo. Accompanying this transfer, the hospitals themselves made an arrangement which enabled these services to be transferred to Kitchener-Waterloo, and they co-ordinated the transferring of patients in the services in question. Indeed, due to funding restrictions, the Hospital could not have increased certain of its services, and numbers of beds, without reciprocal decreases in other services, and the transfer of those services to St. Mary's. The community at large was advised of the changes, and was told that all obstetrics and paediatrics services would, as of specific dates be performed only at Kitchener-Waterloo.

23. The Hospital submitted that to find a sale in these circumstances would mean that a "sale" would occur whenever a physician withdrew or transferred his or her medical privileges from one hospital to another. We do not agree. It is not critical in our view that the transfer was precipitated by the decision of the obstetricians to withdraw their services from St. Mary's. Parties for many reasons may decide to engage in a sale or transfer. The Board's task, in light of all the factors before it, is to determine whether or not a sale within the meaning of section 63 has occurred. The circumstances here indicate that such a sale has occurred, and this conclusion is not altered because the circumstances were prompted by the withdrawal of services. Even if the Plan was an unwilling response forced upon the hospitals by the promised withdrawal of services, the two hospitals still agreed to a realignment scheme and engaged in actions pursuant to it that constituted a "sale". A "sale" does not occur every time a physician "transfers" privileges to another hospital. But that is not all that happened here. The withdrawal of services was merely one factor in a much longer context. The fact remains that part of the "business" of St. Mary's was transferred to Kitchener-Waterloo.

24. Nor is it critical that no staff from St. Mary's were transferred over, on some seniority credit basis, to Kitchener-Waterloo. Certainly, the lack of transfer of employees is one factor to be considered. But it is only one factor, and must be assessed in the context of the entire transaction and in all the circumstances. The form of a transaction may not be particularly illustrative of the real transaction. It is the substance of what occurred that is important. If it were otherwise, and the Board looked only to the surface details, employers would be able to structure events in legal form in a manner that would ensure that a "sale" never occurred, even if in substance such a transaction had in fact resulted. Section 63 is designed to look beyond the outward structuring to the substance of the transaction, seen from the collective bargaining and labour relations perspective. It may well be, therefore, that the reasons for having made particular decisions as to the structuring of the transaction are relevant in a section 63 application in assessing the true heart and shape of the transaction. Evidence of why particular transaction events were so executed could well be relevant.

Here, even though there was no "transfer" of employees from St. Mary's to Kitchener-Waterloo, on all the facts, a "transfer" of part of the business has occurred. See, in this respect, Metropolitan Parking, supra, at paragraph 36, and Daynes Health Care Limited [1984] OLRB Rep. Aug. 1091.

43. What occurred was not merely an expansion of Kitchener-Waterloo's existing obstetrics and paediatrics departments, although in the result the departments did expand, but an agreement between the two hospitals to transfer the business of the obstetrics and paediatrics departments from St. Mary's over to Kitchener-Waterloo. It would be artificial to describe the realignment Plan as a series of agreements whereby, under one agreement, a service would be closed down at one of the hospitals, and under another agreement, the other hospital would expand a similar service. Rather, these hospitals together agreed that, because of the inefficiencies of duplicated services, they would close down services and transfer those services to the other hospital. Through this arrangement of reciprocal movement between the two hospitals, Kitchener-Waterloo acquired the ability to expand its obstetrics and paediatrics departments. The hospitals arranged to transfer patients from the departments closed down at the particular hospital to the hospital where they remained open. The community was advised of this transferring of services. The Ministry gave its official approval to the transference of the legal entitlement from one institution to the other. Not only was the work of providing obstetrics and paediatrics services transferred over, but so too was the means to provide those services and the legal entitlement to perform that "business". In these circumstances, a sale occurred.

44. The parties are agreed that if a sale is found (as we have), intermingling occurred. The facts support the parties' agreement. The Board concludes that intermingling has resulted from the sale, with the employees of the two businesses, formerly run by St. Mary's and Kitchener-Waterloo separately, now being intermingled by Kitchener-Waterloo, even though no nurses from St. Mary's were transferred over. In these circumstances, the provisions of section 63(6) of the Act apply.

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

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

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

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

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

45. We turn next to define the appropriate bargaining unit, as authorized by the provisions of section 63(6)(b). O.N.A. submits that the appropriate bargaining unit at Kitchener-Waterloo should encompass nurses in the obstetrics and paediatrics services. The Hospital asserts that the appropriate bargaining unit should be all nurses of the Hospital. There do not appear to be many prior cases on point. In Hotel Dieu of Kingston [1984] OLRB Rep. June 816, the Board had to deal with the exercise of its powers under subsection (4) of section 63 to define the like bargaining unit. The Board specifically noted that it was not determining the appropriateness of the bargaining unit under subsection 63(6), which is the question before us. And see City of Peterborough [1979] OLRB Rep. Feb. 133. At St. Mary's, O.N.A. is the bargaining agent for both full time and part-time nurses. The collective agreements with respect to each of those bargaining units recognize O.N.A. with respect to "all lay, registered and graduate nurses employed by the hospital, engaged in nursing care, save and except head nurses and persons above the rank of head nurse." Both these bargaining units therefore are hospital wide, and are not structured by departments or services. At Kitchener-Waterloo, the nurses have been treated as in one unit, the entire hospital, for labour relations purposes, and they do transfer between services and departments. In effect, O.N.A. asks that we find appropriate a bargaining unit consisting of two departments only, within the overall nursing complement of the Hospital.

46. As described in Hospital for Sick Children [1985] OLRB Rep. Feb. 266, the Board in certification applications asks "does the unit which the union seeks to represent encompass a group of employees with a sufficiently coherent community of interest that they can bargain together on a viable basis without at the same time causing serious labour relations problems for the employer?" In certification proceedings, the Board is asked to describe an appropriate bargaining unit for previously unorganized employees (displacement applications raise different concerns). Accordingly, the Board looks at whether the unit sought by the union is an appropriate unit in the context of the initial granting of bargaining rights. But section 63 is designed to preserve existing bargaining rights, not grant new ones. The considerations applied by the Board in determining an appropriate bargaining unit, under section 63(6)(b), must therefore take into account existing bargaining structures. It may well be, therefore, that the Board will find appropriate a bargaining unit, where there has been intermingling under section 63, which it would not have found acceptable in certification proceedings. Too rigid an approach to describing the appropriate bargaining unit would undercut the purpose of section 63, to protect bargaining rights despite a change in legal ownership of a business. We must balance these two aspects, the need to protect bargaining rights and the need to determine an appropriate bargaining unit.

47. In balancing these considerations, we nevertheless cannot accept the unit sought by O.N.A. We do not consider a bargaining unit consisting only of two departments in a multi-department, multi-service hospital to be appropriate. In our view it would lead to undue fragmentation, and would likely result in serious labour relations problems for all parties. Bargaining units in hospitals are generally defined in terms of "all nurses", or "all employees employed in a nursing capacity", without differentiation based solely upon the department or departments in which particular nurses work at a given point in time. In hospital settings throughout the province, as reflected at St. Mary's where O.N.A. represents the nurses, the employers and the union have generally not delineated units on a departmental basis, for to do so is neither consistent with the administrative operation of hospitals nor to the benefit of the nurses represented by a trade union. Such fragmentation may well impede a nurse's ability to move to other departments within a hospital. It may also seriously impede the efficient running of the hospital.

48. O.N.A. and both St. Mary's and the Hospital treated their nurses as falling within an "all hospital" or "all nurses" grouping. We conclude similarly, given the context in the hospital sector, that the appropriate grouping would be of all the nurses at Kitchener-Waterloo, and not only those in obstetrics and paediatrics. We therefore conclude that the appropriate bargaining units will generally be described as all nurses engaged in a nursing capacity at Kitchener-Waterloo. For reasons that follow, we need not finalize the precise description of the bargaining unit, nor decide whether there should be both a full-time and part-time bargaining unit. (We note that the parties' submissions did not distinguish between the full-time and part-time nurses or units). In so deciding, we are cognizant of the fact that such a bargaining unit here may lead to the extinguishment of O.N.A.'s bargaining rights. But in the hospital sector, and given the evidence, to find appropriate a unit of only the nurses in obstetrics and paediatrics would create serious labour relations problems.

49. We consider next whether a vote ought to be directed. The vote would ask nurses whether they wished to be represented by the applicant. Ordinarily in cases of intermingling, the Board considers the relative percentages in the voting constituency of the unionized and non-unionized employees in determining whether or not to direct a representation vote.

50. In Bermay Corporation Limited [1980] OLRB Rep. Feb. 166, the Board wrote as follows:

51. When, as in this case, the employees are drawn from two sources, one of which has not had collective bargaining, the Board may consider whether it is appropriate to exercise its discretion under section [63] to terminate a union's bargaining rights and, with them, its collective agreement. It may do so directly, without a vote, when a union represents only a small percentage of the employees. (e.g. The Corporation of the City of Mississauga [1974] OLRB Rep. Mar. 184). Where, however, a substantial number of the employees have been represented by a union, the Board may take a representation vote among the employees to assist it in that determination. That is what was done in this case.

52. In Silverwood Dairies [1980] OLRB Rep. Oct. 1526, the Board wrote:

53. The Board must now determine whether a representation vote should be taken of the employees in bargaining unit #1. Where an intermingling has occurred within the meaning of section 63 and some of the intermingled employees are represented by one trade union while others are represented by another trade union, the Board has a discretion to direct that a representation vote be taken to enable the intermingled employees to choose which of the two trade unions will be their bargaining agent. However, where there is a large disparity in the size of the intermingled groups of employees, the Board will generally not direct that a representation vote be taken, but rather will declare that the trade union representing the great majority of employees is to be the bargaining agent for the new bargaining unit...

54. The Board had not specifically defined the minimum proportion of employees in the intermingled bargaining unit which a trade union must have represented prior to the intermingling for a representation vote to be appropriate. However, specific cases in which the Board has directed or refused a representation vote as a result of the degree of representation enjoyed by each of the competing trade unions provide some guidance as to the applicable parameters. In Alcan Building Products, [1968] OLRB Rep. May 212, an employer closed its window division and terminated all of the employees in that division. The employer's siding division took over the premises and rehired sixteen of the former window division employees who, together with the siding Division's work force of twenty-seven employees, became part of a total work force of forty-three employees. The Board found that a sale of a business and an intermingling of the employees of the two businesses had occurred. On the basis of respective representation of 37 per cent and 63 per cent of the employees by the competing unions, the Board directed that a representation vote be held. In the Borden case, [1970] OLRB Rep. Jan. 1244, the Borden Company Limited sold the Brantford area home delivery routes portion of its business to Silver-wood Dairies Limited. The Board ordered a representation vote when the purchaser intermingled the ten employees formerly employed by the vendor with the purchaser's twenty-six employees at Brantford. Thus, representation of approximately 28 per cent of the employees in the new bargaining unit was held to be sufficient to justify a representation vote. In Bryant Press Limited, [1972] OLRB Rep. Apr. 301, a vote was ordered where the trade union represented only about one-third of the intermingled employees, the remaining two-thirds having not been represented by any trade union. Similarly, where "roughly one-third" of the employees in the new bargaining unit were represented by the applicant trade union, the Board found it to be a proper case to conduct a representation vote" in the Canadian Trailmobile case, supra.

55. In Mountain View Dairy Limited case, supra, at paragraph 9, the Board declined to direct a representation vote where the applicant trade union represented only eight of the approximately sixty employees in the new bargaining unit, and declared the respondent trade union, which represented the remaining employees, to be the bargaining agent for the employees in the intermingled bargaining unit. Moreover, the Board suggested in that case that it would have disposed of the case in the same manner even if the respondent trade union had represented only seventy-five per cent of the employees in the new bargaining unit and the applicant trade union had represented twenty-five per cent. However, in Middlesex-London District Health Unit, [1971] OLRB Rep. Sept. 560, a vote was ordered despite the fact that the applicant trade union represented only about twenty-five per cent of the employees in the new bargaining unit. Similarly, in The Regional Municipality of Waterloo and the Corporation of the City of Cambridge, [1973] OLRB Rep. June 302, the Board directed that a representation vote be taken where one of the two competing trade unions represented twenty-four of the thirty-three employees and the other trade union represented only the remaining twenty-seven per cent of the employees.

56. Here, if a vote were to be directed, it would be directed of those nurses properly falling within the all nurses bargaining unit(s) at the hospital. The total number of nurses at Kitchener-Waterloo, full-time and part-time, is approximately 807. We must determine how many of the 807 nurses are nurses or positions which O.N.A. represents. On the facts, 74 positions in obstetrics and paediatrics were created at the Hospital as a direct result of the "sale". Regardless of who actually has filled those positions, given our "sale" finding, 74 positions were transferred over. The union at best therefore represents, in effect, 74 employees at Kitchener-Waterloo. The union thus represents 74 out of 807 nurses, or approximately 9% of the bargaining unit.

57. Such a small percentage of the bargaining unit represented by O.N.A. would not lead us to direct that a representation vote be held. And even if we took the union's best position on the numbers, and accepted O.N.A.'s argument that all 110 nurses in the obstetrics and paediatrics departments at St. Mary's should be considered, the applicant would represent only approximately 14 per cent of the nurses, again too small a number to direct a vote.

58. In these circumstances, we decline to direct a representation vote and we declare that O.N.A. is not the bargaining agent for any of the Hospital's nurses and that the applicable collective agreement is no longer binding.

59. An issue remains as to the effect of these declarations. Under section 63(2), where the Board determines (as we have) that a sale of a business has occurred, "the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement ." Under section 63(6) the Board can declare that they are "no longer bound by the collective agreement". O.N.A. submits that once a "sale" is found, the collective agreement must be applied even though the Board subsequently declares that O.N.A. is not the bargaining agent and that the collective agreement no longer applies. Although we have so declared, O.N.A. asserts that when the new nursing positions in obstetrics and paediatrics at the Hospital resulted from the sale, they nevertheless had to be filled in accordance with the collective agreement. (See Bermay Corporation Limited, supra, at paragraph 33). The Hospital and the Intervenors both argue that, even if a "sale" is found, the collective agreement should not be applied to cause a re-staffing of the obstetrics and paediatrics services at Kitchener-Waterloo unless and until it is established that O.N.A. will have bargaining rights at the Hospital. As can be seen, each party has made assertions on whether the collective agreement ought to be applied in the period between the date of the sale and the declarations issuing. But none of the parties has directly addressed whether the declarations are effective only as of the date of the decision, or can be effective at an earlier date, which is the issue implicitly raised in the parties' submissions. We have not had the benefit of their views on the Board's jurisdiction to make the declarations effective at other than the date of our decision, nor, if we have the authority, how we ought to exercise that discretion here. This is a significant policy issue, with potentially significant ramifications for the parties and the nurses concerned. Although the matter has been raised, we are not satisfied that the parties turned their minds to the precise issue described above.

60. In these circumstances, should the parties be unable to resolve all remaining matters, these proceedings are to be relisted, at the request of any of the parties, to deal with the issue of the date as of which our declarations that O.N.A. is not the bargaining agent and that the collective agreement no longer applies are to be effective, and any other matters arising from this issue.

61. We turn finally to a consideration of the section 89 complaint.

62. With respect to the alleged breaches of sections 50, 64 and 67 of the Act, our decision on these issues must await a decision as to the effective date of our declaratory relief. Whether or not the Hospital breached these sections may well depend on whether a collective agreement was applicable at the relevant time (when the newly-created jobs were posted and filled) and on whether O.N.A. was at the time bargaining agent for any nurses at the Hospital. We remained seized for these issues and we reserve our decision on these alleged breaches, and any appropriate remedial relief.

63. We next consider the allegation that Kitchener-Waterloo breached section 66 of the Act. The Hospital had taken the position that the collective agreement did not apply, that there had been no sale. The Hospital's evidence was that it was concerned that hiring nurses from St. Mary's on any transfer arrangement would result in a situation where O.N.A. represented some of the nurses in the obstetrics and paediatrics units and other nurses working beside those nurses would be unrepresented. In the Hospital's view, this would present significant administrative difficulties. The Hospital denied that this concern formed any part of the reason for its decisions to first offer all the positions internally or to subsequently treat St. Mary's applicants on the same basis as new hires from the general community. But we must assess this evidence in the context where the Hospital had previously been prepared to give some preference to these nurses. In all the circumstances, we conclude that the Hospital did not hire St. Mary's nurses, at least in part, only because they were represented by a trade union. Kitchener-Waterloo had been quite prepared to hire them, indeed to prefer them in some fashion, when it did not realize that O.N.A. was asserting representation rights. It was of this view as late as May 23, 1989. On that date, it learned that O.N.A. would be asserting successor rights. Shortly thereafter, it decided not to hire them. That decision was in breach of section 66.

64. After deciding to give some preference to St. Mary's nurses, and when it learned about a potential successor rights claim, the Hospital altered its position and decided not to favour the nurses represented by the applicant. It did so because the person making the effective decision for Kitchener Waterloo concluded that hiring St. Mary's nurses would create significant administrative difficulties for the Hospital because they were unionized. Ms. Skelton-Green testified that she believed this to be the case, that it would mean organized and unorganized nurses working side by side in obstetrics and paediatrics. We do not find nor suggest that she engaged in a nefarious scheme to deprive O.N.A. or the nurses it represented of their rights. But even if her belief was accurate (and we note that section 63 is designed to deal with such concerns), it cannot justify a decision that deprived St. Mary's nurses of an opportunity they would otherwise have had to apply for the jobs. St. Mary's nurses were discriminated against because O.N.A. represented them.

65. After posting the new positions internally, the Hospital then advertised the remaining vacancies on an external new hire basis. No logical reason was provided for the decision by the Hospital to not give, at that stage, some preference to St. Mary's nurses over external nurses. Ms. Skelton-Green testified that there were only two reasons for the decision to treat the St. Mary's nurses as new hires along with strangers to either hospital. First, the Hospital did not wish to antagonize nurses in the community who had not been previously connected to either hospital, and who might feel slighted by preference given to St. Mary's nurses. Second, the Hospital remained concerned that budgetary requirements would cause lay-offs in the future, and it wanted to continue to protect its own nurses should such lay-offs occur. It felt that if it hired St. Mary's nurses, with any recognition of their high seniority, the result might be that Kitchener-Waterloo nurses would subsequently have to be laid off. Neither reason is credible. The Hospital had previously favoured some sort of transfer arrangement with St. Mary's nurses. There had been no concern at that time with respect to the feelings of nurses unrelated to either institution. All the options being favourably considered then had involved some sort of preference to the nurses of the two institutions over unconnected nurses in the community. The Hospital only expressed such a concern after hearing of O.N.A.'s position. It is particularly difficult to give any credence to this reason when it remained true that the St. Mary's nurses were the most qualified for the new positions. Indeed, this is demonstrated by the fact that all 42 of the St. Mary's applicants were first offered the new positions. The second reason provided is even less credible. Even if Kitchener-Waterloo wanted to protect its nurses from future lay-offs, and not confront the situation where nurses who had come over from St. Mary's would keep jobs while nurses who had always been at Kitchener-Waterloo were laid off, it was completely unnecessary to treat St. Mary's nurses as new hires on the same basis as strangers. It was only necessary to ensure that the St. Mary's nurses had less seniority than the existing Kitchener-Waterloo nurses. The Hospital could have protected its nurses, and still given preference to the more skilled St. Mary's nurses over nurses unconnected to either hospital, simply by giving St. Mary's nurses seniority dates that ran from date of transfer. The Hospital offered no explanation for why it did not do this.

66. In our view, it treated St. Mary's nurses as new hires on the same basis as strangers because it was trying to structure the transaction in such a fashion that it would not look like a "sale" under section 63 of the Act. It wanted to create a staffing of the expanded services that did not look as though any employees from St. Mary's had "transferred" over from that hospital to Kitchener-Waterloo. This decision was also in contravention of section 66. We do not suggest that parties engaging in transactions that might be the subject of section 63 applications cannot structure the transaction in a manner they consider appropriate. Indeed, the provisions of sections 63 and 1(4) of the Act are designed to preserve bargaining rights, regardless of the structuring by the parties of such transactions. Ordinarily, parties so structuring their transactions will not commit a breach of the Act through that structuring alone. However, here Kitchener-Waterloo had earlier decided that the St. Mary's nurses ought to be afforded some preference in hiring over external candidates. They had decided so for sound business reasons, as the St. Mary's nurses were the most qualified and could provide the best patient care at the lowest cost. Those were the reasons then motivating Kitchener-Waterloo. Then, after deciding to give preference to St. Mary's nurses, Kitchener-Waterloo made the decision to treat St. Mary's nurses the same as new hires who were strangers because it didn't want O.N.A. to be successful in its section 63 application. They still hired them all before any outside nurse. But this way, calling them and treating them as new hires along with third party nurses, it would not look as if the nurses had "transferred" or been intermingled. It would not look as if they were "St. Mary's nurses". In short, Kitchener-Waterloo discriminated against the nurses at St. Mary's precisely and only because they were represented by O.N.A. There is no doubt that had the nurses at St. Mary's been unrepresented, Kitchener-Waterloo would have afforded them some form of transfer or seniority rights or preferential opportunities to bid for the new jobs, compared to outside hires.

67. . These findings that the Hospital breached section 66 in its filling of the newly-created positions do not depend on a finding that O.N.A. had bargaining rights with the Hospital at the relevant time, or that the collective agreement was then applicable. Whether or not it was then effective, or for that matter, whether or not a "sale" occurred, the fact remains that the Hospital discriminated against the St. Mary's nurses in obstetrics and paediatrics because they were unionized. This is, in the circumstances, a breach of section 66.

68. While the question of the breach of section 66 is independent of whether the collective agreement was then applicable and whether O.N.A. then had bargaining rights, the question of the appropriate remedy may well be dependent upon resolving those matters. In terms of the appropriate remedy with respect to the breach of section 66, the Board would try to place the applicant, and the employees represented by the applicant who might have suffered as a result of Kitchener-Waterloo's breach of the Act, in the position they would have been in but for the breach. But that position could vary depending on whether the newly-created positions had to be filled according to the collective agreement. It was only in how it filled the newly-created positions that the Hospital breached section 66. If it had to fill them according to the collective agreement, there may be no remedial direction for the breach of section 66. In light of our decision reserving on the applicability of the collective agreement and on whether there has been a breach of sections 50, 64 or 67, we also reserve on and remain seized with respect to the question of the appropriate remedy for the breach of section 66.

69. Therefore, subject to our comments above, this matter is to be remitted to the parties for their consideration. The Board will remain seized with respect to the remedial aspects and those other matters identified above.

70. Finally, Kitchener-Waterloo submits that any remedial relief under section 89 ought to be reduced because of the delay caused by O.N.A. during the instant proceedings. We need not deal with this matter now, since in the result there may be no damages owing to any of the nurses in question, and in any event, that is a remedial issue and we have remitted this question to the parties at this stage. However, to assist the parties in resolving the remaining matters, our initial sense is that we are not inclined to reduce the amount of damages otherwise appropriate. Assuming for the moment that counsel's conduct inappropriately caused delay, we are not disposed to lessen the damages a nurse might be entitled to because of conduct of counsel during the litigation. We would be reluctant to penalize those entitled to remedial relief for any such reason.

DECISION OF BOARD MEMBER JAMES A. RONSON; October 15, 1991

1. I agree with my colleagues that this matter may be scheduled, on request, for hearing with respect to further submissions on the effect of section 63 of the Labour Relations Act.

2. With respect to their other conclusions, I cannot agree and will provide my reasons at a later date.