Amalgamated Transit Union, Local 113 v. STM Specialized Transit Management Corporation, 1991 CanLII 6142

[1991] OLRB Rep. July 900

0498-89-R; 0499-89-R Amalgamated Transit Union, Local 113, Applicant v. STM Specialized Transit Management Corporation, All-Way Transportation Corpora­tion, Toronto Transit Commission, Respondents

BEFORE: N. B. Satterfield, Vice-Chair, and Board Members J. A. Ronson and J. Redshaw.

APPEARANCES: Jim Fyshe, Earle Fitzsimmons and Rick Jones for the applicant; B. R. Baldwin, Liz Keenan, Ray Hould and Rudy Stehle for STM Specialized Transit Management Corporation and All-Way Transportation Corporation; Douglas Grey, Bruce H. Stewart, Ian McPherson, Guy Giorno, Roger Winter, Heinz Hustedt and Tim Oke for Toronto Transit Commission.

DECISION OF THE BOARD; July 30, 1991

1In these applications, for ease of reference, the applicant Amalgamated Transit Union, Local 113 will be referred to either as "the applicant" or "the union" and the respondents STM Specialized Transit Management Corporation, All-Way Transportation Corporation and Toronto Transit Commission, will be referred to collectively as the respondents and individually as "STM", "All-Way" and "the TTC", respectively.

2File No. 0498-89-R is an application under subsection 1(4) of the Labour Relations Act for a declaration that STM and All-Way be treated as constituting one employer for purposes of the Act and, or in the alternative, that STM and the TTC be treated as constituting one employer for purposes of the Act.

3File No. 0499-89-R is an application under section 63 of the Act for a declaration that, as the result of a sale of business within the meaning of the section, STM is the successor employer to All-Way and, or in the alternative, a declaration that the TTC is the successor employer to STM.

4The union is seeking identical relief in each application. In addition to the declarations referred to in paragraphs 2 and 3, the applicant seeks certain other specific declarations and direc­tions relating to the applicant's bargaining rights for employees of All-Way now alleged to be bind­ing on STM and/or the T'rC pursuant to subsection 1(4) and/or section 63 of the Act.

5All-Way and STM admitted in their replies to the application under subsection 1(4) of the Act that "... they are factually related employers within the meaning of [subsection 1(4) of the Act]." Both companies are wholly-owned subsidiaries of Vitran Corporation Inc. ["Vitran"] and operate under common control and direction and carry out related activities.". They asserted, however, that the Board should not exercise its discretion under subsection 1(4) to declare that they be treated as constituting one employer for purposes of the Act. Their counsel reiterated those positions at the hearing into the applications. With respect to the alleged sale of a business from STM to the 'ITC, counsel for the applicant advised the Board at the end of his argument-in-chief that he would not be pursuing that part of the application in File No. 0499-89-R. Therefore, that application is dismissed insofar as it pertains to an alleged sale of a business from STM Spe­cialized Transit Management Corporation to the Toronto Transit Commission within the meaning of section 63 of the Act. The remaining issues raised by these applications are:

(1) whether All-Way and STM and/or STM and the TTC should be declared as constituting one employer for purposes of the Act;

(2) whether STM should be declared the successor employer to All-Way under section 63 of the Act; and,

(3) what further relief should be granted if one or more of those declara­tions are made.

6The Board heard the testimony of Ray Hould and Rudy Stehle for All-Way and STM, Bryan Millsip and Robert J. Thacker for the TTC, Earle Fitzsimmons and Charles B. Johnson for the union. Hould is vice-president of transportation of Vitran Corporation Inc., referred to at paragraph S above, and president of STM and All-Way. Stehle is general manager of STM and was general manager of Para-Way Transportation Division of All-Way (hereafter "Para-Way"). Mill-sip and Thacker are, respectively, assistant general secretary and manager, employee relations of the TTC. Fitzsimmons was shop steward and grievance officer for the union at Para-Way and the TTC. Johnson is president and business manager of the union. Their testimony was heard during six days of hearings within a two-month period. In addition to their viva voce evidence, a substan­tial volume of documentary evidence was introduced through them.

7The Board has reviewed and assessed their testimony and the documentary evidence in making its findings of fact set out in the decision, but it will not attempt to summarize the evi­dence. There was little dispute respecting the significant facts. In the few instances where it was necessary for the Board to resolve conflicts or inconsistencies in the testimony of the witnesses, the Board has resolved them having regard for the usual criteria for assessing credibility, the submis­sions of the parties and what is reasonably probable in the circumstances.

8These applications relate primarily to the provision of dedicated small vehicle service for the transportation of the physically handicapped in Metropolitan Toronto (hereafter "Metro"). It is a transportation service by reservation for the ambulatory disabled. At the date of making of these applications, STM was providing the service for the TTC under contract with the TTC as part of its Wheel-Trans service for the disabled. The events giving rise to the applications began in 1987. In order to put those events, and others, into context, it is useful to set out the relevant, sig­nificant facts in order of their historical development.

9The TTC has contracted out various transportation services for the disabled for some 15 years prior to these applications. A variety of vehicles have been used to provide these services, including Mighty Mite vans, station wagons and Orion II buses. The vans and the station wagons were owned by the contractor, the Orion buses were owned by the TTC. All vehicles were driven and serviced by employees of the contractor. At all relevant times the contractor has been All-Way, and it or its Para-Way division operated the transportation services. The most recent (and the last) contract between All-Way and the TTC was executed May 24, 1983 to be effective from November 1, 1983 until October 31, 1986, with an option to the TTC to extend it for a further two years until October 31, 1988. The TTC exercised its option. These transportation services for the disabled have become known collectively as the TTC Wheel-Trans service, although the term "Wheel-Trans" does not appear in the TTC's contract with All-Way. Since the latter part of 1982 for full-time drivers and since 1983 for full-time maintenance employees, All-Way operated the Wheel-Trans service until the end of its contract with the TI'C under the terms of collective agree­ments between it and the union. The drivers and maintenance employees were covered by separate agreements. The last agreements were for the period January 1, 1988 to December 31, 1988. The parties to those agreements were the Para-Way division of All-Way and the union.

10All-Way provided Wheel-Trans service prior to 1983 with its own vehicles and was responsible for the taking of reservations for and the scheduling and dispatching of the service. In 1983, the TTC took over reservations, scheduling and dispatching. All-Way continued to own, operate and service the vehicles to provide the transportation service necessary to meet the TTC schedules. In 1984, All-Way added station wagons to its fleet to provide a dedicated, small vehicle service for the ambulatory disabled. There is some evidence, although not entirely clear, that a limited service had been provided previously by taxis arranged for by All-Way but not operated by it. That arrangement, whatever it was, ceased after All-Way had built its station wagon fleet to approximately 27 vehicles. Para-Way also had provided, until November 30, 1988, a non-dedicated (in other words, unscheduled) service, on request of the TTC dispatcher, as needs arose. Begin­ning in 1984, Orion II buses were introduced to phase out the Mighty Mite vans. The Orions were owned by the TTC but manned, operated and maintained by All-Way.

11The TTC, at a special meeting on May 26, 1987 adopted a report of one of its commis­sioners setting out "A Plan for Enhanced Public Transit Services for the Mobility Disadvantaged" and recommended it to Metro Council for its approval and adoption. The Plan included the recom­mendations that the TTC "... assume the operation of all aspects of the Wheel-Trans service by TTC staff at the conclusion of the current contract." and that Metro Council be asked to "... con­cur in the [TTC's] decision to fully integrate the Wheel-Trans service, ...". Metro Council gave its approval in December 1987 to the TTC assuming all aspects of the Wheel-Trans service on the expiry of All-Way's contract, October 31, 1988, or any extension of it necessary to an orderly take over.

12All-Way was opposed to any plan which would remove from the private sector the, opportunity to bid competitively for the provision of Wheel-Trans service and it waged a vigorous, but ultimately unsuccessful campaign with the TTC and Metro Council. Late in 1987, All-Way 'and the union began negotiations for renewal of the collective agreements covering its drivers and maintenance employees. All-Way proposed that they be renewed for a three-year term on the grounds that the TTC might not be in a position to take over all of the service by October 31, 1988. The union would not accept that term or a two-year term later proposed by All-Way. The parties eventually reached a settlement in May 1988 for a one-year renewal to December 31, 1988. During the negotiations the union advised All-Way that the TTC had agreed that it would recognize the union as bargaining agent of any All-Way employees who transferred to the TTC with the Wheel-Trans service. The union made it clear to All-Way that it did not want the All-Way collective agreements to become binding on the TTC after All-Way's contract with the TTC expired because the union believed it could negotiate a better agreement directly with the TTC. The evidence is equivocal as to whether Johnson, the union spokesman in the negotiations, stated expressly that the union did not intend to seek to have the TTC declared a successor or related employer to All-Way for that reason, but he clearly intended that the All-Way collective agreement not flow through to the TTC.

13The basis of the union's advice to All-Way that the TTC had agreed to recognize it as bargaining agent for any employees transferring to the TTC with the Wheel-Trans service was a letter dated September 4, 1987 which it received from the TTC and which states:

This will confirm our advice to you that if and when the T.T.C. takes over the operation of "Wheel-Trans", A.T.U. Local 113 will be recognized as bargaining agent for those employed by the T.T.C. in the Wheel-Trans operations. In addition, and in order to assist in an orderly tran­sition of the Wheel-Trans operations from All-Way Transportation to the T.T.C., the T.T.C. will engage in discussions with Local 113 pertaining to employees involved in the Wheel-Trans operations.

In a letter dated March 18, 1988 from the 'TTC to the union, the 'TTC expressed its willingness to negotiate collective agreements to include the Wheel-Trans service. It states in major part:

As you are aware, the Commission has been mandated to integrate those operations of Wheel-Trans currently being performed by a private contractor. This is to advise you that the Commis­sion is prepared to meet with representatives of Local 113 in order to negotiate the establish­ment of Collective Agreements to encompass the future Wheel-Trans Operations. These negoti­ations will obviously involve reaching agreements in the areas of wages, benefits, working conditions, and job security.

The union and the TTC began negotiations shortly after that letter and reached a settlement in September 1988. The settlement produced two memoranda for the Wheel-Trans service, one for drivers and the other for maintenance employees. Each memorandum required that All-Way employees who wished to transfer to the TTC declare their intentions by October 15, 1988.

14There is a factual dispute between the union and the TTC as to whether the TTC intended to take back the entire Wheel-Trans service. It is suffice for now to say that whatever the TTC's intentions were, at the very least, it sought and obtained Metro Council's approval to take over the entire Wheel-Trans service being operated by All-Way at the expiry of All-Way's contract with the TTC. That was to be October 31, 1988, but the contract was extended to December 31, 1988 in order to accommodate the transition of service. Whatever the TTC's intent had been, in May 1988 it began steps to contract out a small vehicle service. It eventually sought and obtained Metro Council's approval in October 1988 to continue to contract to one or more contractors the operation of small vehicles for transportation of the ambulatory disabled for a period of 36 months beginning January 1, 1989. The apparent basis of approval was that the continued contracting out for that period would be cost effective and would leave the TTC with a common fleet (presumably of buses) to maintain. It would also allow time for the TTC to identify a suitable wheelchair -accessible small vehicle, which the TTC would own, to replace the station wagons.

15The TTC invited a proposal for dedicated small vehicle and non-dedicated small vehicle transportation services for the ambulatory disabled. At the time, All-Way was providing through its Para-Way division, the dedicated small vehicle services under the terms of its contract with the TTC which had been extended until December 31, 1988. STM, not All-Way, submitted a proposal on November 15th for the dedicated small vehicle service. STM had been incorporated by Vitran for objects which included providing specialized transportation services for the disabled. It was incorporated in November 1988. Vitran apparently wanted to have a clear separation of its sched­uled school bus operations and its transportation services for the disabled. All-Way operates the school bus transportation service and its Para-Way division had been created to distinguish between the two services. Para-Way was not a separate corporation. There is no doubt that when STM made its bid it traded substantially on its relationship with Para-Way through Vitran. In fact, STM counsel conceded in final argument that STM had relied on Para-Way's goodwill with the TTC in promoting its own qualifications to provide the dedicated small vehicle service.

16The 'FTC rejected STM's proposal, apparently on the basis of the cost to the TTC for the service. On or about December 13, 1988, it awarded a contract for the non-dedicated service to a taxi company, Able Atlantic. The dedicated small vehicle service also was awarded to Able Atlantic, but on an interim basis. The union served notice on the TTC in a letter dated December 14th that the union denied "... that the T.T.C. has the right to contract out any part of the Wheel- Trans Bargaining Unit work, and particularly any part of such work which is presently being per­formed by Para-Way [drivers]." The union's position at that time was based on the inference it had drawn from the TTC's position in negotiations that it would contract out the Wheel-Trans service if the parties failed to conclude a collective agreement for the service. The union drew the inference from that position that there would be no contracting out of Wheel-Trans service if the parties con­cluded a collective agreement. The union was aware before negotiations settled that the TTC was not going to take over All-Way's station wagons. The letter also served notice that a grievance would be filed if the TTC persisted in attempting to contract out the work. The union did file a grievance dated February 7, 1989. All-Way's contract with the TTC expired on December 31, 1988. All of its Para-Way division bargaining unit employees had opted to transfer to the TTC effective January 1, 1989. All-Way's collective agreements with the union also expired as of December 31st, by which date neither party had given notice either to terminate the agreement or negotiate amendments to it. In such circumstance, each agreement provides that it "... shall con­tinue automatically ... for periods of one year each ...". When Johnson was asked in cross-exami­nation why the union had not served notice on All-Way to negotiate a renewal of the agreements, he replied to the effect that All-Way would have thought he was crazy. All-Way had given condi­tional notice of termination of employment on October 5, 1988, to be effective January 1, 1989, to all of Para-Way's staff and bargaining unit employees and their employment ceased with Para-Way in keeping with the notice.

17The TTC informed STM early in February 1989 that some of the bid conditions in the TTC's original invitation could be revised were that to result in a revised proposal from STM that would yield a lower cost to the TTC than STM's original proposal. STM submitted a revised pro­posal. The TTC advised STM on March 2nd that its revised proposal had been accepted for a three-year period beginning April 1st, 1989, with an option to the TTC to renew it for two years. STM began the dedicated small vehicle service on March 20th at the TTC's request, although the parties had not executed a formal contract. STM's original proposal had been predicated upon STM contracting with "individual owner/operators" to provide the necessary vehicles and drivers. There were two reasons for doing so. First, based on the experience of other Vitran subsidiaries which used owner/operators, S'FM expected their use to result in a more cost-effective way of delivering the level of dedicated small vehicle service specified by the TTC. Second, the Para-Way drivers were not available. They had all committed themselves for transfer to the TTC by October 15th. The TTC formally agreed in a letter to STM dated April 19, 1989, that STM would have the contractual right to supply the service based on sub-contracting with owner/operators. That is the way the service began on March 20th. Union counsel wrote to STM on March 21st claiming that, pursuant to subsection 1(4) of the Act, the union was bargaining agent for a unit of drivers similar to the bargaining unit in the expired collective agreement between the union and the Para-Way division of All-Way. These applications were made May 4th and claimed to be made without prej­udice to the grievance. No similar application had been made earlier when Able Atlantic was awarded the contract for non-dedicated small vehicle service and awarded the dedicated service on an interim basis, and none was made at or after the making of these applications.

18STM operates the dedicated small vehicle service from the same office which Para-Way had used. It does not use any of the other All-Way properties which Para-Way had used when it provided the service. In addition to Stehle who had been retained from Para-Way's operation, STM hired back Stehie's former secretary, two former dispatchers and one staff. The staff employee became STM's safety supervisor. One of the dispatchers had transferred to the TTC and was hired back from there. One of the owner/operators was a former Para-Way driver who had transferred to TTC. All of the station wagons leased by Vitran's leasing company to the owner/operators to begin the service had been used by Para-Way. 27 station wagons serve 27 routes. They are equipped with the same two-way radios served by the same frequency as Para­Way had used.

19STM provides the same station wagon service for the ambulatory disabled through its owner/operators and their drivers as Para-Way had provided until December 31, 1988 with its driv­ers under the terms of its collective agreement with the union. The scheduled hours of service are the same under STM's contract as they were under Para-Way's, although the routes are run differ­ently. The 'FEC supplies STM with the daily schedule from which STM prepares the run sheets for each route. Drivers organize their own routes for completing their run sheets. Alterations to run sheets resulting from cancellations, or additional orders are received by STM from the TTC and dispatched by STM radio to the drivers. The TTC does not have direct radio access to STM's fre­quency.

20The agreement between the TTC and STM contains a variety of conditions affecting the operation of the dedicated small vehicle service. The 'FTC specifies such things as the colour and passenger capacity of the station wagons and that they be equipped with air conditioning and two-way radios. They also must bear signs identifying the vehicles with the 'FTC and its Wheel-Trans service. STM uses removable signs. The TTC requires STM to have the vehicles inspected for mechanical fitness three times a year at a TTC-approved station. The TTC can require STM to have a vehicle removed from service. Drivers are not uniformed, but must satisfy a dress code set by STM and approved by the TTC. They also must undergo STM's driver training program required and approved by the TTC which also has the right to monitor the program. The service operates the same hours as the rest of the Wheel-Trans service and STM cannot alter the hours of service. The TTC sets the fares for the service and STM collects the fares for the 'ITC. STM must advise the TTC of any vehicle accident involving personal injury or causing a delay in competing the routes. TTC inspectors have nothing to do with STM's vehicles in the Wheel-Trans service. Nor does TTC tell STM which drivers or vehicles to use for a route or the route to be taken in picking up and delivering passengers. STM performs its obligation under the agreement without directions from the TTC on how to do so.

21The applicant's primary claim for relief, as asserted in final argument, is that STM and the TTC carry on related businesses or activities under common control or direction within the meaning of subsection 1(4) of the Labour Relations Act, and ought to be declared as constituting one employer for purposes of the Act. Applicant counsel submits that the declaration would extend bargaining rights which the union has for TTC employees to cover the drivers of the station wagons operated by STM under its contract with the TTC. Subsection 1(4) states:

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

In the alternative, the applicant claims that STM is the successor to All-Way as the result of the sale of a business within the meaning of section 63 of the Act and that STM and All-Way carry on related businesses or activities under common control or direction within the meaning of subsec­tion 1(4) of the Act and ought to be treated as constituting one employer for purposes of the Act. The relevant provisions of section 63 state:

63. (1) In this section,

(a) "business" includes a part or parts thereof;

(b) "sells" includes leases, transfers and any other manner of disposition and "sold" and "sale" have corresponding meanings.

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application.

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

22Applicant counsel argues, correctly in the Board's view, that either of these declarations respecting All-Way and STM would bind STM to the collective agreement between the union and All-Way.

23Applicant counsel did not address directly the question of whether STM and the 'FTC carried on "... associated or related activities or businesses ..." with respect to the union's primary position. It is implicit in his submissions, however, that the operation of the dedicated small vehicle service, referred to colloquially by the parties as the station wagon service, for the ambulatory dis­abled was the associated or related activity or business carried on by STM and the TTC. Counsel for the TTC, without conceding that those two parties carried on associated or related activities or businesses within the meaning of subsection 1(4), argued that there was no common control or direction of the station wagon service as between STM and the TTC. The Board is prepared to assume for purposes of this branch of the union's claim for relief, that STM and the TTC carry on associated or related activities or businesses respecting the station wagon service for the ambula­tory disabled.

24The Board acquires the discretion under subsection 1(4) of the Act to make a "one employer" declaration when the following conditions are present:

(1) there must be two or more entities;

(2) they must carry on associated or related activities or business, whether or not simultaneously; and,

(3) the activities or businesses must be under common control or direc­tion of the entities.

The first condition is obviously satisfied with respect to STM and the TTC and STM and All-Way.

25The Board turns first, then, to the argument of union counsel that STM and TTC exer­cise common control or direction over associated or related activities or businesses. Counsel sub­mits that the Board has interpreted subsection 1(4) to mean that it is the activities or businesses, not the entities themselves, over which the exercise of common control or direction must be found to exist. In this respect, counsel relies on the Board's analysis of how the words of the subsection should be construed at paragraph 105 of Brantwood Manor Nursing Home, [1986] OLRB Rep. Jan. 9. The Board concluded that the subsection required only that the activities or the businesses of the two or more entities be under common control or direction, not that the entities themselves also be under common control or direction.

26The assumed, related activity is the operation of the station wagon service for the ambulatory disabled. The TTC has provided a service for the ambulatory disabled for approxi­mately 15 years, but there is no evidence that it has been provided by direct employees of the TTC. In fact, it may be readily and reasonably inferred from the evidence that the service has been pro­vided by subcontract. During most of that time the subcontractor has been an entity of the present Vitran organization, primarily All-Way and latterly its Para-Way division. STM was incorporated by Vitran to specialize in transportation of the disabled. Its contract with the TTC was its first in that field and, at the time of these proceedings, its only one. It is obvious that there is no common ownership between STM and the TTC and, on the evidence, their business operations are under different management. Consequently, the applicant relies on the terms of the de facto commercial contract between them by which, he contends, the TTC has retained effective control of the station wagon service. They had not executed a formal contract at the time of these proceedings. Counsel for the applicant referred the Board to the following authorities in support of his proposition that the TTC retains effective control of the station wagon service under the terms of the contract: The Ontario Legal Aid Plan, [1989] OLRB Rep. Dec. 1176; Brantwood Manor Nursing Homes Limited, [1986] OLRB Rep. Jan. 9; Complete Car Care Centre, [1983] OLRB Rep. Aug. 1293; and, certain decisions referred to in those cases. TTC counsel does not dispute that common con­trol or direction over an activity or business might be found in the terms of a commercial contract between two contracting parties. He contends, however, that the provisions in the contract between the TTC and STM which the applicant claims leave effective control or direction of the station wagon service with the 'FEC are nothing more than the prudent terms which parties to a commercial contract would include to protect their respective interests. Counsel submits that those terms do not amount to the FEC retaining control of the subcontracted service, as the Board has discussed when deciding whether control or direction has passed to the subcontractor for purposes of a subsection 1(4) declaration. To the contrary, counsel argues, the TTC has passed control of the station wagon service to STM, and has done so to an even greater extent than was the case with Para-Way. TTC counsel submits that the following authorities support his claim that the TTC has not retained control over the station wagon service and has passed control of it to STM: Metropolitan Life Insurance Company, [1989] OLRB Rep. Feb. 175; The Globe and Mail, [1988] OLRB Rep. April 384; The Corporation of the City of Stratford, [1985] OLRB Rep. June 923; Federated Building Maintenance Company Limited, [1985] OLRB Rep. Nov. 1585; Caressant Care Nursing Home of Canada Limited, [1984] OLRB Rep. Aug. 1060; Complete Car Care Centre, supra; and, The Charming Hostess Inc., [19821 OLRB Rep. April 536.

27The authorities relied on by both counsel demonstrate clearly that the Board has accepted the proposition that the terms of a commercial contract between two or more nominally dependent entities can be brought within the reach of subsection 1(4) of the Act. Whether such entities are under common direction or control within the meaning of that subsection depends on whether control over work which is the subject of the contract has passed to the subcontractor, or whether the employer with the collective agreement obligation simply has substituted the subcon­tractor's employees for its own without giving up control and direction of the employees. See Charming Hostess, supra, at paragraphs 42-u. The Board described the issue this way in Caressant Care, supra, at paragraph 5:

The question is whether, on an on-going basis, the contractor really has taken over control and responsibility for the selection, training and supervision of the employee work force, and is duly dependent in making the decisions that it does.

The contractor in that application had been engaged to provide on-site dietary and housekeeping services in a new nursing home operated by Caressant Care, supplying the employees and on-site supervision for those services.

28While the Board agrees with TTC counsel that the terms of the TTC's de facto contract with STM reserves less control to the TTC than the predecessor contract under which Para-Way operated the station wagon service, that is irrelevant to whether the TTC has passed control over the service to STM under its contract. The Board has reviewed that contract and, in particular the terms which the applicant argues should cause the Board to conclude that the TTC has retained effective control over the station wagon and, as a result, that STM and the TTC are under common control or direction. The Board finds it unnecessary for purposes of this decision to detail those terms. This is because the Board finds the factual context of the contractual relationship between the TTC and STM to be sufficiently analogous to that of the contractual relationship of the munici­pality and the contractor in the City of Stratford decision, supra, to adopt its reasoning and con­clude that the TTC has passed control of the station wagon service to STM. The Board disagrees with TTC counsel that the facts of this subsection 1(4) application are on all fours with the facts in the City of Stratford application but the Board agrees that its facts make out a stronger case for the applicant's position herein than do the facts of the instant case.

29The Board in the City of Stratford, supra, had been asked to declare that the firm with which the City had contracted to collect its garbage and the City be treated as one employer for purposes of the Act. The decision at paragraphs 10 and 11 sets out in substantial detail some of the contractor's responsibilities. The Board observed that, since the contractor was "... owned and operated ... completely independently of the City, ...", if common control or direction existed between them it had to be found in the degree of authority that the City can or does exercise over the contractor's operations for the City. Then, after examining the terms of the contract, the Board concluded that the City had given up functional control over the employees who perform the gar­bage collection work, that the control which it retained was merely that which, as a matter of com­mercial reality, was sufficient to ensure that the contractor met at all times the City's general speci­fications and requirements. The Board was not persuaded that such control "... evidences common control or direction of the garbage collection work in the City by [the contractor] and the City.". In the Board's view in this instant application, the City's contract with the contractor imposed more stringent controls on the contractor's performance of its services to the City than are imposed on STM by its contract with TTC. Moreover, the TTC does not exercise any control or direction over STM's owner/operators. It is STM which selects, engages and trains them, establishes their dress code, disciplines them, sets their rates of remuneration and assigns them to routes. In short, STM and not the TTC exercises fundamental control over the working environment of the owner/operators.

30Accordingly, the Board finds that STM and the TTC are not under common control or direction and it is unnecessary for the Board to decide whether they carry on related activities or businesses. In the result, the application in File No. 0498-89-R for a declaration that STM and the FEC be treated as constituting one employer for purposes of the Act is dismissed.

31The applicant's alternative position is that STM is the successor to All-Way as the result of a sale of a business within the meaning of section 63 of the Act and that STM and All-Way carry on related activities or businesses under common control or direction within the meaning of sub­section 1(4) of the Act and ought to be treated as one employer for purposes of the Act. While applicant counsel argued the "sale" alternative first and described the "one employer" declaration as its fall back position, the Board finds it appropriate to deal first with the related employer alter­native.

32Counsel for All-Way and STM admitted that those two entities did carry on related activities or businesses under common control or direction within the meaning of subsection 1(4) of the Act. The evidence clearly supports that admission. Therefore, the Board finds that STM Spe­cialized Transit Management Corporation and All-Way Transportation Corporation carry on asso­ciated or related activities or businesses under common control or direction within the meaning of subsection 1(4). Accordingly, the preconditions referred to at paragraph 24 herein have been satis­fied and the Board has acquired the discretion to make a "one employer" declaration. The ques­tion is whether the Board ought to make the declaration.

33Applicant counsel's argument in support of the Board exercising its discretion to declare All-Way and STM to be treated as one employer for purposes of the Act is simple and straightfor­ward. That is, STM's contract with the TTC has resulted in the station wagon service being pro­vided non-union by STM, whereas All-Way previously had provided it using employees for whom the applicant held exclusive bargaining rights. The applicant is not contending that the result was intended by either STM or All-Way when STM entered into its contract with the TTC. Counsel argues both subsection 1(4) and section 63 are designed to protect established bargaining rights from the effect of commercial transactions, whether or not the transaction was intended to erode or interfere in those rights. Therefore, since the effect of the STM/TTC transaction would be to eliminate altogether the applicant's bargaining rights defined in its collective agreements for driv­ers with All-Way if the Board does not declare All-Way and STM to be treated as constituting one employer for purposes of the Act, the Board ought to make that declaration.

34Counsel for All-Way and STM, on the other hand, emphasized that there was no scheme or intent to interfere with the applicant's bargaining rights when STM entered into the con­tract with the FEC for operating the station wagon service. Counsel argued that there are three types of circumstances in which the Board has found there to be a scheme to avoid bargaining rights obligations and in which the Board has made a one-employer declaration. These are where two related employers exist, one "unionized" and the other "non-union" and:

(1) the unionized company is deliberately wound down and its work transferred to the non-union company; or

(2) employees are transferred between the two companies; or,

(3) the non-union company is used to circumvent prohibitions or limita­tions in the collective agreement on the unionized company contract­ing out bargaining unit work or using employees who are not in the bargaining unit to perform work normally performed by bargaining unit employees.

Counsel submits that All-Way's business was taken back by the TTC and both that circumstance and putting out the station wagon service to public tender was beyond its control; that there were no employees to transfer to STM, since all of All-Ways employees either had their employment terminated or had accepted transfer to the TTC; and, there was no attempt to get around any con­tracting out prohibitions or limitations because the collective agreement covering drivers had no limitations on contracting out or on non-bargaining unit employees performing that work. There­fore, none of the circumstances which have moved the Board to make a one-employer direction in order to protect subsisting bargaining rights are present here.

35Finally, counsel argued that, unless the Board found that there was a scheme to defeat or erode the applicant's bargaining rights, it should not make a one-employer declaration because to do so:

(1) would be dramatic interference with a public bid system which led to a contract premised on the use of independent contractors (owner/operators);

(2) would seriously undermine STM's contract with the TTC respecting their agreement that STM that STM was to provide the station wagon service by contracting with independent owner/operators and might nullify the contract between STM and the TTC;

(3) might nullify STM's contracts with the owner/operators because the Act prohibits STM from contracting with individual employees; and,

(4) would deprive any persons who have contracted with S'FM to pro­vide station wagon service and who might be found to be dependent contractors under the Act, of their right to select their bargaining agent and, further, would foist on them the wages, benefits and other terms and conditions of employment of the applicant's last collective agreement with All-Way.

With respect to the need for "mischief', "intent" or a "scheme" to defeat or erode a union's bar­gaining rights or to avoid obligations under a collective agreement in order to justify the making of a one-employer declaration, counsel referred the Board particularly to Acto Builders (Eastern Limited, [1979] OLRB Rep. June 465, at paragraphs 15 and 16, and Inducon Construction of Canada Limited and Codeco Limited, [1975] OLRB Rep. Apr. 399, at paragraphs 18 and 19.

36For all of these reasons, counsel submits that the Board should not declare that All-Way Transportation Corporation and STM Specialized Transportation Management Corporation are to be treated as constituting one employer for purposes of the Labour Relations Act.

37The Board does not agree with counsel for All-Way and STM that there need be intent or a scheme to interfere with the bargaining rights of a trade union or to avoid obligations under a collective agreement before the Board will exercise its discretion under subsection 1(4) and declare that two or more entities be treated as constituting one employer. That was made clear by the Board in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 at paragraph 12 as quoted in Brantwood Manor Nursing Homes Limited, [1986] OLRB Rep. Jan. 9, at paragraphs 48 and 49, one of the authorities relied on by applicant counsel. In discussing the nature and purpose of sub­section 1(4), the Board in B rant Erecting takes note of the similarity of its remedial purpose to that of section 63 and states, "[n]either remedial provision requires a finding of anti-union animus: their primary application is to bona fide business transactions which incidentally undermine or frustrate established statutory rights.". For the applicant, the substitution of STM for All-Way as the entity to bid for the remaining, available Wheel Trans business from the FEC (which STM obtained) meant the loss of the work to which its bargaining rights attached, unless it succeeded in these applications. As counsel for the applicant put it so succinctly in final argument, "If the applicant loses this case, it loses all of its bargaining rights". That aptly describes the effect of denying a one­ employer declaration even though the preconditions for the exercise of the Board's discretion exist and the erosion of bargaining rights has been established. It has the same effect as a successful application for the termination of bargaining rights.

38As for the commercial implications of a one-employer declaration for STM's contract with the TTC and with contracts with the owner/operators, it is clear that the purpose of subsection 1(4) of protecting established statutory rights takes precedence over the protection of any commer­cial transactions which might be impacted by a declaration. As the Board stated when describing the purpose of subsection 1(4) at paragraph 12 of Brant Erecting, supra:

"Section 1(4) was enacted in 1971 and deals with situations where economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one entity. Where such legal entities carry on related business activities under common control or direction, the Board is empowered to pierce the corporate veil. Sec­tion 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which the activity is carried on. Legal form is not permitted to dictate or fragment a collective bar­gaining structure, nor will alterations in legal form undermine established bargaining rights."

[emphasis added]

The "definable commercial activity" here to which the applicant's bargaining rights attach, is the contracting with the TTC for the provision of the dedicated small vehicle service for the transporta­tion of the physically handicapped in Metropolitan Toronto. It was formerly done by All-Way and is now being done by STM. A declaration that All-Way and STM are to be treated as constituting one employer for purposes of the Act would preserve that attachment and make All-Way and STM “….jointly and severally bear the obligations..." of the employer under the collective agreement for drivers between the applicant and All-Way. See Brantwood Manor, supra, at paragraph 93. The fact that STM and the TTC entered into a contract by which they agreed that the dedicated small vehicle service (i.e. the station wagon service) should be provided by owner/operators under contract to STM and the fact that STM entered into contracts with owner/operators to provide the service ought not, at least in the circumstances of this case, be a basis for denying the applicant, an innocent third party, the statutory protection provided by a one-employer declaration for its bar­gaining rights under its collective agreement with All-Way.

39This is not to say that there are no circumstances in which commercial contracts impact­ing on the commercial activity which gives rise to the collective bargaining relationship would not be relevant and deserving of significant weight in deciding the exercise of the Board's subsection 1(4) discretion. There well may be particular circumstances, for example, where bargaining rights have existed in a Board certificate or a voluntary recognition agreement for more than 12 months and no collective agreement has been executed, in which the Board might give substantial weight to the commercial obligations of the related non-union employer.

40Had All-Way, on expiry of its contract with the TTC, entered into a new contract with the TTC containing the same terms as the contract between STM and the TTC, and then entered into contracts with owner/operators with the same terms as STM's contracts with them, the appli­cant, at the very least, would have had access to arbitration under its collective agreement with All-Way to try and protect its bargaining rights and enforce the terms and conditions of the agree­ment. That is what the applicant would get out of a declaration that All-Way and STM be treated as constituting one employer for purposes of the Act and are bound to the collective agreement for drivers between All-Way and the applicant. Should the parties be unable to agree on what the col­lective agreement obligations are, it would be open to either of the parties to pursue the dispute to arbitration, including the questions of whether any of the persons providing the station wagon ser­vice are employees under the drivers' agreement and whether STM has breached the collective agreement because of the terms under which it engaged the owner/operators to perform the ser­vice.

41That would still be the case were the Board to determine that the owner/operators were not employees within the meaning of the Act. It would remain an arbitrator's task to determine whether they, or any of them, were employees under the collective agreement. Therefore it is unnecessary for the Board to determine the employment status of the owner/operators in order to decide how to exercise its discretion under subsection 1(4).

42In all the circumstances of this application, the Board is satisfied that the applicant's bargaining rights in its collective agreement for drivers with All-Way have been undermined by the transfer from All-Way to STM of the contracting with the TTC for the provision of the dedicated small vehicle service for the transportation of the physically disabled. Accordingly, in order to pre­serve those bargaining rights, the Board declares that All-Way Transportation Corporation and STM Specialized Transit Management Corporation are to be treated as constituting one employer for purposes of the Labour Relations Act effective from the incorporation of STM and, as a result, STM is bound to the collective agreement for drivers between All-Way and the applicant effective from the date when STM began to operate the dedicated small vehicle service for the TTC and, to the extent that the collective agreement may have continued to renew under its terms for renewal, must continue to apply its terms mutatis mutandis. Since the other remedies sought were not pleaded in final argument, the Board will make no further declarations or directions.

43As between All-Way and STM, the applicant pleaded section 63 in the alternative and requested the same additional remedies. Since a declaration under section 63 would do nothing more for the applicant than the one-employer declaration, there is no need to decide that applica­tion and those proceedings are terminated.

44The applications for declarations under subsection 1(4) and section 63 of the Labour Relations Act respecting the Toronto Transit Commission were dismissed for the reasons given ear­lier in the decision.