Canadian Paperworkers Union Local 1150 v. Paperboard Industries Corporation, 1992 CanLII 6373

Ontario Labour Relations Board

[1992] OLRB Rep. August 946

0237-91-R, 0238-91-R, 0239-91-U Canadian Paperworkers Union Local 1150, Applicant v. Paperboard Industries Corporation and Specialized Packaging Products Ltd., Respondent

BEFORE: N. B. Satterfield, Vice-Chair, and Board Members D. G. Wozniak and A. Hershkovitz.

APPEARANCES: Dave Watson, Jim Foster and Elwood Tinney for Canadian Paperworkers Union Local 1150; June Ford, J.G. Boudreau, Elizabeth Stairs and David Deering for Paperboard Industries Corporation; James E. Bowden and Harry Irving for Moore Packaging Corporation Ltd.

DECISION OF N. B. SATTERFIELD, VICE-CHAIR, AND BOARD MEMBER A. HERSHKOVITZ; August 5, 1992

1. These are applications made under subsection 1(4) and section 64 [formerly section 63] of the Labour Relations Act and a complaint made under section 91 [formerly section 89] of the Act. For ease of exposition, the Board will refer to Canadian Paperworkers Union Local 1150 as "the applicant" or "the Union"; to Paperboard Industries Corporation as "Paperboard"; and to Specialized Packaging Products Ltd. as "Specialized". The application and the complaint were brought on for hearing together. At the outset of the hearing, the complaint was stood down on consent until the Board determined the applications. Later in the proceedings, the Union and Paperboard agreed that the complaint and t he application under subsection 1(4) of the Act (File No. 0238-91-R) should be withdrawn as against Paperboard and the Board so directed. The applicant also sought to withdraw the subsection 1(4) application as against Specialized. Absent consent from Specialized, the Board ruled that the parties could deal with its disposition in final argument. When that time came, counsel for the applicant advised the Board that he would make no submissions on that application.

2. Accordingly, the complaint under section 91 in File No. 0239-91-U and the application under subsection 1(4) in File No. 0238-91-R are withdrawn as against Paperboard Industries Corporation and the same application is dismissed as against Specialized Packaging Products Ltd. Therefore, the remainder of this decision deals with the application under section 64 of the Act in File No. 0237-91-R.

3. The applicant seeks declarations that Specialized is the successor employer to Paper-board as the result of a sale of a business within the meaning of section 64 of the Act from Paper-board to Specialized, that the applicant continues to be the bargaining for the employees of Specialized in a like bargaining unit in that business and is bound to the collective agreement between the applicant and Paperboard which was in effect from August 18, 1988 until August 17, 1991. The relevant provisions of section 64 are:

4. (1) In this section,

business" includes a part or parts thereof;

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, her or its 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, her or its 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 54, sells his, her or its 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 54, as the case requires.

4. The transactions between Paperboard and Specialized which the applicant alleges constitute a sale of Paperboard's business, or part thereof, to Specialized, are an agreement of sale and purchase by which Specialized acquired certain assets of Paperboard at a plant which it had operated at Holland Landing near Bradford, Ontario ("the Holland Landing plant") and an assignment to Specialized of Paperboard's lease for those premises and the property on which they were located.

5. Paperboard is an integrated box making company which manufactures corrugated sheet from linerboard and paper and manufactures boxes from the corrugated sheet. Specialized is known in the paper industry as a "paper converter" or a "sheet plant". Those interchangeable terms apply to box companies which manufacture boxes from corrugated sheet purchased from an independent manufacturer of sheet. Such independent manufacturers of corrugated sheet are known in the paper industry as "feeder plants". Prior to the alleged sale, Specialized obtained its corrugated sheet from Independent Corrugators, a company owned in equal shares by Specialized and three other paper converter companies. The four companies are competitors for box sales in the same market area.

6. Paperboard and Specialized are also competitors for box sales in the same market. They were before the alleged sale and continue to be afterward. Paperboard sells primarily to high volume users of corrugated boxes. Specialized sells to smaller customers and produces and sells specialized packages with a high labour cost content. The Union has bargaining rights for Paper-board's employees at the Holland Landing plant and its plant on Kennedy Road in Mississauga. The Union, or a related Local, also has bargaining rights for the employees of Specialized at its plant in Barrie and for the employees of Innovative Corrugated Industries Ltd. in Oakville. They are owned by the same holding company.

7. Independent Corrugators supplied corrugated sheet to Innovative, as well as Specialized. During 1990, Peter Moore, whose holding company owns Specialized, became dissatisfied with the financial arrangements respecting Independent Corrugators because his companies' share of Independent's profits were unfavourably disproportionate to their purchase of corrugated sheet from it. When Moore's efforts to have this situation adjusted were unsuccessful, he began a search for a corrugator which he could buy. When the Board uses the term “corrugator" in this decision respecting the transactions between Paperboard and Specialized, unless the context clearly indicates otherwise, it refers to all of the machinery which together is necessary for the manufacture of corrugated sheet. Moore began his search through equipment dealers in North America and Europe. In September, Paperboard announced publicly the Holland Landing plant would be closed. Moore learned from a United States trade catalogue that the equipment was for sale. He inquired with Paperboard about the corrugator but was told it was not for sale in Canada. The plant closed and employment ceased in mid-October. John Kent, the plant manager, was retained for a while to oversee the dismantling and removal of equipment as it was sold. When another suitable job in Paperboard did not materialize, he took a severance offer and resigned effective December 31, 1990.

8. By the time the Holland Landing plant closed, Moore was negotiating with Paperboard for the purchase of the corrugator on the basis of an undertaking that Specialized would buy containerboard, the paper materials from which corrugated sheet is made, from Paperboard, and Paperboard would buy from Specialized coated corrugated sheets and certain of the paper waste from the corrugation process. They exchanged draft letters of intent in late October, but negotiations had stalled by mid-December because of a dispute between Paperboard and its landlord about the assignment of Paperboard's lease to Specialized. Moore wanted either an acceptable lease assignment or a price adjustment to accommodate the cost of removing the corrugator to Specialized's Barrie plant. Negotiations resumed in early 1991 and were eventually concluded so that Specialized could take over Paperboard's lease and operate the corrugator at the Holland Landing plant. Paperboard took possession on April 15, 1991.

9. When negotiations were completed, Specialized had:

(1) an assignment of lease from Paperboard for the property and premises comprising the Holland Landing plant, consented to by the landlord;

(2) an agreement of sale and purchase for all of the equipment comprising the corrugator, spare parts for the equipment and maintenance items;

(3) an indemnity agreement making Paperboard responsible for restoring the leased premises to an environmentally satisfactory condition and indemnifying Specialized and Moore personally from any liability arising out of any failure by Paperboard to complete the environmental restoration; and

(4) a containerboard sales agreement with Paperboard for the supply of containerboard to Specialized at the Holland Landing plant and for the sale to Paperboard of coated corrugated and certain waste paper.

Specialized also purchased 300 tons of paper for making corrugated sheet which was in inventory at the plant.

10. Moore had approached Kent in December about working for Specialized if it completed an agreement for purchase of the corrugator and assignment of the lease. Since Kent was still on Paperboard's payroll, Moore got permission to speak with him. They came to an arrangement which resulted in Kent eventually going on Specialized's payroll on April 15, 1991. Moore's original plan had been to hire a general manager for the plant who had experience managing corrugated sheet production. However, after Moore's first negotiations with the landlord and discussions about the Holland Landing Plant's water and sewage systems, he began thinking about Kent. Later, during Moore's second visit to see the corrugator, Kent expressed to him an interest in working for Specialized if it purchased the corrugator. Moore questioned Kent about the water and sewage systems, and the groundwater problems, and came to realize that Kent had an intimate knowledge of the corrugator and of the premises and property, including problems with the water supply, groundwater pollution and the idiosyncrasies of the corrugator. Kent also had prepared an inventory of all of the equipment, spare parts and maintenance items in the plant for Paperboard and he knew what their condition was as at October 15. One of the sale conditions in the draft letters of intent exchanged by Paperboard and Specialized in late October was that the machinery and equipment were being sold and purchased "... on the basis of the condition..." as at October 15. That condition is part of the final sale agreement and all of the items on the list of machinery and equipment which is part of the agreement's contents, were on the inventory list prepared by Kent. Moore acknowledged that Kent knew everything needed to make the corrugator work, including how to deal with the water supply and ground Water problems. Moore made it clear to Kent that he would want to have the corrugator up and operating as soon as an agreement was reached with Paperboard. Kent assured Moore that this was possible.

11. Kent had a list of former Paperboard employees and by April 16 he had hired 16 of them needed to operate and maintain the corrugator, plus a clerk and schedules for the office. He had a crew of three come in for some preparatory work before start-up on April 15. Moore left it up to Kent as to who should he hired and when Moore had made it clear that he wanted the corrugator operational immediately, Kent decided that he would hire ex-Paperboard employees who knew the equipment and whose capabilities he knew. He had received the go-ahead in early March to make tentative hiring arrangements. He began with a crew of seven or eight and had the corrugator running by April 24th. The following Monday, April 29th, he had a full crew working and producing market quality corrugated sheet.

12. Once Moore was assured that the corrugator was functional, he advised Independent that Specialized and Innovative would not be buying corrugated sheet from Independent after May 1st. Specialized and Innovative sold back all of their shares in Independent to it and Moore resigned as a director of Independent.

13. Specialized and Innovative were merged effective May 1st, together with three other companies owned by Moore's holding company, into Moore Packaging Corporation ("Moore Packaging"). On the same day, Moore, as president of Moore Packaging, issued an announcement of the merger to customers of Specialized and Innovative. It contained the following reference to the Holland Landing plant:

As well, we wish to announce the acquisition of Paperboard Industries shutdown Bradford Plant, and the 87" S & S corrugator installed there. This plant will reopen today and also operate under the Moore Packaging name.

The latest acquisition will allow us to continue to supply you with the service and quality that you deserve at a competitive price.

14. The Holland Landing plant produces approximately 17 million square feet of corrugated sheet per month, of which approximately 13 million is used by the Moore Packaging box plants. The remaining four million square feet is sold on the open market. Paperboard takes slightly more than one per cent of the surplus under its commitment in the containerboard sales agreement with Specialized. The rest of the surplus is sold to other paper converters. While Specialized did not get any customer information from Paperboard, purchasers have included all but one of Paperboard's customers formerly supplied from the Holland Landing plant. None had been customers of Specialized.

15. The Holland Landing plant continues to dispose of baled waste to the same dealer that Paperboard had used.

16. The parties do not dispute those facts, only the conclusions which the Board should draw from them respecting section 64 of the Act. The Board has reviewed and considered their arguments in full in making its decision, but has not attempted to set out the parties' detailed arguments. Instead, they are summarized below.

17. Applicant counsel submits that all of these circumstances add up to a sale of part of Paperboard's business to Specialized. He argues that Specialized acquired much more than a parcel of idle assets and a property lease when it acquired the corrugator. According to counsel, when Specialized acquired the corrugator, its ancillary equipment and the plant infrastructure, it acquired the heart and lifeblood of Paperboard's box-making business at the Holland Landing plant. That is not all that Specialized got, counsel argues. It got Paperboard's former plant manager and enough of its former employees to make up the crew needed to operate the corrugator and run the office right from the closing date of the transactions. In Kent it got the person who had the knowledge to assemble the crew of employees and how to deal with the idiosyncrasies of the equipment and plant infrastructure. So there is a total continuity of the corrugating operations and everything in place to constitute a ready-made business, with Kent to put the whole thing into operation. Counsel submits, as well, that there was a continuity of Paperboard's corrugated sheet customers, none of whom had been customers of Specialized, a continuity of containerboard supply and baled waste disposal. All of which, according to counsel, leads to the inescapable conclusion that Specialized has acquired a significant part of Paperboard's business at the Holland Landing plant. Counsel referred the Board to W.F. Stevens Reproductions Inc., [1984] OLRB Rep. Apr. 674; Thorco Manufacturing Limited, 65 CLLC ¶16,052; The Tatham Company Limited, [1980] OLRB Rep. March 366; Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691, and Dufferin Steel Company Amico Division, [1976] OLRB Rep. March 81 referred to therein at paragraph 4 for the remedial purpose of section 64 and the attendant need to serve that purpose by interpreting the section liberally. With respect to what constitutes a business, counsel referred the Board to Antonacci Clothes Inc., [1984] OLRB Rep. July 887; Thorco Manufacturing, supra, and Beef Terminal (1979) Limited, [1980] OLRB Rep. Aug. 1167. For the tests which the Board has applied in determining whether there has been a section 64 sale of a business, counsel relied on Culverhouse, supra, Marvel Jewellery Limited and Danbury Sales (1971) Ltd., [1975] OLRB Rep. Sept. 733 referred to at paragraph 7 of Culverhouse, and Tatham Company, supra. Finally, counsel referred the Board to the following decisions for their alleged factual similarity to this application: Bermay Corporation Limited, [1979] OLRB Rep. July 608; Big Bear Storage, [1979] OLRB Rep. March 164; Culverhouse, supra, and Tatham Company, supra.

18. The argument of Specialized's counsel runs as follows. At all material times, Specialized and Paperboard were competitors and Specialized already had its own corrugator when it purchased some idle assets from Paperboard for which Paperboard had no use. Specialized already had its own organization which it brought to the Holland Landing plant and, when it was put together with the transaction respecting the corrugator, all it amounted to was a change in the legal form through which Specialized operated the corrugator end of its business. The location, equipment, employees and people who supplied Specialized with corrugated sheet before and after the transaction were simply incidental to the corrugator part of Specialized's business. The employees were useful, but not critical to the transaction. In short, Specialized did not acquire from Paperboard the elements of a business which support employment, it merely got a collection of idle assets which could be used to expand an existing parallel business. Counsel referred the Board to SenStar Corporation, [1989] OLRB Rep. Nov. 1159; Woodway Structural Components, [1971] OLRB Rep. Nov. 732; Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan. 47; Canada Cement Lafarge Ltd., [1975] OLRB Rep. Dec. 905; British American Bank Note Company Limited, [1979] OLRB Rep. Feb. 72; Grand Valley Ready Mixed Concrete Supply Limited, [1981] OLRB Rep. June 663; and, Dominion Stores Limited, [1979] OLRB Rep. July 626. He relies on SenStar, supra, for its review of Board jurisprudence, particularly Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193; on Woodway, supra, as an example of the elements of the alleged sale being a new business; on Sunnybrook and Canada Cement, supra, as examples of the sale and purchase of unwanted assets; and on Sunnybrook, British American Bank Note, Grand Valley Ready Mixed and Dominion Stores, supra, as examples of transactions carried out between companies carrying on parallel businesses where the results of each transaction is more likely an expansion of the purchaser's business than the acquisition of the seller's business.

19. In determining whether what Paperboard sold to Specialized was part of Paperboard's business for purposes of section 64 of the Act, it is essential to keep in mind the remedial purpose of the section. The Board described that purpose in Aircraft Metal Specialists Ltd., [1970] OLRB Rep. Sept. 702, quoted at paragraph 19 of the Tatham Company, supra:

"The purpose of section 47a [now section 55] [now section 64] becomes important in assessing the various tact situations that arise. Section 47a operates on a number of levels, the first level, of course, is to prevent the subversion of bargaining rights by transactions which are designed to get rid of the union. We have encountered situations where there are transactions between various corporate entities which are in effect paper transactions", and are a form of corporate charade engaged in for the purpose of eliminating the trade union. In this type of case the Board has liberally interpreted section 47a to preserve the bargaining rights and has attempted to look beyond 'paper transactions' to achieve that purpose. See e.g. Kem's Masonry, [1964] OLRB REp. Dec. 382 and Trenton Riverside Dairy, September 1964 (1964) 2 C.L.S. 76-1005.

A further and important purpose of section 47a is to preserve the bargaining rights with respect to work which has accrued to the benefit of the employees as a result of their union becoming the bargaining agent through certification or voluntary recognition. Once the union has been recognized with respect to a particular business the union then obtains a right to bargain with respect to wages, hours and other conditions of employment in that business, The right to participate in the business and its functions in that manner is in the nature of a vested right and section 47a allows the union to pursue that bargaining right when all or part of the business is sold. In making determinations under section 47a therefore, the Board is interested in maintaining the bargaining rights where the sale involves a continuation of the business."

to which the Board added those observations at paragraph 20:

20. Section 55 prevents the destruction of bargaining rights or a dislocation of the collective bargaining status quo, by transforming the institutional rights of the union and the collectively bargained rights of the employees into a form of "vested interest" which becomes rooted in the business entity, and like a charge on property, "runs with the business." To accomplish this objective, the statute gives a very special meaning to the word "sale", envisages that bargaining rights can be continued in a severable 'part" of a business, abrogates the notion of privity of contract, and eliminates the significance of the separate legal identity of the new employer.

21. That purpose causes the Board to look beyond the legal forms of the businesses and the commercial transactions between them which give rise to section 64 applications and, instead, to focus on examining the predecessor's business to which the bargaining rights attach, and to determine whether that business, or part of it, has been disposed of to the successor, or whether there is a continuation of the predecessor's business, or part of it. Inherent in the determinations is the question of whether what was disposed of to the successor or continues with it, is the predecessor's business, or a part of it, and not just a collection of its surplus assets. The difficulty of that task was recognized by the Board in Tatham Company, supra, and described at paragraph 26:

22. All of the cases to which we have referred recognize that there are no easily administered mechanical tests which permit the Board to readily distinguish between a "mere sale of assets" and a sale of "part of a business." As the Board commented in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1194 at paragraph 34:

"This distinction is easily stated, but the problem is, and always has been, to draw the line between a transfer of a "business" or 'a part of a business' and the transfer of 'incidental' assets or items. In case after case the line has been drawn, but no single litmus test has ever emerged. Essentially the decision is a factual one, and it is impossible to abstract from the cases any single factor which is always decisive, or any principle so clear and explicit that it provides an unequivocal guideline for the way in which the issue will be decided."

The issue of employer successorship arises out of a seemingly endless variety of factual settings. with each new case presenting some of the factors considered relevant to the resolution of prior cases which raising other materially altered, entirely omitted, or newly-added facts which arguably should affect the decision on the merits. Much of the confusion which attends successorship results from the facility with which each case can be distinguished on its facts from all former cases; but to dismiss the confusion so lightly would be to disregard the fundamental differences inherent in the various business contexts in which the successorship issue arises. Factors which may be sufficient to support a "sale of a business" finding in one sector of the economy may be insufficient in another. In some industries, particular configuration of assets - physical plant machinery and equipment - may be of paramount importance; while in others it may be patents, "know-how", technological expertise or managerial skills which will be significant. Some businesses will rely heavily on the goodwill associated with a particular location, company name, product name or logo; while for other businesses, these factors will be insignificant. The Labour Relations Act applies equally to primary resource industries, manufacturing, the retail and service sector, the construction industry and certain public services provided by municipalities and local authorities. In each of these sectors the nature of the business organization is different, yet in each case section 55 [now section 64] must be applied in a manner which is sensitive to both the business context and the purpose which the section is intended to accomplish.

As those comments indicate, the Board has looked to a wide range of factors to assist it in determining whether there has been a section 64 sale of a business, many of which are referred to in the foregoing quote. The caution about their use expressed more than three and one-half years earlier in Culverhouse Foods, supra, at paragraph 16, was valid when the Tatham Company was decided and remains so today:

En route to a determination of the above essential questions the cases offer a countless variety of factors which might assist the Board in its analysis: among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life of its own; none will necessarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same it is was before, i.e. whether there has been a continuation of the business.

21. The facts in the case are that Specialized acquired from Paperboard all of the real property and premises which made up its Holland Landing Plant together with the corrugator machine and its associated equipment essential for the manufacture of corrugated sheet. These were not peripheral to Paperboard's business at the Holland Landing Plant. They were central to its integrated boxmaking operations. On the evidence before the Board, the corrugator was accurately described by applicant counsel as the heart and lifeblood of Paperboard's business at the Holland Landing plant of producing corrugated paper boxes. In substance, Specialized took over an essential part of Paperboard's business at the Holland Landing plant: its location and its production capacity for corrugated sheet. Specialized also acquired from Paperboard a source of linerboard for the corrugator and an agreement that Paperboard would take a small part of the corrugator's production and some of the paper waste from its operations. Other baled waste also goes to the same disposal facility as was used by Paperboard. Specialized hired Kent and 14 other former Paperboard employees, all of whom had experience applicable to the operation and maintenance of the corrugator, and two office employees. In Kent, Specialized got all of the knowledge needed to get the corrugator up and running and keep it that way. This is because he had an intimate knowledge of the plant and its infrastructure, the water supply and groundwater problems, the corrugator machine and its idiosyncrasies, and the associated equipment. Specialized also got the benefit of his knowledge of the former employees and their capabilities respecting the operation and maintenance of the corrugators. Also, in Kent, along with the other former Paperboard employees whom he hired for Specialized, it got a ready-made workforce who were able to bring the corrugator to full operation within a week of the closing date.

22. As a result, shortly after Paperboard and Specialized completed their transactions, Specialized was producing corrugated sheet in Paperboard's former plant, on its former corrugator manned entirely by its former employees for Specialized's own use and for sale in the market. At first, there was no surplus corrugated sheet to sell on the market, but, by June Specialized began producing and selling surplus corrugated sheet. By August it was producing thirteen million square feet for its own use and four million square feet for sale. Specialized was shipping the surplus to all but one of Paperboard's former customers, none of whom had been customers of Specialized.

Thus, there is a continuity of some of the same work by some of the same employees, producing for Specialized one of the same products for most of the same customers as was done previously for Paperboard. As the Board observed in Metropolitan Parking Inc., supra, at paragraphs 31 as referred to at paragraph 8 of SenStar Corporation, supra, "[i]f the elements formerly used by [the vendor] to carry on business are now in the hands of [the purchaser], and used for the same business purpose, it is difficult to resist the conclusion that there has been some form of transfer from ~the vendor] to [the purchaser] ..."; and further, at paragraph 32, after referring to the significance of the purpose of section 64 to preserve bargaining relationships and collective agreements, "[i]f 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 64]". Seen from the perspective of the former Paperboard employees now employed by Specialized, the same grounds which support that inference in this case would make it reasonable for them to conclude that not much has changed except for the name of their employer. They continue to work in the same location, under the same plant manager, on the same corrugator machine, using the same skills and the same materials to turn out the same product, corrugated sheet. They could not be faulted in those circumstances from concluding that the business in which they continue to work has been transferred from Paperboard to Specialized.

23. While it is clear that all of the elements of Paperboard's business at its Holland Landing plant did not find their way into Specialized's possession, there is little doubt that those elements which did were a coherent and severable part of Paperboard's economic organization at that location. While Paperboard had an integrated corrugated box manufacturing operation at the plant, a separate market existed for the corrugated sheet which was surplus to its requirements. The facts also establish that "stand alone" corrugated sheet plants exist in the paper industry. Independent is an example. There is nothing in evidence before the Board which suggests that what Paperboard left behind at its Holland Landing plant was not a severable part of its business and those same elements appear to have provided Specialized with a business opportunity at the Holland Landing plant which it could pursue on its own and to its own advantage.

24. In order to determine whether what Specialized has acquired is part of Paperboard's business, the Board must consider Specialized's acquisitions in the business context of its transactions with Paperboard. Specialized did not acquire from Paperboard any introduction to its corrugated sheet customers, accounts receivable, finished inventory, patents, trade marks, logos. Paper-board did not surrender its ability to compete with Specialized for corrugated sheet sales. It continued to operate as an integrated paper box manufacturer serving the same markets for paper-boxes and corrugated sheet as prior to the sale, but from Kennedy Road in Mississauga. Specialized also had its own economtc organization based in Barrie operating its business of paper converter. While it had an external source of corrugated sheet, it was not in the business of manufacturing corrugated sheet, except as one of four equal partners in Independent Corrugators. Specialized's only influence over Independent was as a shareholder and a customer, and through Moore as a director. That is made clear by Moore's inability to redress to his satisfaction his concerns about the financial arrangements respecting Specialized's relationship with Independent. Clearly it is Independent that is in the business of manufacturing and selling corrugated sheet, not Specialized. What Specialized acquired from Paperboard has given it a ready-made entry to that part of the paper industry and enabled it to compete with Paperboard and other integrated box manufacturers in an area of the paper industry market where it has not previously competed. This is so even though Specialized did not get from Paperboard any introduction to its corrugated sheet customers, or any of its accounts receivable, finished inventory, patents, trade marks or logos. The market for corrugated sheet is very price sensitive and customer loyalty to a particular supplier is not significant. Therefore, Specialized would have little need, if any, for any introduction to Paper board's customers or for its accounts receivable. In fact, Specialized did not need either because it is selling surplus corrugated sheet to all but one of Paperboard's former customers. Whether or not Paperboard held any patents or trade marks which it did not dispose of to Specialized, Specialized did not need them for the manufacture and sale of corrugated sheet, and the same can be said for any Paperboard logos.

25. The Board is satisfied that Specialized has been able to do this not by the expansion of its business into the Holland Landing plant but by the transfer from Paperboard to Specialized of a severable part of Paperboard's business at that location in the form of the assignment of Paper-board's lease for the land and premises, the sale of the corrugator and the employment of Kent and the other former Paperboard employees to operate the corrugator. Everything that was needed in the way of capital and human resources to operate a business of manufacturing corrugated sheet at the Holland Landing plant have been transferred to Specialized.

26. The circumstances in this application are readily distinguishable from those which faced the Board in Sunnybrook, British American Bank Note, Grand Valley Ready Mixed, and Dominion Stores, supra. Also, this case clearly is not one which involves the transfer of work previously performed by Paperboard's employees without the transfer of significant elements of Paperboard's business, a situation not covered by section 64. In that respect, see British American Bank Note, supra, at paragraph 11.

27. Therefore, in all of the circumstances of this application and having regard to the purpose of section 64, the Board finds that the transactions between Paperboard Industries Corporation and Specialized Packaging Products Ltd., constitute the transfer of part of the business of Paperboard Industries Corporation to Specialized Packaging Products Ltd. within the meaning of section 64 of the Labour Relations Act.

28. The parties agreed that, should the Board find that there has been a section 64 sale of a business as between those parties, in view of the merger of Specialized Packaging Products Ltd., into Moore Packaging Corporation, the declaration should be made respecting the latter entity. Therefore, pursuant to subsection 64(2) of the Act, the Board declares that Moore Packaging Corporation, is bound to the collective agreement between the Canadian Paperworkers Union, Local 1150 and Paperboard Industries Corporation which was in effect from August 18, 1988 until August 17, 1991 as if it had been a party to the agreement.

29. In summary:

(1) the application under subsection 1(4) of the Labour Relations Act in File No. 0238-91-R has been withdrawn as against Paperboard Industries Corporation and the Board has dismissed it as against Specialized Packaging Products Ltd.;

(2) the Board has found that there has been a sale of a business within the meaning of section 64 of the Act from Paperboard Industries Corporation to Specialized Packaging Products Ltd., and has declared that Moore Packaging Corporation, into which Specialized Packaging Products Ltd. has been merged, is bound to the collective agreement between the Canadian Paperworkers Union, Local 1150 and Paperboard Industries Corporation which was in effect from August 18, 1988 until August 17, 1991 as if it had been a party to the agreement;

(3) the complaint under section 91 of the Labour Relations Act in File No. 0239-91-U which was stood down on consent of the parties has been withdrawn as against Paperboard Industries Corporation; and,

(4) insofar as the complaint stands against Specialized Packaging Products Ltd., the complainant shall advise the Registrar whether it intends to proceed with the complaint.

DECISION OF BOARD MEMBER D. G. WOZNIAK; August 5, 1992

1. I respectfully dissent from the decision of my colleagues.

2. On the facts, as determined by the evidence in this case, I would not make a finding that there has been a sale of a business or part of a business as the Board has applied those terms in prior decisions. I find the facts here are more indicative of Moore having purchased certain assets of Paperboard Industries, specifically the corrugator (as in the majority decision this term refers to all of the machinery necessary for the manufacture of corrugated sheet).

3. The assignment of the lease for the Holland Landing premises and subsequent hiring of certain of Paperboard's former employees was incidental to and in no way a condition, precedent or subsequent, to the transaction, the subject of which was Moore's initial and primary interest, namely the purchase of the corrugator.

4. In making a determination as to whether a sale has taken place within the meaning of section 64, there are a myriad of factors that may be considered. No one factor or factors taken together is necessarily determinative of the issue. I would adopt the statement in Metropolitan Parking Inc. as cited in Tatham Company and quoted by the majority at paragraph 20 of their decision. I would simply emphasize that "essentially the decision is a factual one, and it is impossible to abstract from the cases any single factor which is always decisive, or any principle so clear and explicit that it provides an unequivocal guideline for the way in which the issue will be decided."

5. In the excerpts from Tatham Company and Culverhouse Foods, both found at paragraph 20 of the majority, it is clear that a decision pursuant to section 64 is often complex and, while being mindful of the purpose section 64 was meant to achieve, the decision must be mindful as well of the business context in which the transaction occurs.

6. In Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan.47, a purchaser bought some assets of a closed food retailer, leased the same premises, and carried on a food retail business. The Board drew the distinction between the purchaser leasing from the landlord as a third party and the assignment of the lease from the seller, or the purchaser becoming the tenant of the vendor or purchasing the real property with the assets. In Sunnybrook the Board found no sale had occurred within the meaning of section 47A (now section 64). In all three of the distinguished cases the Board had found a sale had taken place within the meaning of the Act. In the case before us there has been an assignment of the lease, albeit with differing terms. However, a further distinction was that in the case involving an assignment of the lease, Kitchener Food Market (unreported), the entire transaction was contingent on the approval of the assignment of the lease.

7. In this case the lease was incidental to the purchase of the corrugator. As the majority noted in paragraph 8 of their decision "Moore wanted either an acceptable lease assignment or a price adjustment to accommodate the cost of removing the corrugator to Specialized's Barrie plant". This indicates that Moore's purpose was to purchase the corrugator and not to purchase or carry on the "business" of Paperboard Industries Corporation.

8. John Kent was the plant manager for Paperboard at the Holland Landing site. Moore approached him about working for Specialized if it completed an agreement for the purchase of the corrugator and assignment of the lease. Kent's employment with Specialized was dependent on an assignment of the lease. The purchase of the corrugator was not dependent on an assignment of the lease, this was merely one option. Moore originally intended to hire the plant manager of Independent Corrugators to manage the plant. The fact is that Kent made the initial approach to Moore about working for him. When it appeared that Moore would receive an assignment of the lease he determined to hire Kent because of his intimate knowledge of the equipment and in particular of the idiosyncrasies of the site. It was Kent who assumed responsibility for having the corrugator in operation and for hiring employees. Naturally Kent hired some of the employees who had previously worked under him for Paperboard Industries. He hired those who in his opinion had the knowledge and experience necessary for the new organization. It is significant that the employees hired, while still engaged in production of corrugate sheet, were not necessarily performing in the same positions nor the same fashion as they had for Paperboard.

9. As the majority acknowledged at paragraph 24 the fact that Specialized supplies some of the same customers as were supplied by Paperboard is due to the price sensitivity and the absence of loyalty to a particular supplier. It is also partially due to the box manufacturing industry being a small and highly specialized one. Most of the manufacturers obtain their corrugated sheet from the same suppliers of which there are a limited number. The customer base supplied by Moore was in no way the result of it having received any introduction to them, any accounts receivable, finished inventory, patents, trademarks or logos from Paperboard Industries. Indeed, Paper-board Industries continues to manufacture corrugated sheet and supply some of the same market from its plant in Mississauga. It is worth noting that Moore produces in the order of 17 million square feet per month of corrugated sheet at the Holland landing site. The majority of this is for its own use, something less than twenty-five percent of production is sold on the market.

10. All of this indicates that Specialized set out to acquire a corrugator to supply its own converter plant which had previously been supplied by Independent Corrugators in which Specialized had held a 25 percent interest. This is what it achieved. Specialized and its sister company Innovative, both owned by Moore, were merged and together with the corrugator site at Holland Landing comprise Moore Packaging Corporation. Moore now had a secure and adequate supply of corrugated sheet for its production facilities which had previously been supplied through Moore's one quarter interest in Independent Corrugators. The supply of corrugated sheet to the open market, while not insignificant, was a minor part of Moore's business. Supplying corrugated sheet to the open market had been part of Paperboard's business at the Holland Landing site. Paperboard also produced corrugated sheet for its own needs and the open market at its site in Mississauga. This is another indication that Specialized, now Moore Packaging, did not take over nor was involved in the continuation of Paperboard's business at the Holland Landing site.

11. For all of these reasons I would dissent from the findings of the majority, decline to make the declaration set out in paragraph 24(2) and dismiss this application.