International Brotherhood of Electrical Workers, Local 353 v. T. Edison Electrical Enterprises Inc., 1992 CanLII 6755

Ontario Labour Relations Board

[1992] OLRB Rep. February 262

3219-90-R International Brotherhood of Electrical Workers, Local 353, Applicant v. T. Edison Electrical Enterprises Inc., Rudy Chiefari c.o.b. as Westview Electric Contractors, and Westview Electric Contractors Inc., Respondents

BEFORE: Ken Petryshen, Vice-Chair, and Board Members W. A. Correll and J. Redshaw.

APPEARANCES: Susan Philpott and Bob Gill for the applicant; Norman R. A. White and Rudy Chiefari for Westview Electric Contractors Inc. and Rudy Chiefari c.o.b. as Westview Electric Contractors.

DECISION OF THE BOARD; February 12, 1992

1The names of the respondents are amended to read: "T. Edison Electrical Enterprises Inc., Rudy Chiefari c.o.b. as Westview Electric Contractors, and Westview Electric Contractors Inc.

2These are applications under sections 64 [formerly section 63] and 1(4) of the Labour Relations Act. The evidence did not support, and the applicant did not pursue in argument, the sale of a business allegation. Accordingly, the application is dismissed insofar as it relates to sec­tion 64 of the Act. With its section 1(4) application, the International Brotherhood of Electrical Workers, Local 353 ("Local 353") seeks a declaration that T. Edison Electrical Enterprises Inc. ("T. Edison"), Rudy Chiefari c.o.b. as Westview Electric Contractors ("Westview Electric") and Westview Electric Contractors Inc. ("Westview Inc.") constitute one employer for purposes of the Act. Local 353 requests the Board to declare that the respondents are bound to the Electricians Provincial Agreement and a housewiring agreement between Local 353 and the Electrical Contrac­tors Association of Ontario.

3Rudy Chiefari and Bob Gill, a business representative for Local 353, testified in this proceeding. In making its factual findings, the Board carefully reviewed the oral and documentary evidence and the parties' submissions relating thereto.

4On May 30, 1986, Rudy Chiefari and D. Monaco signed a voluntary recognition agree­ment on behalf of T. Edison with Local 353 which provided that, in effect, T. Edison would be bound to the Electricians Provincial Agreement and a Local Appendix which covered certain resi­dential work. Monaco and Chiefari each had a fifty percent interest in T. Edison. Their relation­ship in this business endeavour was initiated by Monaco, who was a general contractor with an interest in an entity called Architectural Contracting and a friend of Chiefari's. T. Edison was cre­ated to perform electrical work on a subcontract basis from Architectural Contracting. It appears that most, if not all, of the electrical contracting work performed by T. Edison came from Archi­tectural Contracting and related to commercial projects. T. Edison entered into the voluntary rec­ognition agreement because the projects were union jobs. The voluntary recognition agreement was signed a couple of weeks before T. Edison started to perform work and at a time when it had no employees.

5Monaco and Chiefari both played a role in incorporating T. Edison. They were direc­tors of T. Edison and some documentation shows Chiefari to be the President. Although Monaco was the source of T. Edison's work, it appears that Chiefari was primarily responsible for conduct­ing T. Edison's business. Chiefari priced the jobs, did the invoicing and the payroll, worked as an electrician and supervised the employees. T. Edison's business was operated out of Chiefari's home. When employees were needed, Chiefari contacted Local 353. Chiefari made the bank deposits and was in possession of T. Edison's records. Chiefari's brother was the bookkeeper for T. Edison. When Local 353 referred a grievance against T. Edison to the Board pursuant to sec­tion 126 [formerly section 124] of the Act, Chiefari attended a meeting with a Labour Relations Officer and executed a Memorandum of Agreement on behalf of T. Edison dated November 27, 1986. It appears that both Monaco and Chiefari were required to sign T. Edison's cheques.

6T. Edison started performing electrical contracting work in June 1986 and stopped working no later than September 1986. During this period, it worked at shopping malls, primarily the Promenade Mall. Chiefari testified that when the voluntary recognition agreement was signed he was aware of the work which T. Edison was about to obtain from Architectural Contracting and that he expected to perform this work himself. When performing bargaining unit work, Chiefari only required his own hand tools. During the period of time it performed work, T. Edison employed at least three persons at various times.

7After performing work in September 1986, Chiefari did not work for approximately two months. It appears that Architectural Contracting stopped subcontracting electrical work to T. Edison. In November 1986, Chiefari registered as a sole proprietorship using the name Westview Electric. The nature of the work he has performed since then is that of an electrical contractor. The initial work he obtained related to commercial jobs in shopping malls. Chiefari testified that approximately two percent of the electrical work he performed with Westview Electric in its first year was work in the ICI sector. Apart from that small percentage of ICI work in his first year with Westview Electric, Chiefari has only performed electrical work in connection with new homes. Chiefari testified that this work in the residential sector requires less skill and uses less voltage than one would generally find in the ICI sector.

8In 1991, Chiefari created Westview Inc. to carry on his electrical contracting business. The evidence indicates that when he was a sole proprietor or under Westview Inc., Chiefari was in control. He bid the jobs, priced them and supervised employees.

9As noted earlier, Local 353 pursued a grievance against T. Edison at the Board and obtained a settl ment with Chiefari dated November 27, 1986. As part of the settlement, Chiefari acknowledged that T. Edison was bound by the Electricians Provincial Agreement and agreed to pay damages to Local 353. Chiefari testified that T. Edison did not pay any damages to Local 353 since it had not been paid for work it had performed. Local 353 pursued its claim and was able to recover some money in July 1987. Since the execution of the settlement, Local 353 did not have any contact with T. Edison. Bob Gill started working for Local 353 in July 1987 and in' early December 1990, he received some information which caused him to attempt to contact T. Edison. He called Chiefari and left a number of messages for him to return the calls, but never received a reply. In early January 1991, a Local 353 representative went to the address ofT. Edison and dis­covered it was a residence. In late January 1991, Gill contacted a lawyer which led eventually to the filing of this application in March 1991. Chiefari testified that he never mentioned Westview Electric to Local 353.

10In his evidence, Gill identified the most recent collective agreement to which T. Edison was bound. He indicated that it covered work in the ICI sector and high-rise residential work -apartments and condominiums. He acknowledged that this collective agreement did not cover low-rise residential work. Gill also acknowledged that T. Edison never signed a low-rise residential agreement.

11Counsel for the respondents argues that for a number of reasons Local 353 is not enti­tled to the relief requested. Counsel challenges the validity of the voluntary recognition agreement on the basis that T. Edison entered into it without intending to use members of Local 353. Counsel also argues that two of the pre-conditions to section 1(4) have not been met. He submits that the respondents are not under common control and direction and are not engaged in related activities. Counsel also contends that the Board should not exercise its discretion to grant section 1(4) relief in this case having regard to Local 353's delay in bringing this application. Counsel for Local 353 argued that the pre-conditions in section 1(4) have been met and that this was an appropriate case for the Board to grant Local 353 the relief it has requested.

12Before turning to the section 1(4) issue, the Board will deal with the respondents' con­tention that the voluntary recognition agreement is invalid. Counsel argues that Chiefari did not intend to use Local 353 members when the agreement was executed. He submits therefore that the absence of such an intention distinguishes the facts here from those in Nicholls-Radtke, [1982] OLRB Rep. July 1028 where the Board upheld the validity of a "pre-hire" agreement. Counsel maintains that the voluntary recognition agreement in this instance is invalid since it was obtained with employer support contrary to the Act.

13The Board is satisfied that T. Edison and Local 353 entered into a valid voluntary rec­ognition agreement in 1986. In reaching this conclusion, we have considered the following matters. We have some difficulty in accepting counsel's assertion that Chiefari did not intend to use electri­cians supplied by Local 353 when the voluntary recognition agreement was executed. Chiefari was familiar with the extent of the subcontract work to be performed by T. Edison prior to signing the voluntary recognition agreement. Also, as soon as the need for other electricians arose, Chiefari asked Local 353 for electricians. When considered with the other evidence before us, these facts raise some doubt about Chiefari's testimony concerning his original intention. Perhaps a more accurate characterization of what occurred is that Chiefari did not anticipate using Local 353's elec­tricians, but if the need arose he would use them. In our view, executing a voluntary recognition agreement with an intention to use union members if and when they are needed would not invali­date the agreement and would not be inconsistent with the principles in the Nicholls-Radtke deci­sion.

14A finding of employer support is not automatic even if one were to conclude that T. Edison did not intend to use Local 353 members when it signed the agreement. This is so because such a finding is not dependent on the employer's intention alone. One can infer from the evidence that Local 353 had every intention of supplying members to work for Local 353. The evidence does not indicate that anyone from T. Edison indicated to Local 353 that it never intended to use Local 353 members. Given that Local 353's conduct in this instance was consistent with entering into a valid "pre-hire agreement", the situation here is not caught by the employer support provisions of the Act. In determining whether a trade union has been the beneficiary of employer support within the meaning of sections 13 and 49 [formerly section 48] of the Act, the Board has regard to the purpose of those provisions. In Edwards & Edwards Limited, 52 CLLC ¶17,027, the Board expressed the following views on what is now section 13 of the Act:

The unfair practice sections of the Act (including section 45 [now 46] which prohibits the type of employer conduct referred to in section 9) [which latter section in its relevant parts was the pre­decessor of the present section 101 are, in large part, designed to safeguard the freedom of employees to join and to bargain collectively through the trade union of their own choice which is granted in section 3. That purpose is furthered by the provisions of section 9 which places upon the Board the obligation to satisfy itself that no employer has meddled in the affairs of an applicant for certification. The section is clearly aimed at "company-dominated" trade unions which are not entitled to be certified, on the theory that a trade union fostered by an employer cannot be considered as having been freely chosen by employees. The section designates con­duct by means of which an employer might seek to confine the broad right conferred by section 3 and is therefore to be called into play where that purpose appears. We consider it is intended to be applied where employer activities are of such a character or are of such proportions that it is reasonable to infer that the employees have not exercised a free choice in the matter of the selection of a bargaining agent, or where an employer has given material assistance to a trade union in connection with its organizational or other activities; where, in other words, the partic­ular applicant is not truly the chosen bargaining agent of the employees concerned.

In Canada Crushed Stone, [1977] OLRB Rep. Dec. 806, the Board also commented on the pur­pose of section 13 at paragraph 27:

The broad purpose of the section, simply stated, is to preserve the integrity of the collective bar­gaining process by barring the application of any trade union which, because of employer sup­port, does not owe its sole allegiance to those whom it seeks to represent. A trade union which has accepted the support of any employer whose interests may be affected by its representation places itself in a potential conflict of interest and thereby undermines itself as a union "quali­fied" to act on behalf of those it seeks to represent. Section 12 catches both the "sweetheart" arrangement between the parties directly affected and also the accepted support of any outside employer whose interests may be affected by the collective representation of those whom the union seeks to represent. In both instances the union's acceptance of employer support activates the Section 12 bar.

15After an extensive review of the Board's jurisprudence in this area, the Board in Cabral Foods Inc., [1985] OLRB Rep. Feb. 165 noted at paragraph 35 that "if a trade union's ability to be certified or to enter into binding collective agreements could be destroyed by unsolicited employer behaviour of which the union was totally unaware, sections 13 and 49 would cease to serve as pro­tections from employer interference in employees' selection of a bargaining agent and, instead, become potent instruments for affecting just such interference".

16In this case T. Edison entered into the voluntary recognition agreement in order to obtain jobs on union projects. Local 353 entered into the agreement with a view to supplying elec­tricians to T. Edison. Even if Chiefari's intention was not to use Local 353 members, the principles in the above cases illustrate why this situation is beyond the scope of the employer support provi­sions. Clearly, Local 353 was unaware of and did not solicit the alleged employer support. We note as well that the section 3 rights of employees were not compromised since T. Edison did use Local 353 members.

17Section 1(4) of the Act provides as follows:

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

18As the wording of section 1(4) discloses, three conditions must be satisfied in order for the Board to exercise its discretion to treat more than an entity as one employer for purposes of the Act. They are:

(1) there must be more than one corporation, individual, firm, syndicate or association or any combination thereof;

(2) the activities or businesses of two or more of those entities must be under common control or direction; and,

(3) the entities concerned must carry on related or associated activities or businesses.

19The following paragraphs in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 set out the purpose and effect of subsection 1(4) of the Act:

12....

Section 1(4) was enacted in 1971 and deals with situations where the economic activity giving rise to employment or collective bargaining relationships regulated by the Act, is carried out by, or through more than one legal entity. Where such legal entities carry on related business activi­ties under common control or direction, the Board is empowered to pierce the corporate veil. Section 1(4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure; nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1(4) is similar to that of section [631 [now 64] which pre­serves the established bargaining rights and collective agreement when a "business" is transfer­red from one employer to another. Section [63] [now 64] has been part of the scheme of the Act since the mid 1960's. Neither remedial provision requires a finding of anti-union animus; their primary application is to bona fide business transactions which incidentally undermine or frus­trate established statutory rights. Since the two sections are complementary, it is not unusual, as in the present case, for an applicant to rely on both.

13. Section 1(4) does not require that related business activities under common control or direc­tion be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1(4) of the phrase "whether or not simultaneously". The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and business may be effectively transferred from one corporate entity to another, without any of the indicia of a "transfer of a business" which might trigger the application of section [631 [now 64]. This is especially the case in the construc­tion industry where many of the employers will not have the permanence or investment in fixed plant and equipment characteristic of a manufacturing concern. A small construction company can move from jobsite to jobsite or place to place, assembling tools, equipment and a labour force as required after it has made a successful bid. There may be no established economic orga­nization, labour force or configuration of assets. A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of businesses between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. Similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed there will often be good commercial reasons for doing so unrelated to any express desire to undermine the union's bargaining rights. The earlier company may have run into financial difficulties, or lost its reputation, or there may be legal, accounting or tax advantages in establishing a new vehicle through which the business, or related business activities can be conducted. Again, it is quite possible to do this without a clear and concrete disposition between the two firms so as to call section [63] [now 64] into play. To ensure that the industrial relations status quo is preserved, the Legislature has provided that where two employers carry on related economic activities, under common control and direction, whether or not simultaneously, they can be treated as one for the purposes of the Act. However, it should be noted that section 1(4) is discretionary. The Board need not make a 1(4) declaration even when the conditions precedent are present; and has not done so, for example, where a trade union is seeking to extend rather than preserve its bargaining rights.

14. A more difficult question is whether Brant Erecting and Hoisting and Provincial Steel can be said to have engaged in "associated or related activities or businesses" since, for practical pur­poses, Brant Erecting ceased to exist as a going concern prior to the establishment and subse­quent incorporation of Provincial Steel. The respondent contends that the two businesses cannot be "related" within the meaning of section 1(4) because they were never engaged in any joint ventures or business endeavours, nor were they carrying on business at the same time. The respondent argues that such overlap as there may have been between the activities of Provincial Steel and Brant Erecting, was solely for the purpose of winding up the latter company, and can­not be regarded as the kind of related activity to which section 1(4) is directed. But for the 1975 amendment to the Act, this argument would have considerable force; but it is now clear that the "associated or related activities or businesses" need not be carried on simultaneously. The amendment extends the ambit of section 1(4) to situations in which one business entity is actively carrying on business and the other is not. It is not necessary to have shared participation in a common business or endeavour or even contemporaneously economic activity. The rela­tionship between the business entities is a functional rather than a temporal one. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two busi­nesses may be "related" within the meaning of section 1(4) even though their activities are car­ried on through different or corporate vehicles and are not carried on simultaneously. It is evi­dent that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of "privity of contract" or "the corporate veil".

20Counsel for Mr. Chiefari acknowledges that the first pre-condition has been met, namely the existence of two entities. After reviewing the evidence and the parties' submissions, the Board finds that the remaining two pre-conditions have also been met.

21Counsel argued that the entities were not under common control and direction since Chiefari did not control T. Edison. Since Monaco controlled the source of the work, counsel sub­mitted that Monaco alone controlled T. Edison. The fact that Monaco was the source of the work does not lead to the conclusion that Monaco controlled and directed T. Edison by himself. The evi­dence discloses that to a significant degree the control and direction of the business came from Chiefari. Chiefari, who owned fifty percent of the company, was responsible for the day-to-day operations of T. Edison. He did the estimating and priced the jobs. He supervised the employees, sent out the invoices, did the payroll and carried on the business from his home. Chiefari did sign the voluntary recognition agreement along with Monaco and he executed the Minutes of Settle­ment resolving the grievance by himself. In material respects, Chiefari's role with T. Edison is not unlike the role he plays with the other respondents. When one examines this issue from a labour relations perspective, one is compelled to find that Chiefari played a significant role in the control and direction of T. Edison. There is no dispute that Chiefari completely controlled and directed Westview Electric and Westview Inc. On the basis of these facts, the Board finds that T. Edison, Westview Electric and Westview Inc. were under common control and direction.

22Counsel for Chiefari argued that the respondents were not engaged in related business activities since T. Edison performed work exclusively in the ICI sector while the other respondents performed work almost exclusively in the residential (new homes) sector which required less skill. However, the Board has interpreted the words "associated or related activities or businesses" in a manner consistent with the broad remedial purpose of section 1(4). In this context, it is useful to note the following comments in Frank Plastina In vestments Ltd.,[1986] OLRB Rep. June 720:

20. Given the remedial thrust of section 1(4) and the broad language chosen by the Legislature ("associated" or "related", "activities" or "businesses"), it is apparent that the section was intended to apply to a wide variety of commercial activities, even when an employer's main or principal business concern may be something else. That was the opinion of the Board in Elmont Construction Limited, [1974] OLRB Rep. June 342 (application for judicial review dismissed, sub nomine, Elmont Construct Limited and Bruce Huntley Contracting Limited v. Toronto Building and Construction Trades Council et al., 75 CLLC ¶14,270), and it is one with which we respectfully agree. The fact is, that a firm engaged in the construction business can, with relative ease, become involved, from time to time, in various sectors, subdivisions, phases, or special­ized kinds of construction work, depending largely upon the business opportunities which present themselves, and we do not think we should readily hold that those activities are "unre­lated" - particularly if they are being undertaken at the same time and involve common manage­rial or employee skills....

23All of the respondents are or were engaged in the business of electrical contracting. T. Edison did work exclusively in the commercial area and we note that Westview Electric performed the same kind of work during its initial months of operation. Given that Chiefari or his employees essentially only require hand tools to perform their work, it is quite easy for the business to per­form work in different sectors of the construction industry. The relatively minor differences in the electrical contracting work performed by T. Edison and the other respondents does not support a conclusion that this pre-condition has not been met. On the facts before us, the Board finds that T. Edison, Westview Electric and Westview Inc. were engaged in related business activities.

24Counsel for Mr. Chiefari also argued that the Board should not exercise its discretion in Local 353's favour because of Local 353's delay in bringing this application and because the effect would be to extend bargaining rights. Local 353 was unaware of the existence of Westview Electric until shortly before it filed its application. Chiefari did not advise Local 353 that T. Edison ceased operating and that he was operating Westview Electric. This is not a case where Local 353 was aware that Chiefari was operating a related company but delayed in obtaining relief. It is argued that Local 353 did not act with due diligence in protecting its bargaining rights. In the circum­stances before us, the Board is not prepared to find that any delay or lack of due diligence on the part of Local 353 should disentitle it to some relief. In KNK Limited, [1991] OLRB Rep. Feb. 209, the Board concluded that delay should not be an automatic bar in a section 1(4) case. We adopt the general principles in that decision and particularly the following comments:

57. In our view, where a trade union has established the legal requirements for a section 1(4) declaration, as well as the "mischief' which such declaration was designed to prevent, a declara­tion should ordinarily be made unless there is either particular prejudice or compelling policy reasons for not doing so. Those policy reasons should be rooted in labour relations rather than commercial law considerations, and the alleged prejudice should involve something more than having to apply a collective agreement which the related employer has disregarded in the past. If that were the test, the purpose of section 1(4) would be undermined, and the related employer could plead, in reply, the very "mischief' upon which the union relies and for which section 1(4) is a remedy. The argument becomes entirely circular. A union's undue delay in the face of knowledge of the corporate relationship (i.e. what section 1(5) suggests a union will not know) may be a factor to be considered in exercising the Board's discretion, but the focus should be on the actual prejudice suffered by the employer and the extent to which the union's inaction actu­ally contributed to that prejudice. Where the union's inaction is so longstanding as to be tanta­mount to an abandonment of its bargaining rights, the Board may well dismiss the application. However, where the balance of labour relations interests can be achieved by limiting the retro­spective effect of a declaration or granting such other relief "as it may deem appropriate", the Board should consider that option, rather than dismissing the application altogether.

25Local 353 has established the legal requirements for a section 1(4) declaration. In the circumstances, the Board can find no prejudice or compelling policy reasons for not giving Local 353 the declaration it seeks. Accordingly, the Board hereby finds that T. Edison Electrical Enter­prises Inc., Rudy Chiefari c.o.b. as Westview Electric Contractors and Westview Electric Contrac­tors Inc. constitute one employer for purposes of the Labour Relations Act. In the circumstances, this declaration is limited to those commercial activities or contracts entered into by Westview Electric or Westview Inc. after the receipt of this section 1(4) application.

26The Board also declares that Rudy Chiefari c.o.b. as Westview Electric Contractors and Westview Contractors Inc. are bound to the current Electricians Provincial Agreement and the Local Appendix covering high-rise residential work - apartments and condominiums. In essence, this is the same collective agreement to which T. Edison was bound in 1986. The effect of this dec­laration is to protect the bargaining rights of Local 353, not extend them.

27As noted earlier, Local 353 also seeks a declaration that the respondents are bound to its low-rise residential agreement with the Electrical Contractors Association of Toronto. In taking this position, it relies on a Certificate of Accreditation issued in 1975 by the Board to the Electrical Contractors Association of Toronto for all employers of journeymen electricians and apprentices for whom Local 353 has bargaining rights in the ICI and residential sectors within a specific geo­graphical area not here relevant. Local 353 also relies on its agreement with T. Edison executed in 1986 and the following subsection of section 130 [formerly section 128]:

130.-(4) Where, after the date of the making of an application for accreditation, the trade union or council of trade unions obtains bargaining rights for the employees of an employer through certification or voluntary recognition, that employer is bound by any collective agreement in existence at the time of the certification or voluntary recognition between the trade union or council of trade unions and the applicant employers' organization or subsequently entered into by the said parties.

28The Board finds that it would not be appropriate to give Local 353 this declaration. As the evidence disclosed, T. Edison was bound to a collective agreement which covered certain work performed in the ICI sector and a part of the residential sector, namely apartments and condomini­ums. Local 353 does not have bargaining rights with T. Edison which covers low-rise residential work. The Board reads section 130(4) as providing that an employer will be bound by any collec­tive agreement in existence as long as the trade union has bargaining rights for that employer for the work covered by the collective agreement. Since Local 353 does not have bargaining rights with T. Edison for low-rise housing work, the respondents are not bound to Local 353's low-rise resi­dential agreement with the Electrical Contractors Association of Ontario. If we were to grant this declaration, the Board would be extending Local 353's bargaining rights and not preserving them.