[1992] OLRB Rep. February 109
0122-92-U Canadian Union of Public Employees and its Local 1343, Complainant v. Deloitte & Touche, Respondent
BEFORE: K. G. O'Neil, Vice-Chair, and Board Members W. H. Wightman and E. G. Theobald.
APPEARANCES: Nancy Rosenberg, Norman MacKenzie and Lucie MacKenzie for the complainant; John R. Read for the respondent.
DECISION OF THE BOARD; February 15, 1993
This is a complaint under section 91 [formerly section 89] of the Labour Relations Act to the effect that the respondent has violated section 65 [formerly section 64] and section 68 [formerly section 67] of the Act by refusing to bargain with the applicant and failing to adhere to the terms of the collective agreement between the complainant and the Ottawa Centre Nursing Home Incorporated (referred to below as the nursing home). It is agreed that the named respondent was appointed by an order of the Ontario Court, General Division on December 19, 1991 to be the receiver and manager of the nursing home. The threshold issue between the parties, and the one dealt with in this decision, is whether or not the respondent is a successor employer for the purposes of the Labour Relations Act. The union asserts that it is; the respondent asserts that its appointment as receiver and manager did not involve a transfer or disposition of the nursing home business.
At the outset of the hearing, counsel for the respondent conceded that the court order appointing it did not preclude proceeding before the Board in the absence of leave of the court.
The parties had entered into the following agreed Statement of Facts, and argued the matter on that basis without need for oral evidence. They are set out without the appendices filed with the Board:
The Complainant is the exclusive bargaining agent for all employees of the Ottawa Centre Nursing Home Incorporated (the "Nursing Home"), except for persons above the rank of Supervisors, registered and graduate nurses, Activities Director, office and clerical staff and students employed during the school vacation period.
A collective agreement was in effect between the Complainant and the Nursing Home from October 1st, 1989 to September 30th, 1991.
In late 1990, it came to the attention of the Union that the Nursing Home was not contributing to the pension plan or paying union dues and approached the Nursing Home with respect to these violations.
On July 19, 1991, the parties agreed on a settlement with respect to this matter.
The Nursing Home did not honour this settlement and the violations continued.
On July 25, 1991 the complainant sent notice to bargain to the Nursing Home, however, no negotiations followed and the agreement remains in effect.
On October 4, 1991, a grievance was filed in respect of a number of violations of the collective agreement.
On November 27, 1991, the parties agreed on a settlement with respect to this matter.
The Nursing Home did not honour this settlement and the violations continued.
On December 19, 1991, the Respondent became the receiver and manager of the property, assets and undertaking of the Ottawa Centre Nursing Home pursuant to a court order of the Honourable Justice Isaac.
The court order was obtained on an ex parte motion by Ernst & Young Inc., the liquidator of Standard Trust Company who in turn held certain security over the assets of the Ottawa Centre Nursing Home.
On February 3, 1992, the Complainant sent notice to bargain to the Respondent.
On February 10, 1992, the Respondent replied to the Complainant's notice by stating that it did not intend to enter into any form of negotiations with the Union.
On February 19, 1992, a grievance was filed regarding violations of the collective agreement regarding vacation entitlement.
On February 19, 1992, a grievance was filed regarding violations of the collective agreement regarding welfare benefits.
The Respondent took the position, with respect to these grievances, that it was not bound by the collective agreement. On March 2, 1992, the parties agreed to hold these two grievances in abeyance.
The Respondent, since its appointment, has continued the operation of the Nursing Home. It has advised the Complainant that the primary goal of the receiver is to sell the Home as a going concern and that all efforts have been made towards that goal.
The Respondent, since its appointment as receiver/manager has not adhered to the terms of the collective agreement between the Complainant and the Nursing Home.
Specifically, the Respondent has not complied with Article 4 (union dues), Article 16 (vacation entitlement), Article 20 (extended health care plan) and Article 24 (uniform allowances).
The union submits that the terms and purpose of section 64 are broad enough to and should encompass all receiverships. However, it is argued that the facts of this case do not require such a broad finding. It is submitted that the case law overwhelmingly draws a crucial distinction between court appointed receivers (judicial receiverships) and receivers appointed pursuant to instruments such as debentures (private receiverships). It is counsel's submission that for the most part, those appointed pursuant to instruments are not considered successor employers, whereas those appointed pursuant to court orders are considered successors if they operate the business. We are urged to follow the case law which finds that court appointed receivers are successors. Union counsel asserts that the case law is clear that any receiver is bound by the collective agreement, and must uphold their terms during the term of the operation of the receivership.
Union counsel acknowledges that Price Waterhouse [1983] OLRB Rep. July 1184 is an exception to the case law to the effect that a court appointed receiver is also a successor employer. Noting that the decision of the Board in that case was based on an agreement by counsel that there should be no distinction between the two kinds of receiver, we are urged to find that we need not come to the same conclusion. Counsel argues that there is good reason for the distinction between a court appointed and privately appointed receiver if there is going to be any kind of receiver who does not become a successor. The court appointed receiver is an officer of the court, not an agent of the debtor. Thus, court appointed receivers' functions are not just to gain as much as possible for the creditor who appoints them. They have obligations to the court well beyond those of a private receivership. Union counsel asked us to follow RASL Ventures et al [1988] 17 Can LRBR 1 (B.C. LRB). Union counsel also referred to the following cases in argument: Mount Citadel [1976] OLRB Rep. July 367; Toronto Dominion Bank and Price Waterhouse Ltd. [1979] OLRB Rep. Jan. 50; Price Waterhouse et al [1983] OLRB Rep. June 944; Price Waterhouse et al [1983] OLRB Rep. July 1184; Uncle Ben's Industries Ltd. et al [1979] 2 Can. LRBR 126 (B.C. LRB); Fraser Valley Arenas Ltd. [1979] 3 Can LRBR 195 (B.C. LRB); Ontario World Air Ltd. et al v. Price Waterhouse et al [1981] 2 Can LRBR 405; St. Louis Bedding Co. [1982] 42 C.B.R. 75 (BCTQ); Weldco-Beales [1991] 12 CLRBR (2d) 133 (B.C. IRC); Hamilton Cargo Transit Limited [1983] OLRB Rep. June 887; Maritime Life Assurance Company v. Chateau Gardens (Hanover) Inc. et al [1983], 43 0. R. (2d) 754.
The position of the respondent receiver and manager is that because it is only operating the business for the purpose of preserving it until sale it has no obligations to the union. The respondent's position is that the receiver is not bound by the collective agreement for two reasons. Firstly, it is submitted that there is no collective agreement in force because of the continuation clause of the collective agreement, which provides that the agreement only continues in effect unless there is notice to bargain. Here, where notice to bargain was given, we are urged to find there is no collective agreement in effect which could bind the respondent.
Secondly, counsel says that if the concepts and consequences of commercial law are to mesh with labour relations law, the July 1983 Price Waterhouse case, referred to by union counsel above as the exception, should be followed. As in that case, the respondent's position is that there has been no disposition of the business, therefore no successorship arises under the Act. Counsel urges us to give the Maritime Assurance decision, cited above, less weight. It arises out of the same set of facts as the Price Waterhouse decision, never mentions the Board's decision that a successorship did not arise, and has an error in it. The decision says that title to the assets passed with the appointment of a receiver, which is incorrect.
Further, respondent counsel argues that the contracts of employment are terminated as if the debtor had ceased doing business. Counsel acknowledges that the receiver became the employer, but says that the transfer or disposition that is necessary for a sale did not occur. In counsel's submission, the receiver has possession of the assets for a very different purpose than what the Labour Relations Act provisions intended. They have them for the limited purpose of finding a third party purchaser.
In particular, respondent counsel strenuously objects to the idea that a receiver should be responsible for the past obligations under the collective agreement as claimed by the union. He characterizes the union's case as a search for "deep pockets". He says this would be to totally reprioritize the obligations of the bankrupt and this would not be in keeping with any statutory authority. Any past obligations arising from the activities of the nursing home should be dealt with in the ordinary course of the bankruptcy. Employer counsel necessarily referred to many of the same cases as the union, as well as Price Waterhouse Limited [1983] OLRB Rep. Mar. 441 and C. U. P. E. and Casselman Nursing Home, a decision of a board of arbitration chaired by David Kwavnick, dated January 20, 1992. He also referred to textbook authorities on receivership.
In reply, union counsel says, referring to the freeze conditions under section 79 [now section 81] of the Act, that it is not the law that the collective agreement terminates because notice to bargain is given.
As to the point that the common-law terminates the employment contract, counsel maintains that this is no longer the law, or in the alternative it is not relevant for a decision on this issue. She refers to Uncle Ben's Industries Ltd., above, which deals with the history of the common-law position on this point. The union's position is that McGavin Toastmaster (1975), 1975 CanLII 9 (SCC), 54 D.L.R. (3d) 1 had settled the point. It is the labour relations regime and not the common-law which applies, since we are not talking about individual contracts of employment. Union counsel maintains that the texts referred to are merely the opinions of the author, and not of particular assistance. She disagrees that the Maritime Assurance case hinges on the one admittedly inaccurate point that title is lost by an owner on the appointment of a receiver and manager by the court.
Finally, counsel strenuously rejects the idea that all the union is trying to do is find deep pockets. She maintains that a receiver who is in the employer's place temporarily, but with full authority to pull in all the receivables, should have the same obligations that would ordinarily have been offset against those receivables.
Decision
The question we must determine is whether or not the receiver in this case, who is operating the business of the nursing home pursuant to the authority of a court order, has the status of a successor employer under section 64 of the Act. Section 64, in relevant part provides as follows:
(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.
As can be seen from the argument set out above, the dispute between the parties is centred around whether or not there has been a disposition. There is no dispute that the receiver is operating the business. Thus, if there has been a disposition of the business, the receiver and manager would be the successor employer. This makes this case different from the great majority of sale of business cases, where it is agreed that there was a disposition of something, but the parties cannot agree on whether or not what was disposed of was the business (or part thereof).
As has been observed in many of the cases, the definition of sale is quite a broad one including specific reference to the word lease and the very broad phrase "any other manner of disposition". The Board, with judicial approval, has held that in the labour relations context and given the broad wording of the statute, an expanded meaning of the word sale is warranted. In Thorco Manufacturing Ltd., 65 C.L.L.C., para. 16,052, the Board said as follows:
According to its strict signification, the term sells is usually taken to describe a transaction involving the disposal of property by one to another in consideration of a sum paid or agreed to be paid by the recipient in money or its equivalent. As used in section 47a [now 64], however, the word sells has been given a wide definition which includes lease, transfers and any other manner of disposition of the business or part thereof. In legal parlance the word lease generally denotes a specific kind of contract by which one party, called the lessor, for a consideration in money or its equivalent, confers on another, called the lessee, the exclusive possession of certain property for a period of time.
The word transfers, however, is obviously a term of wide significance and unless restricted by the context is capable of describing a multitude of transactions whether by sale, exchange, gift, trust or otherwise by which property, rights, or interests, etc. are transmitted absolutely, conditionally etc. or by operation of law from one person to another. We are unable to find anything in the language of the section to denote any legislative intention to restrict the meaning of the word transfers to any particular kind of transfer. Also, having regard to the particular language used and the remedial object sought to be attained by and the wide meaning which must be attributed to the preceding word transfers, it is our opinion that the generality of the words any other manner of disposition is not intended to be in any way limited or interpreted ejusdem genens with the words leases, or transfers. In our opinion, it is more in harmony with the language of and the remedy envisaged by the enactment to interpret the words and any other manner of disposition as an omnibus or saving provision intended to include dispositions of the business or a part or parts thereof by any mode or means whatever which are not appropriately described by the preceding words which state that sells includes leases or transfers.
It is a rudimentary principle applicable to the construction of remedial legislation that, consistent with the language of the enactment, the interpretation which must be adopted is the one which best serves to advance the remedy and to suppress the mischief contemplated by the legislation. (See also section 10 of The Interpretation Act R.S.O. 160 c. 191). Having regard to this principle and to the fact that the language of the section is entirely susceptible of and in agreement with such a meaning, we are impelled to give the section a large and liberal rather than a narrow or restrictive construction.
- In writing for the Divisional Court in Re Hughes Boat Works Inc. and U.A. W., (1979) 1979 CanLII 1853 (ON HCJ), 26 O.R. (2d) 420 at 432, Mr. Justice Reid commented as follows:
Was the interpretation made of s. 55 [now 64] by the Ontario Labour Relations Board unreasonable? There were two factors to which the Board made special reference. The first was the expanded meaning of the word "sale". "Sale" is used in the statute in a special sense, a much wider sense than it is ordinarily accorded. In ordinary parlance a lease is not a sale. As used in s. 55 [now 64], however, sale includes lease. The inclusion of a meaning that is in a sense the very opposite to the ordinary meaning of the word "sale" suggests to me that the Legislature intended a very broad meaning indeed for the word "sale" in s. 55. This makes irrelevant a good many of the decisions relied on by [the] applicant in which Courts were called on to interpret the word "sale" in other contexts.
Thus, "sale or other manner of disposition" means something very different in the labour relations context of a sale of a business than it does in its ordinary or commercial law sense. Labour relations considerations must govern when interpreting section 64.
- It is clear then that, in applying the section to the facts before us, the labour relations purpose must be kept in mind. This was discussed in C. U. P. E. v. Metropolitan Parking Inc., [1980] 1 Can. LRBR 206, in part, as follows:
It is important to emphasize, however, that section 55 of the Act [now 64] of the Act has never been regarded merely as an "unfair labour practice" provision, directed at schemes" designed to subvert bargaining rights. The section is also intended to preserve bargaining rights in the case of bona fide business transactions (i.e., transactions undertaken for purely commercial reasons and untainted by any anti-union motivation) which incidentally undermine the industrial relations status quo. This two-fold purpose was discussed by the Board in Aircraft Metal Specialists Ltd., [1970] OLRB Rep. Sept. 703:
The purpose of section 47a (now section 55) becomes important in assessing the various fact 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, December 1964, OLRB Mthly. Rep. 382 and Trenton Riverside Dairy, September 1964 (1964) 2 C.L.S. 764005.
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 had 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 the 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 continuum of the business.
In recent years most of the litigation before the Board has involved increasingly complex, but bona fide, business transfers which result in the same kind of dislocation as a simple bilateral sale. Collusive arrangements, or transactions explicitly designed to subvert bargaining rights, have become much less common; and can, in any event, be dealt with under sections 56, 58 and 61 [now 67, 68 and 71] of the Act.
Has anything been transferred or otherwise disposed of in this case within the meaning of section 64? The first exercise must be to examine the event which is said to constitute a sale under section 64. Here it is the appointment of, and attendant transfer of power to, the receiver and manager that is said to be the event which constitutes the sale within the meaning of the statute. The terms of the alleged sale are defined by the order of the court which is the source of the receiver and manager's powers.
It is useful to summarize the essential elements of the order. By virtue of that order, the respondent became receiver and manager of all the property, assets and undertaking of the nursing home, including the nursing home license, and any rights or privileges whatsoever pertaining to the said license. It was specifically given the authority to operate the business, and has done so. The assets of the nursing home were ordered to be delivered to the receiver and the receiver was to protect and insure that property "pending sale thereof by private sale, sale by tender, or otherwise, as the receiver shall in its absolute discretion elect". Other powers of the receiver include the right to prosecute and defend legal actions as necessary for the proper protection of the property.
Some attention was given to paragraph 5 of the order which reads as follows:
THIS COURT ORDERS that the Receiver shall be at liberty to appoint an agent or agents (including an independent manager of the Property) and such assistants (including barristers and solicitors, and any of the servants, employees, officers and directors of the Defendant) from time to time as it may consider necessary for the purpose of preserving the Property and carrying on the business of the Defendant relating to the Property and performing any of its duties and powers hereunder, provided however that the employment or retention of any employee of the Defendant shall not constitute the Receiver as a "successor employer" to the Defendant or any of its affiliates or otherwise make the Receiver liable for obligations of the Defendant or any of its affiliates to their employees.
[emphasis added]
It is our view that this provision cannot be determinative in this case. It is the Board's exclusive jurisdiction to determine whether there has been a sale for labour relations purposes. The respondent cannot be relieved of its statutory obligations under the Act by the above term of the Order, and it is not apparent that was the intended effect. In any event, the Board would not be of the view that retention of any employee or employees (which is the extent of the above provision) would alone constitute the receiver and manager a successor employer in any event. The retention of employees ts a factor to be considered, particularly on the question of whether the business has continued. (See also the comments of the Board in CUPE v. Metropolitan Parking, supra, to the effect that the retention of employees is only one factor to be considered and is not necessary to a finding of a sale. If it were otherwise, the simple expedient of not retaining employees would avoid the section). In any event, as noted above, it is conceded that the business has continued, and thus the question of the retention of employees is not central to the current case.
2l. Continuing on with the consideration of the terms of the receiver and manager's appointment, we note that the right of the receiver to sell is not absolute. For any sale in excess of $250,000 and any sale or disposition of the nursing home license or any part thereof, or any sale of real property, the consent of the defendant or the approval of the court is necessary. Fees and rents formerly owing to the nursing home are to be paid to the receiver. The receiver is at liberty to borrow and to pledge the nursing home as security which ranks in priority to any charge on the property if the borrowing is for the purpose of protecting and preserving the property, subject to the $250,000 limit. The receiver's remuneration is by way of fee, with the power to advance itself monies against the fees eventually fixed by the court. The fees and expenses of the receiver constitute a first charge against the property.
Thus the receiver and manager in this case has wide, but not absolute powers. Title to the property and assets of the nursing home has not passed to the receiver and manager. However, a court appointed receiver acts as principal and not as agent of the employer. It was not argued otherwise. See, among others, Mount Citadel Limited, [1976] OLRB Rep. July 367. The respondent in this case admits that it is the employer of the nursing home employees and therefore, in that respect, is clearly acting as principal. All the incidents of ownership and elements of the business, with the exception of title, have passed to the receiver and manager.
One of the most recent cases of this Board which discusses the issue of successorship under the Ontario legislation in the context of a receivership is Hamilton Cargo Transit Limited, [1983] OLRB Rep. June 887. In that case an instrument appointed receiver and manager, who had an agreement with the major creditor of the failing business, arranged for a numbered company to operate the business. The Board concluded that the arrangement between the receiver and the numbered company had the attributes of a lease more than the attributes of an ordinary sale. Having regard to the broad definition of "sale" in the Act which specifically includes lease the Board commented as follows:
"The very use of the word 'lease' in the definition in the Act seems to leave no doubt that the transfer of assets contemplated by the section may be for a limited period only, and that title to the assets need not pass at all. The inquiry is by no means academic, since an arrangement like the present may continue for months or even years prior to the time that an ultimate sale of the business is completed."
The Board found that the arrangements between the receiver and the operator of the business was a sale of a business within the terms of the Act, albeit on a limited term basis and with the restrictions necessary to preserve the business "as is".
The respondent in Hamilton Cargo Transit Limited, summarized above, had no more control over the operation of the business than the receiver and manager in this case. Indeed, it would appear that the receiver and manager on our facts has more control given its power to effect sale, albeit with the approval of the court. A further distinguishing factor between the two is the right in the operator in Hamilton Cargo Transit to operate for profit, rather than to receive fees, as the Receiver and Manager does on our facts. However, there is nothing in section 64 which requires the potential of profit in the definition of business; non-profit operations are equally subject to the Act. See, for example, the remarks in Parkwood Hospital, [1980] OLRB Rep. May 759 at para. 11 and following.
The 1979 Price Waterhouse decision, Toronto Dominion Bank v. Price Waterhouse, [1979] OLRB Rep. Jan. 50 (the Haladner decision) case referred to in Hamilton Cargo Transit Limited was the first of a trilogy of Price Waterhouse cases which were central to the argument before us. The 1979 application for successorship was brought when the business was being operated by an instrument appointed receiver so that the bank which held the first charge on the assets might enforce its security. The Board found that although the receiver was carrying on the business for the benefit of the bank to which it owed a fiduciary duty, its actions were those of the company which retained the legal and equitable ownership of the assets. Therefore, the Board concluded that a disposition of the business had not yet occurred and the application was premature.
The next in the series of Price Waterhouse cases was UFCW v. Price Waterhouse, [1983] OLRB Rep. June 944 (the Picher decision) and concerned a company known as Windsor Packing. Like the 1979 Price Waterhouse decision of the Haladner panel this involved Price Waterhouse as an instrument appointed receiver. Based on the idea that the privately appointed receiver in that case remained the agent of the insolvent company, the Board followed the earlier Price Waterhouse decision and found the successor application to be premature.
In another Price Waterhouse decision, [1983] OLRB Rep. July 1184 (the Furness decision), the Board dealt with the financial difficulties of Chateau Gardens Nursing Home. Price Waterhouse had been appointed receiver and manager first under a debenture and then by court order. Counsel agreed, and the Board accepted, that there should be no difference for labour relations purposes between a court appointed and a debenture appointed receiver in the following passage at paragraph 15 and 16:
A number of decisions of other Canadian Labour Relations Boards were cited to the Board. None of the cases cited were directly on point, see Ontario Woridair Ltd. 81 CLLC ¶16,117; Fraser Valley Arenas (1975) Ltd. (1979) 3 Can. L.R.B.R. 195; and Uncle Ben's Ltd. (1979) 2 Can. L.R.B.R. 126. These cases considered different situations where a receiver or a manager or a receiver and a manager or a mortgagee in possession were involved and whether there was a difference between privately-appointed receivers and managers as opposed to court-appointed receivers and managers. It is clear that there are valid distinctions to be made in the field of commercial law in these areas for the property rights of the parties may be differently affected depending on the terms of the private instrument under which a receiver or manager are appointed compared with a court-appointed receiver or manager. lt was agreed by counsel before the Board that from a labour relations point of view no distinction ought to flow from whether receivers and managers are appointed under the terms of a private instrument or by a court. The Board agrees that obfuscation ought to be avoided by all means. (cf. Price Waterhouse Ltd., [1983] OLRB Rep. June 000 (sic))
This Board is in sympathy with this approach. In our view, the question of whether there has been a sale under section 63 [now 64] is best approached by identifying the employer which is bound by the bargaining rights, the business or part thereof which is affected by the application, the function actually being performed by the receiver and/or manager, whether there has been an actual sale, lease, transfer or other manner of disposition of a business or part of a business and the identity of the person to whom such a sale, lease, transfer or other manner or disposition has occurred. We therefore find that the consequences upon labour relations flowing from a court-appointed receiver are no different than those which result from the private appointment of a receiver.
The emphasis on the actual function of the receiver and/or manager rather than on the form of the appointment is consistent with the Board's established jurisprudence in sale of business cases that it is not the form, but the substance that will determine the result. See, among many others, Thunder Bay Ambulance Service, [1978] OLRB Rep. May 467 at paragraphs 11 and 12. We understand the conclusion that the consequences in labour relations following from court appointment are no different than those which result from the private appointment of a receiver in that light. Each set of facts must be dealt with to see what has actually occurred; the fact alone of a judicial or private receivership will not be the end of the enquiry. None of the cases gives automatic meaning to the event because it is one or the other. In our view, the Furness decision does not stand for the proposition that a judicially appointed receiver cannot acquire the status of a successor under the Ontario legislation.
The Furness panel of the Board found the functions of Price Waterhouse to be the receipt and disbursement of money in the managing of the business. It found that Chateau Gardens (the original owner) continued to exist with "control over the indispensable license to operate". It further found that Chateau Gardens remained the employer and that the collective agreement was being honoured on its behalf. On this basis, the Board found no successorship. There are significant differences in the case before us. For instance, the receiver manager has conceded it is the employer, and the court order gave it control over the nursing home license as well as all the other assets and functional elements of the nursing home business.
After the Furness decision, there was a further chapter in the Chateau Gardens receivership saga. Having failed to establish a successorship at the Board the union was before the court on the application of the receiver-manager for directions on how the assets and undertaking should be distributed on its later sale. This case is cited above as the Maritime Assurance decision, named after the principal creditor who had appointed Price Waterhouse as the receiver under its debenture. The court was specifically considering the effect of a retroactive wage award by an interest arbitrator under the Hospital Labour Disputes Arbitration Act. The question concerned who was responsible for wages ordered to be paid retroactively to the time before the appointment of the receiver. The court found that the claim of the employees should be excepted from the ordinary rules of priority which would have had them only ranking as unsecured creditors. This was explicitly based on the successor rights provisions of the Labour Relations Act. There are two particularly notable aspects of this decision. One is that the Furness decision which had explicitly found that there was no successorship under those same provisions for the very same parties is not referred to, although other labour board decisions that preserve the distinction between court appointed and instrument appointed receivers are referred to. Secondly, in recounting the general effects of a court appointment, the court made the statement, erroneous in its reference to loss of title, that the company remains in existence but has lost its title to and control of its assets.
The rejection of the distinction between private and judicial receiverships for the purposes of labour relations in the Furness decision lead the B.C. Labour Relations Board to give the issue detailed attention and analysis in RASL Ventures Ltd., cited above. The B.C. Board also dealt with the problems with the Maritime Assurance decision in the following passage at page 16:
It has been argued that the court's judgement in Maritime Life Assur. Co. was based, in part, on the erroneous finding that a court appointed receiver-manager obtains title to the assets of the corporation upon its appointment. In point of fact, Madam Justice Van Camp stated that "[t]he company remains in existence but has lost its title to and control of its assets" (at p. 556). Nevertheless, we do not find the absence of title in a receiver-manager to be determinative. It is more relevant to focus on the control which a receiver-manager has over the assets and, more generally, the control which it has over the business operation as a going concern together with the employment relationship. Some of these points were considered by the Ontario Board in Hamilton Cargo Transit Ltd., supra, albeit in the context of an instrument appointed receiver-manager.
The B.C. Board went on to further rely on the Hamilton Cargo Transit decision and to note that although Hamilton Cargo Transit dealt with an instrument appointed receiver there were two propositions of central relevance established in that decision: firstly, that a finding of successorship is not dependent upon the passing of title in the assets of the corporation and secondly, that a successorship declaration may be granted even where the disposition of a business is only intended to continue for a limited period of time. We agree with these propositions.
The B.C. Board disagreed with the Hamilton Cargo decision to the extent that it turned on the idea that the business in that case was being run for the profit of the interim manager on agreement with the bank and the receiver. It cited other authority for the idea that a successorship should not be restricted to profit making economic activity. The B.C. Board in RASL went on to find that a court appointed receiver-manager could be found to be a successor employer in that it obtains possession and control of the assets of the corporation and to the extent that it operates the business does so as a principal. Thereafter an employment relationship between the receiver-manager and the employees of the business exists. In the case before us the receiver has specifically conceded that it is the employer of the employees and thus that point, which required some extensive analysis for the B.C. Labour Relations Board to determine, is not in issue before us.
Although the provisions of the B.C. Labour Relations Act are somewhat different, they are not different in substance on the issues before us, and there is nothing in the RASL decision which turns in any way on any difference in the legislative provisions in Ontario and B.C. The same cannot be said for St. Louis Bedding Co., cited above, which was decided under the considerably different legislative provisions of the Quebec Labour Code which basically provide that when the business is "operated by another" a succession occurs. This is much broader language than the Ontario language and thus the Quebec Board's conclusion that an instrument appointed receiver/manager was a successor under that language is of limited assistance as to the interpretation of the Ontario language.
We return to, and agree with, the comment of the B.C. Board in the RASL decision set out above that it is relevant to focus on the control which a receiver manager has over the assets and, more generally, the control which it has over the business as a going concern and the employment relationship. If control of the operation has effectively changed hands, this will be an important indicator that a disposition, rather than just a change of a management team, has occurred.
The issue of control of the ongoing operation is also an element in Board cases determining whether part of a business has been disposed of or work merely contracted out. Where control of the operation has been given up, even if important elements such as a license are retained in the title of the original owner, a declaration of sale of a part of a business by way of contracting out is more likely. On the other hand, where effective control of the operation through decision making power is retained with the original owner, a finding of sale is less likely. See for instance, Don Mills Bindery, [1983] OLRB Rep. Dec. 2008 and Ontario 474619 Ltd. [1981] October 1452. In both cases, where retention of decision making remained with the original owner, no declaration was made of a sale of a business.
By contrast, in James River-Marathon Ltd., [1983] OLRB Rep. October 1672, the acquisition and retention of an essential license in the ownership of one party did not mean it was the successor employer where it had simultaneously leased the woodlands operation. This was because the lessee rather than the lessor operated and controlled the woodlands portion of the business. Instead, the lessee was the successor employer. See also Caressant Care [1984] OLRB Rep. Aug. 1060, at paragraphs 22 to 26, in particular. There, the Board found that a sale of a business had occurred to the new operator (soon to be new owner) when the operator had commenced operation and control of the business despite the retention of the license to operate a nursing home in an interim phase by a receiver before a sale to the new owner was complete.
It is the essence of the role of a receiver to change the ambit of the owner's control. One of the excerpts filed by the respondent from E. Bruce Leonard's Guide to Commercial Insolvency in Canada, expressed it this way, at paragraph 341:
In the case of both private receiverships and judicial receiverships, the object and purpose of the remedy is to deprive the debtor of control of the property in his possession. The remedy is based upon the protection of rights of creditors, shareholders or the public as a result of the higher rights given under private contract, general corporate legislation or particular public-interest legislation.
To what extent has control of the nursing home operation passed to the receiver and manager in the case before us? Control of the day to day operations of the home has passed to the extent that the receiver agrees that it is the employer. There is no evidence that Ottawa Centre Nursing Home retains any control over the operation of the business, other than as mentioned in the court order. In that order, the significant reference to any role for the owner is that the sale of the property, the license, or assets over $250,000 cannot be effected without the owner's consent or order of the court. However, throughout the order it is clear that the initiative is in the hands of the receiver. The owner can facilitate a sale arranged by the receiver, but ultimate control is with the court, not with the owner. This is not a significant amount of control for labour relations purposes, in our view. The extent of the transfer of power over the assets of the owner and more importantly control over the operation of the nursing home is a transfer of control at least as extensive as a lease. As noted above, "lease" is specifically mentioned as an intended component of the Act's definition of sale. The receiver and manager here apparently has virtually complete control over all the necessary incidents of the economic vehicle, the business, to which bargaining rights attach. We are therefore of the view that a finding that the respondent is a successor employer is warranted in this case.
We have carefully considered the respondent's argument that since the only reason it is operating the nursing home is to be able to sell it, it is only on the eventual sale that a successorship should be found. The labour relations rationale for such a proposition is not evident. It suggests that the bargaining rights of the applicant would be indefinitely in limbo pending a sale, or presumably the decision to liquidate if a sale proved impractical. The owner's role in employment matters on the material before us is non-existent. The real employer, by its own admission, is the respondent. There is no labour relations reason to require the applicant to deal with a party with no effective control of the employment relationship.
The parties also argued about the extent of the liability of the respondent if it was found to be a successor. The respondent does not dispute that if it is a successor it is liable from the date of its appointment. It strenuously resists liability before that date. We were referred by the union to the decision of the Ontario High Court of Justice in Re United Brotherhood of Carpenters and Joiners of America, Local 3054 and Cassin-Remco Ltd., (1979), 1979 CanLII 2013 (ON HCJ), 105 D.L.R. (3d) 138 where a related question of liability was decided. This decision was referred to and relied upon by the court in Maritime Life Assur. Co. v. Chateau Gardens, referred to above. This was the further development in the financial difficulties of the 1979 Price Waterhouse decision, mentioned above, in which the Board had decided that it was premature for the union to apply for successorship in an instrument-appointed receivership.
On the question of the extent of liability, as noted in Hamilton Cargo Transit Limited, cited above, the Board's function under the successorship provisions is to make a declaration of legal rights, and not to make the findings of liability consequent upon those rights:
The Board under section 63 [now section 64] of the Act issues a declaration of legal rights only, and does not, on its own, make any findings of past liability consequent upon that declaration…….
On the agreed facts, the union in the instant case had given notice to bargain both to the predecessor and the respondent, a giving of notice which would be pursuant to section 54 [formerly 53]. Therefore it is section 64(3) that applies to this situation. We are of the view that further comment about the liability of the receiver is not warranted, since we are not here deciding the merits of any claims the union might have. In the circumstances, it is also not necessary to address the employer's argument about the effect of the continuation clause of the collective agreement.
The parties directed no argument to the unfair labour practice framework in which this matter was commenced. It was clear that the first issue between them was whether or not there was a successorship. We remit any remaining issues to the parties for consideration. We will remain seized if there is any further aspect of this case that needs to be determined. A labour relations officer is hereby authorized to contact the parties to assist them in canvassing and dealing with any remaining issues between them. If either party wishes the Board to determine any matter remaining in disputes it should write to the Board setting out those matters and the points it wishes to make together with a statement as to whether it wishes a further oral hearing on those points.
For the reasons set out above, the application is allowed to the extent indicated.