Hotel Employees Restaurant Employees Union, Local 75 v. Accomodex Franchise Management Inc., 1993 CanLII 8023

Ontario Labour Relations Board

[1993] OLRB REP. APRIL 281

2424-92-R Hotel Employees Restaurant Employees Union, Local 75, Applicant v. Accomodex Franchise Management Inc., Kelloryn Hotel Inc., Responding Parties v. United Food & Commercial Workers, Local 206, Intervenor

BEFORE: R. 0. MacDowell, Alternate Chair, and Board Members R. W. Pirrie and C. McDon­aid.

APPEARANCES: Pamela Chapman, Ilana Lewis, Stan Urbain and Dave Price for the applicant; David L. Brisbin and Stephen Phillips for Accomodex Franchise; E. Coetzee for the intervenor.

DECISION OF THE BOARD; April 20, 1993

I

1. This is an application under section 64 of the Labour Relations Act. Hotel Employees, Restaurant Employees Union, Local 75 ("Local 75") claims that the "business" or "part of the business" of the Skyline Triumph Hotel, at Keele Street and 401 in North York, has been transfer­red to Kelloryn Hotel Inc. and/or Accomodex Franchise Management Inc. ("Accomodex") which now runs the operation as a "Howard Johnson" Hotel. Local 75 claims that, as a result of this transfer, it retains bargaining rights for the employees working at the hotel, and the successor(s) [see infra, paragraph 8] must apply the collective agreement which Local 75 had with the Skyline Triumph.

2. Accomodex replies that there has been no transfer of a "business" or "part of a busi­ness" within the meaning of section 64 of the Act. All that has been transferred is a collection of idle assets. This position is supported by the United Food & Commercial Workers, Local 206 ("UFCW") which purports to represent the employees now working at the hotel.

3. There was no reply from Kelloryn Hotel Inc., nor did "Kelloryn" appear or take an independent role in this proceeding (i.e. independent of Accomodex). There was no reply from the Skyline Triumph organization either.

4. The provisions of section 64 of the Act in effect at the time of the transfer read as fol­lows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(10) For the purposes of sections 5, 58, 60, 62 and 125, a notice given by a trade union or council of trade unions under subsection (3) or a declaration made by the Board under subsection (6) has the same effect as a certification under section 7.

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

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

(b) the new or enlarged municipality has the like rights and obligations as a person to whom a business is sold under this section and who intermingles the employees of two of the person's businesses; and

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

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

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

II

5. This application was filed on November 12, 1992. A hearing in the matter was held, in Toronto, on February 15, 1993. On February 16, 1993, the Board issued a brief "bottom line" decision, with reasons to follow, declaring that there had been a transfer of a "business" within the meaning of section 64.

6. At the hearing on February 15, 1993, the UFCW appeared and asserted an interest in the outcome of this proceeding. The UFCW had not filed a formal intervention prior to the hear­ing; however, the UFCW asserted that it was interested in the outcome of the case because of a collective agreement with Kelloryn Hotel Inc. that was executed on November 20, 1992 (i.e. a few days after this application was filed). That collective agreement makes the UFCW the bargaining agent for the employees at the hotel which is the subject matter of this proceeding, and requires those employees to become members of the UFCW.

7. The UFCW has not been certified to represent the employees at the hotel, and it is not clear whether, at the time the UFCW entered into the above-mentioned collective agreement, there were any employees actively at work at the hotel (which did not open until December 1, 1992). There is no evidence that any of the employees purportedly bound by this agreement were members of the union at the time it was signed. Nevertheless, Local 75 did not object to the Board receiving submissions from the UFCW, provided that this did not prolong a proceeding in which counsel had already reached substantial agreement on the facts. And, as it turned out, the UFCW did not take an active role, called no evidence, and merely made submissions on the conclusion which the Board should draw from the evidence agreed upon or led by the other parties.

8. We should also note that, by agreement, the parties have narrowed the issue before us to one simple question: does the transaction by which the "Triumph" Hotel passed from its previ­ous owners to Kelloryn and/or Accomodex, constitute a transfer of a "business" or "part of a busi­ness" within the meaning of section 64 of the Labour Relations Act. The Board was not required, nor asked, to determine the precise identity of "the successor employer" now operating the "How­ard Johnson" Hotel at Keele and 401 (i.e. Accomodex, Kelloryn, or perhaps both - see section 1(4) of the Act). Nor were we asked to consider any of the remedial provisions of section 64, or the consequences of a conclusion that section 64 was applicable (such as the impact of the Local 75 agreement). Counsel for Accomodex advised the Board that if the transaction we are asked to con­sider is one to which the statute applied, it was acknowledged that Local 75 would represent the hotel's employees, and the parties could then work out among themselves what that would mean in practice. Counsel for Accomodex indicated that he was confident the parties would be able to do so. Accordingly, it was unnecessary for the Board to determine whether Accomodex or Kelloryn, or both, were the "employer" for the purposes of the Labour Relations Act.

9. The Board proceeded on that basis, and the facts were not substantially in dispute. The evidence consisted of an agreed statement of facts, supplemented by the viva voce testimony of Stephen Phillips, the President of Accomodex, and Stan Urbain, the Secretary and Business Man­ager of Local 75.

10. Credibility is not an issue. The question is one of characterization: did the "Howard Johnson" Hotel business at Keele and 401 acquire all, or a legally significant "part", of the "busi­ness" of the Skyline Triumph, within the meaning of section 64 of the Act. If it did, Local 75's bar­gaining rights are preserved in that "business" or "part of a business", regardless of the precise relationship between Accomodex and Kelloryn.

III

11. In 1981, Local 75 was certified to represent the employees working at the "Triumph" Hotel located at 2737 Keele Street, North York, near Highway 401. Until 1988 the hotel was known as the Triumph Sheraton Hotel. Thereafter, it was known as the Skyline Triumph Hotel. We do not know the reason for this change in name or whether (as seems likely) it signifies a change of ownership or commercial affiliation. In 1991, the owners of the hotel were the Skyline Triumph Hotel Limited Partnership and Triumph Hotel Holdings Ltd.

12. The Triumph Hotel was substantially renovated in 1989, adding a new tower with 176 rooms. In 1989-90 the Triumph also renovated its meeting rooms. We do not know the cost of these renovations or the value of the renovations in relation to the value of the existing premises; however, the tower almost doubled the Triumph's room capacity, and much of the existing facility is relatively new.

13. As of July 1, 1991, there were 216 employees working in the hotel. Those employees were represented for collective bargaining purposes by Local 75. They occupied such job classifica­tions as: maids, bellpersons, waiters, waitresses, buspersons, bartenders, porters, cashiers, dish­washers, housekeepers, etc.

14. The employees worked in the rooms, restaurants and service facilities associated with the hotel complex. Their terms and conditions of employment were prescribed in a collective agreement with Local 75 which was executed on July 25, 1990. That collective agreement runs from October 1, 1990 to September 30, 1993, and from year to year thereafter unless terminated by notice.

15. On July 19, 1991, the Triumph Hotel closed, without advance notice to its employees, its patrons, or those with whom it did business. We do not know the precise reason for that clo­sure, but the appointment of Price Waterhouse as the receiver of the "property, assets and under­taking" suggests that the Triumph was another casualty of the recession. Presumably, the owners encountered financial difficulties or there was insufficient business to support the hotel's recently expanded operation. It is common ground that the sudden closure was distressing for all con­cerned.

16. During the period between July 19, 1991 and December 1, 1992, the Triumph Hotel was controlled by a receiver, Price Waterhouse and/or a trustee in bankruptcy, Richter and Part­ners Inc. Throughout this period, Local 75 had ongoing contact with these parties concerning the payment of outstanding union dues, salary, termination and severance pay respecting the employ­ees in the bargaining unit. As late as November 4, 1992, a representative of Local 75 was admitted to the Triumph Hotel by the receiver and a person now employed by the "Howard Johnson Plaza Hotel North York" (Mr. Oliver Gomes), to review payroll, pension/health and welfare, and dues records which remained in the building. Local 75 has never abandoned its bargaining rights or its interest in continuing to represent the workers employed in the hotel.

17. On or about September 9, 1992 the Triumph was sold to an entity named Kelloryn Con­sulting Inc., pursuant to an agreement of purchase and sale dated July 27, 1992. The parties before us did not distinguish between Kelloryn Consulting Inc. and Kelloryn Hotels Inc. (the name on the UFCW collective agreement). For present purposes, we will therefore continue to refer to the owner of the hotel simply as Kelloryn.

18. As a result of the agreement of purchase and sale, Kelloryn acquired the lands, build­ings, and virtually all of the tangible assets formerly used by the Triumph in its hotel operation. These assets are described in the agreement of purchase and sale this way:

(a) the lands situate at 2737 Keele Street, in the City of North York, as more particularly described in Schedule "B-i" and shown outlined in red on the plan annexed hereto as Schedule "B-2" (the "Lands") and all of the right, title and interest of the Debtors, in and to the following:

(b) the buildings, structures (including the parking facilities) and improvements (save and except any trademark or tradename attached thereto) on the Lands together with all fixtures (including light fixtures and plumbing fixtures), attachments, machinery, equipment, furnaces and systems located in or on the buildings, structures and improvements of the Lands including the lighting, heating, air conditioning, plumb­ing, electrical, ventilating, boilers, compressors, sprinklers, maintenance equipment, transformers, master T.V. antenna, television aerials and wiring with individual leads to rooms, lobbies, offices, facilities and otherwise, fittings, hot water heaters and other improvements erected in or upon the Lands (the "Buildings") and all of the right, title and interest of the Debtors; and

(c) all of the furniture, appliance (electrical or otherwise) equipment and other tangible personal property, including but not limited to refrigerators, stoves, window blinds, curtains, screen windows, doors and the items located in or on the Lands or Buildings (the "Chattels") save and except leased equipment (which will be dealt with as pro­vided in paragraph 18 of the Agreement), Inventory and receivables of the Debtor and Excluded Chattels as outlined in Schedule "E" hereto, and all of the right, title and interest of the Debtors.

19. It was originally anticipated that some 380 Magnavox colour television sets and stands would be excluded from the transaction, but ultimately, these were acquired by Kelloryn as well. Kelloryn did not acquire certain inventory (which apparently had been seized by creditors) or vari­ous other chattels including: some paging and communications devices, a fax modem, 3 American Express card identification machines, a Coca-Cola display refrigerator, 2 cigarette machines, cof­fee-making equipment, a City of Toronto recycling bin, and a popcorn maker.

20. In summary, then, Kelloryn acquired the land, building and all of its contents, which included fixtures, furniture, kitchen and dining room equipment, laundry equipment, telephone equipment, linens and other laundry and housekeeping supplies, except the chattels mentioned above. Much of this material can now be found in the new operation - although there has been an ongoing effort to refurbish the premises and upgrade its amenities. There have been modifications to the security, fire and sprinkler systems, as well as changes to the decor of the bars and restau­rants and the major meeting rooms.

21. Mr. Phillips, the President of Accomodex, testified that there have also been "operating changes" to the hotel (room amenities, housekeeping program, linens, etc.), although he noted that, from a physical standpoint, there was no addition of furniture, vinyl, or pictures to the rooms, and the TV sets remained about the same. There was a change in the exterior of the hotel, some replacement of windows, and cosmetic changes to the bars and restaurants. Some of the furniture was recovered, there was new paint and wallpaper, plants were added to the restaurant area, and menus were revised. Some of the kitchen equipment was refurbished and the kitchen area itself was re-tiled. The existing pool and sauna were upgraded with the addition of gym equipment and a "Health Club".

22. Because of the way the building is constructed, the general lay-out remains the same. The lobby, ballrooms, restaurants, and meeting rooms remain much as they were before. Their appearance has been improved and the names have changed. The external signage has also been changed to reflect the fact that the hotel is now operated as the Howard Johnson Plaza North York. The hotel opened under that name on December 1, 1992.

23. The hotel advertising brochures clearly identify it as the "Howard Johnson North York" located at Keele and 401. That advertising material notes prominently that the hotel is:

"Ten minutes from the North York business district, Pearson International Airport. Close to Canada's Wonderland, Kingswood Theatre, Black Creek Pioneer Village, York University and Yorkdale Shopping Centre, fifteen minutes from the excitement of downtown Toronto".

The press releases announcing the opening of the Howard Johnson identify it as the former Skyline Triumph at Keele and 401. It is now accurately described as the "Howard Johnson" Hotel at Keele and 401.

24. The location of the hotel is important - as Mr. Phillips confirmed in his evidence. He testified that:

"This business is location, location, location, and if you have the facility and service and credi­bility to go with it...".

The repetition underlines the importance that Mr. Phillips ascribes to the location.

25. Mr. Phillips testified that hiscompetitors were also defined on the basis of location, and that one of the first things he tried to do was attack the local and regional market, by establishing contacts with local businesses and travel agents. His efforts have been at least partially successful.

26. Accomodex has entered into contracts with many of the regular corporate and govern­ment clients of the Triumph Hotel, including the Ministry of Transportation, on similar terms to the previous contracts between those clients and the Triumph Hotel, and as a result, certain regu­lar business has been obtained for the Howard Johnson Plaza Hotel. The head office for the Minis­try of Transportation is located directly across Keele Street from the hotel.

27. Kelloryn has entered into a licensing and operating arrangement with Accomodex, whereby Accomodex undertakes the day-to-day operation and marketing of the hotel. The arrangement with Accomodex makes the hotel into a "Howard Johnson" facility and gives Acco­modex extensive and exclusive rights to run the operation.

28. Accomodex has the authority from the Howard Johnson Hotel chain to add additional hotel franchises to a system which now includes about six hundred Howard Johnson Hotels in North and South America. There are no Howard Johnson Hotels in Canada which do not have an accompanying Accomodex licensing arrangement. In addition, eight of the twenty-five Howard Johnson Hotels in Canada are operated by Accomodex on behalf of the owner/franchisee in accor­dance with operating agreements similar to the one between Accomodex and Kelloryn.

29. The Howard Johnson franchise system provides a recognized "name brand" marketing advantage, as well as consulting resources for the franchisee. Some of these advantages were out­lined in a proposal letter from Mr. Phillips, for Accomodex, to Ron Kelly, President of Kelloryn Consulting Inc. That letter, dated June 25, 1992 reads, in part:

SUBJECT: Skyline Triumph.

This letter will serve to confirm AFM's (Accomniodex) serious interest in formulating a long term Howard Johnson franchise agreement and Accommodex operating agreement on the hotel property currently known as the Skyline Triumph Hotel in North York, Ontario.

Accommodex would operate the property at the Plaza level, and would utilize the Howard Johnson reservation referral system and sales and marketing network as a supplement to the hotel's local and regional marketing efforts.

Accommodex would be prepared to proceed on either a straight Howard Johnson franchise or Accommodex Operating Agreement basis, however we would recommend that the potential investors in the hotel consider both the Howard Johnson system and Accommodex management resources as a potential dual benefit that is available to maximize the overall marketing efforts of the hotel and the day to day control of the operating entity.

However, the Howard Johnson chain did not buy the hotel. Kelloryn bought the hotel, which it then affiliated with the Howard Johnson system.

30. The proposal letter goes on to detail the various fees and royalties which are payable for these services. There is a franchise fee, a room royalty, a separate agreement for the reservation system with a fee payable on the basis of gross room sales, and access to the Howard Johnson national media campaigns, marketing programs, and sales efforts. This access, too, involves a fee based on gross room sales.

31. The operating agreement and the franchise agreement both have a term of twenty years. Mr. Phillips testified that, since 1989, Accomodex has added thirteen "properties" to the Howard Johnson group.

32. The details of the Accomodex/Kelloryn operating agreement need not be reproduced here. It suffices to say that Accomodex retains complete control and discretion in the management of the operation in all its aspects - including labour relations. Accomodex is responsible for the selection, employment, termination of employment, supervision, direction, training and assigning of the duties of all employees, and may enrol those employees in pension plans, benefit arrange­ments (including multi-employer plans) as it considers appropriate. Accomodex conducts all labour relations activities, including grievance and arbitration proceedings, and collective bargaining negotiations. In these proceedings, Accomodex appeared on its own behalf and on behalf of Kello­ryn. But Accomodex does not "own" the hotel - by which, in this context we mean, the land, premises, building equipment, chattels, stock-in-trade, and so on. Accomodex organizes and "runs" the operation for Kelloryn.

33. It is interesting to note that Accomodex and Kelloryn are both entitled to assign the operating agreement to any "successor" which may result from any merger, consolidation, or reor­ganization, or to any "affiliate or related entity" to Accomodex or Kelloryn (defined as someone owning half their shares or net assets) which acquires all or substantially all of the business or assets. Any such assignee must assume and agree to be bound by the terms and provisions of the operating agreement. Likewise, if Kelloryn wishes to mortgage its property, it must bind the mort­gagee to continue the operating agreement. These commercial arrangements tie the operating agreement to the hotel operation at Keele and 401 in somewhat the same way that Local 75 claims that its collective agreement is tied to that operation by virtue of section 64 of the Labour Relations Act.

34. There is no doubt that the Howard Johnson connection was considered by Kelloryn to be important for the hotel business at Keele and 401 - otherwise, it would not have entered into the franchise arrangement. But there is no hard evidence about how important the Howard Johnson connection is, or what proportion of the clientele patronizes the hotel because it is operated as a "Howard Johnson" or by Accomodex for that matter. Mr. Phillips estimated that 75-80% of a hotel's profits are derived from room sales, and only 10-15% are derived from its food and bever­age revenues. Approximately 80-85% of room occupancy is booked in advance, and only 10-15% involves last-minute direct booking, or off-the-street trade. Mr. Phillips estimated that 20-25% of room nights were generated through the reservation system in conjunction with association book­ings, and trade groups; but, again, it is difficult to determine how much of this is attracted by, or associated with, the Howard Johnson name.

35. On the other hand, there is not much doubt that, in a formal sense, any goodwill associated with the Triumph name had vanished by December 19, 1992. However, the location involved inherent advantages which the new owner was able to acquire without any express transfer of "goodwill" and was able to tout - apparently successfully - both in its general advertising and its approaches to former users of the hotel facilities.

36. Prior to its closure in July 1991, the Triumph Hotel offered the following services: rental of guest rooms, meeting rooms and banquet rooms; a dining room, lounge, cafe and room service, all serving food and alcoholic beverages; housekeeping and maintenance; a laundry; portering; mini-bars in some rooms; and a telephone service. The Howard Johnson Hotel offers much the same. Its services include: rental of guest rooms, meeting rooms and banquet rooms; a dining room, lounge, cafe and room service, all serving food and alcoholic beverages; housekeeping and maintenance; a laundry; portering, mini-bars in some rooms, and a telephone service. The nature of the business and the nature of the work remain the same; moreover, the hotel competes in and serves the same geographic market, and has been successful in attracting some of the same local clientele.

37. Mr. Phillips testified that on or about December 1, 1992 Accomodex hired about 150 employees. He said that Accomodex conducted a "job mart" in the first ten days of the hotel's operation, to sort through some 4,200 applications that it had received from prospective employ­ees. No effort was made to notify, recall or recruit former employees of the Triumph, although about 10 such employees were eventually hired. There is no evidence that Accomodex/Kelloryn made any effort to contact Local 75 which was still "on the scene", as late as November 1992, a month before the hotel reopened. Instead, Kelloryn signed a voluntary recognition arrangement with the UFCW.

38. One of the employees now working in the hotel, who previously worked there, is a Mr. Gomes, who was a maintenance supervisor for the Triumph. Mr. Gomes remained on the scene throughout 1991 and 1992 in order to safeguard and preserve the hotel's mechanical systems. Mr. Gomes has specialized knowledge of the building and was engaged by Accomodex in much the same capacity as he was employed by the Triumph.

39. The vast majority of the employees now working at the hotel were never previously employed there. The evidence does not specify the precise hiring date for these workers, although they could not have been actively at work much before the hotel opened on December 1. As we have already noted, there is no evidence that any of these employees were members of or wished to be represented by the UFCW by November 20, 1992, the date on which it had executed its col­lective agreement with Kelloryn, the purchaser of the hotel. There is no evidence of any previous collective bargaining or other relationship between the UFCW, Accomodex or Kelloryn, or the Triumph organization.

40. The duties undertaken by the employees now working in the Howard Johnson Hotel are essentially the same as those undertaken by the employees working at the Triumph. The job classifications in the Local 75 agreement are virtually identical to those in the UFCW Agreement -although the wage rates in the Local 75 agreement appear to be higher. No one disputes that the character of the work and the "character" of the business are the same.

41. We think it is also fair to take notice of the fact that the changing of hotel names and owners occurs in the Toronto area, as does the renovation of hotel facilities. It is not infrequent for hotels to move from one chain to another. Mr. Phillips cited an example: a local Howard Johnson Hotel near the airport has recently been "defranchised" and will become a "Delta" facility.

42. The parties have agreed that:

43. Documents and records remained on the premises at the time of the sale of the Triumph Hotel, and remain in the possession of Accomodex, including personnel records (scheduling, payroll, pensionlhealth and welfare benefits and dues records), budget and other financial records, guest registration records, lists of suppliers, lists of clients including corporate clients, and other documents relating to the operating of the Triumph Hotel prior to its closure. Para­graphs 5(a) and (b) of the Agreement of Purchase and Sale specifically provided that Kelloryn was to be provided with copies of all contracts and leases concerning the property and former hotel operations, and Paragraph 17 of the Agreement provided for the assignment of all leases to Kelloryn.

However, Mr. Phillips testified that these documents were not particularly useful. Accomodex had its own marketing plan arranged prior to the completion of the sale transaction involving, for example, its own survey of Chamber of Commerce business listings for prospective clients in the area. These endeavours by Accomodex were one of its selling points to Kelloryn, and part of the general business plan with which Kelloryn eventually agreed.

43. There is no evidence that Accomodex brought any significant physical assets to the hotel operation at Keele and 401, but it has the operating expertise, management systems, and link to the Howard Johnson organization which, it is hoped, will contribute to the hotel's business suc­cess. Mr. Phillips has twenty-eight years of experience in the industry and has worked for several hotel chains. However, the current general manager of the hotel was an "external candidate", who was not drawn from the organization of Accomodex, Howard Johnson, or the Triumph.

IV

44. The issue before us, then, is whether Accomodex/Kelloryn has acquired the "business" or "part" of the business of the Triumph, within the meaning of section 64 of the Act. If that has occurred, Local 75 continues to have bargaining rights for the employees who work at the hotel, and those employees continue to have whatever rights or obligations are specified in the Local 75 collective agreement. Section 64 prevents a dislocation of the collective bargaining status quo by transforming the bargaining rights of the union and the collectively-bargained rights of employees into a form of vested interest which, like a charge on property, runs with the business (or part of the business). To accomplish that objective, the statute gives a rather special meaning to the word "sale", envisages that bargaining rights may be retained in a severable part of a business, and elim­inates the significance of the separate legal identity of the new owner.

45. But does section 64 apply in this case? In addressing that issue, we do not think that it advances the analysis very much to describe the transaction under review as a mere "sale of assets". It certainly involves that; but even from a purely commercial law perspective, one way of buying a business is to purchase its assets. As Arthur Scace observed in his text, the Income Tax Law of Canada (5th ed.):

Although businesses may be consolidated in a number of different ways, e.g., by an amalgama­tion or winding up, there are only two methods by which a business can actually be bought or sold, namely the purchase and sale of either assets or shares.

A commercial lawyer would hardly consider it a novel proposition if it were suggested that a sale of a business could be accomplished by an asset transaction, or that someone could go into business by acquiring someone else's business capacity. To describe what has occurred here as an asset transfer, simply begs the question of whether there has nevertheless been a "sale" of all or "part" of the Triumph's business, for collective bargaining purposes, under the Labour Relations Act.

46. Similarly, we do not think that we should simply give a literal or dictionary meaning to the words "business" or "part of a business" that appear in section 64. Obviously, in this literal sense, the hotel facilities (lands, buildings, furniture, trade fixtures, equipment, etc.) were a "part" of the "business" of the Triumph which found their way, virtually en bloc, into the hands of Kelloryn/Accomodex. If the Board were to give the words of section 64 this stark literal reading, Local 75's case would be unanswerable; and perhaps there is nothing particularly extraordinary about a successor in title inheriting the obligations of a predecessor. (We also note, parentheti­cally, that quite apart from "successorship" questions, the employees must ultimately look to the assets of the business to satisfy any financial claims based upon their collective agreement, so, in this respect, there is a practical connection between the collective agreement and the assets, even if in some legal sense the collective agreement binds something else.)

47. However, when interpreting section 64, the Board has not adopted this mechanical, literalist approach, nor has it automatically embraced common or commercial law concepts. The Board has recognized that it is dealing with a statutory code of rights and obligations which have few common or commercial law antecedents. Indeed, when one examines the subject matter of the statute, it becomes readily apparent that it involves concepts for which there is no common-law foundation, and for which a dictionary will not provide much assistance.

48. A trade union is not a "person" at common law, nor is it a corporation, but it is never­theless a body that has statutory rights and responsibilities under the Labour Relations Act. A col­lective agreement - the product of collective bargaining - is not a contract at common law nor enforceable in a court, but it is nevertheless an enforceable creature of statute, with statutory attributes and features which might look quite curious to a common-law lawyer. (For example: it binds employees who are not parties to it, supersedes those employees' individual contracts of employment, may be negotiated in some cases even though there are no employees to which it applies, yet cannot be ended early by the parties that negotiated it without this Board's consent -sections 51, 123, 53(3) of the Act.) Bargaining rights - by which we mean a legal agency relationship between the union and a group of employees - are an artificial construct regulated by the statute in a manner which likewise cannot be understood outside the statutory scheme. Those bargaining rights do not attach to particular employees, they do not evaporate with employee turnover, and they do not even require the actual consent of employees (the "principals" if "agency" notions are pursued), whose wishes can only be tested, periodically, as the legislation permits (see the com­ments of Laskin, CJC in Terra Nova Motor Inn, 74 CLLC ¶14,253 at page 450). A collective agree­ment continues to operate even if there is a complete turnover of the employees to whom it applies (for example: if the Triumph had got its affairs in order and had reopened with a completely differ­ent employee complement). These are all statutory creations, peculiar to the world of labour law which has its own rules, internal logic, and balance of policy considerations. And those rules may not be completely congruent either with concepts rooted in other areas of the law, or with a "man on the street" understanding of business affairs.

49. These considerations may be self-evident for those familiar with the terms of the Labour Relations Act, but they are particularly evident in the way in which section 64 is drafted.

50. Under section 64 of the Act, a "sale" includes a lease or any other manner of disposi­tion, thereby merging concepts which a commercial lawyer would consider legally distinct. The word "business" is undefined, but it is obviously intended to be a very elastic term, because it must be broad enough to encompass the activities of a wide range of public and private sector employers to which the Labour Relations Act applies (manufacturers, retailers, public utilities, municipalities, service businesses, school boards, social service agencies, etc.). Yet at the same time, for labour relations purposes under the statute, a "business" is something that, in some circumstances at least, can be sensibly severed into its "parts" to which bargaining rights also adhere, and for which they and the collective agreement continue. A business also has a "character" which, if changed, may prompt the Board to terminate bargaining rights (see section 64(5) of the Act); moreover, businesses are distinct from their owners. An owner may intermingle an acquired business with a pre-existing one, which again may prompt the Board to re-fashion the bargaining structure, test employee wishes in a representation vote, or terminate bargaining rights (see section 64(6)).

51. Finally, if there is any doubt that the concept of successorship is a rather unique, policy-laden creature of statute, one need only consider section 64.2 which came into force on January 1, 1993. It deems a "sale of a business" to have occurred between independent suppliers of services, even though there may be no sale or disposition of anything between them at all, and the legal successor acquires from its predecessor none of the assets, equipment, etc. needed to supply the services. Bargaining rights attach to a relationship between employees, their work, and their workplace, regardless of who happens to be employing them from time to time. Under section 64.2 bargaining rights are maintained so long as there is a continuity of work done by unionized employees in that particular location.

52. Of course the fact that section 64.2 was recently added to the Act, suggests that rela­tionships of this kind would not have been caught by the statute before (see for example, the analysis in Metropolitan Parking Inc.,[1979] OLRB Rep. Dec. 1193). However, the amendment underlines the proposition that successorship is part of a broader scheme of collective bargaining regulation that addresses a variety of mischiefs; and when the Board is interpreting that statutory scheme, one should not expect commercial law considerations to be paramount.

53. This is the theme explored by the Board in More Groceterias Limited, [1980] OLRB Rep. Apr. 486. In More, the Board found that a sale of "part" of Loblaws' business had occurred when Loblaws abandoned one of its local supermarkets in favour of a new superstore some miles away, and More acquired the discarded premises in order to expand its pre-existing grocery busi­ness. The Board concluded that, in this industry, the land, premises and location were a critical "part" of the "business", capable of transfer, so that More was a successor employer within the meaning of section 55 [now 64] of the Act. The Board began its analysis this way:

54. Section 55 of The Labour Relations Act is a very important part of the legislation guarding against the subversion of acquired collective bargaining rights and providing some permanence to them in an otherwise volatile commercial context. In the former respect, it is assisted by the various unfair labour practice sections of the Act together with section 1(4) which permits the Board to treat as one employer a business carried on through more than one corporation where there is a common control or direction and whether or not these businesses are being carried on simultaneously. An interesting early example of this unfair labour practice aspect of the provi­sion can be found in the important Thorco Manufacturing Limited (1965), 65 CLLC ¶16,052 case, a case that today could be just as fairly dealt with under section 1(4). However, this pur­pose of the provision is not applicable in the facts at hand. We are satisfied that the relationship between the respondent(s) and Loblaws has been arms length and there is no evidence that the subject commercial transactions were other than for bona fide business purposes.

55. Unfortunately, however, the latter function of the section - providing some permanence to collective bargaining rights - is often the most difficult to apply. Here the Legislature has deter­mined that the objectives of labour relations policies require that the rightful prerogatives of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by protection to the employees from a sudden change in the employment relation­ship. Indeed, the transition from one corporate organization to another will in most cases be eased and industrial strife avoided if employees and their representatives are assured of some real measure of continuity in the collective bargaining process by operation of law. So strong is the basis to this policy that the Supreme Court of the United States arrived at a similar conclu­sion without the benefit of a specific statutory provision like section 55. See John Wiley & Sons Inc. v. Livingston, (1964), 376 U.S. 543, 84S. Ct. 909; Goldberg, The Labor Law Obligations of a Successor Employer (1969), 63 N.W.L. Rev. 735; Note, (1966), 66 Col. L. Rev. 967; Note, (1969), 82 Harv. L. Rev. 418. This ongoing nature of collective bargaining agreements under­lines again that such documents are not "ordinary contracts" nor are they in any real sense the simple products of consensual relationships. See McGavin Toastmaster Ltd. v. Ainscough et al, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718; 54 D.L.R. (3d) 1 Laskin, C.J.C. It is against these impressive policy con­siderations that the Board must give meaning to and apply section 55.

56. The fundamental issue in cases of this kind is the threshold determination of the section: Has a business been sold? The term "sells" is defined to include "leases, transfers; and any other manner of disposition." This all-embracive definition obviously reflects the labour relations policy considerations discussed generally above. To repeat, collective bargaining rights are not to be treated as co-extensive with commercial ownership and, to this extent, labour law policy seeks to insulate industrial relations from disruption by necessary and inevitable interaction in the market place. The term "business", on the other hand, is simply defined to include "a part or parts thereof." No similar exhaustive definition was attempted by the Legislature in recognition, we think, of the great diversity in commercial affairs and the resulting need for a case by case elaboration of the term in the light of labour law policy. A brief perusal of the many factual situations giving rise to the Board's jurisprudence bears testimony to the wisdom of this legislative choice. Accordingly, at the outset of reviewing a few of the cases that have applied the term "business" in the context of retail food stores, it should not be surprising to learn that the Board in determining whether a business has been sold has not deferred to the commercial documenta­tion employed; has not been influenced by the use of intermediary agents to effect transfers; and has not made simple distinctions between asset and business dispositions. Rather, it has tried to make workplace assessments with respect to the continuity of a particular enterprise, activity, or service arriving at conclusions that a court of law in a commercial matter might not arrive at, but conclusions which are fair to both the statute and context under review. See Gordons Markets (decision of the Divisional Court of Ontario, unreported, November 21, 1978).

Somewhat similar comments were made in Metropolitan Parking Inc., supra, where the Board wrote (in part):

26. The legislative history in this jurisdiction reveals an unbroken trend towards increased pro­tection for employees and their union, and a concomitant increased obligation imposed upon successor employers. Legal doctrines such as "the corporate veil" or "privity of contract" have been de-emphasized, modified or eliminated so that a collective bargaining framework can be developed which will be in accord with industrial relations realities. Not surprisingly, the Board decisions follow a similar trend and, as a result, early decisions do not provide an unfailing guide to the results in later ones. Not only has there been a change in the statutory framework, but as the Board has accumulated experience and encountered more sophisticated business arrange­ments, there has been a development of its jurisprudence. It is important to emphasize, how­ever, that section 55 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, [19641 OLRB Monthly Rep. December 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 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 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 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 of the Act. (See, for example: Sun Parlour Greenhouse [1964] OLRB Rep. Jan. 94; Intermountain Industries Ltd., [1975] 1 Can. LRBR 257 (B.C.L.R.B.); Academy of Medicine, [1977] OLRB Rep. Dec. 783; and, more recently, Humber College, [1979] OLRB Rep. June 820.) In the present case, there is no allegation that TAP and Metropolitan have been involved in an illegal scheme to undermine bargaining rights.

27. The task of the Board in any particular case is to determine whether there has been a "transfer" or "disposition" of a "business" within the meaning of section 55 of the Act; and, if necessary, to sort out conflicting bargaining rights or problems of bargaining structure. Following the decision of the Court of Appeal in R. ex rel Kitchener Food Market Ltd., et al., (1966), 54 D.L.R. (24) 219, and the enactment of what is now section 55(12), the Board's decisions in this regard have become "final and conclusive for the purposes of the Act." It is the Board, therefore, which must give a meaning to the statute which will effect the legislative intention. The Board has always construed the terms "sale" and "business" broadly, in view of the collective bargaining purpose which the concept of successorship was designed to achieve. As the Board noted in Thorco Manufacturing Ltd., 65 CLLC ¶ 16,052:

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

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

54. A "business" is a commercial vehicle which has been rationally constructed to produce certain goods or services for a defined market; and, over the years, the Board has come to what might be described as an "operational" or "instrumental" interpretation of that term. In St. Leon­ard's Society of Metropolitan Toronto, [1993] OLRB Rep. Jan. 56, the Board put it this way:

The Board's conception of the "business" under the Labour Relations Act is an operational or instrumental one. The business is not its legal envelope, nor the employees, nor some incidental or unrelated grouping of assets, nor the body of work in which employees may be engaged from time to time. It is a delivery system, an economic vehicle, an organizational means of getting something done. It is to this vehicle that bargaining rights attach and in which they continue if the undertaking or a coherent part of it is transferred to a new owner.

This also seems to be the approach taken by the Supreme Court of Canada in Syndicat national des employes de la Commission scolaire regionale de l'outaouais (CSN) v. Union des employes de ser­vice local 298 (FT Q), Bibeault et al. 1988 CanLII 30 (SCC), [1988] 2 SCR 1048 - a decision involving the successor rights provisions of the Quebec Labour Code. Beetz J. describes a business undertaking as something that "consists of a series of different components which together constitute an operational entity", and "all the means available to an employer to obtain his objectives".

55. The instrumental approach to successorship suggests that bargaining rights are attached to an economic vehicle - the mechanism, resources or facilities by which the undertaking serves its purpose - rather than the purpose itself, the employees, or their work. Bargaining rights attach to the business undertaking. The Board then tries to determine, from a labour relations perspective, whether the transfer and continuation of some facet or facets of that undertaking, warrants a continuation of bargaining rights - for, of course, when interpreting section 64, the Board has to keep in mind its purpose and effect. The Board tries to reach a result which is fair to both the statute and the context under review - that is, a result that appears to be called for to remedy the mischief for which section 64 was passed. That mischief is not the loss of work or work opportunities, but rather the disruption of bargaining rights which would flow from a change in the ownership but continuation of all or part of the elements that make up the business.

56. As a result of section 64, bargaining rights are not coextensive with commercial ownership or the continuing identity of the owner, nor does it matter how the new owner comes to have possession of the instruments necessary to carry on all or part of the functions of the predecessor. Bargaining rights continue with a continuation of the business undertaking or a part of it. The cases explore just what those instruments or elements of the business are, and what can be said to be the essence of the undertaking - land, equipment, location, employee skills, licences, patents, etc. They consider, from a labour relations perspective, whether a sufficiently-coherent grouping of those things has been transferred so as to warrant a continuation of bargaining rights.

57. Accordingly, in deciding whether there has been a sale of the predecessor's "business" for successor rights purposes, the Board has found it useful to consider the extent to which the various elements of the predecessor's business can be traced to the alleged successor - that is, whether there has been an apparent continuation of the predecessor's undertaking or organization, albeit with the change of owner. This "tracing" approach was considered by the Board in Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691 (application for judicial review dismissed January 18, 1979) where the Board listed some of the factors which might be significant in deciding if there had been a transfer of the predecessor's business:

In each case the decisive question is whether or not there is a continuation of the business ... 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 as it was before …

58. If many of the elements that made up the predecessor's business organization can be found in the hands of the successor, and are used for the same business purposes, there is an infer­ence that there has been a transfer of a business to which section 64 applies. The more the transferee's ability to carry on his business is derived from or dependent upon things acquired from the proprietor of the predecessor business, the stronger the inference will be - particularly if the predecessor has ceased to carry on its business or has withdrawn from the relevant market. Continuity of the economic mechanism or vehicle points towards a "successorship" within the meaning of the Act - which is to say the application of a provision that results in a continuation of the institutionalized collective bargaining relationship. The issue before the Board, of course, remains whether there has been a transfer of a "business" or "part" of a business within the meaning of section 64; but it is much easier to make that finding, with the result that the collective bargaining relationship will be continued, if there is a substantial continuity of the other elements of the predecessor's business organization.

59. As might be expected in a labour relations statute, the Board pays particular attention to the "character" of the business (a matter referred to in section 64(5)) and the characteristics of the employer/employee relationship, because, from a labour relations point of view, the impor­tance of the business is that it generates work opportunities for employees. The activities of the business require it to enter the labour market as an employer, and this, in turn, can give rise to the employment or collective bargaining relationships with which the Act is concerned, and which section 64 is designed to preserve. Accordingly, in determining whether there has been a "sale" within the meaning of the Act, the Board attaches particular significance to the nature of the work performed in, and by, the business, before and after the alleged transfer. If the nature of the work performed subsequent to the transfer is substantially similar to the work performed prior to that transaction (and if the employees, or types of employees, are the same) this would normally sup­port an inference that there has been a transfer of a business or part of a business within the mean­ing of section 64. This approach with its focus on jobs is one that seems to have been taken by the B.C. Court in R v. B.C. Labour Relations Board ex pane Lodum Holdings Ltd. (1969) 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41. At page 52, Dryer, J. commented:

The importance of the 'business' in its labour relations aspect is the jobs it provides for the employees. One factor to be considered therefore, is whether the same or substantially the same jobs are being performed. That depends on a number of factors, such as whether the jobs are being performed at the same or substantially the same times and places, in respect of the same or substantially the same goods or services, and for the same or substantially the same customers or patrons, etc. These matters are, in my opinion, more important than the form of transfer.

60. Unless there is a continuation of work and jobs, it would make little sense to preserve the collective bargaining relationship or collective agreement. Conversely, if the work, jobs, or employees are the same or substantially similar, it is easier to conclude that the transaction is one to which section 64 was intended to imply - and that is especially so if the work is being performed in the same context, at the same location, with the same equipment, or in respect of the same cli­entele.

61. However, a successorship finding does not depend upon a continuation of the very employees who worked in the predecessor's business before, any more than bargaining rights or the continuing operation of the business depend upon maintaining the employment of particular individuals. Employee turnover does not erase bargaining rights, just as the departure of employ­ees does not automatically mean that bargaining rights travel with them - even though the employees are "part" of the business. Moreover, to emphasize the transfer of identifiable workers would invite the new owner not to continue their employment, lest their previous union affiliation influ­ence the Board's successorship conclusion. (This is not a hypothetical problem - see the comments of the panel in Gordon's Markets, [1978] OLRB Rep. July 630 at paragraph 24; and note the unusual (and illegal) scheme by which the employer in Metropolitan Parking sought to avoid hiring former union members who had worked for the predecessor before.)

62. None of the parties referred us to any previous Board cases involving a hotel, but most of the tavern cases which were referred to in argument were analyzed by the Board on what we have described as the "operational" approach to section 64. For example, in Katrina's Tavern, [1978] OLRB Rep. Sept. 838, the predecessor's establishment was described by the Board as a bleak and rather shabby undertaking, with loud music, mediocre food, and a rough clientele, which eventually closed because of its financial difficulties. It was sold to a new owner who sought to renovate the premises to establish an elite, gay club. The goodwill of the former bar was of no value (or even negative value); nevertheless, the Board concluded:

63. The Board has in the past determined that the absence of goodwill in a transaction is not of itself determinative in deciding whether there has been the sale of a business within section 55 of the Act. (See, for example, Winiker Industrial Auctioneers Ltd. [1978] OLRB Rep. Jan. 15 and Culverhouse Foods Ltd. [1976] OLRB Rep. Nov. 691.) The Board is interested in whether there has been a continuation of the business. Here there was a transfer of the liquor licence, a lease­hold interest, various tangible assets, and interests in contracts virtually all of which could and would be used to carry on the business of the sale of food and drink. Therefore, it would seem that there was a continuation of the business in which The Forge was engaged and, unless sec­tion 55(5) operates, a sale of a business within the meaning of section 55. The fact that the busi­ness was closed for approximately eight months does not affect the conclusion in this case. The Employer here was closed to affect repairs and renovations and was prepared to open whenever these were completed. There was still a transfer of assets and most importantly, after this trans­fer the same sort of business continued to operate from the premises.

64. Similarly, in Krush, [1987] OLRB Rep. June 859, the successor acquired a tavern for­merly known as "The Benny" which was renovated and reopened four months later as the Krush. The Board concluded that the essential elements of the business - the premises and liquor licences -had been acquired and were being continued by the new owner, so that there was a successorship under section 64 of the Act - even though the new owner proposed to change the ambience and cli­entele, and had bought what was admittedly a deteriorating business. The Board noted that types of entertainment, themes, and patrons come and go, with or without a change of ownership; how­ever, the essential elements of the drinking establishment remained and had, in this case, been acquired and continued in the hands of the successor. The Board was not persuaded that there had been any change in the nature of the work or "character" of the business within the meaning of, section 64(5) of the Labour Relations Act. (See also Vivace Tavern Inc., [1982] OLRB Rep. Aug. 1224, Blondie's Entertainment Limited, [unreported] Board File 2073-83-R, Cabbagetown Inn Limited, [unreported] Board File 2780-80-R, The Last Resort Hotel Inc., [1984] OLRB Rep. Dec. 1700, Jimmyz II, [1977] OLRB Rep. Sept. 572, and Horseshoe Tavern, [1981] OLRB Rep. Sept. 1237. For a recent British Columbia decision to the same effect, see: Three B's Enterprises 90 CLLC ¶16,022), and ¶16,050.)

65. Most of the cases under section 64 involve an alleged sale of a business in its totality. Only a few consider the meaning to be ascribed to the words "part of a business". Yet those words pose much more difficulty than the term "business" itself. Almost anything actually traceable to the predecessor could be considered "part" of its business, but it cannot have been intended that every minor disposition of surplus assets should give rise to a successorship. To accept that view, would make section 64 the vehicle for extending rather than preserving bargaining rights. That is why the Board has not accepted a literal or dictionary definition of the words "part of a business" and has been much less inclined to find a successorship where the transferee already has its own existing undertaking or capacity.

66. The content of the term "part" of a "business" must be considered in the particular fac­tual context; however, a few cases may illustrate the way in which the Board has interpreted those terms. The Board has found a transfer of "part of a business" where one of a chain of retail stores has been sold to a competitor (Loblaws Groceterias, [1973] OLRB Rep. Jan. 72, More Groceterias Limited, supra); where there was a transfer of certain milk delivery routes in a particular geo­graphic area (Borden Company Limited, [1970] OLRB Rep. Jan. 12~); where there was a transfer of the oil burner and installation service of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Limited, [1972] OLRB Rep. May 515); where a slaughter­house which was formerly part of a much larger integrated meat-packing company was transferred to a new owner (Beef Terminal, [1980] OLRB Rep. Aug. 1167); where the shock-absorber portion of a much larger business was transferred to a firm which leased the machinery equipment, tools and a portion of the premises used by the predecessor (Canack Shock Absorbers, [1973] OLRB Rep. Oct. 508); where a firm acquired the premises and some of the equipment used by the prede­cessor to produce two products which had accounted for only a small portion of the predecessor's total production (Alcan Building Products Limited, [1968] OLRB Rep. May 212); and where a firm took over some of the functions of a larger enterprise using some of the equipment, employ­ees or a portion of the premises formerly used by the larger business to serve at least some of the same customers (Vaunclair Meats Limited, [1981] OLRB Rep. May 581, Antonacci Clothes Inc., [1984] OLRB Rep. July 887, involving respectively a meat purveyor and a clothing manufacturer). (c.f.: Central Native Fisherman's Co-operative et al, [1977] 1 Can. LRBR 329, the British Columbia Relations Board found that there had been a transfer of a "part of a business" when a cannery which was formerly part of a much larger business organization was sold to a fisherman's co-opera­tive.)

67. In each of these cases, the Labour Relations Board found that the predecessor had transferred a coherent and severable "part" of its economic organization - managerial, or employee skills, plant, equipment, know-how, or goodwill - thereby allowing the successor to perform a definable part of the economic functions formerly performed by the predecessor. This “new” economic organization undertook activities which gave rise to employment, and the terms and conditions of employment, together with the union's right to bargain about them were preserved. The "part" of the predecessor's business which it no longer wished to continue, provided the business opportunity which the successor was able to pursue to its own advantage.

68. In all of these cases, there was a transfer of a distinct part of the predecessor's configu­ration of assets or capacity to carry on business, and no material change in the character of the work performed by the employees within that asset framework. There was a continuation of the work performed, the essential attributes of the employment relationship, and the skills of the employees; and, but for section 64, the established bargaining and collective bargaining rights would have been lost. This was the mischief to which section 64 is directed, and the Board was satisfied on the evidence in each of these cases that it should be applied.

69. All of the cases to which we have referred recognize that there are no easily adminis­tered, mechanical tests which permit the Board to 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. 1193 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.

69. 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 while raising other materially altered, entirely omitted, or newly-added facts which arguably should affect the decision on the merits. Indeed, 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; and, quite frankly, the results in some of the cases are difficult to reconcile -reflecting, among other things: the quality of the evidence before the Board in particular cases (especially before and after the passage of what is now section 64(13)); the quality of the argument; and the evolution of the Board's jurisprudence as various panels, over the years, have assessed in new factual settings, the "mischief' to which section 64 was directed.

70. But to dismiss the difficulty 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, a 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, and in each of these sectors the nature of the business organization is little different. Yet in each case 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. To cite but one unusual example: in Riverview Manor, [1983] OLRB Rep. Sept. 1564 (application for judicial review dismissed February 5, 1985), the Board found that a licence to run a nursing home business was a critical part of that business, to which bargaining rights could attach, even though the purchaser of the licence later invested a substantial sum to build its own nursing home across town. In that highly-regulated business, the licence was viewed by the Board in that case as the key asset - as evidenced by the substantial sum that had been paid for it.

71. Finally, it is important to recognize that not only do the cases arise in a variety of different contexts so that direct comparisons are difficult, but the law itself has not been static. Although the Board strives for consistency, the statute has been amended on several occasions, and with increasing experience, the Board has developed a more coherent theory of successorship. Indeed, from time to time, the Board revises its approach in accordance with its accumulating experience. (See, for example: St. Leonard's Society, [1993] OLRB Rep. Jan. 56, Parnell Foods Limited, [1992] OLRB Rep. Dec. 1164 and Mil-Dom-Ex Packaging, [1992] OLRB Rep. Dec. 1155). As with the common law, the utility of a particular approach to interpreting the Labour Relations Act, or the significance of a particular "test", only emerges with experience, and an evaluation of alternatives which may not be considered until a concrete case presents them.

72. In cases which arose when the economy was buoyant, or transactions involved a whole, ongoing business, the Board once tended to focus on the dynamic quality of a business or its operation as a "going concern". If that dynamic quality was lacking, the Board was inclined to hold that there had been no transfer of a business but merely a disposition of assets. In more recent years and more troubled economic times, the absence of this dynamic quality has been accorded less significance.

73. Quite apart from questions of successorship, it has become much more common in recent years for businesses (or parts of them) to shut down for periods of time and lay off employ­ees, then reopen again when the market improves - without anyone suggesting that the union's bar­gaining rights or the employees' recall rights, for that matter, have disappeared. In this era of cor­porate "restructuring", it has also become much more common for businesses to discontinue or hive off portions of their operation or undertaking, which then become the nucleus or even the entire undertaking of the "new" business organization. If instead of reopening on its own, or reviving this commercially-moribund portion of the operation, it was transferred to someone else - as increasingly happened through receivers - it was much less clear than it once might have been, that bargaining rights should disappear merely because that portion of the idle undertaking was now owned by someone else - especially since the purpose of section 64 is to eliminate the significance of the fact that a new legal entity owns the "things" that have been transferred. Clearly there is a potential tension between commercial law considerations, a layman's view of the "business", and the objectives reflected in the Labour Relations Act, but it has become much less evident in recent years that this tension should be resolved by the Board "reading into" the statute the words "as a going concern", after the word "business" in section 64(2). The concept of a "going concern" and the words "as a going concern" are not unknown in law, but in drafting section 64, the Legislature has not injected that phrase and it is not intuitively obvious that the Board should be doing so as a matter of interpretation. This is not to say that the absence of ongoing activity is irrelevant; merely that it may not be determinative.

74. If a new investor bought the controlling shares in a dormant company with idle assets and brought them to life with an injection of capital, there is little doubt that the union's bargain­ing rights would continue in respect of that company now that it had become active. A union would not need to invoke section 64 because, although there had to be a "sale of a business" in common parlance and commercial law terms, the legal entity with which it has bargaining rights - the “owner” of the assets - would be unchanged. Bargaining and collective agreement rights would continue. Should the result be different from a collective bargaining point of view, if the same investor used the same funds to purchase the assets themselves rather than controlling shares in the corporate envelope, but, as before, revived the business as a going concern under new ownership?

75. With the experience of two recent recessions and a considerable amount of corporate restructuring, the Board is less inclined than it once might have been, to give overriding signifi­cance to the absence of ongoing business activity at or before the point of alleged "sale". A busi­ness shut-down or closure remains significant, but it is not always determinative. As the Board noted recently in New Dominion Stores, [1989] OLRB Rep. May 473:

Similarly, hiatus between closure and opening [of a business] is not determinative, but only one factor. The fact that the hiatus between the closure of Dominion Store #986 and the opening of the A & P Store was quite long, twenty-two months, does not itself mean that the business of the former has not been transferred to the successor. There is no temporal bright line beyond which bargaining rights will not transfer. If all the circumstances yield a conclusion that a busi­ness, or part thereof, has been transferred, then the appropriate declaration will issue, whether the interval be twelve months or twenty-two months".

Thus, in Hughes Boat Works Inc., [1977] OLRB Rep. Dec. 815 (application for judicial review dis­missed: (1979) 1979 CanLII 1853 (ON HCJ), 26 O.R. (2d) 420 (Div. Ct.)), the predecessor "North Star" encountered economic difficulties, ceased operations ("went out of business" in layman's terms) and closed its plant which was transferred after several months by a receiver to "Hughes" which began to build boats again. Hughes claimed that the predecessor's business had failed - as demonstrated by the plant closure - and that it had merely purchased the asset shell. But the Board found that Hughes was a successor employer within the meaning of section 55 [now 64] of the Act.

76. Finally, for the purpose of completeness, we should note that just as we have no details of the financial problems which the Triumph experienced, neither were we told about the particu­lar legal proceedings in which it was engaged prior to its commercial demise (but which would appear to involve a court-appointed receiver and/or a receiver in bankruptcy). No one argued that the federal or provincial bankruptcy/insolvency law governed the way in which the Board could or should interpret section 64 of the Labour Relations Act, and the relief sought before us, does not involve any claim against Accomodex/Kelloryn in respect of the period that the hotel was operated by its previous owners.

V

77. The evidence in the present case indicates that Kelloryn/Accomodex has acquired ownership and control, en bloc, of virtually all (or at least a very substantial portion) of the tangible assets of the Triumph, formerly used by the previous owners in their hotel business at Keele and Highway 401. Those assets are now being used by the new owner, in much the same way as before, to supply the same general services, to much the same general market, and at least some of the same customers. We do not know the value of this asset configuration in relation to the renovation and refurbishing program which is now underweight in the "Howard Johnson" Hotel, but we do know that without what the respondents acquired from the Triumph, they could not engage in the economic activity from which they derive most of their revenue: the rental of rooms and the provision of subsidiary services. It is perhaps trite to say so, but without a hotel (with its restaurants, parking lot, ballrooms, meeting rooms, swimming pool and so on), one could not be in the "hotel business" at all, or at that location; and as Mr. Phillips stressed in his evidence, location is a critical element of that kind of business.

78. The respondents did not assemble these elements themselves or put the package together - they bought them largely intact. This was no acquisition of incidental or surplus assets. Accomodex/Kelloryn acquired the asset core of the Triumph. And while the Triumph Hotel was closed for some time, the "new" hotel was opened within three months of its purchase by Kello­ryn, which then entered into the operating and Howard Johnson's franchise arrangements with Accomodex. No doubt Kelloryn hopes that these connections will enhance its profitability and effi­ciency, but it could still be in the hotel business without them. If Kelloryn decided to operate the hotel itself, hiring more outside managers (like the general manager), or if it were "de-franchised" (like the Delta Hotel that Mr. Phillips mentioned), the core of the hotel business - the hotel, its location, and the consequent relationship with its local market - would remain. That unionized core would continue to be unionized - whether that union was Local 75 or the UFCW; and, it is interesting to note, that the UFCW saw nothing incongruous about signing its collective agreement with the asset owner before its "business" actually opened "for business".

79. It is also clear that substantially the same jobs are being performed in substantially the same place in respect of substantially the same services for a similar market. There has been no qualitative transformation of the business or the work or the kinds or classifications of employees working in the hotel. There has been no change in the "character" of the business, and the actual job classifications in the UFCW agreement are virtually identical to those in the Local 75 agree­ment. There would be no operating incompatibility if the Local 75 agreement were applied to the hotel operation until September 30, 1993 when its terms may be re-negotiated (and, incidentally, the workers then employed will have an opportunity to oust Local 75 and choose another union to represent them if that is their wish). There is no anomaly in applying a "hotel collective agreement" to a hotel. The employees themselves are not the same; but that is so, at least in part, because Kelloryn/Accomodex made no specific effort to recruit the former employees or approach Local 75.

80. It is true that certain elements mentioned by the Board in Culverhouse, supra, were not transferred, but these are either of little significance in the hotel business, or are irrelevant on the facts of this case. There is no "inventory" or "stock-in-trade" or "machinery" of the kind that a manufacturing concern might have, and, on the evidence, we are not persuaded that what was owned by the Triumph but not acquired was very significant to the new owner's ability to operate -at least in comparison with what was acquired. Of course, the new owners had to arrange their own financing to purchase this essential "part" of the Triumph organization, and, having done so, undertook some new initiatives, and hoped to acquire customers not previously served by the Tri­umph. This is not insignificant, but section 64 is triggered by a change of ownership, and it would be a most unusual "sale of a business" transaction, in which the new owner did not put his own imprint on the organization by undertaking new business initiatives, or introducing at least some new directions in management. More important, in the present case, is the fact that there has been no significant change in the "character" of the business from the way in which it operated as the Triumph.

81. We have not ignored the fact that the new owners of the hotel may not have considered themselves to be "purchasing" the Triumph's "business" when they bought the bulk of its assets and continued to carry on the same kind of business from the same location. No doubt from a com­mercial or layman's perspective, the Triumph's "business" was "dead" as of the date it closed in July 1991. However, we do not think that hiatus is conclusive where, as here, the asset configuration has remained substantially intact and continues (albeit with renovations) at the core of the "new" business organization. Our decision has the effect of affixing bargaining rights to an asset configuration, but in all the circumstances, we do not think that this is inappropriate when this "part" of the predecessor's organization is so integral or essential to its operating capacity.

82. For the foregoing reasons, we concluded that the transaction by which Kelloryn/Accomodex acquired the land, premises, trade fixtures, etc. formerly used by the Triumph, was a "sale" of a "business" for the purposes of section 64 of the Labour Relations Act. It follows that Local 75 continues to have bargaining rights for the employees working in the hotel, and the Local 75 collective agreement determines what their terms and conditions of employment will be.

83. In accordance with the agreement of the parties, that was the only issue which we were asked to determine, so we make no finding on the precise legal identity of the "successor employer", nor do we need to address any other portion of section 64.