The Millwright District Council of Ontario v. Tri-Corps Industrial Contractors et al., 1994 CanLII 10006

Ontario Labour Relations Board

File No.: 0801-94-R Date: 1994-10-13

Re: The Millwright District Council of Ontario on its own behalf and on behalf of Local 1916, Applicant And: Tri-Corps Industrial Contractors, Industrial Labour Corps. Inc., Scotron Holdings Inc., Christman & Leitch Contractors Ltd., Christman & Associates Contractors Ltd., Responding Parties

Before: Louisa M. Davie, Vice-Chair, and Board Members W. H. Wightman and K. S. Davies.

Appearances: Harold F. Caley and Andrew Dobbie on behalf of the applicant; Russ Straus on behalf of Christman & Associates Contractors Ltd.; Ian S. Campbell, John Christman and Scott Hoag on behalf of Tri-Corps Industrial Contractors, Industrial Labour Corps. Inc. and Scotron Holdings Inc.

DECISION OF THE BOARD

1. This application filed pursuant to section 64 and subsection 1(4) of the Labour Relations Act ("the Act") was heard by the Board on September 20 and 21, 1994.

2. In this application the applicant Millwright District Council of Ontario on its own behalf and on behalf of Local 1916 ("the Union" or "the Millwrights") asserts that the responding parties Tri-Corps Industrial Contractors ("Tri-Corps"), Industrial Labour Corps. Inc. ("Industrial"), Scotron Holdings Inc. ("Scotron"), Christman & Leitch Contractors Ltd. ("Christman & Leitch"), and Christman & Associates Contractors Ltd. ("Christman & Associates") carry on associated or related businesses or activities under common control or direction and for purposes of the Act constitute one common employer. The union further asserts that Tri-Corps is a "successor employer" as a "sale" of a "business" within the meaning of the Act has taken place by Christman and Associates to Tri-Corps. The Union asserts that as a result of these facts Tri-Corps is bound to the provincial Collective Agreement between the Association of Millwrighting Contractors of Ontario, Inc. and the Millwright District Council of Ontario ("the Provincial ICI Agreement").

3. The Board notes at the outset that Christman & Associates and Christman & Leitch were not represented by legal counsel. Mr. Russell Straus, the President, a Director and majority shareholder of Christman & Associates represented these two corporate respondents at the hearing. As a result the Board advised Mr. Straus at the commencement of the hearing that there was no requirement that parties appearing before the Board retain legal counsel. The Board often conducts hearings where one or more parties are not represented by legal counsel. The Board advised Mr. Straus however that hearings before it were legal proceedings. The Board's function was to adjudicate upon the issues in dispute. The Board therefore could not act as an advocate for or an advisor to any party merely because that party was not represented by counsel. Such conduct would be inconsistent with the Board' role as a neutral adjudicator. As a result, the Board advised Mr. Straus that he must bear the responsibility for the presentation of the case on behalf of the corporate entities which he represented, and that he must bear any risk associated with the decision not to retain counsel. The Board did note the procedure typically followed in these types of applications, the issues in dispute, and indicated to Mr. Straus that if he had any questions with respect to the procedures before the Board we would attempt to answer such questions within the confines of our adjudicative role.

4. The Board heard the evidence of John Christman and Russell Straus. Each of these two witnesses presented their evidence in a clear, honest and forthright fashion. The relative credibility of the witnesses has not been a factor in our determination of this application as many of the relevant facts were not in dispute.

Facts

5. John Christman is a millwright by trade. He started his apprenticeship in 1964 working for Sutherland and Shultz and Canadian Comstock. After attending trade school he commenced employment with Lackie Brothers and completed his apprenticeship with that corporate entity. The Board takes note of the fact that each of these three corporations are established mechanical and millwright and rigging contractors in the construction industry in Ontario.

6. John Christman continued in his employment relationship with Lackie Brothers for approximately twenty years until in or about April 1985. During his employment he held successively more responsible positions as journeyman millwright, foreman, superintendent. In April 1985 when he ceased employment with Lackie Brothers he held the position of Vice-President, Service and Maintenance.

7. Ken Leitch and Russell Straus were also employees of Lackie Brothers. Russell Straus is also a millwright by trade and in 1985 had been employed by Lackie Brothers for approximately nine years.

8. In or about March or April 1985 John Christman and Ken Leitch left Lackie Brothers and incorporated Christman and Leitch. John Christman and Ken Leitch each owned or controlled fifty percent of the shares of that company. That company commenced operations as a millwright and rigging contractor. John Christman was a director and president of the corporation and a "key person" in its operations.

9. Shortly thereafter Russell Straus joined Christman and Leitch as a journeyman millwright. As indicated herein Russell Straus held successively more responsible jobs as foreman/supervisor often running jobs and projects on behalf of the company.

10. On April 8, 1985 Christman and Leitch voluntarily recognized the Union as exclusive bargaining agent for all of its millwright employees and became bound to the ICI provincial agreement.

11. In or about September 1985 John Christman purchased Ken Leitch's shares and interest in Christman and Leitch. On November 8, 1985 the name of the company was changed to Christman and Associates. John Christman continued as president and director of the company and remained a "key man" in its operations.

12. In or about March 1986 Russell Straus purchased twenty percent of the shares of Christman and Associates. Mr. Straus continued as foreman/supervisor with the company.

13. On July 7, 1986 Christman and Associates voluntarily recognized the Union as exclusive bargaining agent for all of its millwright employees and became bound to the ICI provincial agreement.

14. Originally Christman and Leitch, and subsequently Christman and Associates started "small". It sought out and bid on local small in-plant "maintenance" and "project" jobs within the industrial millwright and rigging industry, but would do any type of millwright or rigging job at which it was the successful bidder. In the early years the owners of the company regularly worked "on the tools". Christman and Associates continued to do a number of jobs which were "small" in terms of both the number of persons employed on the job and the total dollar value of the job. Mr. Straus estimated that these types of jobs continue to represent approximately fifty percent of Christman and Associates' current sales.

15. From its inception in 1985 until 1990 the millwright and rigging business of Christman and Associates grew from approximately five hundred thousand dollars in sales in its first year of operation to approximately six million dollars in sales for the 1991 fiscal year. From a small organization with few employees the business of Christman and Associates grew so that by 1991 the business had approximately twenty-five to thirty employees. At peak times (ie. during summer plant industrial shutdowns when much millwright and rigging work is performed) the employee complement would grow to one hundred. The company's market share and market area were also increased over this five year period.

16. Throughout 1985 to 1990 the respective roles of the eighty percent shareholder John Christman, and the twenty percent shareholder Russell Straus, also grew and developed. By 1990 John Christman's energies were devoted principally to the administrative side of the business. He continued to estimate jobs, explore customer contacts, bid on jobs etc. By 1990 Russell Straus was also doing some estimating and was responsible primarily for the operations side of the company looking after jobs which had been acquired by Christman and Associates.

17. During the period from 1985 to 1990 the growth of Christman and Associates was directly attributable to John Christman. He was the "key person" who directed the growth and development of the company, and who dictated its policies and the directions it would take.

18. In 1990 Russell Straus approached John Christman with the idea that he wanted to start his own business. At the time John Christman was not anxious to have Russell Straus leave the company to start up his own business. Mr. Christman was also considering certain tax implications confronting him and the company. After further discussion it was agreed that John Christman would sell to Russell Straus his shares in Christman and Associates.

19. The sale of the shares occurred pursuant to an agreement dated February 14, 1990. As part of the sale agreement John Christman was required to sign an employment and non-competition agreement. Some of the details of these two arrangements require further elaboration.

20. At the time of the sale of the shares Mr. Christman owned forty common shares in the company while his spouse owned forty special shares (Russell Straus in turn owned ten common shares while his spouse owned ten special shares). Mr. Christman sold his forty common shares to Mr. Straus for three hundred and forty-five thousand dollars. His spouse sold her forty special shares to Mr. Straus for an additional three hundred and forty-five thousand dollars. The entire purchase price ($690,000.00) was payable and was in fact paid shortly after the closing of the share transaction on February 16, 1990.

21. The financing for this transaction was obtained by Russell Straus through arrangements with his bank. In addition, John Christman and his spouse each agreed to loan fifty thousand dollars to Russell Straus (and his company Straus Industrial Contractors Limited) for a total of one hundred thousand dollars. That loan bore interest at 10 percent per annum, was to be payable two years after the closing, and was secured by promissory notes. The promissory notes were collaterally secured by a second charge upon the fixed assets of Christman and Associates. The promissory notes also contained a provision that if John Christman ceased to be an employee of Christman and Associates the notes became due and payable prior to their maturity. As detailed herein John Christman's employment with Christman and Associates was in fact terminated and the loan was paid in full at that time.

22. The employment and non-competition agreement was entered into as part of the consideration which passed between the parties to the share purchase agreement, and represented as consideration John Christman's agreement "to provide ongoing advisor/consulting services to" Christman and Associates, together with his agreement not to compete. The employment agreement was for a three year term from February 16, 1990 to February 15, 1993. It lists John Christman's duties as:

DUTIES

(a) The Employee will be responsible for customer contacts and the promotion of new business relating to estimating jobs of the millwrighting and rigging variety. The Employee further agrees to provide such services and expertise as may be reasonably required to facilitate the profitability and growth of the Corporation.

(b) The Employee agrees to use his best efforts to serve the Corporation during the term of his employment and to promote the best interest of the Corporation. The Employee shall perform all duties on a timely basis and in a diligent, faithful and conscientious manner and in the best interest of the Corporation.

23. Pursuant to the employment contract John Christman was paid an annual salary plus a bonus based on a percentage of net income before taxes and a monthly car allowance. He was also entitled to certain pension and medical benefits and vacation.

24. Although the term of the employment contract was for three years, the contract itself contained provisions for its earlier termination. Christman and Associates could terminate John Christman's employment at any time by giving six months written notice or by paying six months salary in lieu of written notice. If terminated, the non-competition clause agreed to by Mr. Christman would cease to apply either at the end of the six month written notice period, or six months after the termination if the payment in lieu of notice option was exercised. As noted the one hundred thousand dollar loan secured by the promissory notes also became due and payable upon John Christman's termination.

25. Although he undoubtedly had much personal experience (especially in the operations side of the business) Mr. Straus was new to the running of the company and he wanted to retain John Christman's experience and expertise to assist him in running the company and to maintain customer contacts. Certainly at the time of the share purchase agreement and employment and non-competition agreement, John Christman brought to the business his contacts in the millwright and rigging industry, his business knowledge and acumen to keep the company running, and his ability to get jobs and see them to completion in a manner profitable to the company.

26. As of February 16, 1990 Russell Straus and his spouse became the sole shareholders of Christman and Associates. Mr. Straus became president of the company while his spouse became secretary-treasurer. Both were directors and officers of the company. Although neither an officer nor director of the company, John Christman stayed on as a employee and fulfilled primarily the role of estimator and salesperson. Both John Christman and Russell Straus would estimate jobs, solicit customers, get Christman and Associates on customer bid lists, and after obtaining jobs would ensure the work was carried out and completed ie. ensure the necessary materials, equipment and labour were all dispatched to the job.

27. Shortly after obtaining one hundred percent ownership of Christman and Associates Mr. Straus sold a thirty percent interest in the company to six persons whom he characterized as "key people" at the time. These minority shareholders included a millwright estimator, the fabrication shop manager, and certain foremen/supervisory employees. Each minority shareholder obtained a five percent interest in the company upon paying fifty thousand dollars to purchase that interest. Since that time one of these minority shareholders has sold his interest. At present Russell Straus and his spouse own seventy percent of the company while five minority shareholders each owning six percent control the other thirty percent. The spouses of these five minority shareholders are each officers and directors of Christman and Associates. The three hundred thousand dollars raised through the sale of this thirty percent interest went into the general operating account of Christman and Associates.

28. After Russell Straus bought the shares and became president, the company continued to operate as a millwright and rigging contractor under the name of Christman and Associates. It also continued its growth.

29. In February 1991 Christman and Associates exercised its option and terminated the employment of John Christman by providing to him six months pay in lieu of notice. Russell Straus testified that it was his decision to terminate John Christman's employment relationship because he felt at the time that Christman and Associates was "not getting a full honest days work for" the wages and bonus which it was paying to John Christman. Although John Christman continued to be very capable it was Mr. Straus' opinion that he was not devoting the same amount of time and energy to Christman and Associates as he had been doing when he was its president and majority shareholder. What Mr. Christman did he did well. Mr. Straus just felt it wasn't enough and was of the belief and hope that the company could survive without John Christman.

30. Since John Christman's departure from the company in February 1991 Christman and Associates has in fact continued to do well. Its sales continued to grow. The company added an electrical department to its operations, purchased a second boom truck and created separate departments (piping, boom truck, millwright and rigging, fabricating, equipment shop) to better track its various costs. The overall employee complement at Christman and Associates also increased from approximately twenty-five to thirty employees in 1991, to approximately fifty-five to sixty employees in 1993 (with a peak during summer shutdowns of approximately 150 employees). Included in that growth is the addition of five full-time millwrights. Sales in the millwright and rigging department have also grown from approximately six million in 1991 to approximately eight million in 1993. As set out herein however in recent times the profitability of the company and its sales in its millwright and rigging department have started to decline.

31. Prior to John Christman's departure from Christman and Associates another estimator had been hired by the company. After John Christman's departure an estimator was hired and one of the field foreman/supervisors was brought in to perform the sales and estimating duties. In this fashion Christman and Associates replaced the experience and expertise lost in these areas when it determined to terminate its employment relationship with John Christman.

32. After his employment was terminated in February 1991 John Christman continued to be bound by the non-competition clause for the next six months. As a result he remained unemployed and did some personal things including building a cottage.

33. In September 1991, John Christman commenced work for another unionized millwright rigging contractor called Process Mechanical Industrial ("PMI") a division of Process Industrial Company Inc. Mr. Christman had been approached by Cliff Snyder the president of that company. Mr. Snyder was a personal friend of Mr. Christman as the two men had worked together at Lackie Brothers until 1985 when John Christman left the company. Mr. Snyder himself had left Lackie Brothers sometime after 1985.

34. At PMI Mr. Christman was appointed manager in-plant service. His duties were to concentrate on local based operations ranging from in-plant maintenance service to equipment installation service to equipment installation, relocation and rebuilding. He was also to undertake other selected special projects which fell within his area of expertise.

35. John Christman remained with PMI until May 1993. There is nothing in the evidence to suggest that while he was employed at PMI the business of Christman and Associates ceased to grow as a result of. Mr. Christman's return to the market area. Indeed the evidence indicates Christman and Associates continued along its growth pattern.

36. In May 1993 John Christman was laid-off by PMI as a result of a lack of work.

37. While employed at PMI Mr. Christman had come into contact with Scott Hoag. Mr. Hoag is also a millwright by trade and had been employed in the sales department at PMI performing sales and estimating functions with respect to the millwright work for that company.

38. In the fall of 1993 Mr. Hoag approached Mr. Christman. After some discussions the two men decided to form a partnership and carry on business as a millwright and rigging contractor. For tax planning purposes John Christman incorporated a holding company (Industrial) wholly owned by himself, his wife and a Christman family trust. Scott Hoag incorporated a holding company (Scotron) wholly owned by himself and the Hoag family trust. In turn, on December 1, 1993 these two holding companies formed an equal partnership. The name of the partnership is Tri-Corps.

39. Tri-Corps commenced its operations as a millwright and rigging contractor in December 1993. As did Christman and Leitch and subsequently Christman and Associates, Tri-Corps has also started out small. At present it employs Scott Hoag and John Christman plus two other millwrights. These millwrights have not necessarily been employed on a full-time, forty hour per week basis but have been engaged by Tri-Corps to meet work load demands. In addition Tri-Corps may call on two "helpers" on an as needed basis.

40. At Tri-Corps Scott Hoag and John Christman are each a ~key person". Each solicits customers, estimates jobs, bids on work and performs the actual millwright and rigging work to complete the jobs which Tri-Corps obtains. It is John Christman's hope and expectation that the business of Tri-Corps will grow beyond its present small size. To that end Tri-Corps will take advantage of all opportunities presented to it although it presently continues to focus and obtain primarily the smaller "in-plant maintenance" type jobs.

41. In order to obtain work for this new partnership, both Scott Hoag and John Christman sent out letters to various industrial and manufacturing enterprises. Although Tri-Corps would like to stay "close to home" in the Kitchener-Waterloo area, it has also solicited customers west of that area as far away as London, and east of that area to Toronto. This is generally the same market area served by Christman and Associates. In addition to letters soliciting customers, Tri-Corps obtains its work and leads for new work in much the same manner as many other millwright and rigging contractors --- personal contacts at the plants, word of mouth, leads from customers and vendors etc. At least some of the letters of solicitation sent by John Christman were sent to prospective customers for whom Christman and Associates had performed millwrighting and rigging work in the past (although these customers were not "exclusive" customers of Christman and Associates and had engaged other millwright and rigging contractors to perform services on their behalf).

42. We heard much evidence about the nature and type of work performed by Christman and Associates and Tri-Corps and the clientele or customer each services. We do not propose to detail that extensive evidence. It is sufficient to note that within this industry and this market place there is a finite number of "customers" or industrial and manufacturing enterprises who may from time to time require the services of a millwright and rigging contractor. There are a number of both unionized and non-unionized contractors who provide services to a "core" group of customers. These customers do not necessarily make exclusive use of a particular millwright and rigging contractor and may at various times and for various purposes engage a number of different contractors. In recent times competition for the available work has increased amongst the millwright and rigging contractors.

43. Notwithstanding assertions to the contrary, and notwithstanding the fact that Christman and Associates is a multi-trade contractor and not merely a millwright and rigging contractor as is the case with Tri-Corps, we find that when Tri-Corps entered the market it became an actual and potential competitor of Christman and Associates. Notwithstanding their respective size there is a degree of overlap in the activities of both Tri-Corps and Christman and Associates. The area of overlap is not total and the scope of work in which Christman and Associates is engaged is presently much broader than that of Tri-Corps (including as it does for example electrical and piping work). We consider it more significant however to focus on the general nature of the millwright and rigging work performed and the skills of the employees who do that work. To that end it is sufficient to note that both Tri-Corps and Christman and Associates in a general sense operate similar millwright and rigging businesses in Southern Ontario in competition with each other and in competition with a number of other millwright and rigging contractors.

44. Since Tri-Corps commenced its operations the millwright sales at Christman and Associates have decreased. Although Christman and Associates' sales are still up when compared to its sales in February 1991 when John Christman's employment was terminated, since December 1993 its actual sales in the millwright and rigging department together with its profits for that department have declined. We do not find it necessary to conclusively determine the matter but have assumed for purposes of these applications that at least one of the factors for the decline in sales is the existence of Tri-Corps as another competitor in this millwright and rigging market place.

45. When he commenced his partnership with Scott Hoag, Mr. Christman determined not to use the Christman name. He testified that he didn't want to use his name because "I didn't want any confusion to exist when we went out to sell our services with the company that I have sold. I felt it would have been a detriment had I done that". In cross-examination and subsequently in response to a question from the panel Mr. Christman elaborated that he "didn't want to have any misunderstanding within the market place that there was any connection between the two companies. Customers frown on having two companies come in to bid to find out that they are connected.... I didn't think it would do my business any good for someone to have that impression. We were a new business, a new start-up and that's how we wanted it."

46. Finally, we note that after John Christman left Christman and Associates in February 1991 there was no continuing relationship between Christman and Associates and John Christman or the companies with which he subsequently became associated --- either PMI as an employee or Tri-Corps as a partner. Neither Russell Straus nor his spouse nor any of the minority shareholders of Christman and Associates have any interest (financial or otherwise) direction or control of Tri-Corps, Industrial or Scotron. Neither Scott Hoag nor John Christman, nor their respective holding companies, nor their partnership Tri-Corps have any interest (financial or otherwise) direction or control of Christman and Associates. The companies operate as separate and distinct entities and as noted compete with each other. There has not been any interchange of employees, no hiring of former Christman and Associates' employees by Tri-Corps and no transfer of work from Tri-Corps to Christman and Associates or from Christman and Associates to Tri-Corps. Tri-Corps and Christman and Associates have separate business addresses, separate fabrication and shop facilities, separate banks and each issues cheques in their own name. There has not been any purchase of equipment by Tri-Corps from Christman and Associates, nor is there any other type of financial support or arrangement between Christman and Associates and Tri-Corps, or amongst the principals John Christman, Scott Hoag and Russell Straus.

47. We do not propose to fully set out the able submissions of the parties but intend to merely summarize and briefly highlight their respective positions.

48. The substance of the submissions made by counsel for the trade union was that John Christman is and was a "key person" in the operations of Tri-Corps, Christman and Leitch and Christman and Associates with the result that each of these three entities were associated and related employers under common direction and control within the meaning of subsection 1(4). With respect to the section 64 application counsel asserted that as "key person" John Christman was "the business". When Tri-Corps commenced its operations it acquired John Christman and his "business". In essence, John Christman merely started a new company doing the same type of millwright and rigging work, operating in the same market place, in the same geographic area. Counsel pointed to the solicitation letters sent by Tri-Corps to customers who were also customers of Christman and Associates noting that in December 1993 John Christman was merely continuing in a new form the company which he had started and built up from 1985 to 1991. The fact that there was a hiatus between Mr. Christman's association with Christman and Associates and the start of his new business was not significant and did not affect his status as a "key person" (Ian Somerville Construction Ltd., [1988] OLRB Rep. Oct. 1022, Steeles Electric, [1994] OLRB Rep. May 603).

49. Counsel asserted that just as Christman and Associates started small and was built-up, Tri-Corps was also starting off small but with the expectation that it would grow. That expectation arose because of the past experience and expertise, customer contacts and goodwill and reputation which John Christman had. Those same assets were brought to Tri-Corps as John Christman continued to carry on business in the exact same manner as before but with a new business entity.

50. It was submitted that the trade union ought not to be penalized for bringing its application in a timely fashion before there was evidence of significant erosion of their bargaining rights. There was in fact actual and potentially greater erosion of those bargaining rights as was evidenced by the fact that the unionized Christman and Associates had experienced a decrease in sales which was in part attributed to Tri-Corps' entry in the market place. There was also evidence that one particular sale had been lost by Christman and Associates to Tri-Corps. In support of these various submissions counsel relied upon Construction P.H. Grager Inc., [1985] OLRB Rep. Feb. 233; Stucor Construction Ltd., [1987] OLRB Rep. Apr. 614; Ian Somerville Construction Ltd., supra, Warren Steeplejacks Limited, [1989] OLRB Rep. Mar. 309; Kent Acoustics Limited, City Acoustics Limited, J. L. Acoustics Ltd., August 12, 1990, Board File No. 1367-89-R [now reported at [1990] OLRB Rep. Aug. 855]; Douglas MacDonald Development Corporation, Douglas Ronald MacDonald, David Cohn Anderson and David Victor Spillenaar, September 20, 1990, Board Files Nos. 1071-89-R, 1072-89-R; Deluxe Electrical Contractor Ltd., [1990] OLRB Rep. Nov. 1135; Ably Concrete Floor Limited, [1991] OLRB Rep. May 579; Gallant Painting, [1991] OLRB Rep. Sept. 1051; Kepic Wrecking Inc., [1993] OLRB Rep. June 516; Merit Contractors of Niagara, [1994] OLRB Rep. Feb. 152; Steeles Electric, supra, Central Forming & Concrete Inc.; Altracon Construction Limited; Gaspo Construction Limited; Ash worth Engineering Inc., July 18, 1994, Board File Nos. 3666-93-R, 3667-93-G, 3857-93-R [now reported at [1994] OLRB Rep. July 805].

51. Counsel for Tri-Corps asserted that the pre-requisites for a declaration pursuant to section 64 or subsection 1(4) had not been established. There was neither a sale of a "business" nor common direction and control. Although John Christman may have been a "key person" in Christman and Associates up until 1990, his status changed after he sold his shares in Christman and Associates to Russell Straus. Thereafter he was no longer a "key person" as evidenced by the fact that Christman and Associates terminated his employment in February 1991 and continued to carry on business and grow without John Christman after that termination. The hiatus between John Christman's departure in February 1991 and the commencement of the Tri-Corps business in December 1993 was significant and indicated that whatever good will was associated with the key person had evaporated.

52. Counsel argued also that the business and activities of Tri-Corps and Christman and Associates could not be said to be "associated or related". The activities of the two entities were different, their respective size and consequent ability to perform certain jobs was different, and each served a different market place with Tri-Corps focusing on small maintenance projects. There was no relationship, interchange of employees or any other functional interchange between the two entities. Counsel also asserted that there was no common direction and control as there was no overlap of shareholders, officers or directors. There was no financial support between Tri-Corps and Christman and Associates. The usual indicia of common premises, logos, sales staff, management expertise were also absent. In instances such as these where both entities continue to exist common direction and control must be contemporaneous as of the date of application.

53. Moreover, the purpose of both section 64 and subsection 1(4) was remedial, to preserve and protect bargaining rights and not extend them. Neither section was intended to be a shortcut to certification. Where, as here the "predecessor" or "related" company was still in business and doing well there was no mischief which application of these provisions would cure. There was no erosion of bargaining rights but merely legal competition in the market place. Loss of work due to competition was not in and of itself sufficient reason to grant either a declaration of successorship on a common employer declaration. In his submissions counsel relied upon Rivard Mechanical, [1981] OLRB Rep. May 550, In-plant Contractors Inc., [1993] OLRB Rep. May 421, Merit Contractors of Niagara, [1994] OLRB Rep. Feb. 152, Pinecrest Queensway Health and Community Services, [1992] OLRB Rep. Nov. 1211, Rosmar Drywall and Acoustics Limited, Unreported decision Board File Nos. 0863-92-R, May 14,1993.

Decision

54. The relevant portions of section 64 and subsection 1(4) of the Act state:

64.(1) In this section,

"business" includes one or more parts of a business; ("entreprise")

"predecessor employer" means an employer who sells his, her or its business; ("employeur precedent")

"sells" includes leases, transfers and any other manner of disposition; ("vend")

"successor employer" means an employer to whom the predecessor employer sells the business. ("employeur qui succede")

(3) If, when the predecessor employer sells the business, a trade union is the bargaining agent for any employees of the predecessor employer, has applied to become their bargaining agent or is attempting to persuade the employees to join the trade union, the trade union continues in the same position in respect of the business as if the successor employer were the predecessor employer.

(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.

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

The Sale of a Business Application

55. A brief review of the principles which underline the application and interpretation of section 64 is useful.

56. Section 64 is a remedial provision. The purpose of the section has been succinctly summarized in a number of decisions of the Board. Thus in Tatham Company, [1980] OLRB Rep. Mar. 366 the Board, referring to its earlier decision in Aircraft Metal Specialist Limited, [1970] OLRB Rep. Sept. 702 stated:

19. . . .

“'The purpose of section 47a [now section 64] 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, [1964] OLRB Rep. Dec. 382 and Trenton Riverside Dairy, September 1964 (1964) 2 C.L.S. 76-1005.

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

20. Section 55 [now section 64] prevents the destruction of bargaining rights or a dislocation of the collective bargaining status quo, by transforming the institutional rights of the union and the collectively bargained rights of the employees into a form of "vested interest" which becomes rooted in the business entity, and like a charge on property, "runs with the business." To accomplish this objective, the statute gives a very special meaning to the word "sale", envisages that bargaining rights can be continued in a severable "part" of a business, abrogates the notion of privity of contract, and eliminates the significance of the separate legal identity of the new employer.

57. In Gallant Painting, supra, the Board stated at paragraphs 41 to 44:

41. As noted, section 63 [now section 64] is designed to preserve bargaining rights where there is a "continuum of the business". (See also Thunderbay Ambulance Services inc., [1978] OLRB Rep. May 467.) The broad and liberal interpretation which the statute has given to the term "sells" as including "any other manner of disposition" underscores the purpose of the section. Regardless of legal form, and regardless of the actual physical transfer of fixed assets, inventory or equipment, customer lists, accounts receivable or the like, for labour relations purposes a "business" or "part of a business" may nonetheless have been "transferred" or "disposed" of in "any other manner".

42. Given the remedial purpose of section 63, the primary focus of the Board in applications under section 63 is what is the "business" of the predecessor to which the bargaining rights have become attached or "vested". Rather than focusing upon the legal forms and commercial transactions which surround the circumstances which gave rise to the section 63 application, the Board looks to the predecessor's "business" and determines if this has been "disposed" of in some manner to the successor or if there has been a continuum of that business by the successor. Have the essential elements of the predecessor's "business" been transferred to the successor thereby enabling the successor to continue the business? (See for example Grand Valley Ready-Mixed Concrete Supply Limited, [1981] OLRB Rep. June 663)

43. The determination as to what constitutes the "business" of the predecessor is not an easy task. The Ontario Labour Relations Board Reports contain a multitude of cases involving section 63 applications. It is however impossible to extract from these cases a single factor or element which is always determinative. The difficulties surrounding the factual determinations which the Board must make are compounded by the fact that the elements or factors which are significant in each case can vary with the business context. As a result, there are very few "text book" cases. As was noted in The Tatham Company Limited, [1980] OLRB Rep. Mar. 366:

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 arising out of materially altered, entirely omitted, or newly-added facts which arguably should affect the decision on the merits. Much of the confusion which attends successorship results from the facility with which each case can be distinguished on its facts from all former cases; but to dismiss the confusion so lightly would be to disregard the fundamental differences inherent in the various business contexts in which the successorship issue arises. Factors which may be sufficient to support a 'sale of 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. In each of these sectors the nature of the business organization is different, yet in each case section [63] must be applied in a manner which is sensitive to both the business context and the purpose which the section is intended to accomplish.

44. A "business" is the totality of the undertaking. A "business" may include such tangible assets as tools, equipment, machinery, physical buildings together with such less tangible assets as skilled management and operating personnel and intangibles such as goodwill (see Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193). A "business" must be distinguished from the work performed or carried out by the business. This is particularly true in circumstances such as the present which involve a business which obtains its work by being the successful bidder on contracts which are regularly sent out for tender (either public tender or invited tender).

58. Thereafter the Board referred to its decision in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193 to note that mere continuity of work is not necessarily in and of itself sufficient to found a successor employer declaration under section 64. In Metropolitan Parking the Board noted:

33. There need not be a transfer of the entire business before section [64] comes into play. The successor rights provisions may also be triggered by the transfer of "part ofa business." [See section 64(1).] This language suggests that bargaining rights continue when something considerably less than "the totality of the undertaking" has been transferred. Presumably the Legislature envisaged the preservation of bargaining rights where there is a severance and transfer of a discrete, cohesive portion of the economic organization or activities which comprise the totality of 'the business." 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 (Supercity Discount Foods, [1979] OLRB Rep. Apr. 119; Loblaws Groceterias Ltd., [1973] OLRB Rep. Jan. 73); where there is a transfer of the right and means to produce one of the products formerly produced by the predecessor's business; (Canac Shock Absorbers, [1973] OLRB Rep. Oct. 508); where there was a transfer of certain milk delivery routes in a particular geographic area (Borden Co. Ltd., [1970] OLRB Rep. Jan. 1244), and where there was a transfer of the oil burner installation and service branch of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Ltd., [1971] OLRB Rep. May 515.) In each of these cases the Board found that the predecessor had transferred a coherent and severable part of its economic organization - managerial or employee skills, plant, equipment, "know how" and goodwill - thereby allowing the successor to serve the market formerly served by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms 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. It was otherwise in Woodway Structural Components, [1971] OLRB Rep. Nov. 732, Canada Cement LaFarge Ltd., [1975] OLRB Rep. Dec. 905, and Dufferin Steel, [1976] OLRB Rep. Mar. 81. In these cases there was a significant change in the character of the work, product or market so that the Board concluded that what had been transferred was not the predecessor's business. The successor had merely incorporated incidental elements of that business into his own economic organization - even though each of the elements acquired could previously be found in the predecessor's business organization and, in that sense, were "part" of the predecessor's business. What was transferred lacked that dynamic quality which distinguishes an idle collection of surplus assets from an active, severable and coherent part of a going concern.

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. Thus, an apparent continuity of the business may not be significant if the alleged successor has already been engaged in a similar business, or has set up a "new" business which resembles the "old" one in many respects. In Ralph Ford Electrical, [1974] OLRB Rep. June 388, for example, several key employees of the alleged predecessor became dissatisfied and struck out on their own in competition with their former employer. In that case the Board found that there was not a transfer of a business, but rather the creation of a new "parallel" business which only incidentally made use of some of the tangible elements of the predecessor's business organization. Similarly, in Sunnybrook Food Mkt., [1974] OLRB Rep. Jan. 47 the continuation of a grocery business on the same premises, and with some of the same fixtures, was not enough to support a successorship finding, the Board was not satisfied that there had been a transfer and continuation of the predecessor's business (i.e., the business that he owns and operates) but simply the continuation of a like business. It is recognizable that so long as there is a market for a product, some entrepreneur is likely to appear who will produce for that market and, in so doing, he may share many of the characteristics of his alleged predecessor.

But continuity of the work done is not sufficient alone to satisfy section 144. There must be some nexus between two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successors/zip. There must be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand. [emphasis added]

A continuity of the work and/or the employees is significant, but it is not always sufficient, to sustain a finding of successorship. This Board adopted a similar view in British American Bank Note Co. Ltd., [1979] OLRB Rep. Feb. 72- a case which, like the present one, involved the consequences of a loss of a contract:

There are limits, however, to the extent to which section 55 can be used to preserve collective bargaining rights. It is clear that the provisions of this section do not attach bargaining rights to the work being performed by a business but only to the business itself, while this distinction may not be easy to draw in some cases, it is essential that it be maintained since section 55 cannot be interpreted as guaranteeing to a bargaining agent an absolute right of property in work performed by its members. Section 55 serves only to preserve bargaining rights that have become attached to a business entity so that when that business entity is transferred, either in whole or in part, those bargaining rights survive and bind the successor employer.

The focus of section 55 is the business entity - the employer's total economic organization - not simply the work which the employees perform.

44. For a transaction to be considered a "sale of a business" there must be more than the performance of a like function by another business entity. There must be a transfer from the predecessor of the essential elements of the business as a block or as a "going concern". A business is not synonymous with its customers or the work it performs or its employees. Rather, it is the economic organization which is used to attract customers or perform the work. The Legislature could have provided for the continuation of bargaining rights whenever there is a continuity of the work performed, but it did not do so. Bargaining rights are continued only when the employer transfer his business. The use of the active verb and possessive pronoun is not insignificant.

59. The substance of the union's case is that in a bid oriented business in the construction industry similar to that of Tri-Corps and Christman and Associates, the essential element of the "business" resides in the estimating expertise and management experience of John Christman. In effect, John Christman was so "key" to the business of Christman and Associates that he is the personification of the business. Thus, when this key asset was transferred or moved from Christman and Associates to Tri-Corps there was a "sale" of the "business" within the meaning of section 64.

60. We were referred to a number of "key person" cases which we do not propose to analyze. Suffice it to say that each case did and must of necessity turn on its own particular facts. There are a number of cases in which labour relations consequences did attach to the movement of a key person to a new entity as the Board found a "sale" occurred when the key person moved and in effect took the "business" with him or her (see for example Stucor Construction Limited, supra, Deluxe Electrical Contractor Limited, supra, Construction PH Grager Inc., supra, Gallant Painting, supra, Kepic Wrecking Inc., supra, Steeles Electric, supra.

61. On the other hand there are also a number of cases in which the movement of persons to a new entity did not attract labour relations consequences pursuant to section 64 (see for example Jen-Ry Utility Contracting Company Limited, [1984] OLRB Rep. Dec. 1724, Braneida Mechanical Service Limited, [1981] OLRB Rep. Aug. 1102, Rivard Mechanical, supra, Ralph Ford Electric, [1974] OLRB Rep. June 388, Merit Contractors, supra, In-plant Contractors, supra, Drycor Electric, Board File No. 0032-93-R unreported decision dated June 20, 1994).

62. In a number of the cases referred to by the trade union the Board found that the movement of a "key person" did not amount to a "sale" of "the business" but did cause the Board to conclude that two entities carried on associated or related employers under common direction or control (see for example Ian Somerville Construction Limited, supra, Warren Steeplejacks Limited, supra, Kent Acoustics Limited, supra, Douglas MacDonald Development Corporation, supra). This issue will be addressed in greater detail below.

63. Thus it can been seen that not every movement of managerial personnel from one business to another will constitute a sale of a business within the meaning of section 64. In addition, the cases indicate that bargaining rights attached to a "business" and not to an individual. It is only where the key person is so identified with the "business" that it is realistic to view his/her movement to be a transfer of all or part of a "business" that a declaration pursuant to section 64 will be made. To hold otherwise would result in a "sale" whenever an expert, experienced manager, estimator, field supervisor or similar managerial personnel left the unionized company to join another. Within the construction industry it is not unusual to find persons who have obtained specific expertise or management knowledge and experience, who have developed entrepreneurial skills, or who have otherwise acquired specialized abilities by reason of their employment history or association within the industry. It is inevitably these types of attributes which enable persons within the industry to either attract offers of employment from other companies or individuals, or which permit them to start up their own business enterprise either alone or in conjunction with others who may have similar or complimentary expertise, knowledge and skills. Certainly, in instances where a business has started from scratch (as is the assertion in the case before us) it is difficult to imagine anyone who does not have some experience, skill or expertise. A complete novice to the construction industry is not likely to start up his/her own business in the industry.

64. In the result we concur with the observations of the Board in Merit Contractors of Niagara, supra, where the Board stated:

14. As the Board pointed out in Gallant Painting, supra, not every movement of a person significant to a business will constitute a sale of business within the meaning of the Labour Relations Act, or otherwise attract labour relations consequences. In that respect, the applicants were unable to point to any "key person" case in which the Board found a sale of business where the "key person" did not hold an ownership interest in the alleged predecessor or a vendor entity which subsequently ceased to operate. It is conceivable that an individual could be a "key person" and that a business could survive his/her departure. But however important a person may be to the operation of a business, s/he will not be a "key person" within the meaning of the Board's sale of business jurisprudence unless the business is substantially different without him/her. That is, for an individual to be "key person", s/he must be identified with a business or some significant part of it.

65. The evidence in this case indicates that in fact the business of Christman and Associates was not substantially different without John Christman. After John Christman sold his shares to Russell Straus and ceased to "call the shots" at Christman and Associates, the business of Christman and Associates continued to operate and grow. Of even greater significance is the fact that after John Christman's employment was terminated the business of Christman and Associates did not only continue to operate but expanded. After Russell Straus concluded in February 1991 that the company could survive John Christman's departure, the millwright and rigging sales at Christman and Associates continued to grow, and its total employee complement nearly doubled in size. Although a significant part of that growth in employee numbers was in the other trade classifications such as electricians, approximately five full-time millwrights have also been added to the Christman and Associates' payroll since February 1991. Christman and Associates continued to operate in the same market place doing the same type of millwright and rigging work with the same type of millwright employees for the same or the same type of customer. There was no appreciable difference between the business of Christman and Associates in February 19911 before John Christman's departure and thereafter.

66. Whatever may have been the status of John Christman prior to February 1991 (and there is no doubt that at least until February 1990 he was the "key person" at Christman and Associates) the evidence indicates that by February 1991 he could no longer be considered "key" to the continued operations of the business. Indeed the evidence highlights the fact that during the course of an enterprise's history the "key" personnel may change. The founder may change. The founder of the company does not necessarily remain as its key person or one of its key personnel. The passage of time may result in a loss of "key person" status and can lead to the conclusion that persons formerly key to the organization are no longer so identified with the organization as to be viewed as the personification or the very essence of "the business".

67. That this is what occurred in this case is evidenced both by the fact that (a) Mr. Straus as president and majority shareholder of Christman and Associates felt sufficiently comfortable to terminate the services of Mr. Christman at a time when the latter was contractually bound to remain in his employ for a further two years (thus incurring also a penalty of pay in lieu of notice); and (b) Christman and Associates continued to prosper after John Christman's termination.

68. We have concluded that in February 1991 John Christman was no longer the "key" person at Christman and Associates and could no longer be perceived as "the business" of Christman and Associates. His movement elsewhere would not therefore in and of itself cause us to conclude that there has been a sale of the Christman and Associates "business" to Tri-Corps.

69. Are there any other factors present which warrant or support remedial on declaratory relief pursuant to section 64? We find that there are not. There has not been any sale or transfer of goodwill, customer lists, accounts receivable, existing contracts, inventory or equipment. There has not been any interchange of employees or hiring of former Christman and Associates' employees by Tri-Corps.

70. What there has been is some solicitation of Christman and Associates' "customers". This fact either standing alone or even in conjunction with the involvement of John Christman as a former "key" person at Christman and Associates is not however sufficient to constitute a sale of a business within the meaning of section 64 of the Act. In this regard the nature of the in-plant maintenance and construction millwright and rigging business is also significant. The evidence discloses that these customers are not and have not been exclusive customers of Christman and Associates. Rather these customers call upon the services of different millwright and rigging contractors who operate in competition with each other in this marketplace. Tri-Corps is but yet another competitor.

71. Although John Christman did have prior contact with these customers while at Christman and Associates, and although these contacts have undoubtedly assisted him and his partner Scott Hoag at Tri-Corps (as Scott Hoag's contacts would equally assist), it can't be said that there has been a "continuum of the business" of Christman and Associates in Tri-Corps. The nature of the industry negates such a finding.

72. Tri-Corps is not simply a continuation of the business John Christman started as Christman and Leitch and later Christman and Associates. Rather it is a similar and parallel business established in competition with Christman and Associates. The alleged successor has set up a new business while the alleged predecessor's business is unchanged and continues to actively and successfully operate. The loss of sales at Christman and Associates may be due to this competition but are not the result of any "sale" of all or part of the "business" within the meaning of section 64 of the Act.

73. The root of the Tri-Corps business does not lie with Christman and Associates. The root of the Tri-Corps business lies in the personal attributes of John Christman and Scott Hoag. That is not to say that Tri-Corps, started out "from scratch". As has been noted, in the construction industry in particular, persons will of necessity rely on exposure and contacts made while engaged in other positions in that industry. In this case the "know-how", expertise, experience and reputation which are essential in this bid oriented market were acquired by John Christman and Scott Hoag from having worked in the industry for nearly thirty years. They were not acquired from, and are not merely rooted in, the business of Christman and Associates.

74. To find a sale of a business in these circumstances would be to create trade union bargaining rights where there were none.

The Common Employer Application

75. We note at the outset that the fact that there has or has not been a "sale" of a "business" within the meaning of section 64 does not necessarily mean that Tri-Corps and Christman and Associates do or do not constitute one common employer under subsection 1(4) of the Act. Section 64 and subsection 1(4) are not mutually exclusive (see Economy Store Fixtures Limited, [1992] OLRB Rep. May 575).

76. Once again we find it useful to briefly refer to the purpose of subsection 1(4). In Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 the Board stated:

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

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

14. . . it is now clear that the "associated or related activities or businesses" need not be carried on simultaneously. The amendment extends the ambit of section 1(4) to situations in which one business entity is actively carrying on business and the other is not. It is not necessary to have shared participation in a common business or endeavour or even contemporaneously economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two businesses may be "related" within the meaning of section 1(4) even though their activities are carried on through different or corporate vehicles and are not carried on simultaneously. It is evident that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of "privity of contract" or "the corporate veil". (See also Pinecrest-Queensway Health and Community Services, supra).

77. In this case it is not disputed that there exist two or more entities. Although counsel for Tri-Corps, asserted otherwise, we are satisfied that the second criteria for a common employer declaration is also present insofar as the two entities carry on associated or related activities. In Frank Plastina Investments Limited, [1986] OLRB Rep. June 720 the Board held:

20. Given the remedial thrust of section 1(4) and the broad language chosen by the Legislature ("associated" or "related", "activities" or "businesses"). It is apparent that the section was intended to apply to a wide variety of commercial activities, even when an employer's main or principal business concern may be something else. That was the opinion of the Board in Elmont Construction Limited, [1974] OLRB Rep. June 342 (application for judicial review dismissed, sub nomine, Elmont Construct Limited and Bruce Hundey Contracting Limited v. Toronto Building and Construction Trades Council et al, CLLC 14.270), and it is one with which we respectively agree. The fact is, that a firm engaged in the construction business can, with relative ease, become involved, from time to time, in various sectors, subdivisions, phases, or specialized kinds of construction work, depending largely upon the business opportunities which present themselves, and we do not think we should readily hold that those activities are "unrelated" - particularly if they are being undertaken at the same time and involve common managerial or employee skills.

78. Although the activities of Tri-Corps, and Christman and Associates are not identical there is sufficient overlap to find their activities to be "related" within the meaning of subsection 1(4). The nature of the work being performed and the skills of the employees point to such a finding. Tri-Corps and Christman and Associates are both engaged in the construction industry as millwright and rigging contractors employing millwrights to perform in-plant "maintenance" and "construction" millwrighting work. The differences which do exist are not of such a magnitude as to cause us to conclude that their activities are "unrelated" for purposes of subsection 1(4) (See for example Warren Steeplejacks Limited, supra).

79. As noted sections 64 and subsection 1(4) are not mutually exclusive. The Board's jurisprudence indicates however that these two statutory provisions may meet or come together when the Board must determine whether the movement or transfer by a "key person" results in "common control or direction" within the meaning of subsection 1(4) of legally separate entities.

80. Once again the Board's decisions make it clear that the determination of whether there is common control or direction is dependent on the facts. Thus in Inplant Contractors Inc., supra, the Board referred to Jen-Ry Utility, supra, stating:

56. In the present case, we are satisfied that the first two criteria are met. With respect to the third, in Jen-Ry Utility Contracting Company Limited, supra, the Board discussed the meaning of having "control" or "direction" of a company for the purposes of section 1(4):

57. All of these cases make it clear that the test for "control" under section 1(4) of this Act envisions the ultimate power to "call the shots" where necessary, as counsel for the respondent put it, with respect to the labour relations of the two enterprises, and not simply the authority and responsibility to direct the activities of employees in the field. Were it otherwise, a totally independent and established company hiring the manager of field services from another company would inevitably find itself in the position of being a "related employer" for the purposes of the Labour Relations Act. Rather, we accept the submission of the respondent that the section contemplates a point of central decision-making control with the ultimate power to, for example, say "yes" or "no" to a wage proposal from the union for both entities. Such power, as the Board cases show, may come simply from the legal relationship between the two entities, (e.g., Great Atlantic & Pacific Company Limited, A & P Drug Mart Limited, [1981] OLRB Rep. March 285) or from a total lack of independence in practical or economic terms, (e.g. J. H. Normick, Foley, supra, and even Brant Erecting & Hoisting, [1980] OLRB Rep. July 945,) or it may come from a combination of the two, (Kennedy Lodge, supra, Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214).

58. Usually, the existence of common shareholders, directors or officers is an indicia of common control and direction. In a small business, in particular, it is not surprising to find that where one or two persons constitute the ownership, directorship or executive, these persons also hold the authority to 'call the shots". On the other hand, it is also not unusual to find persons occupying the positions of directors or officers in a corporation who do not in fact hold the ultimate power to make decisions affecting labour relations. Thus, the Board looks beyond the paper structure of a company to determine where the real power to make labour relations decisions resides. In some cases, the Board has found companies which do not share common shareholders, directors and officers to be under common control and direction: see, for instance, Widcor Limited, supra and Metropolitan Toronto Condominium Corporation #880, [1992] OLRB Rep. Dec. 1145.

81. The focus on the facts has caused the Board to conclude that in some instances the movement of key persons to a new entity did constitute common control or direction with respect to associated or related activities, although that movement did not necessarily fall within the application of section 64 of the Act (See for example Ably Concrete Floor, supra; Kepic Wrecking Inc., supra; Steeles Electric, supra, Warren Steeplejacks Limited, supra; Kent Acoustics Limited, supra; Ian Somerville Construction Ltd., supra; Douglas MacDonald Development Corporation, supra).

82. In other instances it was found that there was no common direction or control with respect to associated or related activities notwithstanding the transfer of a key person, or alternatively the Board determined that a section 64 declaration made it unnecessary to decide the issue (See Deluxe Electrical Contractor Ltd., supra; Merit Contractors of Niagara, supra; Jen-Ry Utility Contracting Limited, supra; Rivard Mechanical, supra; Inplant Contractors, supra.)

83. There is nothing in the evidence to suggest that John Christman currently has any control or direction with respect to the operations of Christman and Associates, or that Russell Straus has any control or direction with respect to the operation of Tri-Corps. In the absence of the existence of any common shareholders, directors or officers as indicia of common control and direction, the only fact which would warrant a finding of common control and direction is that John Christman a person who was a "key person" at Christman and Associates is now a "key person" at Tri-Corps.

84. As indicated herein we have already determined that when John Christman left Christman and Associates in February, 1991 he was no longer a key person. He no longer had the authority to "call the shots". By that time the real authority to make decisions, including those relating to labour relations matters, resided with Russel Straus, the president and majority shareholder of Christman and Associates (and perhaps with the other six minority shareholders whom Mr. Straus characterized as "key people").

85. The issue then becomes whether the fact that John Christman was a key person at Christman and Associates at least until February, 1990 when he sold his shares, and his status as a "key person" at Tri-Corps more than three and a half years later can nevertheless form the basis for a finding that there is common control or direction between the associated or related activities of Tri-Corps and Christman and Associates.

86. Some of the Board's decisions (See for example Ian Somerville Construction Ltd., supra, Kent Acoustics Limited, supra and Steeles Electric, supra) have concluded that there was common control or direction where a key person left one entity and established a new entity later notwithstanding a hiatus of many years. Those cases however are readily distinguishable from the present as in each of those case the entity which the key person left behind ceased to exist on operate after his departure. It is difficult to envision more compelling evidence of an individual's status as a "key person" with a company than the fact that the company ceases to operate when the key person is no longer associated with it. In those circumstances, when the key person returns at some later point in time to revive a business which has been dormant or non-operating during his absence, it is much more apparent that the key person is the "link" which establishes, for labour relations purposes, the common control and direction between the associated or related activities of the separate entities (which are not at that point operating simultaneously).

87. Those are not the facts of the present case. There is a significant hiatus between the time John Christman left Christman and Associates or ceased to be a key person at Christman and Associates and the emergence of Tri-Corps during which Christman and Associates continued to grow and prosper both in terms of the number of employees it employed and its sales volume in the millwright and rigging department. Just as this fact detracts from a finding that there has been a sale of a business because John Christman was not, for labour relations purposes, a key person at Christman and Associates in February, 1991, 50 too does this fact detract from a finding of common control and direction. It is not sufficient to say that at one point in time a person who is "key" in a newly formed company was also "key" in a former unionized company. The Board must have regard to the totality of the evidence. In this case that evidence includes not only the fact that Mr. Christman was no longer a "key person" at Christman and Associates when his employment was terminated in February 1991, but also the fact of the hiatus and the intervening events, and the circumstances which existed at Christman and Associates during that hiatus.

88. This is not a case where there is no hiatus between John Christman's departure from Christman and Associates and his re-emergence at Tri-Corps, shortly thereafter. There is more than two and a half years between these two events during which John Christman worked for another employer unrelated to Christman and Associates, and during which Christman and Associates continued to operate and grow. Neither is this simply a case where a key person leaves a business and the next day establishes a new business in competition with his former employer. The facts of those types of cases and the issue of common control and direction may be much more difficult to determine. In the end result each case does indeed turn upon its own peculiar facts. A hiatus period may not always be determinative of the issue. In this case however, having regard to the totality of the evidence, we are satisfied that the third criteria for a common employer declaration -namely that there be common control or direction - is not present.

89. Finally, we note that there has not been any erosion of the trade union's bargaining rights. It is true that the trade union need not necessarily wait until actual erosion has been demonstrated to have its bargaining rights protected by a common employer declaration. On the evidence before the Board however any "erosion" which has or which may potentially occur arises not because associated or related businesses or activities are or have been carried out under common control and direction, but because of competition by a separate, newly established parallel business.

90. This application is therefore dismissed.