[1994] OLRB Rep. May 603
2522-92-R; 2616-92-G International Brotherhood of Electrical Workers, Local 353, Applicant v. Eli's Electric Service; Town And Country Electric LTD.; Town and Country Electric; Steeles Electric; E & E Steeles Electric Ltd. c.o.b as E & E Steeles Electric c.o.b as Steeles Electric, Responding Parties.
BEFORE: Jules Bloch, Vice-Chair, and Board Members R. M. Sloan and G. McMenemy.
APPEARANCES: Craig Flood and Mike Oram for the applicant; Ron Himelfarb, Eli Himelfarb and Mary Himelfarb for E & E Steeles Electric Ltd..
DECISION OF THE BOARD; May 6, 1994
[1]. The style of cause is hereby amended to reflect the correct names of the responding parties: "Eli's Electric Service; Town and Country Electric LTD.; Town and Country Electric; Steeles Electric; E & E Steeles Electric Ltd. c.o.b as E & E Steeles Electric c.o.b as Steeles Electric". The responding parties will be referred to as Eli Himelfarb for ease of reference.
[2]. Board File #2522-92-R is an application pursuant to sections 1(4) and 64 of the Labour Relations Act ("the Act"). Board File #2616-92-G is a referral to the Board, under section 126 of the Act, of a grievance in the construction industry.
[3]. These matters first came on for hearing before a panel of the Board consisting of Vice-Chair Bloch and Board Members Fraser and Redshaw ("Bloch Panel"). At that initial hearing, the parties were represented by labour relations counsel who appear before the Board on a regular basis. After counsel for the responding parties finished his opening statement, the parties requested that the panel mediate the outstanding issues in dispute, and should such mediation fail, the parties requested that the same panel continue with the hearing of the matters on the merits. The parties signed an agreement to that effect. The agreement is reproduced below.
OLRB 2522-92-R and 2616-92-G
Between
International Brotherhood of Electrical Workers Local 353
and
E & E Steeles Electric Limited, Town & Country Electric Limited, Eli's Electric Service
The parties mutually request that the Board mediate their outstanding differences and, if such medication efforts are unsuccessful, mutually request that the Board continue with the hearing of these matters.
Signed & Dated at Toronto this 6th day of May, 1993
"Eli Himelfarb" "Michael I. Oram"
E & E Steeles IBEW. Local 353
Electric Limited
[4]. Part of the mediation involved an issue which the Board would not normally deal with in respect of either a section 1(4)/64 application or a grievance. Mr. Eli Himelfarb had been a member of the International Brotherhood of Electrical Workers, Local 353 ("Local 353" or "the Union"), however, because of a finding by a Union "Trial Board" that he violated the Union's constitution, a fine had been levied against him in the amount of $10,000.00. Mr. Himelfarb did not pay the fine and consequently was suspended from membership on April 4,1988. Part of the mediation included the panel attempting to mediate the issue of whether Mr. Himelfarb should be reinstated in the Union.
[5]. It was the unanimous view of the panel that, assuming all the facts presented by Counsel for the responding party in the opening statement to be true, Mr. Himelfarb would have a "rough row to hoe" in respect of all three applications under the Act. We offered him our opinion in respect of his chances of success and we urged upon him a settlement that included the reinstatement of his Union membership. At the end of the day, the parties reported to the Panel that they had tentatively agreed to a settlement.
[6]. Subsequently this matter was relisted for hearing. On August 3, 1993 the matter continued before Vice-Chair Bloch and Board Members Sloan and McMenemy. The Responding Party had by then changed counsel and new counsel raised an assertion of bias against the Chair of the Panel. The parties had previously agreed that Board Members Sloan and McMenemy could replace Board Members Fraser and Redshaw. Counsel for Eli Himelfarb submitted that the original "Bloch Panel", by expressing an opinion on the probable outcome of the case, had prejudged the case and therefore could not be an impartial trier of fact. In counsel's view, mediation does not include a frank assessment of a party's chances based on a party's best evidence and the relevant jurisprudence.
[7]. After the parties had been given full opportunity to make oral submissions in respect of the bias motion, the Board in an oral ruling on August 4, 1993, unanimously dismissed the responding party's motion. The following are the reasons for the August 4, 1993 decision and the decision and reasons for the matters in issue argued before the Panel in respect of the merits of the case.
[8]. It is axiomatic that a specialized Tribunal like the Labour Relations Board ("the Board") is different from a Court. The Board has it own Rules of Procedure (see: Rules of Procedure January 1993). As well, the Board is governed by specialized legislation which was enacted to create the framework for the adjudication of matters within the exclusive jurisdiction of the Board.
[9]. One of the specialized features of the Board is the important role that settlement of cases plays. This is especially so in the construction industry. Both the Trade Union and the Responding Parties are governed by the construction industry provisions of the Act. In respect of the construction industry, the Board, in section 126 applications convenes as an arbitration panel, pursuant to construction industry collective agreements, as well as a statutory Board with exclusive jurisdiction in respect of the Act. (See: Re International Association of Heat & Frost Insulators and Asbestos Workers Local 95 and Master Insulators Association of Ontario et al (1979) 1979 CanLII 1622 (ON HCJ), 99 D.L.R. (3d) 757). This special status, by statute, includes a construction industry division within the Board (see: section 104(5) of the Act). There are full-time Vice-Chairs and Board Members who have specialized construction experience. As well there is a full time labour relations officer dedicated to construction industry grievances and matters related to those grievances. The construction industry has come to expect a specialized understanding, by the construction industry division of the Board, of construction industry labour relations issues. Counsel who present construction industry cases usually come from a small group of lawyers, that make up a sub-set of the general labour relations bar. These counsel have an acute knowledge of their sub-specialty, construction labour law, and consequently know how to strategically litigate a case before the Board.
[10]. The concept of mediation/arbitration is not a new one. In this case, both Parties requested that the "Bloch Panel" perform the dual role of mediator and arbitrator. This request was made pursuant to or in conformity with section 126 (3) of the Act, which states:
126.-(3) Upon a referral under subsection (1), the Board has exclusive jurisdiction to hear and determine the difference or allegation raised in the grievance referred to it, including any question as to whether the matter is arbitrable, and subsections 45 (6.3), (8), (8.1), (8.3) and (9) to (12) apply with necessary modifications to the Board and to the enforcement of the decision of the Board.
Section 126 (3) specifically incorporates by reference, with necessary modifications, section 45 (8.1) which states:
45.- (8.1) An arbitrator or board of arbitration has the following powers:
To require any party to furnish particulars before or during a hearing.
To require any party to produce documents or things that may be relevant to the matter and to do so before or during the hearing.
To enter any premises where work is being done or has been done by the employees or in which the employer carries on business or where anything is taking place or has taken place concerning any of the differences submitted to the arbitrator or arbitration board and inspect or view any work, material, machinery, appliance or article at the premises and interrogate any person about any of the differences or about any work or thing.
To authorize any person to do anything that the arbitrator or arbitration board may do under paragraph 3 and to report to him, her or it about it.
To make such orders or give such directions in proceedings as he, she or it considers appropriate to expedite the proceedings or to prevent the abuse of the arbitration process.
To mediate the differences between the parties at any stage in the proceedings with the consent of the parties. If mediation is not successful, the arbitrator or arbitration board retains the power to determine the difference by arbitration.
To fix dates for the commencement and continuation of hearings.
To summon and enforce the attendance of witnesses and to compel them to give oral or written evidence on oath in the same manner as a court of record in civil cases.
To administer oaths and affirmations.
To admit and act upon such oral or written evidence as he, she or it considers proper, whether admissible in a court of law or not.
To consider such submissions provided in such form or by such method as he, she or it considers appropriate.
There is nothing in the legislation to suggest that in the course of a mediation in conformity with section 45(8. 1)(6) it may not mediate related and included issues.
[11]. The issue of bias must be placed squarely within a specific legislative and labour relations context. Section 1 (5) and 64 (13) of the Act place a statutory obligation on the Responding Parties to adduce all facts within their knowledge that are material to the allegations. The Rules of the Board require that these facts be pleaded prior to the commencement of the hearing. In this way, the Panel prior to the opening statements has a very good understanding of the Parties' best case scenarios. In this type of application, the Responding Parties present their evidence first and consequently make the first opening statement. At the end of the opening statements, the Panel is in a position to understand the true dimensions of the litigation.
[12]. In the case at hand, the Parties requested that the Board mediate/arbitrate the applications pursuant to section 64, 1(4) and 126. For the mediation to be effective, all three of the applications before the Board had to be settled at the same time. It is axiomatic that one can not settle a grievance without first establishing if bargaining rights exist. The Parties understood this and made their request to the Board on that basis (see the parties' written agreement).
[13]. For a mediation to succeed, Parties have to know the possibility of success in the litigation phase. This opinion must be based on the facts raised before the mediator and the mediator's understanding of the relevant jurisprudence, and practice as it relates, in respect of these Parties, to the construction industry. In this fashion, the Parties can decide what is in it for them in respect of settlement. Of course, settlement is also based on many intangibles, for example, the speed and cost of the settlement process in juxtaposition to the litigation process; or the mediator's ability to deal with and resolve issues that are not before the trier of fact.
[14]. In Brosseau v. Alberta Securities Commission (1989), 1989 CanLII 121 (SCC), 57 D.L.R. (4th) 458 the Supreme Court of Canada ruled that the Chairman, pursuant to the Securities Act, R.S.A. 1970, Chap. S.333 as amended by, had statutory authority to both investigate and adjudicate. The investigation in that instance was done by the Chair on his own motion and not with the consent of the Parties. The Court, in rendering its decision stated the following at page 464:
As with most principles, there are exceptions. One exception to the nemo judex principle is where the overlap of functions which occurs has been authorized by statute, assuming the constitutionality of the statute is not in issue. A case in point relied on by the respondents, Re W.D. Latimer Co. Ltd. and A.-G. Ont.; re Onuska and Bray (1973), 1973 CanLII 417 (ON HCJDC), 43 D.L.R. (3d) 58, 2 O.R. (2d) 391 (Div. Ct.); Affirmed sub nom. Re W.D. Latimer Co. Ltd. and Bray, 1974 CanLII 698 (ON CA), 52 D.L.R. (3d) 161, 6 OR. (2d) 129 (C.A.), addresses this particular issue with respect to the activities of a securities commission. In that case, as in this one, members of the panel assigned to hear proceedings had also been involved in the investigatory process. Dubin J.A. for the Court of Appeal found that the structure of the Act itself, whereby commissioners could be involved in both the investigatory and adjudicatory functions did not, by itself, give rise to a reasonable apprehension of bias. He wrote at pp. 172-3 D.L.R., pp. 140-1 OR.:
Where by statute the tribunal is authorized to perform tripartite functions, disqualification must be founded upon some act of the tribunal going beyond the performance of the duties imposed upon it by the enactment pursuant to which the proceedings are conducted. Mere advance information as to the nature of the complaint and the grounds for it are not sufficient to disqualify the tribunal from completing its task.
In order to disqualify the Commission from hearing the matter in the present case, some act of the Commission going beyond its statutory duties must be found.
Administrative tribunals are created for a variety of reasons and to respond to a variety of needs. In establishing such tribunals, the legislator is free to choose the structure of the administrative body. The legislator will determine, among other things, its composition and the particular degrees of formality required in its operation. In some cases, the legislator will determine that it is desirable, in achieving the ends of the statute, to allow for an overlap of functions which in normal judicial proceedings would be kept separate. In assessing the activities of administrative tribunals, the courts must be sensitive to the nature of the body created by the legislator. If a certain degree of overlapping of functions is authorized by statute, then, to the extent that it is authorized, it will not generally be subject to the doctrine of "reasonable apprehension of bias" per se.
[15]. In the case at hand, the Parties requested that the Board perform a dual function in regard to the matters in Board Files #2522-92-R and #2616-92-C. The Act specifically contemplates this type of arrangement. The agreement of the Parties, in a labour relations context, is extremely important to the legislative goal of harmonious labour relations in the Province of Ontario. As well, each time Parties can resolve their differences without litigation the Parties have a better opportunity to understand each other. This understanding will lead to less problems on the construction site as the adversarial nature of litigation will have been avoided.
[16]. In Careful Hand Laundry and Dry Cleaners Limited [1988] OLRB Rep. Dec. 1205, the Board, in dismissing a motion for apprehension of bias, restated the classic test at paragraph 6 and 7 of the decision:
The applicable test was framed as follows by Laskin C.J.C., speaking for the majority, in Committee for Justice and Liberty v. National Energy Board (1976), 1976 CanLII 2 (SCC), 68 D.L.R. (3d) 716 (5.C.C.): that a reasonably well-informed person could properly have a reasonable apprehension of a biased appraisal and judgment of the issues to be determined (p.713). The Chief Justice continued that "the test of reasonable apprehension of bias ... is a restatement of] what Rand, 1. said in Szilard v. Sztisz, 1954 CanLII 4 (SCC), [1955] 1 D.L.R. 370 at p. 373, [1955] S.C.R. 3 at pp. 6-7 [which, like the Committee for Justice and Liberty, involved bias based on prior association], in speaking of the 'probability or reasoned suspicion of biased appraisal and judgment, unintended though it be"'.
The test is an objective one. It is not sufficient to find apprehension of bias in a decision-maker simply because one party states "I am afraid the adjudicator will be biased because of something she said"; on the other hand, it is not sufficient for the adjudicator to deal with the matter simply by saying "I am not biased" or "I do not think anyone should think I would be biased". An objective test is necessary to avoid both allegations and determinations which are more reflective of self-interest than actuality. The determination must therefore be based on an assessment of the impugned words, including the context in which they were made and the surrounding statements. The test is whether a person who is informed about the circumstance surrounding the event giving rise to the allegation could have a reasonable apprehension that the adjudicator will not or will not be able to determine the matters in issue in a manner consistent with providing a fair and impartial hearing.
[17]. The Parties in this case fully understood the dimensions of their agreement to appoint a mediator/arbitrator as the Board gave the parties time to discuss the matter prior to them signing the agreement. The Board, during the mediation process, must attempt to fashion a settlement which reflects the true potential for success or failure in the litigation phase. The mediation Panel's assessment was based on a full disclosure by the Parties of what they anticipated to be their best evidence. At an early stage it was clear there was not substantial disagreement on the salient relevant facts. In reviewing the context in which the Panel made the assessment on the Responding Party's chances to succeed, the Board finds that the Parties themselves requested this type of assessment when they asked for mediation. As well, by requesting that the Panel continue as a trier of fact and law, should the mediation fail, the Responding Party understood that the litigation would continue with the same panel. At that time and indeed right up to the next hearing date, when new counsel appeared on behalf of the Responding Party, everyone understood that the "Bloch" panel would continue as the trier of fact and law and no-one had any "bias problems" with the procedure. It was only after new counsel was retained that the issue of bias was raised.
[18]. The Parties made a fully informed choice about how to proceed. The Bloch Panel comported itself as a mediation panel. For these reasons, we conclude that a reasonably well-informed person would not properly have a reasonable apprehension that the Chair (or any member of the original Bloch Panel) would appraise and reach conclusions on the issues to be determined in a biased manner.
[19]. The case on its merits involves an assertion by the Union that there has been a sale of business, within the meaning of section 64 of the Act. The Applicant requested that the Board declare that the Responding Parties are all bound by their provincial agreement in the ICI sector of the construction industry in Ontario. In the alternative, the Union alleged that the Responding Employers constitute one employer within the meaning and for the purposes of the Act (section 1 (4)), and requested that the Board so declare, and, further, that the Board declare that the Responding Employers are therefore all bound by the Applicant's provincial agreement in the ICI sector of the construction industry. Further, the Applicant sought a finding, pursuant to section 126 of the Act, by the Board, that the Responding Parties violated the provincial collective agreement and consequently owed damages to the Applicant.
[20]. The Board does not regard it as necessary to recount the evidence in detail nor to set out separately the submissions of the parties. The Board has carefully considered the testimony of the witnesses and the Parties' representations and the relevant jurisprudence in reaching its decision. In the main, the evidence adduced by both Parties was compatible and did not conflict. Where necessary, in respect of conflicting testimony, the Board has preferred one person's evidence over another as set out below. This preference was based on corroborating evidence and inferences in respect of the totality of the evidence.
[21]. The Responding Party called five witnesses including Eli Himelfarb, a principal in all the Responding Parties and an alleged "key person"; Mary-Ellen Himelfarb, his wife and co-shareholder in his present electrical contracting company; Murray Korman, a former business associate; Ben Swirsky, brother-in-law and former President of Bramalea Limited; and Eric Kirshenblatt, a principal in the general contracting firm of Kirkor Construction Limited. The Trade Union called two witnesses, Ron Carroll, a former business agent of the Union; and Mike Oram, a business agent of the Union.
[22]. Eli Himelfarb is a master electrician in the Regional Municipality of Metropolitan Toronto (roughly OLRB Board Area #8). This designation is awarded to journeymen electricians after passing the prescribed test by various Municipal Governments in the Province of Ontario, This designation allows the electrician to bid, as an electrical contractor, on certain jobs in the municipality. Eli Himelfarb was a member of the Union until April 4,1988. At that time, because he failed to pay the fine levied against him by a Union "Trial Board", he was suspended for nonpayment of dues. Between January 11, 1972, the date he signed a collective agreement as an electrical contractor in the construction industry and April 4, 1988, the date he was suspended from the Union, Eli Himelfarb paid union dues and contributed to his pension and welfare plan. These remittances were made pursuant to the appropriate collective agreement.
[23]. The Union approached this case as a "key person" case. That is, Eli Himelfarb was so essential to the business of the Responding Parties that his movement from company to company constituted a transfer of part of his business chronologically down the line from Eli's Electric Service through to and including E & E Steeles Electric Ltd. c.o.b. as E & E Steeles Electric c.o.b as Steeles Electric. In the alternative, the Union asserted that each company's activities were related or associated to each other, and Eli Himelfarb had common control and direction of each company in the chain of companies. In essence, the companies were created to benefit Eli Himelfarb as a "key person" and they constitute one employer for the purpose of the Act.
[24]. To understand the facts of this case it is appropriate to review sequentially Eli Himelfarb's work history, including his interactions with the Union. Eli Himelfarb became a Union member and an apprentice electrician in 1955. From about 1955 to 1972 Eli Himelfarb was a journeyman electrician and a member in good standing of the Union. Eli Himelfarb, like any other Union member, would receive referrals from the hiring hall and go to work on Union jobs for Union contractors.
[25]. On January 11, 1972 Eli's Electric Service entered into a collective agreement with the Union. Eli Himelfarb signed this agreement because the Union had a pool of trained men and he wanted access to them. As well, many of the school projects that he bid on required that the electrical sub-contractor be a union sub-contractor. On May 23, 1972, Mr. Himelfarb took on Ziggy Grinberg, a journeyman electrician, as a partner.
[26]. For a while they operated under the name Eli's Electric Service. However because Mr. Grinberg did not like the name they changed it to Town and Country Electric. Mr. Himelfarb notified the Union of the change of name. The partnership did mostly day care centres, service calls in the residential and commercial sectors and one school in Keswick Ontario. The Keswick school caused a problem in the Grinberg - Himelfarb relationship and consequently they divided the tools and went their separate ways. Eli Himelfarb continued to bid under the name Town and Country Electric. Throughout this period of time the company operated out of Eli Himelfarb's home. Mr. Himelfarb's wife, Mary-Ellen Himelfarb, was responsible for the office. Mr. Himelfarb testified that he thought he signed the agreement under the name Town and Country Electric, although it is clear on the face of the Collective Agreement that he signed the agreement when he was working under the style name, Eli's Electric Service.
[27]. In 1973, he was the successful bidder for Balmy Beach School. Realizing that he did not have the start up capital to do the job, he went to Jacob Korman, a relative, for financial assistance. Jacob Korman agreed to provide the capital. On January 17, 1974 Town and Country Electric LTD. was incorporated. Eli Himelfarb was a minority shareholder in the relationship. Jacob Korman and his son Murray Korman held eighty percent of the shares. Eli Himelfarb held twenty per cent of the shares. Jacob Korman, Murray Korman and Eli Himelfarb entered into a shareholder agreement which outlined the duties of the three shareholders. The agreement contemplated that Jacob Korman would call the financial "shots", Murray Korman would run the office, and Eli Himelfarb would supervise and manage all work contracted for by the company. He would have the right to hire and fire workers. Further, Eli Himelfarb could not work for any outside interest, and should he leave the company prior to the completion of the contract with W.H. Massey Ltd. (the Balmy Beach School) or any other contract, damages could be assessed against him in the amount of $10,000.00. Mr. Himelfarb notified the Union of the incorporation and the status of the company and his role in the company.
[28]. The testimony of Murray Korman and Eli Himelfarb is consistent. Neither Murray Korman nor Jacob Korman had any electrical contracting experience. The relationship between Mr. Himelfarb and the Korman's began because Mr. Himelfarb had an asset (the contract for the Balmy Beach School) which required financing. On the basis of Mr. Himelfarb's knowledge of the industry and his ability to estimate and bid jobs, the company was incorporated to contract in the electrical contracting field of the construction industry. Town And Country Electrical LTD. always used union labour and Eli Himelfarb was the primary contact with the Union. Murray Korman would also, from time to time, deal with the Union. Eli Himelfarb and Murray Korman, principals of Town And Country Electric LTD., testified that they were bound to a collective agreement with the Union.
[29]. Town and Country Electrical LTD. started to have financial difficulties. In August of 1975, Town And Country Electrical LTD. stopped doing electrical contract work in the construction industry. The company broke apart, and Eli Himelfarb returned to the hiring hail as a Union electrician. Between the end of 1975 and 1982, the "hall" referred Mr. Himelfarb to jobs in Canada and the United States. Town And Country Electrical LTD. was dissolved on February 27, 1984. Between August 1975 and February 1984 the company served the Korman's as a corporate tax vehicle. The company did not, during that time frame, operate as an electrical contractor in the construction industry.
[30]. The evidence of Mary-Ellen Himelfarb and Eli Himelfarb was consistent in respect of the post 1981 events. At some point in 1982, Eli decided he wanted to become an electrical contractor again. Eli started using the name Town and Country and did some jobs under that name. Eli was responsible for the bidding and contracting end of the business and Mary-Ellen the office and clerical side of the business. The business was operated out of the Himelfarb's home address. Jacob Korman found out that Eli was operating an electrical contracting business using the name Town and Country. Jacob Korman telephoned Eli and told him that he could not use this name. Eli and Mary-Ellen decided to change the name of the business to Steeles Electric. The business was not doing very well. At some point in 1983, Mary-Ellen called her brother Ben Swirsky, who at that time was an officer of Bramalea Limited ("Bramalea"), a major developer in the province of Ontario.
[31]. Ben Swirsky arranged for Eli Himelfarb to be placed on Bramalea's list of invited bidders. As well, Mr. Swirsky co-signed a loan for Steeles Electric. Eli Himelfarb started tendering under the name Steeles Electric. On May 8, 1984 the company was incorporated as E & E Steeles Electric LTD. The company carries on business as E & E Steeles Electric and Steeles Electric. Eli Himelfarb is a fifty-one per cent shareholder in the company. Mary-Ellen Himelfarb is a forty-nine percent shareholder in the company. The company is operated out of the Himelfarb's home. Mary-Ellen operates the office and clerical end of the business, and Eli operates the construction end of the business. Mary-Ellen testified that she did not think she was investing in a union company. In her view, her investment in time and effort and utilization of her family contacts in connection with this company was always made on the basis that it would be a non-union contractor providing electrical services primarily to Bramalea. Between 1985 and 1990, contracts with Bramalea represented the largest dollar amounts of contracts performed by E & E Steeles Electric Ltd. In 1990, Ben Swirsky left Bramalea, and since 1990 E & E Steeles Electric Ltd. has not received any contracts from Bramalea.
[32]. Ron Carroll testified that on July 27, 1987 he attended at a Bramalea construction project in Bramalea Ontario. At that time he met a person who said he was an employee of E & E Steeles Electric. This person, when asked about his union affiliation, produced a union card with the name Eli Himelfarb on it. Mr. Carroll knew that this person was not Eli Himelfarb. Mr. Carroll drafted a grievance letter against E & E Steeles, however that letter was never sent. Mr. Carroll lost a union election in September, 1987 and consequently lost his position as a business representative. The new regime never followed through with the grievance. Mr. Carroll, prior to leaving office, initiated disciplinary proceedings against Mr. Himelfarb, pursuant to his attempt to allow a non-union person the use of his union card. On October 7, 1987 the executive board of the Union, sitting as a "Trial Board" of the Union, issued a decision finding Mr. Himelfarb guilty of a breach of the Union's constitution and fined him $10,000.00. Subsequently, Mr. Himelfarb was suspended for non-payment of dues.
[33]. Mr. Himelfarb and Mr. Carroll met on July 31, 1987 at the Bramalea job site to discuss the situation. Mr. Carroll states that Mr. Himelfarb insisted he was a union contractor and indicated the union had told a general contractor by the name of Bonfield that Himelfarb's company was not on the union list and therefore he lost the bid on the Bonfield job because the Union had said he was non-union. Mr. Himelfarb states that he told Mr. Carroll at this meeting that he was a non-union company and although Mr. Carroll said that Bramalea was bound to a collective agreement he believed otherwise. In any event he never received a grievance in respect of that job. He was disciplined for giving his Union card to an employee and that, in his mind, was the end of that incident. The only grievance he received is the instant one.
[34]. We find Mr. Carroll's version of the events to be the more accurate version. A nonunion company would not provide its employees with union cards to show a union business agent should a union business agent come on site asking questions. Further, Mr. Himelfarb during that period of time was paying Union dues, pension and benefits. The amounts paid to the various funds are based on hours worked. As well the per hour remittance is based on a negotiated amount in a collective agreement. It was only when Mr. Himelfarb lost his status as a Union member that he stopped remitting dues to the Union and pension and benefit payments to the various funds administered by Murray Bulger.
[35]. This case involves either an alleged successor rights application or a related employer application or a combination of both sections. The Board, in Pinecrest-Queensway Health and Community Services, [1992] OLRB Rep. Nov. 1211, described the purpose and effect of section 64 and 1(4) as follows:
Section 1(4) applies to situations in which activities which generate employment relations governed by the Labour Relations Act are carried on through more than one legal entity, whether or not at the same time. This provision gives the Board the power to pierce the corporate veil and declare two or more entities to constitute one employer for purposes of the Act where the Board is satisfied that they are engaged in associated or related activities under common direction or control. In that respect, section 1(4) modifies traditional common-law notions which are based upon the separation between legal entities and the privity of contract. It is a remedial provision intended to prevent the intentional or incidental frustration or erosion of established bargaining rights consequent upon changes in the structure or form of what is, for labour relations purposes, a single business or activity. To put it another way, whatever separation may exist between two or more entities for corporate, tax or other purposes, the Board is entitled to treat them as being one employer for labour relations purposes if they carry on associated or related activities under common control or direction. The purpose of section 1(4) is to protect the bargaining rights of a trade union and the rights of employees to bargain collectively with their employer through that trade union from being undermined by the form, or an alteration of the form, of a business or activity. In applications under section 1(4), the Board is concerned with the functional relationship between entities. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode or the means of production, utilize similar employee skills, or are carried on for the benefit of related principals (see, for example, Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 and October 1353). Where the Board is satisfied that two or more entities carry on associated or related activities or businesses under common control or direction, which may but does not necessarily include control over employees, the Board may declare that those entities constitute one employer for purposes of the Labour Relations Act. The effect of such a declaration is that the affected entities share the rights and obligations of an employer under the Act and any applicable collective agreement.
Section 64 has the same purpose and a similar effect. Like section 1(4), it recognizes that a "business" is a concept which does not lend itself to precise definition. Rather, a business is an economic activity (whether for profit or not) which can be conducted through a variety of legal vehicles or arrangements. It is the activity, not its form, which give rise to employee-employer relationships which are regulated by the Act and to which bargaining rights attach. Consequently, under the Labour Relations Act, bargaining rights attach to an activity as an employer rather than to a particular employer name or form of employer, and so long as that activity continues bargaining rights continue to exist. As in section 1(4), common-law or commercial law concepts have limited application to section 64 applications. Indeed it is those very concepts which led to the problems which the two provisions are intended to remedy.
The term "business" is not limited to a commercial or profit making activity. Sections 1(4) and 64 apply equally to traditional commercial activity and to municipalities ,school boards,hospitals and other non-profit undertakings which have employees. It is the labour relations aspect of a "business" which is the focus of sections 1(4) and 64. In that respect, it is the continuity of the "activity" which is significant. "Business" is not necessarily synonymous with a particular group or kind of employees or the "work" they perform. Concomitantly, bargaining rights do not necessarily attach to particular work or employees. Although a continuity of work may be significant, it is not always sufficient to justify a finding that that two or more entities constitute one employer, or that there has been a sale of a business. The focus of the inquiry under both section 1(4) and section 64 is the total economic organization, not just the employees or the work performed (see Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193; British American Bank Note Co., [19791 OLRB Rep. Feb. 72; Kitchener-Waterloo Hospital, [1991] OLRB Rep. Oct. 1130).
The Board, in Economy Store Fixtures Limited, [1992] OLRB Rep. May 575, found at paragraph 18 and 19 that section 64 and 1(4) are not mutually exclusive sections of the Act:
Section 1(4) and 64 are not necessarily mutually exclusive in their operation or effect. In appropriate circumstances, both may apply. In this case, the associated or related businesses of Economy and Flair were not active at the same time. Further, the applicant has requested that the Board remained seized with respect to remedial consequences other than declaratory relief. Accordingly, and because the effects of a successful section 1(4) application will not always be identical to the effects of a successful section 64 application, we find it necessary to deal with the latter as well.
For purposes of section 64 of the Act, a sale of business includes any disposition of any part of a business. A sale of business for labour relations purposes can be quite different from a sale of business in the judicial commercial sense. Like section 1(4), section 64 is intended to preserve bargaining rights along a business continuum and many of the comments we have already made with respect to the applicability of section 1(4) apply equally to section 64. A business is a dynamic combination of human initiative and physical assets. It is the human quality which gives a sense of life to a business and which separates it from a collection of assets. Bargaining rights attach to a business as an economic force or organization, not merely to employees, equipment or work performed. As the Board observed in Gallant Painting, [1991] OLRB Rep. 1051 in that respect:
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).
[36]. As the Board has noted in the past, the essence of a "business" in a bid-oriented sector of the construction industry frequently resides in the experience and expertise of its management personnel, rather than, for example, in physical assets such as tools or a specific location (see: Construction P.H. Grager inc., [1985] OLRB Rep. Feb. 233; Deluxe Electrical Con tractor Ltd., [19901 OLRB Rep. Nov. 1135; Ably Concrete Floor Limited, [19911 OLRB Rep. May. 579; Stucor Construction Ltd., [1987] OLRB Rep. April 614).
[37]. We find that Eli Himelfarb, a master electrician, was involved in a succession of companies, for our purposes the Responding Parties, which did electrical contracting in the ICI and the residentjal sectors of the construction industry. Mr. Himelfarb always had an ownership interest in the various companies that form the group of Responding Parties listed above. In each company, he was responsible for the construction end of the business. The companies relied on his expertise in the construction field to bid and win contracts; as well, they relied on his expertise to direct the workers. Each time he left a company, that company ceased to exist in the form of an electrical contracting firm in the construction industry. In all the companies, he was the only qualified electrician, his partners invariably were business or financial people who were either silent partners or who were responsible for the office and the books. With the exception of E & E Steeles Electric Ltd., each time Mr. Himelfarb was involved with a new company, he would inform the union about the company and the principals in the company.
[38]. Eli Himelfarb is the quint essential key person. It is his expertise and experience that has allowed the Responding Parties to flourish. None of the Responding Parties could have existed without him. In particular, Town and Country Electric Ltd. was incorporated because Eli had won a specific contract and needed capital to get the job done. We find that pursuant to section 64, there was a sale of a business from Eli's Electric Service to Town and Country Electric and from Town and Country Electric to Town And Country Electric Ltd. In respect of these companies, Eli Himelfarb and Murray Korman testified that they were bound to a collective agreement with the Union.
[39]. Between 1975 and 1982, Eli Himelfarb was working as a Union electrician on jobs he received out of the hiring hall. During that period of time all the companies he had been involved with as an owner or shareholder were dormant. They were not contracting in the construction industry. The Responding Parties submitted that the passage of time has created a gap such that Board should dismiss the section 1(4) and the section 64 application. The Board in Ian Somerville Construction Ltd., [1988] OLRB Rep. Oct. 1022 was confronted with a similar issue given a 5 1/2 year gap between two businesses that were related and under common control and direction. In that case, the key principal started another business 5 1/2 years after ceasing the first business. The Board in that case dealt with the matter on the basis of whether it should exercise its discretion in respect of the section 1(4) application. The Board stated at paragraph 19:
- The economic activity of ISCL that gave rise to a collective bargaining relationship with Local 27 is, in effect, now carried on by 671860. The two entities are engaged in related activities under common control and direction. We are unable to discover any labour relations reason in these circumstances for concluding that the bargaining rights of Local 27 should not attach to the "definable commercial activity" simply because that activity is carried on through another legal entity 5 1/2 years after ISCL ceased operating. If Robert Somerville revived ISCL in 1987 to carry on the work now performed by 671860, there would be no question that the bargaining rights of Local 27 would continue. The fact that Robert Somerville elected not to revive ISCL but rather to utilize another corporate vehicle to carry on a related business 5 1/2 years later is not a compelling reason to decline to exercise our discretion in Local 27's favour. After reviewing all of the circumstances, including the 5 1/2 year gap, we find that this is an appropriate case to exercise our discretion in favour of granting Local 27 the relief it seeks.
[40]. We find that the Board's reasoning in respect of the discretion issue as it relates to section 1(4) to be of value with respect to the application of section 64 to the case at hand. The passage of time does not negate a sale of a business. Companies are often "put on a shelf' to be resurrected at a later date (see: Construction P. H. Grager Inc., (supra)). Time on its own should not eliminate business transactions. The seven and one-half years between the time Mr. Himelfarb left Town and Country Electric LTD. and the start up of Town and Country does not in a, "construction industry, labour relations sense" affect the sale of the business and consequently the flow through of bargaining rights. We find that there has been a sale of a business from Town And Country Ltd. to Town and Country and from Town and Country to Steeles Electric.
[41]. Steeles Electric operated prior to the incorporation of E & E Steeles Electric Ltd. c.o.b as E & E Steeles Electric c.o.b as Steeles Electric. Steeles Electric was the vehicle through which Eli Himelfarb developed his contacts with Bramalea. Eli Himelfarb depended on Ben Swirsky in the same way he depended on Jacob Korman, in that they were both his access to capital. It is true that the commercial relationship between Himelfarb and Korman was different then the commercial relationship between Himelfarb and Swirsky, however this difference does not have any labour relations significance. Eli Himelfarb in both situations was in control of the workforce and the bidding of work. He was the only one with any electrical contracting experience. Without him there would not have been an electrical contracting business.
[42]. Steeles Electric continued to operate after the incorporation of E & E Steeles Electric Ltd. Eli Himelfarb carried on business in three different names after May 8, 1984, the date of the incorporation of E & E Steeles Electric Ltd. Eli Himelfarb used E & E Steeles Electric Ltd., E & E Steeles, and Steeles Electric. In a labour relations sense, Eli Himelfarb served these "companies" in the exact same way he served all the other Responding Parties. He bid the work, and then managed the work force on a day to day basis. Like the other companies he was not involved in any of the office and clerical decisions. This area of the company was left to Mary-Ellen Himelfarb. Like the other companies, these companies could not have existed without Eli Himelfarb.
[43]. We find that Steeles Electric, E & E Steeles Electric Ltd., and E & E Steeles Electric are controlled and directed by and for Eli Himelfarb. Mr. Himelfarb is a "key person" within the meaning of that label as developed by the jurisprudence.
[44]. In determining whether a section 1 (4) declaration should be made in this case, the Responding Parties requested that the Board exercise its discretion and dismiss this application because the union had delayed bringing this application. The Board in KNK Limited, [1991] OLRB Rep. February 209, reviewed the history and development of section 1(4) as it relates to the exercising of discretion in respect of delay. The Board at paragraph 57 held that:
In our view, where a trade union has established the legal requirements for a section 1(4) declaration, as well as the "mischief' which such declaration was designed to prevent, a declaration should ordinarily be made unless there is either particular prejudice or compelling policy reasons for not doing so. Those policy reasons should be rooted in labour relations rather than commercial law considerations, and the alleged prejudice should involve something more than having to apply a collective agreement which the related employer has disregarded in the past. If that were the test, the purpose of section 1(4) would be undermined, and the related employer could plead, in reply, the very "mischief' upon which the union relies and for which section i(4) is a remedy. The argument becomes entirely circular. A union's undue delay in the face of knowledge of the corporate relationship (i.e. what section 1(5) suggests a union will not know) may be a factor to be considered in exercising the Board's discretion, but the focus should be on the actual prejudice suffered by the employer and the extent to which the union's inaction actually contributed to that prejudice. Where the union's inaction is so longstanding as to be tantamount to an abandonment of its bargaining rights, the Board may well dismiss the application. However, where the balance of labour relations interests can be achieved by limiting the retrospective effect of a declaration or granting such other relief "as it may deem appropriate", the Board should consider that option, rather than dismissing the application altogether.
[45]. In July of 1987, the Union found Mr. Himelfarb performing electrical contracting work with non-union employees in direct contravention of the collective agreement. They decided to discipline Mr. Himelfarb by fining him $10,000.00 because he allowed an non-union employee to use his Union card. Subsequently Mr. Himelfarb was suspended for non-payment of dues. The Union never proceeded with the grievance. In our view, Mr. Himelfarb concluded that the Union had washed their hands of him. He was of the view that they believed him to be a non-union contractor. Mr. Himelfarb relied upon the union's inaction, as a consequence of the union failing to grieve, in the face of a contravention of the collective agreement, and started bidding non-union jobs. The Union has always known of Mr. Himelfarb's connection to Bramalea and they did not, between 1987 and the filing of the instant applications, do anything about stopping Mr. Himelfarb from using non-union employees on the Bramalea job sites, or any other job site for that matter. It is only when the Union filed its related employer application that Mr. Himelfarb was put on notice that the Union was going to assert its statutory rights in respect of his companies.
[46]. We find that Steeles Electric, E & E Steeles Electric, and E & E Steeles Electric Ltd., are one employer within the meaning and for the purposes of the Act. We find that Steeles Electric, E & E Steeles Electric and E & E Steeles Electric LTD. are bound to the Union provincial collective agreement in the ICI sector of the Construction Industry. However, for the reasons expressed in KNK Limited, supra, we would limit the effect of the declaration to those commercial activities or contracts entered into by Steeles Electric, E & E Steeles Electric and E & E Steeles Electric Ltd., after receipt of notice of this section 1(4) application. We would affirm the decision of the Board in KNK Limited, sup ra, which views the curtailing of the retrospective effect of the section as an exception to the general rule of retrospective effect.
[47]. The panel remains seized of this matter with respect to any further remedial issues.