Labourers' International Union of North America, Local 837 v. Aquicon Construction Co. Ltd., 1994 CanLII 9796

[1994] OLRB Rep. December 1611

0422-93-G; 3708-93-G; 0447-94-G; 0469-93-G; 3815-92-R; 3707-93-G; 0942-93-G; 0943-93-R; 3709-93-G; 0444-94-G; 0445-94-G; 3169-92-R; 3170-92-G; 3682-92-G; 3685-92-R; 1358-94-G; 0446-94-G; 0992-94-G; 1286-94-G Labourers' International Union of North America, Local 837, Applicant v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties; United Brotherhood of Carpenters and Joiners of America, Local 18, Applicant v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties; Ontario Provincial Conference of the International Union of Bricklayers and Allied Craftsmen, Applicant v. Aquicon Construction Co. Ltd., Bondfield Con­struction Company (1983) Limited and 352021 Ontario Limited, Responding Par­ties; Labourers' International Union of North America, Local 506, Applicant v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties; International Union of Operat­ing Engineers, Local 793, Applicant v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties; Labourers' International Union of North America, Local 1081 v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties; International Union of Bricklayers and Allied Craftsmen, Local 12, Applicant v. Aquicon Construction Co. Ltd., Bondfield Construction Company (1983) Limited and 352021 Ontario Limited, Responding Parties

BEFORE: Inge M. Stamp, Vice-Chair, and Board Members F. B. Reaume and G. McMenemy.

APPEARANCES: A. M. Minsky on behalf of all the applicants; Armando Camara on behalf Lab­ourers' International Union of North America, Local 506; P. Settimi on behalf of Labourers' Inter­national Union of North America, Local 837; J. Anderson on behalf of International Union of Operating Engineers, Local 793; B. Veitch on behalf of United Brotherhood of Carpenters and Joiners of America, Local 18; J. Robbins on behalf of International Union of Bricklayers and Allied Craftsmen; Joseph Liberman, Frank Aquino and Mario Aquino on behalf of Aquicon Con­struction Co. Ltd.; Angela E. Rae and Ralph Aquino on behalf of Bondfield Construction Com­pany (1983) Limited and 352021 Ontario Limited.

DECISION OF THE BOARD; December 30, 1994

1. These are a number of related applications under sections 64/1(4) and 126 of the Labour Relations Act. The applicant trade unions allege that there has been a transfer of a business within the meaning of section 64 from Bondfield Construction Company (1983) Limited (hereinaf­ter referred to as "Bondfield") to Aquicon Construction Co. Ltd. (hereinafter referred to as "A­quicon"). In addition or in the alternative the applicants assert the two companies are engaged in related activities, under common control and direction and should be treated as one employer pur­suant to section 1(4) of the Act. It was agreed to defer all of the section 126 referrals until the sec­tion 64/1(4) has been adjudicated.

2. Sections 1(4) and 64(1) (1.1) (2) of the Act provide as follows:

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

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")

(1.1) This section applies when a predecessor employer sells a business to a successor employer.

(2) It the predecessor employer is bound by a collective agreement, the successor employer is bound by it as if the successor employer were the predecessor employer, until the Board declares otherwise.

3. The evidence is not in dispute as far as it relates to the chronology of events and the documentation provided by the responding parties. What is in dispute is the three brothers' evi­dence regarding the degree of involvement in the decision-making process and the running of Bondfield by Frank and Mario Aquino.

4. The parties put before the Board a partial agreed statement of facts subject to each par­ties' right to lead other evidence, to add or qualify the agreed statement of facts. The parties fur­ther indicated that there may be some facts in dispute (other than those agreed to). The partial agreed statement of facts is set out below:

PARTIAL AGREED STATEMENT OF FACTS

1. The Responding party, Bondfield Construction Company (1983) Limited ("Bond­field") was incorporated on March 7, 1973 under the name Raljon Construction Com­pany Limited and has carried on business as a General Contractor in Ontario since that time.

2. At the time Bondfield was incorporated, Bondfield's sole Director was Ralph Aquino, ("Ralph") and its Officers were Ralph, who was President, and Ida Aquino, ("Ida") who was Secretary Treasurer.

3. Ralph was the sole Shareholder and Director of Bondfield when it was initially incor­porated.

4. In 1976, Frank Aquino, ("Frank"), Ralph's brother, joined Bondfield.

5. On January 10, 1979, Frank was made General Manager of Bondfield. Frank was removed as General Manager of Bondfield on April 19, 1979, at which point Ralph assumed the title of President and General Manager of Bondfield.

6. In 1980, Mario Aquino ("Mario"), brother to Frank and Ralph, joined Bondfield.

7. On January 30, 1981, Frank acquired 30 common shares of Bondfield, and Mario acquired 19 common shares of Bondfield. Ralph retained the remaining 51 common shares of Bondfield, and also acquired 100 class "A" shares of Bondfield on January 29, 1982.

8. Raljon Construction Co. Limited changed its name to Bondfield Construction Com­pany (1983) Limited effective December 30, 1983.

9. Frank was named Secretary Treasurer of Bondfield in February 1984 and was thereby granted signing authority in accordance with exhibits A.5. On May 29, 1984, Ida was once again named Secretary Treasurer according to the Corporate Minute Books.

10. On February 7, 1984, Frank and Mario were also made Directors of Bondfield.

11. Frank acquired signing authority on behalf of Bondfield on March 12, 1986, according to the Corporate Minute Books (banking resolution of Directors dated March 12, 1986, Exhibit A-i). Prior to that time, however, Frank signed documents from time to time including contracts and cheques, on behalf of Bondfield.

12. On September 30, 1986, Frank and Mario resigned as Directors of Bondfield.

13. The Responding party, 352021 Ontario Limited ("352021") was incorporated under the name of Bondfield Construction Company Limited on February 4, 1977.

14. At the time of incorporation of 352021, Ralph and Frank were Directors of the Com­pany. Furthermore, Ralph was made President of the Company at the time of incor­poration, and Frank was made Secretary Treasurer of the Company at that time. Frank was granted signing authority in accordance with the Banking Resolution dated February 4, 1977 found in exhibit A.2. At the outset, Ralph was the sole Shareholder of 352021.

15. On January 30, 1981, Frank acquired 30 common shares in 352021, and Mario acquired 19 common shares in 352021 with 51 shares to Ralph.

16. On February 2, 1982, Frank resigned as Director of 352021.

17. On December 30, 1983, 352021's name was changed from Bondfield Construction Company Limited to 352021 Ontario Limited. Since that time, 352021 has not been actively engaged in the construction industry.

18. On January 17, 1986, Frank and Mario were made Directors of 352021, and on Sep­tember 30, 1986, they resigned as Directors. As well, Frank resigned as Secretary Treasurer on September 30, 1986.

19. Aquicon Construction Company Limited ("Aquicon") was incorporated on Novem­ber 6, 1986. At all material times, Frank and Mario held either directly or indirectly, through their jointly held ho]ding company 921739 Ontario Limited, all of the shares of Aquicon.

20. As a result of serious unhappy circumstances between Ralph, Frank, and Mario, an agreement was entered into to transfer the shares held by Frank and Mario in Bond­field and 352021 to Aquicon on January 5, 1987.

21. By an agreement dated as of November 15, 1986, Ralph, Frank, Mario, Bondfield, 352021, and Aquicon consented to the transfer of all the common shares held by Frank and Mario in Bondfield and 352021 to Aquicon with Bondfield and 352021 redeeming those shares from Aquicon and with Aquicon transferring all of such shares to Bondfield and 352021 in consideration of the payment by them to Aquicon of the sums of approximately $297,000.00 and $105,000.00 respectively, together with three vehicles which were to be transferred from Bondfield and/or 352021 to Aqui­con.

22. At some point in time, equipment was transferred from Bondfield and/or 352021 to Aquicon which consisted of a transit, a generator, a table saw, two levels, a chipping hammer, two trailers, a typewriter, and a plate.

23. The parties to the agreement dated as of November 15, 1986 entered into a further agreement dated January 5, 1987 whereby they agreed to amend the agreement dated November 15, 1986 to provide, inter alia that Bondfield, 352021 and Aquicon would be associated corporations in 1987 within the meaning of Section 256(1)(d) of the income Tax Act. The transaction closed on January 5, 1987 in accordance with the Agreement dated as of November 15, 1986 as amended by the January 5,1987 Agree­ment.

24. Frank and Mario Aquino commenced the operation of Aquicon in or about the end of January 1987. The Company is engaged as a General Contractor in the construc­tion industry in the province of Ontario.

25. At all material times to the within applications, both Bondfield and 352021 have been, and still are, bound to the provincial collective agreements in the I.C.I. sector of the construction industry with the United Brotherhood of Carpenters and Joiners of America, the International Union of Operating Engineers, the Labourers' Interna­tional Union of North America and the International Union of Bricklayers and Allied Craftsmen.

26. From January 1887 to the date of these proceedings, both Bondfield and Aquicon have operated as General Contractors and have performed work in the I.C.I. sector of the construction industry.

27. From in or about January 1987, the volume of work performed by both Bondfield and Aquicon has grown.

28. Prior to the current applications before the Board, there have been no proceedings brought by any of the applicants against Aquicon at the Board.

With respect to paragraph 22 of the above statement there is disagreement as to when and for what purpose the equipment was transferred.

5. In January 1981 Ralph Aquino gave thirty common shares to Frank and nineteen com­mon shares to Mario and retaining fifty-one shares. The resolution dated January 30, 1981 reads as follows:

RALJON CONSTRUCTION CO. LIMITED

RESOLUTIONS of the BOARD OF DIRECTORS of RALJON CONSTRUCTION CO. LIMITED passed by the consent of the sole Director on the 30th day of January, 1981.

FORM OF SHARE CERTIFICATES

RESOLVED THAT:

1. The form of Share Certificate for the Class A special shares with a par value of 1~ each, as attached hereto as Schedule "A" and initialled by the President for identifi­cation, be and the same is hereby approved and adopted as the form of such Share Certificate of the Corporation; and

2. The form of Share Certificate for the Class B special share with a par value of $10.00 each, as attached hereto as Schedule "B" and initialled by the President for identifica­tion,be and the same is hereby approved and adopted as the form of such Share Cer­tificate of the Corporation.

ISSUANCE AND ALLOTMENT OF SHARES

RESOLVED THAT:

ONE HUNDRED (100) common shares with a par value of $1.00 each in the capital stock of the Corporation be allotted and issued to the Parties whose names appear hereafter, at the price of $1.00 per share and that the Corporation having received the sum of $100.00 in respect of such shares, the said one hundred (100) common shares with a par value of $1.00 each are hereby declared to be fully paid and non-assessable shares and that the following certificates be issued to each of RALPH AQUINO, FRANK AQUINO and MARIO AQUINO as follows:

RALPH AQUINO 51 COMMON SHARES FRANK AQUINO 30 MARIO AQUINO 19 TOTAL: 100 COMMON SHARES

Each and every of the foregoing resolutions is hereby consented to by the signature of the sole Director of the Corporation hereto pursuant to The Business Corporations Act, 1970.

DATED this 30th day of January, 1981.

"Ralph Aquino"

RALPH AQUINO

Each of the foregoing resolutions is hereby consented to by the signature of the sole Share­holder of the Corporation hereto pursuant to The Business Corporation Act, 1970.

DATED this 30th day of January, 1981.

"Ralph Aquino"

RALPH AQUINO

RESOLUTION of the Shareholders of the above-noted corporation passed by the consent of all of the Shareholders on the 17th day of January, 1986.

ELECTION OF DIRECTORS

RESOLVED THAT Frank Aquino and Mario Aquino be and they are hereby elected Directors of the Corporation until the next annual meeting of shareholders of the Corporation or until their respective successors are elected or appointed.

The foregoing resolution is hereby consented to by all of the Shareholders of the Corporation. DATED this 17th day of January, 1986.

"Ralph Aquino" "Frank Aquino" "Mario Aquino"

RALPH AQUINO FRANK AQUINO MARIO AQUINO

CONSENT TO ACT AS DIRECTOR

TO: BONDFIELD CONSTRUCTION COMPANY (1983) LIMITED

I, the undersigned, hereby consent to act as Director of the above Corporation, such consent to continue from time to time until a date upon which I, the undersigned, give my respective written notice to the Corporation revoking such consent or cease to be Director of said Corporation.

DATED this 17th day of January 1986.

"Mario Aquino"

MARIO AQUINO

CONSENT TO ACT AS DIRECTOR

TO: BONDFIELD CONSTRUCTION COMPANY (1983) LIMITED

I, the undersigned, hereby consent to act as Director of the above Corporation, such consent to continue from time to time until a date upon which I, the undersigned, give my respective writ­ten notice to the Corporation revoking such consent or cease to be Director of said Corporation.

DATED this 17th day of January 1986.

"Frank Aquino"

FRANK AQUINO

6. A banking resolution dated March 12, 1986 signed by all three Directors shows Frank Aquino having signing authority for Bondfield's bank account.

7. On the 30th of September 1986 the shareholders of Bondfield passed a resolution accepting Frank and Mario's resignation as Directors of Bondfield.

8. Resolutions of the sole Director of Bondfield were passed January 5, 1987 as follows:

BONDFIELD CONSTRUCTION COMPANY (1983) LIMITED

RESOLUTION of the sole Director of Bondfield Construction Company (1983) Limited passed by the consent of the sole Director on the 5th day of January, 1987.

WHEREAS Aquicon Construction Co. Ltd. is the owner of forty-nine (49) issued and outstand­ing common shares in the capital of the Corporation;

AND WHEREAS Aquicon Construction Co. Ltd. is desirous of selling its shares in the capital of the Corporation to the Corporation.

BE IT RESOLVED that the Corporation do pay to Aquicon Construction Co. Ltd. the sum of $297,677.87 and that the Corporation do deliver to Aquicon Construction Co. Ltd. one 1986 Toyota pick up truck S/N JT4LN55D2G007006 and one 1985 Pontiac 6LE S/N 2G2AG19X6F9702946 in consideration of the transfer of the aforesaid shares.

BE IT FURTHER RESOLVED that the share certificate of Aquicon Construction Co. Ltd. for forty-nine (49) common shares in the capital of the Corporation be and the same is hereby can­celled.

The foregoing resolution is hereby consented to by the signature of the sole Director of the Corporation.

DATED this 5th day of January, 1987.

"Ralph Aquino"

RALPH AQUINO

BONDFIELD CONSTRUCTION COMPANY (1983) LIMITED

RESOLUTION of the sole Director of Bondfield Construction Company (1983) Limited passed by the consent of the sole Director on the 5th day of January 1987.

WHEREAS Frank Aquino is the owner of thirty (30) issued and outstanding common shares in the capital of the Corporation;

AND WHEREAS Mario Aquino is the owner of nineteen (19) common shares in the capital of the Corporation;

AND WHEREAS Frank Aquino and Mario Aquino desire to transfer their shares to Aquicon Construction Co. Ltd.

BE IT RESOLVED that the sole Director hereby consents to the transfer of the thirty (30) common shares held by Frank Aquino in the capital of the Corporation and the nineteen (19) common shares held by Mario Aquino in the capital of the Corporation to Aquicon Construc­tion Co. Ltd.

BE IT FURTHER RESOLVED that a new share certificate for forty-nine (49) common shares in the capital stock of the Corporation be issued to Aquicon Construction Co. Ltd. upon its sur­rendering the aforesaid share certificates assigned to it by Frank Aquino and Mario Aquino.

The foregoing resolution is hereby consented to by the signature of the sole Director of the Corporation.

DATED this 5th day of January, 1987.

"Ralph Aquino"

RALPH AQUINO

9. As of August 1989 Ralph and Ida were the corporate officers and Ralph the sole Direc­tor of Bondfield.

10. On January 30, 1981 Frank received thirty common shares (at $1.00); Mario received nineteen common shares (at $1.00) and Ralph retained fifty-one common shares (at $1.00) of Bondfield Construction Company (1983) Limited.

11. A resolution dated January 5, 1987 signed by the sole Director, Ralph, of 352021 Ontario Limited states:

352021 ONTARIO LIMITED

RESOLUTION of the sole Director of 352021 Ontario Limited passed by the consent of the sole Director on the 5th day of January, 1987.

WHEREAS Aquicon Construction Co. Ltd. is the owner of forty-nine (49) issued and outstand­ing common shares in the capital of the Corporation;

AND WHEREAS Aquicon Construction Co. Ltd. is desirous of selling its shares in the capital of the Corporation to the Corporation.

BE IT RESOLVED that the Corporation do pay to Aquicon Construction Co. Ltd. the sum of $105,322.13 and that the Corporation do deliver to Aquicon Construction Co. Ltd. one 1983 GMC pick up truck S/N 1GTC514B5D0502159 in consideration of the transfer of the aforesaid shares.

BE IT FURTHER RESOLVED that the share certificate of Aquicon Construction Co. Ltd. for forty-nine (49) common shares in the capital of the Corporation be and the same is hereby can­celled.

The foregoing resolution is hereby consented to by the signature of the sole Director of the Corporation.

DATED this 5th day of January, 1987.

"Ralph Aquino"

RALPH AQUINO

12. Aquicon Construction Co. Ltd. is incorporated November 6, 1986 with Frank and Mario as its Directors and shareholders. Bondfield pays Aquicon $403,000.00 by cheque dated January 5, 1987 after completion of the transfers of shares in accordance with the agreement dated November 15, 1986. Forty-nine common shares held by Mario and Frank in Bondfield and 352021 were transferred to Aquicon and then redeemed by Bondfield and 352021 Ontario Limited. This price paid by Bondfield to Aquicon included the 1986 Toyota pick-up truck and a 1985 Pontiac Sedan and $297,677.87 for the redemption of the shares. The price paid by 352021 to Aquicon included one 1983 GMC pick-up truck and $105,322.13 to redeem the shares. Any assessment by Revenue Canada against Aquicon exceeding $427,301.57 would be paid by Bondfield/352021 after any appeal Ralph may wish to file. There is also a list of some hand tools and small equipment taken by Frank which are not part of the agreement. (i.e. transit, table saw, levels, generator, chipping hammer, large walker plate). Bondfield trailers were used on Aquicon jobsites.

13. Frank and Mario had some difficulty in obtaining bonding for their new company Aqui­con. After having been turned down they were able to obtain the necessary bonding with another insurance company in 1987. When Ralph was contacted by the bonding company for reference he told them that Frank and Mario were capable of running a construction company. In 1988 the bonding company extended new bonding rates stating ... "We believe these new rates represented meaningful reductions from the current rate levels, and are pleased to extend them to Aquicon in recognition of the fine financial results posted to date."

14. From its inception to the present Aquicon has successfully bid and obtained work for contracts starting at three million dollars and up. Aquicon performs the same type of construction work (school construction) for the same clients as Bondfield.

15. The evidence of the three brothers conflicts with respect to Frank and Mario's involve­ment in running Bondfield. Ralph testified that between 1976 and 1986 Frank did estimating, pric­ing jobs, and he (Ralph) and Frank would discuss matters and make decisions. According to Ralph, Frank was dealing with the sub-trades, price jobs, negotiate contracts, change work orders with sub-trades. In the absence of Ralph, Frank signed company cheques. Ralph signed the major­ity of the contracts, Frank signed approximately twenty-five percent. One such contract with the Dufferin-Peel Roman Catholic Separate School Board signed by Frank Aquino dated March 22, 1985 was put in evidence. Ralph estimated that Frank did about twenty-five percent of the estimat­ing.

16. Mario's role with Bondfield from 1980-86 started as a worker, became a Jr. Superinten­dent then Superintendent. When Bondfield grew Mario became a General Superintendent from 1984 to 1986. Mario performed Superintendent duties including looking after the job, directing the sub-trades, hiring, laying-off. Frank discussed site problems with Ralph. Frank was involved in dis­cussions regarding tendering on jobs, hiring sub-trades and hiring staff for the jobsites.

17. In 1976 Bondfield's office staff included Ralph, Frank and a secretary. In 1980, a sec­ond secretary was hired. In 1983 an accountant joined the firm. By 1986 Ralph, Frank, an accoun­tant, a secretary and receptionist! typist made up the office staff.

18. Ralph decided with his experience and Frank's education Bondfield should be success­ful. By 1980 the company was successful and Mario joined the company. Ralph and Ida Aquino decided together with Frank to give Mario nineteen percent of the company. Mario had not asked for any shares of the company.

19. In 1986 Frank and Mario told Ralph they were not happy and they were leaving the Company. Ralph indicated he was shocked and had no indication they wanted to leave. Ralph told Frank and Mario to get an accountant and sort out how much money he owed them. After some negotiations it was agreed to pay more than $400,000.00 including some equipment and vehicles (there was agreement on the items in Tab 11 but not when they were taken). Frank left Bondfield at the end of October. Mario left at the end of November.

20. Prior to Aquicon receiving the pay-out from Bondfield, Ralph gave Frank a personal cheque for $50,000.00. This was used for personal expenses as well as some initial business expen­ses for Aquicon. The $50,000.00 was repaid.

21. In the earlier years Frank spent most of his time on the jobsites. In the later years Frank spent more time in the office helping Ralph. Ralph emphatically disagrees that Frank spent his time almost exclusively on the jobsites between 1976 and 1980. According to Ralph, Frank came into the office Saturday, Sunday, after hours, on rainy days. In 1976 Frank worked ninety percent of his time on the tools. In 1980 approximately ten percent. Both Ralph and Frank did lay-outs and footings between 1976 and 1980. Frank did lay-out for grading, backfilling and site preparation.

Argument

22. Counsel for the applicants contends on or before January 5, 1987 there was a sale of a business by Bondfield and the numbered company to Aquicon and or the operation of associated or related businesses under common control and direction by Bondfield and Aquicon. Counsel for the applicants reviewed the extensive evidence and exhibits. The company currently known as Bondfield (1983) has been in existence for twenty-one years. The work carried out by Bondfield in the 70's, 80's and 90's has been public and private school construction in the ICI sector. This is an open bidding system. From 1976 to 1986 the company (Bondfield) becomes a major player among the general contractors in school construction in south central Ontario. The three brothers were partners. This was a family operation.

23. Counsel reviewed the evidence with respect to Mario. He joined in 1980. At the time Mario had fifteen years experience in the plumbing industry and five years as a Foreman.

24. Counsel submits until 1986 the three brothers worked together and created a very suc­cessful company. The fact that Ralph owned fifty-one percent of the shares in law means Ralph had control but in fact decisions were made together. There were no confrontations before 1986. Frank and Mario became officers and shareholders and eventually became Directors with Ralph at Bondfield (1983) and the numbered company. The company went from a few million dollars in the late 70's to twenty-six million dollars by 1986.

25. Counsel for the applicants points out that Aquicon, whose officers and shareholders are Frank and Mario, is incorporated before the split up of Bondfield and the numbered company. Counsel submits exhibit 7 dated November 15, 1986 is critical. This is the agreement setting out the terms of the separation purported to be signed December 23, 1986. It is the shareholder agreement ending the earlier shareholder agreement.

26. Counsel states Aquicon was incorporated November 6, 1986. The agreement is signed December 23, 1986. Aquicon gets about half a million dollars start-up capital and then sets itself up as a general contractor in the school construction field and enters the very same market as Bondfield. There is no non-competition clause. In Aquicon's first fiscal year of operation they did 8.5 million dollars worth of work. The second year a little over 15 million dollars and the third year more than 21 million dollars. In the first three years of operation, from scratch, Aquicon had con­tract revenues of 43 million dollars.

27. Counsel submits this was no fluke. The two brothers Frank and Mario had the start-up capital of half a million dollars, vehicles and some small equipment, and their experience and expertise acquired with brother Ralph at Bondfield.

28. Counsel submits that the reason the new company was successful right from the start had something to do with the fact that there was a sale of part of a business from Bondfield to Aquicon or because of a relationship between the companies and their principals. It is not credible to say a couple of superintendents put this successful business together in two or three years.

29. Something tangible flowed from Bondfield to Aquicon, key people, capital. It is Ralph's evidence that it was the collective roles of the three brothers that contributed to Bond-field's success. Ralph and Frank built up the business together. It was Frank who convinced Ralph not to quit in 1976 when times were tough.

30. The Board will have to decide whose evidence is credible with respect to the duties and responsibilities of Frank and Mario. There is the evidence of Ralph on the one hand and Frank and Mario's on the other. If you believe Ralph then there has been a sale of a business or a section 1(4).

31. Counsel submits Ralph's evidence was given convincingly, straight forward. His evi­dence withstood tough cross-examination and is corroborated by the written records. By compari­son Frank's evidence was evasive, he did not recall or remember some things but did remember others.

32. Frank was a key player of Bondfield whether as owner/shareholder or director or offi­cer, he had a day-to-day function in the management or control of Bondfield.

33. Counsel for the applicants, submits the Board's cases in construction consider who does the estimating, bids the jobs, completes the job, who makes the profits, who contributes to the economic well being of the company.

34. Counsel on behalf of Aquicon submits it took seven years for the applicants to decide either the companies were bound under section 1(4) or there had been a sale under section 64. Counsel suggests all of this would have been known by the applicants between 1987 and now - what is the motivation for bringing these applications now? What has motivated these applications is a severe down turn in the economy not a sudden realization that these companies are related or that there has been a sale.

35. Counsel argues that the Board should exercise its discretion and not make a 1(4) decla­ration given the background and history of these companies. The applicants called no witnesses. They relied on the evidence of Ralph, one of the key persons of Bondfield.

36. Counsel submits that memories would have been more reliable five or six years ago. Much of the evidence is of little significance or irrelevant to the issues to be decided. Aquicon is not denying a transaction took place on January 5, 1987 or that Frank and Mario were at various times shareholders, officers and directors of Bondfield.

37. Counsel for Aquicon submits the Board must look at the labour relations purpose not the commercial transaction.

38. Counsel submits that Frank and Mario did the manual work on site and Ralph did the office work including estimating and pricing until 1980. While Frank spent time in the office on weekends and evenings and rainy days his primary purpose was to work on site. He became some­what of a general superintendent. He went from site-to-site to get jobs started including preparing footings.

39. Counsel submits Ralph's evidence is that Frank and Mario did not go from site-to-site like he did. Frank and Mario were important people in Bondfield because they were family. They did more than the average superintendent. But the control, drive and enterprising spirit of Bond-field is, was and will always be Ralph and that is one of the characteristics that determines control.

40. Counsel submits Mario rarely went into the office and was never involved in any office decisions. Frank co-ordinated sub-trades on site - that is what a superintendent does. You don't have to be a key man or owner to co-ordinate sub-trades, that is part of the superintendent's func­tion. If there were problems Ralph would handle it because he was in charge. Ralph said he was the "big boss". Counsel submits that is because he makes the final decision.

41. There is quite a difference in the evidence of what took place on closing of bids. Coun­sel submits the final decision rests with Ralph both practically and legally. Ralph with fifty-one per­cent of the shares has legal control. Mario was never there for the closing and was not involved in any decision.

42. Counsel submits the only evidence before the Board on closing is that Ralph could not remember which closings Frank was involved in and which ones he did on his own. The only evi­dence is Frank's. He closed some on his own when Ralph was away. Frank said there were only two and he was in constant touch with Ralph by telephone.

43. Counsel contends Ralph retained control of the company by keeping fifty-one percent. Ralph testified that he wanted to retain control of the company. Frank was a full-time superinten­dent on the St. David School project in 1983 - how could he have been involved in any meaningful way in the office in bidding, estimating, hiring? Counsel submits there is no evidence that Frank hired anyone. Ralph did all the hiring.

44. What Frank had done was no more or less than any superintendent would do or Ralph had done when he worked as a superintendent for an earlier company. Counsel argues if a superin­tendent leaves and starts his own business that is not a section 1(4)/64.

45. Counsel for Aquicon submits most of the documents relate to a commercial interest and have no labour relations importance as to whether they were signed November or December or the 1st or 30th. That it is an associated company under the Income Tax Act has no bearing on the com­mon direction and control under the Labour Relations Act. It is a commercial benefit to Frank and Mario.

46. Counsel made submissions regarding the name "Aquicon" - Transfer of Goodwill. The

schools have an open tender system. There is no negotiations with the School Boards. Anyone who is pre-qualified or has a bond can bid. Your name (See Gallant Painting, [1991] OLRB Rep. Sept. 1051) does not get you on the bid list. Aquicon was rejected twice before getting a bond including by Bondfield's bond company.

47. Counsel submits there was no goodwill in the name. Frank and Mario did not trade on the name. The goodwill and the name Ralph Aquino stayed with Bondfield.

48. Counsel submits the evidence shows only three contracts were signed by Frank. You cannot assume there are others. Two of those contracts were prepared with Ralph's name because that was the anticipated procedure. Frank signed them because Ralph was away.

49. The equipment and cars in exhibit 11 were not part of the transaction. According to Frank they had no value and Ralph said they were about fifteen thousand dollars.

50. Counsel submits that Ralph, Frank and Mario were not paid the same and that decision rested with the majority shareholder, Ralph.

51. Counsel contends the issue is not who did the bulk of the estimating or take-offs but what was the essence of the business, where did it come from and who provided the enterprising spirit to Bondfield.

52. Frank and Mario subbed the majority of the work when they started Aquicon. They got their price from the sub-contractors. They only did take-offs on work they performed themselves which is the same work they had done in the field as superintendent and labourer for Bondfield.

53. One of the key points is that after Frank and Mario left, Bondfield did not whither away and die. By 1992 Bondfield grew to 100 million dollars. In all the cases cited by the applicants the predecessor company ceases to exist or operate as it had in the past and that is a key issue. There is no erosion of bargaining rights. The essence of the business continues. The enterprising spirit still lives the same as it did when Frank and Mario were still there except to increase four times in vol­ume.

54. Counsel submits the evidence in its totality clearly indicates that Frank and Mario were important to the operation of Bondfield just as any good superintendent who cares about and is good at his job. Ralph said they were both good. The evidence clearly shows that Ralph owned fifty-one percent and controlled Bondfield.

55. Counsel for Aquicon submits no matter what quantum leap one takes, one cannot find there is a sale of a business under all the Board's criteria. Counsel further submits there are no cri­teria or indicia present in this case to make a declaration under section 1(4).

56. Counsel for Bondfield submits that the evidence shows the requisite facts for a section 64 or 1(4) have been made out. Counsel submits Bondfield does not oppose the applications before the Board. It is counsel's position that the evidence of Ralph should be preferred in all instances where it deviates from Frank or Mario and if this evidence is accepted would lead to a finding that the unions are successful on both counts in their applications.

57. Counsel contends the evidence of Ralph should be preferred because of the relative credibility of the witnesses. The major area where the evidence deviates is the area of control asserted by the three brothers in the running of the Bondfield Companies, both Bondfield and the numbered company and their previous incarnations.

58. Ralph testified he learned estimating from Frank and Bondfield did not hire a full-time estimator until after Frank and Mario left the company.

59. Notwithstanding Frank's evidence of his limited experience with the closing process Frank was successful on his second bid for Aquicon. In his first year of operation Aquicon gener­ated revenue in excess of eight million dollars. Counsel suggests Frank was less than candid when it comes to his experience in these areas. Aquicon does not have an estimator on staff yet they were successful in very short order.

60. The fact that Frank did physical labour on site is not determinative of control and direc­tion a party may have in a particular company. All three brothers performed labour work. The fact that Mario spent eighty to ninety percent on the jobsite makes him no less a director of the com­pany.

61. Regardless of any of the commercial facts (i.e. ownership of shares) the Board should look to Ralph's evidence to determine who the directing minds of the company were, what joined control was exercised by the brothers at all times.

62. Counsel submits there are inconsistencies in Frank and Mario's evidence regarding the salaries paid to the three directors/shareholders and other superintendents. Ralph's evidence should be preferred in this area.

63. The evidence as to why the three brothers broke up 1986 is not clear. Mario testified it was a family problem. Frank testified that Ralph bought a building in 1984 without consulting his partners and that upset Frank and Mario. Ralph said they wanted thirty-three percent each. Ralph testified the purchase of the building was discussed by all three and no one disagreed. Again Frank and Mario are less than candid as to the reason for the break-up.

64. The evidence of Frank and Mario regarding the circumstances surrounding the signing of the documents in 1986 again shows a lack of candidness.

65. With respect to Peter Muhjala it is not credible that Frank did not know he worked for Bondfield and did not ask him where he worked previously.

66. Bondfield came in second to Aquicon on a total of one hundred and seventeen million dollars worth of work. Ralph said he could have done those jobs but for Aquicon. Frank testified that Bondfield could not have done the additional work because of bonding limits and supervisory staffing limits. Counsel submits it is a loss of business.

67. Counsel for Bondfield submits the Act contemplates a sale of part of a business. There is no requirement for the predecessor company to go out of business.

68. The parties submitted a joint case book referring to thirty-one Board decisions. Each counsel reviewed the law and the cases supporting their position with respect to these applications.

Decision

69. The Board has reviewed the evidence, all of the cases cited and considered all of the parties' submissions. There are always unique aspects to these cases and this one is unusual in a

number of respects. There has been a six or seven year delay by the applicants in bringing these applications. This may go to the Board's exercise of its discretion under section 1(4) or to damages in the section 126's should the applicants be successful. It is unclear as to what caused the break-up of the brothers. It is interesting to note the absence of a non-competition clause in the agreement to pay Aquicon for the Bondfield shares. It is reasonable to assume if partners or directors leave a company the remaining partner(s) would want to minimize the risk of the departing group setting itself up in the same business competing against their former partner(s).

70. The commercial transactions that took place are set out in the partial agreed statement of facts and supported by exhibits filed with the Board. Bondfield and the numbered company are bound to the applicants' agreements in the ICI sector.

71. Frank, after graduating as a civil engineer, joined Bondfield in 1976. Bondfield between 1976 and 1986 grew into a successful general contractor in the school construction field. In 1980 Mario joined Bondfield. He had approximately fifteen years experience as a plumber for a well known plumbing contractor. This included a number of years as a Foreman.

72. It is not disputed that Frank and Mario worked as superintendents on Bondfield jobs. All three brothers worked at the tools to various degrees with Ralph the least amount of hands on work. As of 1980 all three brothers were shareholders, officers and directors of Bondfield with Ralph being the majority shareholder at fifty-one percent.

73. Aquicon was successful in obtaining work right from the start. Aquicon is operating in the same school construction market as Bondfield.

74. The evidence of the three brothers differs considerable with respect to Frank and Mario's participation in Bondfield. There is conflicting evidence as to who exercised the control and direction of the enterprise. Frank and Mario's evidence suggests they were no more than superintendents with Ralph calling all the shots. Ralph's evidence is that he, Frank and Mario ran the company and made decisions together.

75. The Act contemplates the sale of "part of a business" and defines "sell" including leas­ing, transfers and any other manner of disposition. [emphasis added)

76. Ralph "gave" his brothers forty-nine percent of his business and made them sharehold­ers and directors. When the three brothers appear to have a falling out Ralph agrees to pay out over four hundred thousand dollars. Frank and Mario resign as directors of Bondfield and start up Aquicon.

77. Without this substantial start-up capital Aquicon would have had a much tougher time to get started. Its instant success can, in part, explained by the availability of this start-up capital. Noticeably absent is a non-competition clause which enabled Aquicon to compete with Bondfield for the same jobs in the same market, namely school construction.

78. It is not credible to suggest two superintendents without substantial experience in esti­mating, bidding, subcontracting etc. in the school construction business could start-up as a general contractor in that field and be successful in the first year.

79. One can speculate how much of the work picked up by Aquicon would have gone to Bondfield but it is reasonable to assume that Bondfield would have had a better chance at obtain­ing some of that work but for Aquicon.

80. When a company loses two of its directors, who own forty-nine percent of the business, and then pays out over four hundred thousand dollars to redeem their shares, there is a definite loss to the enterprise.

81. The Board looks at the loss of bargaining rights as well as the potential loss of bargain­ing rights. In this case two of the three directors who also worked in the field left Bondfield. Bond-field redeemed the shares, originally given to Frank and Mario, at a fair price determined by an accountant in consultation with Frank and Mario. The expertise acquired while being part owners of Bondfield together with the start-up capital enabled Frank and Mario to start a very successful construction company doing the exact same work as Bondfield but as a non-union contractor.

82. Having regard to the above we find there has been a disposition of part of Bondfield's business to Aquicon and it constitutes a sale of a business from Bondfield to Aquicon within the meaning of section 64 of the Act. The Board further declares as a result of such sale Aquicon is bound to the applicants' ICI agreements.

83. In view of the finding that a sale has taken place and Aquicon is bound to the four agreements we see no necessity to resolve the conflicting evidence of the three brothers as it relates to the section 1(4) application. That part of the application is dismissed.

84. The parties are directed to meet with a Labour Relations Officer to attempt to resolve the section 126 applications filed with the Board.