[1994] OLRB Rep. July 865
2367-93-R Labourers' International Union of North America, Local 506, Applicant v. The Board of Governors of Exhibition Place and Medieval Times Dinner & Tournament (Toronto) Inc., Responding Parties
BEFORE: Lee Shouldice, Vice-Chair, and Board Members G. O. Shamanski and H. Kobryn.
APPEARANCES: Murray Gold for the applicant; Carl Peterson for the responding party, The Board of Governors of Exhibition Place; S. John Page for the responding party, Medieval Times Dinner & Tournament (Toronto) Inc.
DECISION OF LEE SHOULDICE, VICE-CHAIR, AND BOARD MEMBER, H. KOBRYN; July 11, 1994
1. Introduction
- This is an application brought pursuant to section 64.2 of the Labour Relations Act. The applicant (also referred to herein as "Local 506" or "the union") asserts that, by virtue of section 64.2 of the Act, a deemed sale of a business has occurred from the Board of Governors of Exhibition Place to Medieval Times Dinner & Tournament (Toronto) Inc. (referred to herein as "Board of Governors" and "Medieval Times", respectively), and that we should so declare. The union also asks for a declaration that Medieval Times is bound by a notice to bargain dated February 25, 1993 which has been delivered to Board of Governors. The responding parties resist these conclusions, and submit that the application should be dismissed in its entirety.
2. The Facts
The Board heard the testimony of three witnesses, but there was little if any disagreement on the salient facts, which are described immediately below. Board of Governors operates the Canadian National Exhibition ("the CNE") every year on the grounds of Exhibition Place in Toronto, Ontario. The Exhibition Place grounds contain a number of buildings (such as the Automotive Building, the Ontario Government Building, and the Queen Elizabeth Building) which are leased by Board of Governors to third parties for special events such as the Royal Winter Fair, the Molson Indy and Caribana. These buildings are also regularly leased to third parties for trade and consumer shows and other functions (such as examinations for CGA, CMA, Architecture and Bar Examination students, sports collectables shows, fur liquidation sales, etc.). As well, certain buildings are leased to semi-permanent tenants (such as the Horse Palace to The Riding School).
Local 506 and Board of Governors are bound to a collective agreement effective from May 1, 1991 to April 30, 1993 (hereinafter "the collective agreement"). A notice to bargain for a renewal contract was given by Local 506 to Board of Governors dated February 25, 1993, pursuant to the collective agreement. The collective agreement contains the following recognition clause:
The employer recognizes the Labourers' International Union of North America, Local # 506 as the Bargaining Agent for all employees of the employer working at Exhibition Place, in Metropolitan Toronto, Ontario who are employed in classifications set out in Appendix "A" or "B", and whose work duties consist wholly or in part of the work duties described therein, save and except non-working foreman and persons above the rank of non-working foremen [sic], Office and sales staff.
Appendix "B" to the collective agreement contains four different classifications of cleaners, with certain cleaning functions corresponding to each of the classifications. It was agreed by the parties that this collective agreement was a merged collective agreement, comprised of a former "stadium" agreement and a former "non-stadium" agreement, although the existence of these predecessor agreements has no practical effect on the ultimate determination of this case.
The dispute before the Board arises as a result of the lease by Board of Governors to Medieval Times of the Arts, Crafts and Hobbies Building on the grounds of Exhibition Place for a term of thirty years duration, with two ten-year extensions which can be exercised at the option of Medieval Times. For a number of years prior to the lease of the Arts, Crafts and Hobbies Building to Medieval Times, Board of Governors utilized the Arts, Crafts and Hobbies Building to house an Arts and Crafts show and various trade and consumer shows. Board of Governors used cleaners who are members of Local 506 to clean the Arts, Crafts and Hobbies Building during and after these trade and consumer shows. When the building was not utilized for a show or event, it was not cleaned, and left dormant until the subsequent show or event. This is, in fact, the case for all buildings located on the grounds of Exhibition Place.
In late 1992 or early 1993, Medieval Times commenced negotiations to lease the Arts, Crafts and Hobbies Building, and a patch of surrounding property, from Board of Governors in order to house its operations in Toronto. By way of an Agreement to Lease dated March 11, 1993, Medieval Times agreed to lease the Arts, Crafts and Hobbies Building and certain adjacent lands from Board of Governors for the term of years referred to above. No lease had been executed as at the date of the hearing. However, Medieval Times took possession of the Arts, Crafts & Hobbies Building in late April, 1993. Board of Governors forwarded a copy of the collective agreement to Medieval Times for its review prior to the execution of the Agreement to Lease in March, 1993.
The business of Medieval Times involves the provision of dinner and entertainment based on a medieval theme. Patrons pay a fixed price for admission to the Medieval Times Castle and are provided with a four-course meal and a two-hour show based on the theme of a medieval tournament. Significant renovations were performed by Medieval Times to the Arts, Crafts and Hobbies Building to create a medieval castle-type structure, and a forty thousand square foot arena was constructed on the property adjacent to the Arts, Crafts and Hobbies Building which houses the dinner area and a performing arena. A bridge links the two buildings. The renovations to the Arts, Crafts and Hobbies Building, and the construction of the adjacent arena, were completed by August, 1993, and the operations of Medieval Times commenced that same month, coincident with the opening of the CNE.
The physical space occupied by Medieval Times is now cleaned by individuals who are not members of Local 506. The evidence before the Board is that the large complement of Medieval Times employees (182 employees as at December 23, 1993, including bartenders, bar assistants, cocktail waitresses, cooks and stable crew) perform basic cleaning tasks as part of their broader job responsibilities. That is, as part of a bartender's job responsibilities, he or she would be responsible for performing basic cleaning tasks at the bar, including garbage removal. The exception to this pattern are some general cleaning services which Medieval Times has contracted out to After Five Office Cleaning (hereinafter "After Five"). This includes vacuuming of carpets, cleaning and re-supplying of washrooms, wet cleaning of non-carpeted floors, polishing of floors, dusting of offices and removal of some garbage. The evidence before the Board was that Medieval Times has three persons from After Five attend on site after show hours for seven hours of cleaning work each, six times per week. One After Five employee is on site during the show for four hours, six days per week, to tidy washrooms. The three person crew referred to above spends an estimated seventy to eighty per cent of its time cleaning the arena and eating area.
Counsel for Board of Governors provided the Board with figures outlining the number of cleaning hours worked by Local 506 employees at Exhibition Place and, in particular, at the Arts, Crafts and Hobbies Building, during 1991 and 1992. Although counsel for the union disputed the relevance of the figures, he did not dispute their accuracy. These figures are the following:
Year Cleaning Hours — Cleaning Hours — Exhibition Place Arts, Crafts &
Hobbies Building
1991 110,125 2,777
1992 116,421 1,405
It was the uncontradicted evidence of Linda Simpson, Co-ordinator of Cleaning Services for Exhibition Place, that there are currently approximately 45 unionized cleaning staff at Exhibition Place, and that the average employee spent approximately two per cent of his or her total working hours cleaning the Arts, Crafts and Hobbies Building in 1992. Ms. Simpson also testified that none of the shows or events which had been located in the Arts, Crafts and Hobbies Building in 1992 had been lost to the Board of Governors for 1993 as a result of the lease of the Arts, Crafts and Hobbies Building to Medieval Times. With one exception, no loss of events or shows was anticipated by Ms. Simpson for 1994. It was also her evidence that no unionized employee had been laid off as a result of the dedication of the Arts, Crafts and Hobbies Building to Medieval Times, as all of the shows and events which would have been held in that building beyond April, 1993 were merely relocated to other buildings at Exhibition Place, which required cleaning during and after the show or event. This cleaning was performed by members of Local 506. The hours of work of the cleaners had not been diminished by the transfer of shows and events to other buildings on the grounds of Exhibition Place.
Finally, it was the uncontradicted evidence of Ms. Simpson that Local 506 members did not and do not perform all of the cleaning required at Exhibition Place. A number of semi-permanent tenants and shows make private arrangements to ensure their cleaning requirements are satisfied. Whether Local 506 employees perform the work depends upon whether Board of Governors obtains a cleaning contract for those shows and/or tenants at the time that the building lease is effected. No such contract was obtained from Medieval Times.
It was on the basis of the above facts that the parties argued the application of section
64.2 of the Act.
3. Argument
Counsel for Board of Governors characterized this case as one which will determine the limits of the application of section 64.2 of the Act. Counsel submitted that, should the union's interpretation of section 64.2 be adopted by the Board, the reach of the section would be extended far beyond both the intent and the spirit of the legislation. Counsel focused the bulk of his argument on the specific words contained in section 64.2 of the Act, their meaning, and their application to the facts before the Board.
Counsel submitted that the protections contained in section 64.2 of the Act were added to the Labour Relations Act as part of the Bill 40 amendments to the legislation in order to ameliorate the consequences of prior Board jurisprudence which found section 64 of the Act and its predecessors to be inapplicable to a change of contractors due to the retendering of a contract, particularly in the building cleaning industry. Counsel observed that amendments to both the Employment Standards Act (R.S.O. 1990, c. E-14, as amended) and the Labour Relations Act were effected simultaneously in order to protect (amongst others) cleaning employees from the loss of representation in certain situations. It was submitted that the Legislature had prescribed by the terms of the amended legislation limited circumstances for the application of section 64.2 of the Act.
Counsel submitted that section 64.2(1) of the Act sets the tone for the application of the entire section, and dissected the various concepts identified in the subsection. Counsel urged the Board to equate the term "premises" contained within subsection (1) with the term "building" also contained therein, on the basis that the "services" provided by or to a building owner must, by the terms of this section, relate to "servicing the premises". Counsel argued that, to the extent that this section of the Act focuses on the "building", it does so because of the term "services", a word which cannot be separated from the term "premises".
Counsel then focused his argument on section 64.2(3) of the Act, which contains the deeming provision of the legislation. Counsel pointed out that a deemed sale of a business under section 64 of the Act does not occur unless all three conditions or criteria contained in this subsection are satisfied.
The language contained in section 64.2(3)(a) was reviewed in detail by counsel. He submitted that the provision, by qualifying its application to situations where the premises in question are the "principal place of work" of employees, contemplates a situation where employees may work at a number of different locations. He further submitted that the word "premises" in this subsection, read in context with section 64.2(1), must again mean "the building". Accordingly, if an employee works at a building doing building cleaning pursuant to a collective agreement, but the building is not his or her "principal place of work", then the collective agreement does not follow the services if there is a change in contractors. Counsel provided the Board with the definition of the word "principal" from the Shorter Oxford English Dictionary, as meaning any of "chief', "main", or "first in rank or importance". This, submitted counsel, suggests that for section 64.2 to apply in the case before the Board an employee would have to spend the primary part of his or her work day or year at the Arts, Crafts and Hobbies Building. Counsel pointed out that the evidence before the Board suggested that prior to April, 1993 any one employee spent very little time over the course of a day or a year at the Arts, Crafts and Hobbies Building performing cleaning tasks.
With respect to section 64.2(3)(b), counsel observed that the words "at those premises", on his theory of the case, referred back to the building in question. It was his submission that a plain reading of the subsection again compels one to conclude that the word "premises" refers to the word "building", and that here the "premises" referred to must be the Arts, Crafts and Hobbies Building.
Counsel argued in the alternative that, if his interpretation were wrong, and should the term "premises" be interpreted to mean all of Exhibition Place, then the union must nonetheless be unsuccessful in its application as it did not then satisfy section 64.2(3)(b) of the Act, because the Board of Governors has not "ceased" to provide "the services" in question at the "premises" -being Exhibition Place - and, as the hours of work of the employees of Local 506 have not been affected (either cumulatively or individually), the employer has not ceased to provide the services even "in part". Counsel submitted, therefore, that no matter how the term "premises" is defined by the Board, the union must be unsuccessful in this application.
Counsel further noted that, under the collective agreement in force at Exhibition Place, the union does not have rights to all of the cleaning that occurs at Exhibition Place, or to any particular cleaning in any particular location at Exhibition Place - and he identified a number of buildings or structures that Local 506 members did not clean on a daily basis (examples being the Bandshell, the Swiss Chalet Restaurant, and most of the booths in the Food Products Building). Counsel noted the evidence of Linda Simpson who testified that the Board of Governors attempts to obtain cleaning contracts for the shows and events which occur on Exhibition Place grounds. If the cleaning contracts are not obtained, Local 506 employees do not clean the premises. He noted that the Board of Governors does not have a contract with Medieval Times to perform cleaning at their buildings. (No evidence was adduced of any efforts made by Board of Governors to secure such a contract).
As a final, alternative argument on the interpretation of section 64.2(3)(b) of the Act, counsel for Board of Governors urged the Board to conclude, if the "premises" are defined as "Exhibition Place", that the loss of the work by Local 506 employees at the Arts, Crafts and Hobbies Building does not constitute even a cessation of "part" of the services at those premises for the purposes of section 64.2(3)(b), due to the insignificant amount of the work previously performed by Local 506 employees at the building. Counsel noted that Board jurisprudence regarding the "sale of a business" under section 64 of the Act establishes that a sale of a "part" of a business occurs only when a "concrete and viable" part of the business has been sold. In his submission, the same analysis can be applied to section 64.2 of the Act, and if applied to the facts of this case would lead us to the conclusion that no concrete and viable "part" of the cleaning services had ceased to be provided at the premises.
With respect to the terms of section 64.2(3)(c) of the Act, counsel for Board of Governors generally deferred to the submissions of counsel for Medieval Times, and indicated that he concurred with the analysis of Mr. Page.
Counsel for Medieval Times also closely reviewed the words of section 64.2 of the Act during argument. He concurred with counsel for Board of Governors that, on the facts of this case, even if Exhibition Place is considered to be the "premises", the union could not satisfy section 64.2(3)(b) of the Act so as to establish all three elements of section 64.2(3), and therefore deem the transaction to be a "sale of a business" for the purposes of section 64 of the Act.
Counsel proceeded to focus much of his argument on section 64.2(3)(c) of the Act, and in particular the concept of "substantially similar services". In counsel's submission, the interpretation of these words is dependent upon the nature of the ultimate receiver of the services, as well as the nature of the service which is provided. On the facts of this case, the cleaning in the Arts, Crafts and Hobbies Building previously performed by Local 506 members consisted of sweeping, garbage removal and cleaning of washrooms, whereas now the cleaning services provided at the Medieval Times Castle and Arena also include food clean up, bar clean up, kitchen maintenance, horse stable cleaning, etc. Counsel submitted that these latter services cannot in any way be considered to be "substantially similar" to those previously performed by Local 506. Counsel observed that, from the perspective of remedy, the "apples and oranges" differences in the tasks performed before and after Medieval Times leased the Arts, Crafts and Hobbies Building makes an effective remedial response by the Board difficult to craft.
Counsel submitted that the work that appears to be closest to a "substantially similar service currently performed at the Medieval Times location is the work performed by After Five. He distinguished that work from that performed by Local 506 members on the basis that eighty per cent of the work done by After Five is done in the newly constructed building adjacent to what was the Arts, Crafts and Hobbies Building. The work is not, therefore, "substantially similar", because it is both different in nature and performed in a different location.
Counsel referred the Board to a number of governmental policy papers regarding the Bill 40 amendments to identify the mischief and purpose behind the amendments to the Labour Relations Act which are reflected by section 64.2 of the Act. In essence, counsel submitted that the amendments were passed to ameliorate the development of the law as it related to the loss of bargaining rights in tendering situations, and the loss of bargaining rights as a result of a movement of contracted work "in house" by an employer after having previously contracted it out. Counsel observed that there was no reference in any of the policy materials prepared by the Ministry of Labour to a situation such as the one before the Board.
Counsel stated that the position taken by the responding parties satisfies the policy concerns identified in the governmental policy papers produced in argument. He submitted that the legislation was never intended to extend to the situation where a third party leased a building from an owner and where the services previously performed for the owner in the building were merely moved to another building within the scope of the collective agreement. Counsel submitted that the application, if it were successful, would cause an extension of the union's bargaining rights, which would be contrary to Board jurisprudence on section 64 of the Act - especially where, as here, no bargaining rights or bargaining unit jobs have been lost, or hours of bargaining unit employees reduced. It was submitted that the Board should go no further than protecting the bargaining rights of Local 506.
Counsel for Medieval Times also submitted that the Board did not have jurisdiction to extend the remedy to any work performed in the new building; that is, as there is no "former" building from which a sale could have occurred, a sale of a business could not possibly be "deemed" in these circumstances. He asked that the Board dismiss the application.
Counsel for the applicant prefaced his remarks by noting that, in his view, it was important to focus on what had really happened at Exhibition Place. In this case, an owner of certain premises, the premises being Exhibition Place, utilized members of Local 506 to clean those premises, and then ceased in part to do so, the services now being done in part by another cleaning company and in part by employees of a lessee. Counsel submitted that this situation was clearly within the scope of the mischief to be remedied by section 64.2.
Counsel directed the Board's attention to the particular language of section 64.2 of the Act. In counsel's view, the bargaining rights of those businesses to which section 64.2 applies now attach to the "premises" and not the business. In that regard, counsel urged the Board to conclude that the word "premises" within section 64.2 must mean, in this case, "Exhibition Place". Counsel questioned the logic of opposing counsel in equating the terms "business" and "premises", especially in light of the use of both terms in the same sentence of section 64.2(1) of the Act. Assuming the Legislature had intended to refer to the same concept, why, counsel asked rhetorically, would it choose to use two different words? Counsel noted that the concept of "servicing the premises" extends beyond just the building, and would include at least the land around the building. Counsel provided the Board with definitions of "premises" from The Concise Oxford English Dictionary and from "Words and Phrases Legally Defined" (3rd Ed) illustrating that the concept of "premises" has been interpreted to extend beyond that of just a physical "building".
Counsel for Local 506 agreed that all three conditions in section 64.2(3) must be satisfied before a deemed sale of a business for the purposes of section 64 is effected by the legislation. With respect to subsection (3)(a), counsel urged the Board to conclude that the applicant had successfully satisfied the condition insofar as "Exhibition Place" is the primary place of work for these employees of Local 506 - that is, that "Exhibition Place" is the "premises" referred to in section 64.2(3)(a). In counsel's submission, the inclusion of the concept "principal place of work" in subsection (3)(a) was intended to exclude from the application of the section the situation where temporary help agencies clean a building on a very short-term basis. Counsel observed that Article 2.01 of the collective agreement circumscribed the applicant's bargaining rights to "Exhibition Place", and urged the Board to conclude that the "premises" must accordingly be defined to mean Exhibition Place.
Counsel asked the Board to assume, for the purposes of argument, that Exhibition Place were a vertical tower, similar in nature to a tall office tower, rather than a number of buildings spread out horizontally. He submitted that, should a unionized contractor have successfully tendered for a contract to clean six floors of the tower, and should that contract be lost to that unionized contractor as a result of a successful tender by another company, that new subcontract would be captured by section 64.2 of the Act. Counsel noted that, on opposing counsel's theory, the subcontract would not be captured by section 64.2 because no one employee would work primarily on all six of the floors. If opposing counsel's theory was correct, he submitted, section 64.2 would have no practical meaning or effect.
With respect to section 64.2(3)(b) of the Act, counsel focused on the words "in whole or in part" to counter opposing counsel's arguments; that is, counsel submits that there has been, on the facts of this case, a partial cessation of the work with respect to the Arts, Crafts and Hobbies Building, the particular building leased by Medieval Times. Counsel urged the Board to focus on the "premises", being Exhibition Place. The services under the collective agreement which are relevant here - building cleaning services - have ceased on part of those "premises". The employer owns the same business, still does what it previously did, but does less of it, because there are "less" premises. It is not the volume of work which matters here, submitted counsel, because the legislation requires the Board to "keep its eye on" the physical building which is the Arts, Crafts and Hobbies Building. Counsel returned to the analogy drawn regarding the office tower, and suggested that it would be no answer to an application under section 64.2 of the Act for an employer who had successfully tendered for a contract for cleaning services to observe that the predecessor had just obtained a cleaning contract at another building down the street and that no hours were lost to the employees of the predecessor who could now work there.
Counsel for Local 506 observed that, taking opposing counsel's argument to its logical extension, section 64.2 of the Act would not apply to Exhibition Place unless it were let in its entirety to another entity. That is, due to the large number of separate buildings on the Exhibition Place grounds, even if the most time spent in cleaning any one building by an employee as a percentage of the total time spent at work approximated twenty-five per cent, it would be virtually impossible for a trade union to succeed under section 64.2 - if the "percentage of time worked at the building" approach is adopted by the Board as a determining factor.
With respect to the interpretation of section 64.2(3)(c) of the Act, applicant's counsel acknowledged here as well the fundamental disagreement of the parties on the interpretation of the Act. Counsel did not dispute that Medieval Times is a unique business, far different in nature from the business of Exhibition Place. Counsel questioned the relevancy of the fact that the use of the premises had changed, and submitted that the key to deciding the case was the nature of the services provided in the building.
Counsel submitted that the phrase "substantially similar services" did not, as was urged by the counsel for Medieval Times, set a high threshold for comparison. On the contrary, counsel suggested that the modifying words "substantially similar" suggested that identical services need not be provided on the premises, thus giving the Board some latitude in making the assessment required by the Act. Counsel submitted that the Board "should not get hung up" if some aspects of the services provided are now different. In fact, he acknowledged that the building cleaning services provided will almost always be different in cases similar in nature to that before the Board, as tenants who replace other tenants or owners will typically bring with them different cleaning requirements. Counsel submitted that this reality should not determine the interpretation of section 64.2(3)(c).
Furthermore, counsel submitted that the Board should not concern itself with the nature of the business of the tenant. Counsel again drew an analogy to an office tower. If a bank, the major tenant of an office tower, decided today to perform cleaning work "in house" rather than by way of subcontract with the building management, as it had in the past, counsel submitted that even though the nature of banking is different from the nature of property management/development, section 64.2(3)(c) should nonetheless be satisfied in the circumstances. He submitted that the focus should be on the nature of the services provided with respect to the premises, rather than the nature of the user of the premises.
With regard to section 64.2(3)(c) of the Act, and opposing counsel's argument regarding the scope of the phrase "substantially similar services", counsel for Local 506 submitted that the type of work currently being performed by Medieval Times employees and After Five employees had, at least in part, been performed by Local 506 members prior to April, 1993. Reference was made to the collective agreement which describes the type of work to be performed by building cleaners employed by the Board of Governors.
Counsel turned his argument towards the testimony that Board of Governors, as part of the process leading up to the execution of the Agreement to Lease, forwarded to Medieval Times the collective agreement between Board of Governors and Local 506. Counsel submitted that this suggested that the parties to the Agreement had some knowledge that the collective agreement might apply to Medieval Times.
Counsel addressed Board of Governors' argument that, because the time spent by the applicant's members in the Arts, Crafts and Hobbies Building was, in effect, de minimus, and because the words "in part" contained in section 64.2(3)(b) should be interpreted to mean a "concrete and viable" part of the services, the requirements of section 64.2(3)(b) of the Act had not been satisfied by the applicant. Counsel for Local 506 disagreed with this submission, and suggested that the true analogy was whether the Arts, Crafts and Hobbies Building was a "concrete and viable" and severable part of Exhibition Place. He noted that the plain words of section 64.2(3)(b) required only that the services cease "in whole or in part", and not "in whole or in "big" part".
With respect to opposing counsel's argument that an effective remedy would be difficult to craft should the application be allowed, counsel for Local 506 noted that the remedy sought by the applicant is only that the Board order that the collective agreement is binding on Medieval Times. He conceded that much of the work performed by employees at Medieval Times was not work performed previously by Local 506 members (i.e. bartending) and made no claim to the work. He submitted that, to the extent there remained a dispute over the application of the collective agreement, that problem could be dealt with by a grievance proceeding to arbitration, In counsel's submission, the problem is a small one and should be of little weight to the Board.
With respect to opposing counsel's argument that the work is not "substantially similar" because up to eighty per cent of it occurs on the new addition to the Arts, Crafts and Hobbies Building, counsel for Local 506 submitted that it was important to note that the words "substantially similar" in section 64.2(3)(c) modifies the words "services" and not the word "premises". Counsel submitted that here the services provided are the same. In any event, as the term "premises" means "Exhibition Place", whether a new building was or was not constructed on Exhibition Place grounds is irrelevant.
With respect to opposing counsel's argument regarding legislative intent, and the government policy papers submitted to the Board, counsel for the applicant questioned the helpfulness of the documents, as they were not, in his view, meant to identify every situation to which section 64.2 of the Act may apply. Most importantly, suggested counsel, they are not the legislation, and counsel submits that section 64.2 by its clear terms extends beyond the problems identified in the documents. In counsel's submission, this case is not a re-tendering case, or a contracting-in case, in the narrow, classical sense. Instead, this case involves a situation where an owner leases property to a tenant and the tenant prefers to contract out the work previously done by the owner. In counsel's view, this scenario is anticipated by section 64.2 of the Act, as it reflects the same mischief which the section of the Act was meant to remedy. The only distinction here is the intermediary of the tenant, which should make no difference at all.
In reply argument, counsel for Medieval Times disputed the applicant's suggestion that section 64.2 now permits bargaining rights to attach to premises. Counsel submits that, if the Legislature had intended such a conclusion, it would have stated such in section 64.2 in far simpler terms than the section currently reads. As a result, counsel disputes that the Legislature intended for bargaining rights to flow with the building. Counsel submitted that section 64.2 of the Act requires the Board to follow the service. Counsel noted that, had the Board of Governors closed the Arts, Crafts and Hobbies Building, the rights of Local 506 members would have continued in the other buildings of Exhibition Place.
Counsel was willing to concede that the concept of "premises" could well extend beyond that of the "building", but only marginally, to include the immediately adjacent grounds, and submitted that for most purposes the terms could be considered the same. Counsel noted that the applicant's position, that the term "premises" should equate to "Exhibition Place" because of the scope of the collective agreement, could easily have been enacted by the Legislature in section 64.2 of the Act. Counsel submitted that such a conclusion should not be reached by the Board.
Counsel also disputed the applicant's submission that the review by Medieval Times of the Local 506 collective agreement, pursuant to the Agreement to Lease, had any relevance. In his submission the argument was a "red herring", noting that it would be specious to suggest that if the Board of Governors had not forwarded the collective agreement to Medieval Times for review that it would be inapplicable to the situation.
Counsel for Board of Governors reiterated in reply a number of his previous submissions. As well, counsel submitted that the applicant was simply attempting by this application to extend its bargaining rights. He drew an analogy to the situation where a unionized employer erected a building which was not captured by the scope clause of a collective agreement, and submitted that the Board had no jurisdiction to extend bargaining rights to the new building pursuant to section 64.2 of the Act. Counsel observed that no services have been lost at Exhibition Place, nor have any bargaining rights been lost.
With respect to the argument that the collective agreement provides the applicant rights for the whole of Exhibition Place, counsel submitted that cases are legion that say that bargaining rights do not attach to land or work, but instead attach to employers. Finally, counsel submitted that opposing counsel's fundamental error was that he focused on the property and ignored use of the term "services" in section 64.2 and that he also ignored the fact that this section was designed to protect bargaining rights and not to extend them. Here, in counsel's submission, Local 506 has lost nothing, and is merely trying to expand its rights into a new building.
4. Decision
(i) Application of Section 64.2
- Section 64.2 of the Labour Relations Act provides as follows:
64.2-(1) This section applies with respect to services provided directly or indirectly by or to a building owner or manager that are related to servicing the premises, including building cleaning services, food services and security services.
(2) This section does not apply with respect to the following services:
Construction.
Maintenance other than maintenance activities related to cleaning the premises.
The production of goods other than goods related to the provision of food services at the premises for consumption on the premises.
(3) For the purposes of section 64, the sale of a business is deemed to have occurred,
(a) if employees perform services at premises that are their principal place of work;
(b) if their employer ceases, in whole or in part, to provide the services at those premises; and
(c) if substantially similar services are subsequently provided at the premises under the direction of another employer.
(4) For the purposes of section 64, the employer referred to in clause (3)(b) is considered to be the predecessor employer and the employer referred to in clause (3)(c) is considered to be the successor employer.
(5) This section shall be deemed to have come into force on the 4th day of June, 1992.
As was acknowledged by counsel who argued this case, this is one of the first opportunities for the Board to consider in detail the substance of section 64.2 of the Act. Counsel took radically different viewpoints as to the purpose and scope of this provision, which was added to the Act as a result of the Bill 40 amendments which came into effect on January 1,1993 (although section 64.2 of the Act is deemed by section 64.2(5) of the Act to have come into force on June 4, 1992).
Section 64.2 of the Act, should it apply to the facts of any particular case before the Board, has the effect of deeming a "sale of a business" to have occurred for the purposes of section 64 of the Act. Accordingly, the consequences of section 64 of the Act will be imposed on the parties by operation of law; that is, should section 64.2 of the Act apply to a factual situation, it is unnecessary for the Board to consider whether the factual situation is properly characterized under section 64 of the Act as a "sale", and whether the economic entity transferred to the alleged successor constitutes "one or more parts of a business" as defined by section 64 of the Act. The transaction is deemed to be a sale of a business for the purposes of section 64.
Counsel for the applicant, in his opening remarks, submitted that section 64.2 of the Act has established a new paradigm for successor rights applications, and suggested that the two step analysis applied by the Board to section 64 applications should be of no application to section 642 of the Act. We agree with counsel that section 64.2 is a new point of departure for the Board, and observe that the blind application of previous Board jurisprudence or principles relating to section 64 of the Act or its predecessors would be inappropriate. This does not, however, preclude the application of particular principles which have been established by the Board under its section 64 jurisprudence. The application of one or more of those principles depends upon the facts of the case before the Board, and it would be inappropriate for the Board to limit or circumscribe the application of those principles at this early stage of the interpretation of section 64.2 of the Act.
Section 64.2 of the Act should, of course, be given a large and liberal interpretation, in accordance with section 10 of the Interpretation Act, R.S.O. 1990, c. I-11. It is the role of the Board to ensure that the intention of the Legislature in enacting section 64.2 of the Act is fully effected. However, determining the full extent and scope of the intention of the Legislature when enacting section 64.2 of the Act is not an easy task. The concept of legislative intent is amorphous and, in any particular case, the full scope of the intent of the Legislature may be incapable of exhaustive determination.
The difficult problem of determining legislative intent is reflected by the circumstances of this case. The documentation relied upon in argument by counsel for Medieval Times does suggest certain purposes behind the enactment of section 64.2 of the Act, but does not necessarily reflect the full intent of the Minister of Labour or the Government regarding the full extent of the mischief that section 64.2 of the Act attempts to remedy. Instead, it reflects only the mischief as perceived by certain Ministry of Labour officials and is not necessarily an exhaustive comment on the full scope of the provisions. Nonetheless, in light of Board jurisprudence which existed prior to the enactment of section 64.2 of the Act, and in particular the decisions of Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193 and Federated Building Maintenance Company Limited, [1985] OLRB Rep. Nov. 1585, it is not difficult to conclude that one purpose of section 64.2 was to protect employees of unionized subcontractors from the consequences of that subcontractor losing a contract (usually by way of the tendering process) in the building cleaning, security and food services industries. As a result of the Board decisions referred to above, bargaining rights enjoyed by employees of subcontractors were not continued in the successor subcontractor (notwithstanding that typically the employees of the former subcontractor would be hired by the successful tenderer). All counsel acknowledged that one of the purposes behind the enactment of section 64.2 of the Act was to protect representational rights in these circumstances.
All counsel also agreed that another mischief that section 64.2 of the Act was meant to eradicate was the "contracting back in" of such work by an employer once bargaining rights had been established by a trade union with a subcontractor of that employer. Again, prior to the enactment of section 64.2 of the Act the protections of section 64 of the Act were unavailable to employees in these circumstances. Section 64.2 ensures that in those same circumstances the bargaining rights of the trade union representing the employees of the predecessor are maintained in the successor.
The question before the Board, though, is whether the intention of the legislature in enacting section 64.2 of the Act is reflected by the facts of this case. In our view, the answer to this question must be sought by considering the terms of section 64.2(1) of the Act, which reads, again, as follows:
This section applies with respect to services provided directly or indirectly by or to a building owner or manager that are related to servicing the premises, including building cleaning services, food services and security services.
Section 64.2(1) of the Act defines the circumstances in which section 64.2 is applied. Distilling section 64.2(1) to its constituent elements, the section applies when
(a) services relating to premises, including building cleaning services, food services and security services, are
(b) provided, directly or indirectly, by or to a building owner or manager.
It is noteworthy to observe the broad language utilized by the Legislature throughout section 64.2(1) of the Act. The inclusive language adopted by the Legislature when referring to the enumerated services specifically identified by that subsection makes it clear that the enumerated services are not exhaustive of the entire range of services which may be captured by the section. The use of the broad phrase "related to servicing the premises" reflects the intention of the Legislature to encompass various other types of services which may be provided by or to building owners or managers. It is also noteworthy that the phrase "provided, directly or indirectly, by or to a building owner or manager" is also wide-sweeping in scope. It is manifest from the language of section 64.2 that the Legislature intended this provision of the Act to have broad applicability, and to encompass a wide range of commercial circumstances.
- In light of the above-noted observations, we are of the view that the wording of section
64.2(1) of the Act clearly captures the transaction which is before the Board. It is evident from the facts of this case that, prior to the lease of the Arts, Crafts and Hobbies Building at Exhibition Place by Board of Governors to Medieval Times, "building cleaning services" were provided "directly or indirectly by ... a building owner or manager" which were "related to servicing the premises" (on a narrow or a broad interpretation of the word "premises"). Accordingly, the transaction between Board of Governors and Medieval Times is liable to be assessed by reference to the rights and obligations reflected by section 64.2 of the Act.
Counsel for the responding parties submitted during argument that section 64.2 of the Act was inapplicable to the facts before us because the provision was never intended by the Legislature to capture a lease-type transaction such as the one between the two responding parties, especially in light of the rather significant structural alterations to the Arts, Crafts and Hobbies Building which were undertaken by Medieval Times immediately after taking possession of the building. It was also submitted by counsel that section 64.2 had no application because Local 506 members were not out-of-pocket or otherwise negatively affected by this transaction. We reject both of these arguments.
In our view, the formal legal description or characterization of the transaction which results in the reorganization of the services in dispute on the premises is not a pertinent consideration in determining the applicability of section 64.2. The Board has historically considered and determined "sale of a business" applications on the basis of the substance of the transaction in question, without reference to form. We are of the view that this same approach must be taken to the interpretation of section 64.2 of the Act. Any transaction which falls within the broad scope of the application provision of section 64.2 will be subject to Board review upon application. The existence of alterations to the physical space undertaken by one of the parties to the transaction is likely to be of little importance when considering the potential application of section 64.2, although it may have some bearing on the satisfaction of the criteria contained in section 64.2(3) of the Act, depending on the facts of the case in question. Furthermore, whether the transaction has or has not had an effect on Local 506 members employed at Exhibition Place is also of little relevance, insofar as the terms of section 64.2 of the Act do not require, as a prerequisite to its application, proof of out-of-pocket loss or negative consequences to the trade union or members of the trade union. Accordingly, we reiterate our view that this transaction is liable to be assessed by reference to section 64.2 of the Act. As it was agreed amongst the parties that the exclusions enumerated in section 64.2(2) of the Act were inapplicable to the facts before us, we now turn to consider whether the transaction in question is deemed to be a "sale of a business" by section 64.2(3) of the Act.
(ii) Section 64.2(3)(a): "Premises"
All counsel were in agreement that the result of this particular application would largely depend upon the meaning attributed by the Board to the word "premises" contained in section 64.2 of the Act. This term is not defined in the legislation. Having considered the argument of counsel, we are of the view that the word "premises" in section 64.2 of the Act must be interpreted, on the facts of this case, to encompass the entirety of Exhibition Place, rather than the Arts, Crafts and Hobbies Building or some smaller geographical area. The analysis which leads us to reach this conclusion is as follows.
We agree with counsel for Board of Governors that the word "building" in section 64.2(1) of the Act must be read in conjunction with the word "premises" contained in that same subsection of the Act. A reading of that subsection, in a perfectly natural manner, can lead us to no other conclusion. In fact, the word "premises" in that subsection is meaningless unless it refers to the word "building" which appears earlier in the subsection. That result does not, however, lead us to the further conclusion that the word "premises" should be interpreted as equating to the word "building" and therefore must mean, on the facts of this case, the Arts, Crafts and Hobbies Building.
There is merit to the applicant's position that the Legislature, had it intended the word "premises" to equate to the word "building", could just as easily have substituted the word "building" for that of "premises" in the section. Furthermore, there is nothing contained in section 64.2(1) which precludes the conclusion that the "premises" referred to could be smaller or larger in geographical size than the "building" referred to in that subsection. Utilizing the office tower example referred to in argument, should a building owner contract out only six floors of a multi-floor tower to a building cleaning contractor, it is not clear why these six floors are not "premises" for the purposes of section 64.2 of the Act, notwithstanding that they are not identical in concept to "the building" in which the floors are located. As was amply demonstrated by the definitions of the term "premises" provided to the Board during argument, common law interpretation of that term has extended the meaning of the word beyond that of merely a building, and can include reference to a broader geographical area.
More importantly, however, we are concerned that a reading of section 64.2 of the Act in the manner urged by the responding parties would eliminate the protections of section 64.2 of the Act, effectively eviscerating its contents. The fact situation before the Board is not a classic case of lost representational rights in the building cleaning services sector due to a re-tender of work or a contracting-in of work. It does, however, exhibit similar characteristics to those situations - Board of Governors, by leasing the Arts, Crafts and Hobbies Building to Medieval Times, and by not contracting with Medieval Times to provide the cleaning services of Local 506 members for the building, effectively loses the cleaning work for that building to After Five, the new contractor. Interpreting the word "premises" in the narrow way urged by the responding parties, especially in situations such as those before us, could well lead over time to a withering of the bargaining rights held by Local 506. There would therefore appear to be merit in the applicant's concerns that an interpretation of the section in the manner proposed by the responding parties would be the start of a rather slippery slope.
This result is highlighted by a consideration of section 64.2(3)(a) of the Act, which contains one of the three criteria which must be satisfied for section 64.2 of the Act to apply to our facts. The "premises" where employees perform services must be their "principal place of work" for section 64.2 to apply. On the facts before the Board, if the term "premises" is defined to mean "the Arts, Crafts & Hobbies Building", no employee could be said to satisfy that criterion. In point of fact, on the theory of the responding parties due to the large number of buildings on the grounds of Exhibition Place, no employee could currently identify any building as his or her 'principal' place of work. The practical effect of this interpretation of section 64.2 of the Act would be to permit the gradual disappearance of both bargaining unit work and bargaining rights by way of partial transfer of the cleaning services over time. We do not believe that this result was intended by the Legislature when enacting section 64.2 of the Act.
In our view, in order to interpret the provision in a fair, large and liberal manner, and in such a way as to ensure that the spirit of section 64.2 is recognized and not defeated, the word "premises" should be interpreted in a manner so as to encompass the entirety of Exhibition Place. As observed above, there is no reason to preclude an interpretation of the legislation which gives the term "premises" a broader scope than that of the word "building" contained in section 64.2(1). On the facts of this case, the mischief to be avoided by the Act can only be avoided if such an interpretation is given to the Act. We feel it important to stress that the scope of the recognition clause in the collective agreement which extends the rights of Local 506 to the grounds of Exhibition Place has not led us to this result. There is no presumption of a correlation between the scope of the bargaining rights held by the trade union and the term "premises" contained in section 64.2 of the Act. Whether the "premises" equate to the geographical scope of bargaining rights held by the trade union in any particular case depends upon the facts of the case.
Dealing specifically with section 64.2(3)(a), therefore, we are of the view that the applicant, on the facts of this case, has satisfied the criteria contained therein. That is, we are of the view that the employees of Local 506 perform services at "premises" (Exhibition Place) that are their "principal place of work". There was no evidence before the Board to suggest that the principal place of work of any of the employees in question was other than at Exhibition Place.
(iii) Section 64.2(3)(b) - Ceasing to Provide Services
During argument counsel for the responding parties' both submitted that, even if the Board concluded that the 'premises' for the purposes of the Act was Exhibition Place rather than the Arts, Crafts & Hobbies Building, the applicant had not satisfied section 64.2(3)(b) of the Act, insofar as Board of Governors had not "cease(d) in whole or in part, to provide the services at those premises". Counsel relied upon the evidence before the Board that no bargaining unit work. had been lost to Local 506 employees because the shows and events which previously had been located at the Arts, Crafts and Hobbies Building had merely been redirected to other buildings on the site of Exhibition Place. In fact, the uncontradicted evidence before the Board is that the hours of Local 506 employees had not been negatively affected by the lease to Medieval Times of the Arts, Crafts & Hobbies Building.
Counsel for the union submitted that the cessation by Board of Governors of the provision of cleaning services at the Arts, Crafts and Hobbies Building satisfied this statutory criterion -that the employer had "ceased to provide physical services at [the] premises" because there are now "less" premises in which cleaning services are performed. Having considered counsel's argument, we disagree with the interpretation of the Act urged upon us by the responding parties. We explain our rationale below.
In our view, counsel for the responding parties are correct in their observation that the quantity of bargaining unit work performed by Local 506 employees has not been altered as a result of the redistribution of the shows and events which had previously been located at the Arts, Crafts and Hobbies Building. This does not, however, lead us to conclude that section 64.2(3)(b) of the Act has not been satisfied. Section 64.2(3)(b) of the Act does not speak to the quantity of work performed by the employees on the premises, but rather a partial or total cessation of the provision of services at the premises.
In that regard, section 64.2(3)(b) of the Act is open to two distinct interpretations. Counsel for the responding parties suggest that, because the shows and events which have previously been housed at the Arts, Crafts and Hobbies Building are now housed elsewhere on "the premises", being Exhibition Place, Board of Governors has not ceased, in whole or in part, to provide building cleaning services at those premises. This, they submit, is enough for the application to be dismissed. It is possible for such an interpretation of section 64.2(3)(b) of the Act to be adopted. However, another interpretation of that subsection is also possible - that, by ceasing to perform the building cleaning services at the Arts, Crafts & Hobbies Building, Board of Governors has ceased to provide, in part, the previously provided services (i.e. cleaning of the Arts, Crafts, and Hobbies Building) at Exhibition Place.
The latter interpretation of section 64.2(3)(b) of the Act seems to us to be a more purposive reading of the legislation, and more consistent with the statutory language. Although initially attracted to the theory espoused by the responding parties, we are of the view that the intention of the Legislature is more fully satisfied by an interpretation of section 64.2(3)(b) which recognizes that the cessation of building cleaning services at one portion of the premises satisfies the statutory criterion whether or not there is a 'redistribution' of similar services at the premises. The specific wording of section 64.2(3)(b) of the Act supports this interpretation. The subsection speaks to the scenario where the employer ceases "in whole or in part" to provide the services. In our view, only part of the services need be discontinued for the subsection to apply.
The interpretation of the legislation as urged by the responding parties would, in effect, permit for an employer such as Board of Governors to slowly, over time, delete portions of the applicant's bargaining rights which correspond to particular geographic locations on the grounds of Exhibition Place. Whether an applicant would be successful in challenging such deletions would depend entirely upon the ability of Board of Governors to redistribute the shows or events to other locations throughout "the premises" - namely Exhibition Place. On the theory of the responding parties, should there be excess capacity at Exhibition Place, an application such as the one before us would be unsuccessful. Should there be difficulty slotting the show or event into other buildings, such that the show or event were relocated beyond the grounds of Exhibition Place and this loss of an event or show led to a corresponding partial (or total) cessation of cleaning services, only then would an application under section 64.2 of the Act succeed.
We do not believe that this result was intended by the Legislature when enacting section 64.2 of the Act. The adoption of such an interpretation of the Act would result in significant disputes between the parties regarding the various possible reasons for the cessation of services, which is not a particularly useful exercise and which in our view was not contemplated by the Legislature. In the result, we are of the view that the applicant has satisfied the criteria contained in section 64.2(3)(b) of the Act.
(iv) Section 64.2(3)(c) - "Substantially Similar Services"
As noted above, the responding parties submitted that, on the facts of the case before us, "substantially similar services" were no longer provided at the premises by another employer as had previously been provided by Board of Governors. In essence, the argument of the responding parties is summarized as follows: The services provided by Medieval Times are different in nature than the services provided by Board of Governors; the Medieval Times castle and arena are different than the Arts, Crafts & Hobbies Building; and the services performed by Medieval Times via After Five are largely performed in the arena which did not previously exist. As a result, the services now provided are not "substantially similar" in nature to those provided previously. Having considered the submissions of all counsel, we are of the view that some of the services previously provided by Board of Governors are now being provided, in a substantially similar form, under the direction of "another employer" as defined by the Act.
It is manifest from the language of section 64.2(3)(c) of the Act that it need not be proved by the applicant that identical services are being provided at the premises by the successor employer for section 64.2(3)(c) to be satisfied. All that is necessary is that "substantially similar" services be provided. Whether the services in dispute are "substantially similar" will depend upon the facts of the case. It is also clear from the language of section 64.2(3)(c) that the criterion can be satisfied independently of the nature of the work or services performed by others in the workplace. In other words, if "substantially similar" services are provided in tandem with substantially different services, the statutory criterion may still be satisfied. Such a situation is reflected by this case.
The basic cleaning services which are now performed by After Five employees appear, on their face, to be "substantially similar" in nature to those previously performed by Local 506 members. The other types of cleaning now performed in the Arts, Crafts & Hobbies Building (stable cleaning, for example) were not performed prior to the lease of the Arts, Crafts & Hobbies Building to Medieval Times. However, it is clear that "substantially similar services" are, to some extent, being performed on the site "under the direction of another employer", namely Medieval Times. This is, in our view, enough to satisfy the statutory test.
Dealing specifically with the arguments raised by counsel for the responding parties, it is clear from our conclusion above that the partially different nature of the overall services provided by Medieval Times at the Arts, Crafts & Hobbies Building does not lead to the conclusion that there has been no deemed sale within the meaning of section 64.2 of the Act.
The renovations done to the Arts, Crafts & Hobbies Building by Medieval Times, and the construction of the Medieval Times arena, do not, in our view, preclude the conclusion that "substantially similar services" are being provided by Medieval Times at the premises. In this particular case, we are of the view that the existence of renovations to the original building has no real effect on the conclusion we have reached. At the end of the day, building cleaning services of a substantially similar nature are being provided at the premises under the direction of Medieval Times and the structural renovations made by Medieval Times have no effect on that conclusion. The construction of the new arena also does not alter this conclusion. It is true that the After Five employees are performing 80% of their work in the new arena rather than the original building, as renovated. However, in our view this does not preclude the Board from considering this area of the premises for the purposes of determining whether "substantially similar services" have been provided by the possible successor employer. To redistribute the services to an adjacent area which is part of "the premises" as defined by the Act is insufficient to remove the services from our consideration for these purposes.
Accordingly, we are of the view that section 64.2(3)(c) of the Act has been established by the applicant, and that the three criteria contained in s.64.2(3) have been proved. In the result, a "sale of a business" is deemed by the legislation to have resulted from Board of Governors to Medieval Times.
(v) Remedy
- The transaction between Board of Governors and Medieval Times is, by virtue of section 64.2 of the Act, deemed to be a sale of a business "for the purposes of section 64", and we so declare. We further declare that Medieval Times is bound by the notice to bargain dated February 25, 1993 delivered by Local 506 to Board of Governors.
DECISION OF BOARD MEMBER G. O. SHAMANSKI; July 11, 1994
I have had the opportunity to thoroughly examine the basis for the majority ruling in this matter before the Board.
The salient facts are accurately reflected in the majority award and this in itself defies comprehension as to how a case under section 64.2 (3) could possibly be established in the circumstances.
There is no dispute that:
a. The Board of Governors did lease the Arts and Crafts and Hobbies Building located within the Exhibition grounds to Medieval Times for an extensive period of time. (para. 4)
b. This lease included adjacent lands upon which Medieval Times constructed a 40,000 square foot arena. (para. 5)
c. Medieval Times did not exercise the option of taking out a contract with the Board of Governors for cleaning services of the Arts and Crafts and Hobbies Building. (para. 10)
d. Arts and Crafts and Hobby shows have been scheduled in other buildings within the Exhibition grounds and the labourers union members perform the cleaning services. There has been no loss of work for bargaining unit members.
e. Tenants and shows often make their own private arrangements with respect to their cleaning requirements. (para. 10)
f. Paragraph 19 clearly established that the union does not have a monopoly to all cleaning that occurs at Exhibition Place.
g. The hours of work of the cleaners in the bargaining unit have not diminished.
This award is clearly an extension of the bargaining unit scope, which was not the intent of the legislation. The intent of the legislation was to protect and preserve the scope of the union bargaining rights and the jobs of it's members - nothing more - nothing less.
The harm the section was designed to prevent is not present in this case. Instead, this section is being used to extend the union bargaining rights without justification.
The majority decision says in fact that a union free tenant moving into a portion of a building to carry on it's business could very well be forced to deal with a union even though its line of business has no resemblance whatsoever to the business that vacated the building to relocate elsewhere and in the process takes with it the certified bargaining agent.
It is not presumptuous to assume from this award that in the event Medieval Times leaves the Exhibition grounds for another facility at another location, they will be forced to take the union with them.
On the basis of the evidence before this Board, I would have dismissed the application.

