Ontario Nurses' Association v. West Lincoln Memorial Hospital and West Lincoln Multilevel Health Facility Inc. operating as Deer Park Villa

[1994] OLRB Rep. September 1196

4492-93-R Ontario Nurses' Association, Applicant v. West Lincoln Memorial Hospital and West Lincoln Multilevel Health Facility Inc. operating as Deer Park Villa, Responding Parties v. Niagara Health Care and Service Workers Union Local 302, Christian Labour Association of Canada, Intervenor

BEFORE: Robert D. Howe, Vice-Chair, and Board Members J. A. Ronson and B. L. Armstrong.

APPEARANCES: Shalom Schachter, Carolyn Woloski, Helen Glint, and others for the applicant; Michael I. Kennedy, Connie Tank, and Greg Huisman for the responding parties; Bert Wierenga and Isobel Farrell for the intervenors.

DECISION OF THE BOARD: September 1, 1994

1. The names of the responding parties are amended to read: "West Lincoln Memorial Hospital and West Lincoln Multilevel Health Facility Inc. operating as Deer Park Villa". (For ease of exposition, those parties will also be referred to in this decision as the "Hospital" and "Deer Park Villa" (or the "Villa"), the applicant will be referred to as "ONA", and the intervenor will be referred to as "CLAC".)

2. This is an application under subsection 1(4) of the Labour Relations Act, which provides as follows:

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.

3. The intervention filed by CLAC includes the following request:

The Intervenor requests that any order issued pursuant to this case be issued in respect of the service workers as well. If they constitute one employer for the requested nurses then it only makes sense that the service unit be treated similarly since we rely on an identical fact situation.

4. The hearing of this matter was substantially expedited by the parties' agreement to refrain from calling evidence and to have the application decided on the basis of the following statement of agreed facts, and the documents referred to therein:

STATEMENT OF AGREED FACTS

1. The Applicant, the Ontario Nurses Association, (hereinafter "ONA") filed a section 1(4) application with the Ontario Labour Relations Board on March 29, 1994. ONA and the Respondents, West Lincoln Memorial Hospital (hereinafter the "Hospital") and West Lincoln Multilevel Health Facility Inc. (hereinafter "Deer Park Villa") and the Intervenor, the Christian Labour Association of Canada (hereinafter "CLAC") are in agreement regarding the facts set out in this statement. The Respondents' Book of Documents and the Supplementary Book of Documents jointly submitted by the parties also form the facts for this matter.

2. West Lincoln Memorial Hospital was incorporated on May 25, 1943 and currently operates as a Group C Hospital under the Public Hospitals Act. The Hospital has 78 beds distributed as follows:

Medical and Paediatrics 25 + 3

Surgical: 17 Continuing Care: 16 ICU: 4 OBS: 13 ER: 0 Total: 78

3. West Lincoln Memorial Hospital is funded, as are all other public hospitals in the province, on a global basis. The hospital is a member of the Ontario Hospital Association. As noted in paragraph 20, the Hospital participates with other hospitals in provincial bargaining with the Applicant. As a separate corporate entity, the Hospital maintains separate financial statements. A copy of the Hospital's annual report for 1992-1993 is attached including financial statements for the year ended March 31, 1993 (Exhibit 18).

4. In 1982 the Niagara District Health Council identified that there was a shortage of Nursing Home beds in Regional Niagara. As a result, 60 additional beds (Exhibit 1) were approved for the Niagara Region which were to be allocated as follows:

39 beds - Grimsby/West Lincoln; and

21 beds - Niagara Falls/Fort Erie

The News Release (Exhibit 1) points out that the Niagara District Health Council requested the provision of heavy nursing care in these beds. Subsequent to this announcement the Ministry of Health issued a call for proposals.

5. West Lincoln Memorial Hospital concluded that it would be in the best interest of the residents of its catchment area to submit a proposal to obtain the licence to operate the 39 nursing home beds. The proposal was submitted in January, 1983. In July of 1983, the Ministry announced that the Hospital had been successful in the competition for the 39 nursing home beds (Exhibit 2). The Ministry in its letter stipulated that the new facility was required to provide ongoing care for 55% of the licensed capacity requiring a minimum of 2.5 hours of care per day. i.e. Heavy care.

6. Deer Park Villa was established on February 2, 1984, pursuant to letters patent (Exhibit 3) and commenced operations in December 1986. Deer Park Villa is a 69 bed facility, 39 of which operate under the Provincial Extended Care Program. In addition, there is a 30 bed Retirement Home on the premises providing private and semi-private rooms. Exhibit 19 is a brochure describing the services provided by Deer Park both on the retirement side and the nursing home facility.

7. Deer Park Villa was created as a separate legal entity pursuant to a motion brought before the West Lincoln Memorial Hospital Governing Board on November 23, 1983 (Exhibit 31). The purpose behind the creation of Deer Park Villa as a separate corporate entity was to hopefully provide for CMHC funding and to allow the Hospital to convey some of its lands to the new institution to provide collateral for the financing of the construction of the new facility. All subsequent decisions with respect to the construction of Deer Park Villa were made by the Hospital Board until the Deer Park Villa Board took over starting in January 1987. CMHC financing for the construction of Deer Park Villa was initially pursued by the Hospital. However, ultimately financing for the construction of Deer Park Villa was provided by the institution obtaining a mortgage from the Toronto Dominion Bank.

8. The Hospital donated the land for the construction of Deer Park Villa. A land severance was carried out and the property on which Deer Park Villa is situated is now owned by it. The building of Deer Park Villa was financed in part by a mortgage held by the Toronto Dominion Bank and secured by a promissory note (Exhibit 4). Monies were also received through a fund raising campaign, a portion of which was used for the construction of Deer Park Villa. The mortgage for Deer Park Villa is secured by the institution itself consistent with the description set out in Note 3 to the 1993 Financial Statement of Deer Park Villa at Tab 24 of the Respondents' Book of Documents. The mortgage with the Toronto-Dominion Bank was arranged by Deer Park Villa. The Board of the Hospital had a role in financing start up costs, such as architect fees, for Deer Park Villa.

9. The nursing home component of Deer Park Villa is governed by the provisions of the Nursing Home Act and its regulations which amongst other things govern staffing. Funding is on a per diem per resident basis and the home is required to file annual Forms 7. Under long term health care reform, funding for the nursing home component of Deer Park Villa is now determined by a Case Mix Index referred to in paragraph 17. Attached as exhibits 20 to 22 are the Form 7's for the years ending 1993, 1992, and 1991 showing operating losses in each of those years.

10. The Governing Board of Deer Park Villa is comprised of the 12 elected Board members who also sit on the Hospital Board plus the representative of the Ministerial Association, who is also a member of the Hospital Board. Members to the Board of Deer Park Villa are elected at its annual meeting. Policies written following the issuance of the letters patent of the Corporation provide that the membership of the Deer Park Villa Corporation consists of the elected directors of the Hospital Board and a representative of the Ministerial Association. The Hospital's by-laws require the Ministerial Association to be represented on the Hospital Board. The monthly Deer Park Villa Governing Board meetings are arranged one week prior to those of the Hospital governing Board. The meetings of the Hospital Executive Committee are scheduled on a bi-monthly basis and are scheduled following the meetings of the Deer Park Villa Governing Board. Both sets of meetings take place in the Hospital's board room. The affairs of Deer Park Villa are not dealt with by the Governing Board of the Hospital and this is reflected in the minutes of their regular meetings. There are no committees of the Deer Park Villa Board.

11. The Officers of the Deer Park Villa Board are as follows:

Ken Southward President Sharon Arnold Vice President John Daciuk Treasurer Noel Ogilvie Secretary

12. Deer Park Villa is attached to the Hospital by an enclosed walkway (Exhibit 5). A copy of the Organizational Charts for both organizations is attached (Exhibit 6). The line of responsibility relating to the Chief Executive Officer in both the Hospital and Deer Park Villa is shown, as well as the lines of communications to the Governing Board of each Facility. The Management Committee of the Hospital is a committee of Department Heads in the Hospital. Ms. Connie Tank, as Administrator of Deer Park Villa, has a standing invitation to attend these meetings and does so on occasion. The purpose of inviting Ms. Tank is to keep her abreast of happenings in the Hospital and also provide her with an opportunity of communicating events and issues that might be occurring at Deer Park Villa.

13. The West Lincoln Memorial Hospital Foundation in part, funded the financing of Deer Park Villa. A copy of the objectives of the Foundation is attached (Exhibit 7). The Foundation was established by the Hospital. The Board of the Foundation is made up of eleven members, six of whom are from the Hospital and five from the community at large. The Hospital as part of a campaign to raise funds for both it and Deer Park Villa actively solicited its employees to make contributions.

14. The financial operations of the Hospital and Deer Park Villa are not jointly operated. Separate financial planning and accounting systems are maintained for each of the Respondents. A financial statement is prepared for each respondent. Each Respondent has its own independent banking relationship, the Hospital with the Canadian Imperial Bank of Commerce and Deer Park Villa with the Toronto Dominion Bank. Deer Park Villa maintains its own accounting, payroll and budgeting systems. Deer Park Villa receives some assistance from the Hospital in the form of entry of raw financial data into the accounting and budgeting computer systems. The data entry is completed only after Deer Park Villa staff have prepared the relevant financial material. Deer Park Villa also controls its own payables. Mr. Greg Huisman, the Director of Finance, merely processes the budgeting and accounting data provided by the staff of Deer Park Villa into the Hospital's computer system.

15. All patient treatment and diagnostic services offered by the Hospital are available to the residents of Deer Park Villa. However, no preferential entitlement is provided to these services. If an emergency occurs, a resident from Deer Park Villa is brought to the Hospital Emergency department by ambulance. Deer Park Villa residents, in addition to being transported to the Hospital by ambulance, are from time to time transported by wheel chair. Deer Park Villa residents also receive on a fee for service basis x-ray services at the Hospital. If X-ray services are required for Deer Park Villa residents, they are booked in the same fashion as anyone residing in the community would do. Deer Park Villa's laboratory services are contracted from Medical Diagnostic Services Inc. Pharmacy services are contracted for Deer Park Villa from Shoppers Drug Mart. Physiotherapy services for Deer Park Villa residents are received from the Niagara Region's Home Care Programs. The following services are purchased from the Hospital: Laundry, Dietary and Maintenance. Deer Park Villa is billed for these services by the Hospital on a monthly basis. Deer Park Villa does obtain some medical and surgical supplies from the Hospital and these are also billed on a monthly basis. The Hospital's cafeteria is open to both Hospital and Deer Park Villa staff members.

16. Deer Park Villa human resources functions are fulfilled by Connie Tank, the Administrator of Deer Park Villa. When Deer Park Villa first opened in December of 1986, the Personnel Department of the Hospital did assist with the start up. This was because of the obvious need for staff with expertise and time in this area which would of course have been lacking in the new facility. The goal in this area was to make Deer Park Villa independent and this has occurred. At present, the Director of Human Resources is available to the Administrator of Deer Park Villa as a resource. There is no structured arrangement with the Human Resources Department of the Hospital.

17. The acuity care levels of the residents at Deer Park Villa fall within the normal patient range across the Province. The 1993 resident classification category profile for Deer Park Villa provides that 43.59% of their residents were classified as F patients. The provincial average in 1993 was 32.92% (Exhibit 8). The acuity care of the residents at Deer Park Villa reflects the needs of the community. The resident mix at Deer Park Villa reflects the mandate it was required to meet to bid for the nursing home licence. The Niagara District Health Council specifically required the provision of heavy care nursing beds when it announced its approval of additional extended care beds for the Niagara Region. This community need was also reflected in the conditions set by the Ministry of Health in awarding the nursing home licence. Deer Park Villa's ability to maintain its resident mix is not based on its proximity to the Hospital.

18. Residents of the Hospital are not discharged more quickly to Deer Park Villa than similar residents of other nursing homes. This is reflected in the Hospital's Discharge Planner's reports for 1993 (Exhibit 9). In addition, it is the patient and not the Hospital that controls which nursing home a patient will be discharged to after release from the Hospital. It is a patient's personal choice which facility he or she will transfer to in order to receive long term care. This is reflected in the attached Discharge Form from the Hospital (Exhibit 10). Lastly, it is the Niagara placement co-ordination services role to co-ordinate the placement of residents in Deer Park Villa in conjunction with the needs of the broader community (Exhibits 11). Thus, patients being discharged from the Hospital do not have a unique ability to be admitted into Deer Park Villa. Residents of Deer Park Villa are admitted on a community wide needs access basis.

19. The Hospital's vacancy rate is not minimized by its proximity to Deer Park Villa for the reasons set out in paragraph 20. Moreover, the Hospital is globally funded by the Ministry of Health pursuant to the Public Hospitals Act. Thus, the Hospital's occupancy rate has no impact on the revenue it receives from the Ministry of Health.

20. On August 7, 1987, ONA was certified to represent certain nurses employed by the Hospital. The Hospital has traditionally participated in provincial bargaining on "central" issues with the Applicant. The current collective agreement expired March 31, 1993, a copy of which is attached (Exhibit 12). The Hospital is again participating in provincial bargaining which is currently underway. The Hospital did not sign a local agreement with ONA incorporating the Broader Health Sector Framework Agreement and is, therefore, under Part VII of the Social Contract Act. ONA and the Hospital are therefore governed by the "fail safe" of Part VII of the Social Contract Act. The Hospital's Social Contract savings target for ONA and CLAC is $288,100.

21. The Hospital's collective agreements with ONA and CLAC provide for a number of benefits including Hospitals of Ontario Disability Income Plan (H.O.O.D.I.P.), Hospitals of Ontario Group Life Insurance Plan (H.O.O.G.L.I.P.), Hospitals of Ontario Voluntary Life Insurance Plan (H.O.O.V.L.I.P.) and Hospitals of Ontario Pension Plan (H.O.O.P.P.). Deer Park Villa is not a member of OHA. and, therefore, its employees are not eligible to participate in those plans.

22. The Hospital also has a collective agreement with the Christian Labour Association of Canada covering its service employees. That agreement terminated September 30th, 1993 and a copy of the agreement is attached (Exhibit 17). The Christian Labour Association of Canada was certified to represent the service employees at the Hospital in July of 1990. The collective agreement between the Hospital and CLAC expired on September 30, 1993. Representatives of the parties met on September 30, October 29, and December 15, 1993, to negotiate the terms of the collective agreement. Agreement on a number of issues was reached by the parties. A "no board" report was issued by the Ministry of Labour on January 6,1994 (Exhibit 42). The Intervenor requested the remaining outstanding issues be submitted to an arbitrator pursuant to the Hospitals Labour Disputes Arbitration Act on January 19, 1994 (Exhibit 43). The Hospital did not sign a local agreement with CLAC incorporating the Broader Health Sector Framework Agreement and is, therefore, under Part VII of the Social Contract Act.

23. On February 26, 1992, ONA was certified to represent certain nurses employed by Deer Park Villa by way of interim certificates on February 26, 1992 (Exhibit 13). The Board issued final certificates on December 9, 1993 (Exhibit 14). Notice to bargain was served by the Applicant on March 5, 1992. Representatives of the parties met on July 14, October 13, 26, 1992, January 14, 15, February 10, 22, April 23 and May 25, 1993, in order to effect a collective agreement. At Exhibit 15 are the terms of the collective agreement that have been agreed to by ONA and Deer Park Villa. Deer Park Villa signed a local agreement with ONA which incorporates the Broader Health Sector framework agreement under the Social Contract Act (Exhibit 26).

24. ONA applied for conciliation with Deer Park Villa on March 2, 1993, and met with a conciliation officer on July 6, 1993. Following receipt of a "no board" report on July 16, 1993, the Applicant served notice on July 19, 1993, of its intention to submit the outstanding items in dispute to a Board of Arbitration pursuant to the Hospitals Labour Disputes Arbitration Act. Nominees were appointed and an interest board established. The Chair of the Board is Arbitrator Belinda Kirkwood and a hearing date was scheduled for May 19, 1994, (Exhibit 16). The interest dispute was adjourned on that day pending the outcome of this matter (Exhibit 45). Deer Park Villa had intended to make an ability to pay argument before the interest board in response to the ONA position that they be awarded hospital parity.

25. The nursing home component of Deer Park Villa is a member of the Ontario Nursing Home Association. The nurses at Deer Park Villa are members of the Manulife Pension Plan administered by the Ontario Nursing Home Association. Separate financial statements are maintained by Deer Park Villa and the Hospital. A copy of the most recent year end financial statement dated March 31, 1993, is at Exhibit 24.

26. Deer Park Villa has a separate collective agreement with the Christian Labour Association of Canada which covers service employees both in the nursing home and retirement home facilities. A copy of that agreement which expires in 1996 is at Exhibit 23. The Christian Labour Association of Canada was certified to represent the service employees at Deer Park Villa on November 10, 1988. A first collective agreement was signed by the parties on July 19, 1989, and expired on December 31, 1990. A second collective agreement was signed by the parties on July 15, 1991, and expired on December 31, 1992. Deer Park Villa and the Christian Labour Association of Canada signed on October 21, 1993, the current three year collective agreement expiring on March 31, 1996. Deer Park Villa signed a local agreement with the CLAC which incorporates the Broader Health Sector framework agreement under the Social Contract Act (Exhibit 44). Deer Park Villa's Social Contract savings target for both ONA and CLAC is $4,415.80.

27. The Hospital and [Deer] Park Villa deny the allegations of ONA that its bargaining rights have been impaired by the Respondents maintaining separate financial statements. The Respondents are separate corporate entities and accordingly separate financial statements are prepared for each as dictated by the Ministry of Health, the Nursing Homes Act and the Public Hospitals Act.

28. If the Applicant is successful in obtaining a declaration of common employer and a finding that the hospital agreements with the Applicant and CLAC apply to the nurses and service employees employed by Deer Park Villa, the additional annual wage cost would be approximately $157,556.00. As noted in paragraph 9, Deer Park Villa has shown significant operating losses in the last three years. This cost does not take into consideration additional costs in benefit improvements, assuming the nurses would be eligible for coverage of those benefits in the Hospital agreement referred to in paragraph 21. There would not be a benefit eligibility issue with respect to service employees represented by CLAC, except for the fact that those employees and the nurses at Deer Park Villa are members of the Manulife Pension Plan, as referred to in paragraph 25 and the question of eligibility for membership in H.O.O.P.P. arises.

29. Another issue would result from a successful declaration. Presumably Deer Park Villa would continue to be funded based on a Case Mix Index under long term health care reform and not on a global basis which is the case with the hospital. Finally, at least one other consequence arises from a declaration that the hospital agreements apply to service employees and nurses employed at Deer Park Villa. Under the Social Contract Act the employees in question would no longer remain under the Broader Health Sectoral framework agreements and would fall under Part VII of the Act (fail safe) with different reduction targets. We believe this would be contrary to the Act and specifically Section 1 .1. Under section 52 of the Act, its provisions prevail over any other Act to the extent necessary to carry out the intent and purpose of the Act.

30. Although a literal reading of the statement of agreed facts would suggest that it is common ground among the parties that if the Board issued a declaration in this matter, the employees in question would no longer remain under the Broader Health Sectoral framework agreements and would fall under Part VII of the Social Contract' Act, and that this would be contrary to that Act, counsel advised the Board at the commencement of the hearing that this was actually an issue on which there is an "agreement to disagree", and that they would each be making submissions concerning the effect of the Social Contract Act. As indicated by paragraph 27 of the statement of agreed facts, they also disagree about whether or not the applicant's bargaining rights have been impaired by the responding parties maintaining separate financial statements.

31. Michael J. Kennedy, who appeared as counsel for the responding parties in this matter (and who proceeded first in argument, on the agreement of the parties), submitted that the operation of the Social Contract Act leaves the Board without jurisdiction to deal with this application or, in the alternative, leaves the Board without jurisdiction to grant a remedy. However, he also indicated that he was content to have the Board hear the parties' submissions on that issue together with their submissions on the merits of the application. In making his submissions on the merits, Mr. Kennedy initially suggested that the Hospital and the Villa are not under common control or direction, but after candidly acknowledging that the Board might have some difficulty with that argument and after being advised that we were unanimously of the view that the Board's time would not be well spent hearing submissions on that untenable position, he did not further pursue that argument.

32. The responding parties' primary position on the merits of the application is that this is not an appropriate case for the Board to exercise its discretion under subsection 1(4) for the following five reasons: (1) the mischief subsection 1(4) is designed to remedy is simply not present in these circumstances; (2) the application is nothing but a thinly veiled attempt by ONA to enhance rather than preserve its bargaining rights, in order to avoid having to face a significant "ability to pay" argument before the Kirkwood Board of Arbitration; (3) ONA's "estoppel-like" conduct should be a factor in the Board declining to exercise its discretion under subsection 1(4); (4) the exercise of that discretion would have disastrous labour relations consequences, in that it would meld together several different collective agreements and groups of employees with different benefits, pension plans, and collective bargaining regimes; and (5) ONA's lengthy delay should disentitle it to any relief under subsection 1(4) or, in the alternative, should preclude it from obtaining any retrospective relief.

33. In opposing the intervenor's request that any order granted in this case be issued not only in respect of the nurses represented by ONA but also in respect of the service workers represented by CLAC, counsel for the responding parties submitted that the intervenor had not raised any facts or circumstances warranting any remedial relief. In this regard, it was his position that it would be possible for the Board to grant relief in respect of ONA but to decline to do so in respect of CLAC.

34. Shalom Schachter, who appeared in these proceedings as counsel for ONA, disputed the responding parties' contention that the Social Contract Act leaves the Board without jurisdiction to deal with this application or without jurisdiction to grant a remedy. He argued that the Board should exercise its discretion under subsection 1(4) and grant relief to the applicant in the circumstances of this case. It was his position that the Hospital and the Villa clearly carry on associated or related activities under common control or direction, and that relief under subsection 1(4) would undoubtedly have been granted by the Board if ONA had applied for it earlier. Although he acknowledged that ONA could and possibly should have been more diligent in making an application under that provision, Mr. Schachter contended that ONA's delay should not preclude it from now obtaining relief under subsection 1(4) because (in his view) that delay has not resulted in any prejudice to the responding parties. He also submitted that the Hospital and the Villa being separate employers for purposes of labour relations has impaired ONA's bargaining rights by necessitating the negotiation or arbitration of two separate collective agreements, and by enabling the Villa to raise an ability to pay" argument during that process.

35. The relief sought by the applicant is a declaration that the Hospital and the Villa constitute one employer for purposes of the Labour Relations Act, and that the Hospital's collective agreement with ONA applies not only to the nurses represented by ONA who work at the Hospital, but also to the nurses represented by ONA who work at the Villa. Counsel for the applicant submitted that in addition to obviating the need for any further proceedings before the Kirkwood Board of Arbitration and precluding the Villa from pursuing its "ability to pay" argument, that relief would give ONA the "tactical advantage" of achieving for the Villa nurses a base rate significantly higher than the rate which would probably be granted to them through the arbitration process. He further submitted that the relief sought by ONA would advance long term labour relations interests by: (1) giving the nurses working at the Villa access to benefits available through the Hospital (such as H.O.O.D.I.P., H.O.O.G.L.I.P., and the other plans referred to in paragraph 21 of the agreed statement of facts), which are not available through a severable nursing home; (2) providing the nurses with greater opportunities for career advancement by giving them access to jobs posted at both the Hospital and the Villa; and (3) promoting labour relations stability by reducing fragmentation, providing fewer opportunities for leap-frogging and whipsawing, and reducing the costs of bargaining.

36. In the event that the Board concludes that the aforementioned remedy is inappropriate in the circumstances of this case, ONA seeks as an alternative remedy a declaration that the Hospital and the Villa constitute one employer for purposes of the Labour Relations Act, without a declaration that the Hospital collective agreement applies to the nurses working at the Villa. In describing the "tactical advantages" which ONA would derive from obtaining that alternative remedy, Mr. Schachter stated that although it would have to return to the arbitration process under the Hospitals Labour Disputes Arbitration Act ("HLDAA"), ONA would do so with "the corporate veil having been pierced and, therefore, in a better position to deal with the 'ability to pay' argument". He also referred the Board to various entries in the financial exhibits reflecting amounts paid by the Villa to the Hospital for services such as nutrition, laundry, and maintenance, and suggested that those "intercorporate transfers are part of the financial practice that leaves the Villa with a deficit and the Hospital with a significant surplus." Mr. Schachter further submitted that as long as the responding parties are separate employers, there is no way for ONA to control the validity of those "intercorporate transfers", or to satisfy itself that part of the rationale for the responding parties' decision-making process is not to manoeuvre them into a better position for purposes of collective bargaining. When asked by Board Member Ronson if ONA could not make the same submissions to the Kirkwood Board of Arbitration and request it to ignore the Villa's "ability to pay" argument on that basis, Mr. Schachter replied that all ONA has to do before the Ontario Labour Relations Board is to establish the possibility of mischief, whereas before the Kirkwood Board of Arbitration it would have to establish actual mischief.

37. In his submissions on behalf of the intervenor, Mr. Wierenga indicated that CLAC is of the view that the Hospital and the Villa are a single employer for both ONA and CLAC, and that the Board should so declare. However, he also indicated that CLAC does not wish to have the Board declare that both of its existing bargaining units are covered by a single collective agreement, as it is of the view that the wage differences can be adequately dealt with through HLDAA.

38. In his reply submissions, Mr. Kennedy submitted that granting any of the remedies requested by the other parties would be prejudicial to the responding parties and would not be good for labour relations. In commenting on the matter of the intercorporate transactions referred to by counsel for ONA, he noted that there is nothing before the Board which supports the proposition that "the Hospital is using its economic muscle to the disadvantage of the Villa". He also noted that it is open to ONA to question the issue of "ability to pay" before the Kirkwood Board of Arbitration. Mr. Kennedy further submitted that ONA has failed to provide any explanation for its delay in seeking relief under subsection 1(4), other than indicating "it's now advantageous, it wasn't before". In disputing the validity of ONA's alternative remedial position that the Board can declare the responding parties to be a single employer but maintain the existence of two separate ONA bargaining units, counsel for the responding parties submitted that if the Villa is part of the employer, the Hospital's collective agreement with ONA would apply to the Villa.

39. Having duly considered the parties' submissions (which are described above in a substantially abbreviated manner), the agreed facts, the exhibits entered on the agreement of the parties, and the numerous cases referred to during the course of argument, the Board has decided that this application should be dismissed for the following reasons.

40. It is unnecessary for the Board to comment upon the validity of the responding parties' contention that the operation of the Social Contract Act leaves the Board without jurisdiction to deal with this application or to grant a remedy, because in the circumstances of this case, assuming without deciding that the Social Contract Act does not remove or impair the Board's discretion to grant relief under subsection 1(4), we are not persuaded that it would be appropriate for the Board to do so. Although it is clear from the agreed statement of facts that the Hospital and the Villa carry on associated or related activities under common control or direction, the circumstances of the instant case do not warrant the Board treating them as constituting one employer for the purposes of the Labour Relations Act, or granting any other relief under subsection 1(4).

41. In Capricorn Acoustics & Drywall Ltd., [1986] OLRB Rep. March 308, the Board wrote, in part, as follows regarding the scope of subsection 1(4) and some of the criteria which have been used by the Board in determining whether to exercise its discretion under that provision:

42. ... The Board in Ethyl Canada, Inc., [1982] OLRB Rep. July 998 described the purpose of subsection 1(4) in the following terms:

Section 1(4) of the Act deals with situations where the economic activity giving rise to the employment is or can be carried out through more than one legal entity. In such circumstances an alteration in legal form, or a transfer of work from one legal entity to another, can undermine established collective bargaining rights. Section 1(4) ensures that the institutional rights of the trade union and the contractual rights of its members, will attach to a definable commercial activity rather than the particular legal vehicle(s) through which that activity is carried on. Legal form is not permitted to obscure economic and collective bargaining realities. In this respect section 1(4) creates a regime of collective bargaining law which significantly modifies common law notions of privity of contract or the corporate veil. However, while the language of section 1(4) is very broad, the section is not intended to apply in every case which in a general or linguistic sense meets its statutory criteria. The Board has a discretion concerning the application of section 1(4) and, in the past, it has exercised that discretion carefully, in light of the circumstances of each case, and labour relations policy considerations.

16. The criteria used by the Board in determining whether to exercise that discretion were set out in John Hayman and Sons Co. Ltd., [1984] OLRB Rep. June 822 at 827-28:

(1) whether the applicant is seeking to acquire bargaining rights by means of section 1(4) in order to avoid the certification procedures of the Act;

(2) whether a declaration would disturb existing bargaining rights;

(3) whether a declaration would interfere with the interests and rights of employees to select their own bargaining representative or to remain unrepresented;

(4) whether the application has been made within a reasonable time after the applicant became, or with reasonable diligence, should have become aware

that the two or more entities were closely related; and

(5) whether a scheme exists which would effectively defeat bargaining rights be transferring work from one related entity to another.

18. In Donald A. Foley Ltd., [1980] OLRB Rep. April 436, the Board stated:

One of the significant purposes of section 1(4) is to guard against the dilution or undermining of bargaining rights already obtained such, for example, as occurs when work is diverted from a unionized employer to an associated, newly created nonunion one as in Evans-Kennedy Construction Limited, [1979] OLRB Rep. May 388; or when there is a risk or threat that bargaining rights may be eroded, as in West York Construction Limited, [1978] OLRB Rep. Sept. 879. For a more detailed review of the purpose of section 1(4), however, see industrial Mine Installations Limited, [1972] OLRB Rep. Oct. 1029 at paragraphs 9 to 13 inclusive.

17. Reference may also usefully be made to the following passage from J.H. Normick Inc., [1979] OLRB Rep. Dec. 1176:

18. Section 1(4) recognizes that the business activities which give rise to the employer-employee relationships regulated by the Act, can be carried on through a variety of legal vehicles or arrangements; and it may not make "industrial relations sense" to allow the form of such arrangements to dictate, and possibly fragment, the collective bargaining structure. In order to have orderly and stable collective bargaining, the bargaining structure must have some permanence and accord with underlying economic and industrial relations realities. Where two employers are nominally independent but are functionally and economically integrated, the essential community of interest between them and the employees employed by one or both of them may make it appropriate to treat them as one employer for some or all collective bargaining purposes. This is not to say, however, that common economic control of related business activities will automatically cause the Board to issue a section 1(4) declaration. The Board, having satisfied itself that the businesses or activities before it are under common control or direction, is given a discretion as to whether or not to issue a section 1(4) declaration. If the scheme of the Act would be better served or the collective bargaining structures placed on a sounder footing by refusing to make a section 1(4) declaration the Board will exercise its discretion accordingly. (See Zaph Construction Ltd., [1976] OLRB Rep. Nov. 741 and Ellwall and Sons Construction Limited [1978] OLRB Rep. June 535.) In view of the broad language of the section which extends to cover such a wide range of business relationships, the labour relations considerations which govern the exercise of the Board's discretion are paramount in determining whether the Board should declare two or more businesses or activities to be one employer for purposes of The Labour Relations Act.

See also E. S. Fox Limited, [1991] OLRB Rep July 819; KNK Limited, [1991] OLRB Rep. Feb. 209; Landmark Contracting Ltd., [1990] June 660; RPKC Holding Corporation, [1986] OLRB Rep. June 828; Brant Erecting and Hoisting, [1980] OLRB Rep. July 945; Dominion stores Limited, [1979] OLRB Rep. June 506; and Kustom Insulation Ltd., [1970] OLRB Rep. June 531.

18. As noted by counsel for ONA, guarding against the erosion of bargaining rights is not the only purpose of subsection 1(4). See, for example, Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214, in which three of the purposes of that provision were summarized as follows:

19. Section 1(4) is designed to accomplish at least three purposes:

(1) One objective is to prevent the erosion of bargaining rights. Take a case in which a union is certified to represent the employees of a firm; as soon as certification is granted, the proprietor redirects work to another enterprise. Treating both corporations as one employer preserves the union's bargaining rights. The large numbers of cases in this category include Dominion Stores Ltd., supra; Radio Shack, supra, and Great Atlantic and Pacific Company of Canada, [1982] OLRB Rep. Mar. 386.

(2) Section 1(4) also removes roadblocks to viable structures for collective bargaining. For example, on an application for certification, the Board may include the employees of two companies in a single unit. See Walters Lithographing Company, [1971] OLRB Rep. July 406 and Diversey (Canada) Ltd., supra. For a case in which a related employer declaration was issued at the instance of management, see Bright Veal Meat Packers Ltd., [1981] OLRB Rep. Mar. 247.

(3) Another function of section 1(4) is to ensure that the union representing employees is able to deal directly with the person or company possessing real economic control over them rather than with someone else who is their employer in name only. See J. H. Normick Inc., supra, and Don Mills Bindery Inc., [1983] OLRB Rep. Dec. 2008

19. In the instant case, if ONA had wished to obtain bargaining rights in respect of a single bargaining unit covering nurses working at the Hospital and the Villa, it could have filed an application under subsection 1(4) in 1987, in conjunction with the application for certification which led to its being certified on August 7 of that year to represent certain nurses employed by the Hospital. The agreed statement of facts indicates that the Villa, which is attached to the Hospital by an enclosed walkway, commenced operations in December of 1986, on land which the Hospital donated for its construction. It may reasonably be inferred from the facts contained in that agreed statement (including the fund raising campaign which provided some of the financing for the Villa's construction, its close geographical proximity to the Hospital, and the operational links between the Villa and the Hospital) that at the time it filed that certification application ONA was aware (through the Hospital nurses whom it thereby sought to represent) that the Villa employed a number of nurses and had a sufficient nexus with the Hospital to warrant the filing of an application under subsection 1(4). However, it is evident that ONA chose at that time to seek bargaining rights only in respect of nurses working at the Hospital, and not in respect of nurses working at the Villa. It was not until approximately five years later that ONA sought to obtain bargaining rights for nurses working at the Villa, and when it did so it still did not file an application under subsection 1(4) or otherwise suggest that those nurses had an employment relationship with the Hospital. Thus, in February of 1992 ONA obtained bargaining rights for full-time and part-time bargaining units comprised of registered and graduate nurses employed by the Villa. It subsequently served the Villa with notice to bargain and met with representatives of the Villa on a total of nine days during the period from July of 1992 to May of 1993 for the purpose of negotiating a collective agreement. It also applied for conciliation and, following receipt of a "no board" report, served notice of its intention to submit the outstanding items in dispute to a Board of Arbitration pursuant to HLDAA. It was not until after the Kirkwood Board of Arbitration had been constituted and ONA had become concerned that it might have difficulty surmounting the Villa's "ability to pay" argument in that forum that the instant application was filed with the Board, with a view to eliminating that argument and, if possible, eliminating the arbitration process altogether by having the Board declare that the collective agreement between the Hospital and ONA covers not only nurses working at the Hospital but also nurses working at the Villa.

20. As indicated above, the purposes of subsection 1(4) include preventing the erosion of bargaining rights, removing roadblocks to viable structures for collective bargaining, and ensuring the union representing employees is able to deal directly with the legal entity possessing real economic control over them rather than with a legal entity which is their employer in name only. In the instant case there has been no erosion of the applicant's bargaining rights, nor does the existence of the Villa as the employer of the nurses working on its premises constitute a roadblock to a viable collective bargaining structure. Since August of 1987 when ONA was certified as bargaining agent for nurses working at the Hospital, the Hospital has participated in provincial bargaining on "central" issues with the applicant, which has succeeded (through that mechanism combined with the collective bargaining dispute resolution mechanism provided by HLDAA) in obtaining a series of collective agreements with the Hospital. It is evident that a similar combination of free collective bargaining and the dispute resolution mechanism provided by HLDAA will also result in ONA obtaining a collective agreement with the Villa.

21. There is nothing in the material before the Board in the instant case which warrants a finding that the legal entity possessing real economic control over the nurses working at the Villa is West Lincoln Memorial Hospital, and that West Lincoln Multilevel Heath Facility Inc. is their employer in name only. Whether the Villa's "ability to pay" argument has merit, or should be disregarded on the basis of the Villa's financial position being the result of artificial "intercorporate transfers" designed to leave the Villa with a deficit and the Hospital with a significant surplus (or on some other basis) is a matter which may appropriately be left for determination by the Kirkwood Board of Arbitration in the circumstances of this case. In this regard, we note that there is nothing in the material before us which provides any basis for determining whether the amounts paid by the Villa to the Hospital for services such as nutrition, laundry, and maintenance, are inflated or otherwise designed to negatively affect the Villa's financial position, as suspected by the applicant, or entirely bona fide, as contended by the responding parties, nor is there anything before the Board which would enable us to determine whether the applicant has a reasonable basis for its suspicion in that regard.

22. In Crown Cork and Seal Company Limited, [1978] OLRB Rep. Sept. 809, the Board wrote, in part, as follows:

23. In August of 1977 the applicant [United Steelworkers of America] was certified to represent certain production employees of the Canadian company at Concord. These employees had previously been represented by the Crown Cork and Seal Employees' Association. In October of 1977 the applicant was certified to represent certain office and clerical employees at Concord who had previously been unorganized. Negotiations for a collective agreement for the Concord production employees commenced in October of 1977, while those for the office and clerical employees began in December of the same year. In October of 1977 negotiations for a new master agreement between the applicant and the parent firm were also held in Miami. At both the Miami and the local negotiations the applicant took the position that the employees of the Canadian company at Concord should be covered by the master agreement. Upon meeting resistance from both of the respondents to this contention, however, the applicant did not continue to press its position and a new master agreement between the applicant and the parent firm was signed sometime in October of 1977 which apparently did not make any reference to the Concord employees. The applicant and the Canadian company entered into a collective agreement with respect to the production employees at Concord during June of 1978 and into another one covering the office and clerical employees in July of 1978. It is clear from the testimony of Mr. William Mills, a representative of the applicant, that it is the desire of the applicant to have one or both of the bargaining units at Concord covered by the master agreement after the current Concord agreements expire.

24. Counsel for the applicant was somewhat vague in explaining the use the applicant would make of any Board declaration that the two respondents constitute one employer for the purposes of the Act. Counsel for the Canadian company expressed the concern that once the current Concord collective agreements expired the applicant would use any Board declaration as the basis for contending that the employees of the Canadian Company in Concord were now covered by the master agreement between the applicant and the parent firm.

25. We are of the view that it is incumbent upon an applicant seeking relief under section 1(4) of the Act to advance some valid industrial relations purpose which would be served by the board exercising its discretion and granting the relief requested. In the instant case the applicant failed to advance any such reason. If in fact the purpose behind the application is to bring the Concord employees under the collective agreement between the applicant and the parent firm, then we do not regard that as a proper basis for the Board to make the declaration requested of it.

26. The master agreement is specifically stated to be between Crown Cork and Seal Company Inc. (the parent firm) and the applicant. We were referred to nothing in the agreement which would indicate that it is meant to apply to a subsidiary of the firm which was operating outside of the United States. The applicant acquired its bargaining rights for the Canadian company's Concord employees by way of two separate certificates from this Board and those bargaining rights are currently reflected in two separate collective agreements. During the most recent negotiations both in the United States and Canada the applicant sought at the bargaining table to have the respondents voluntarily agree to alter this bargaining structure, but without success. We are of the view that section 1(4) of the Act should not be used in circumstances such as this to impose a new bargaining structure on an unwilling employer, particularly where it has not been shown that the existing bargaining structure is inappropriate or lacks viability. It should be noted further that is was not even alleged that the Canadian company was failing to fulfill its obligations under the existing bargaining structure, seeking to subvert existing bargaining rights, or somehow attempting to avoid the effects of any collective agreement which it had entered into. It is clear that the applicant is of the view that the employees of the Canadian company which it represents at Concord should be employed under the same terms and conditions as are the employees of the parent firm in the United States. Without seeking to detract from the motives which might underlie such a position, that is a matter for collective bargaining. For this Board to allow section 1(4) of the Act to be used as a means of importing the terms of U. S. negotiated collective agreements into Ontario would in effect mean that this Board would be imposing the terms of collective agreements upon Ontario based bargaining units rather than having them negotiated through free collective bargaining. In our view this runs counter to the general intent of the Act and is not a proper use for section 1(4). Accordingly we decline to treat the two respondents as constituting one employer for the purposes of the Act or to declare them to be one employer.

27. Although not as extreme, the instant case is somewhat analogous to that case in that the applicant is seeking to bring under its collective agreement with the Hospital the nurses working at the Villa, and to thereby gain for them the superior wage levels and benefits provided by that agreement, which has evolved from a series of negotiations and arbitrations conducted in a different context, and which was never intended to apply to them. Without seeking to detract from ONA's motives in that regard, we are of the view that neither this, nor the elimination of the Villa's "ability to pay" argument which would result from the alternative remedy sought by the applicant, is a proper use of subsection 1(4), which is intended to preserve bargaining rights rather than to enhance them by providing a party with "tactical advantages" of the type sought by the applicant in the instant case.

28. Thus, although the applicant's delay in filing an application under subsection 1(4) would not by itself preclude ONA from obtaining at least prospective relief under that provision, the Board is not persuaded that in the circumstances of this case any such relief is warranted, as there are no work opportunities being shifted between bargaining units, artificial legal entities undermining bargaining rights, dysfunctional bargaining structures requiring consolidation, or other circumstances warranting relief under subsection 1(4).

29. For the foregoing reasons, this application is hereby dismissed.