IWA Canada Local 2693 v. Long Lake Forest Products Inc., 1994 CanLII 9994

[1994] OLRB Rep. October 1343

3084-93-R IWA Canada Local 2693, Applicant v. Long Lake Forest Products Inc. and Kimberly Clark Forest Products Inc., Responding Party v. Ginoogaming First Nation, Intervenor #1 v. Long Lake Employees Association, Intervenor #2

BEFORE: Bram Herlich, Vice-Chair, and Board Members G. 0. Shamanski and D. A. Patterson.

APPEARANCES: W. Dubinsky and W. McIntyre for the applicant; F.J. W. Bickford and T. E.Inglis for Long Lake Forest Products Inc.; R. E. Mannisto for Kimberly Clark Forest Products Inc.; John Erickson for Long Lake Employees Association; A. Rasevych and John Erickson for Ginoogaming First Nation.

DECISION OF BRAM HERLICH, VICE-CHAIR AND BOARD MEMBER D. A. PATTERSON:

October 18, 1994

I

1. This is an application under section 64 of the Labour Relations Act (the "Act"). The applicant (also referred to as the "union") alleges that there has been a sale of a business within the meaning of that section from Kimberly Clark Forest Products Inc. (hereinafter referred to as "Kimberly Clark") to Long Lake Forest Products Inc. (hereinafter referred to as "LLFP"). The union seeks a declaration that a sale within the meaning of the Act has taken place, that the union continues to hold bargaining rights in respect of the business sold, and that LLFP is bound by the terms of what the union asserts is a subsisting collective agreement originally, entered into between it and Kimberly Clark.

2. This application was filed on December 3, 1993. On November 19, 1993 the Intervenor Long Lake Employees Association (hereinafter referred to as the "Association") had filed an

application for certification in respect of a bargaining unit of employees of LLFP (Board File No. 2952-93-R). The union claims that its bargaining rights, which had their genesis with Kimberly Clark continue and include those employees whom the Association is seeking to represent.

3. Both of these matters were listed for hearing in Toronto before a (somewhat differently constituted) panel of the Board on December 20, 1993. All of the parties listed in the style of cause except Ginoogaming First Nation attended before the Board at that time. In a decision dated December 21, 1993 the Board, on the agreement of the parties, directed that the application for certification be held in abeyance pending the determination of the instant matter. Also on agree­ment of the parties, hearing of the present application before this panel was scheduled and com­menced on January 31, 1994 in Thunder Bay.

4. At that time Mr. R. Mannisto appeared on behalf of Kimberly Clark; he indicated that Kimberly Clark had no real interest in participating in this proceeding and took no position with respect to its disposition. He indicated, however, that should the Board or any of the parties require evidence from Kimberly Clark, the appropriate witness(es) could be provided. The remaining parties agreed that it was not necessary for Kimberly Clark to remain during the pro­ceedings and Mr. Mannisto accordingly left on the understanding that the parties would contact him should any evidence be required from Kimberly Clark. Thus, although LLFP eventually called a former managerial employee of Kimberly Clark to testify (primarily, however, in relation to the abandonment issue raised by LLFP and not issues related to the sale per se), Kimberly Clark did not call any evidence and did not participate further in this proceeding.

5. Also in attendance at the first day of hearing in Thunder Bay was John Erickson who appeared as counsel for both the Association and the Ginoogaming First Nation, intervenors. Mr. Erickson stressed the importance to his clients of what he described as a joint venture between them and LLFP, an agreement he suggested would have to be revisited in the event the present application were to succeed. Notwithstanding that, Mr. Erickson indicated that other concerns had led his clients to decide to decline any further participation in this proceeding. Although Mr. Erickson consequently withdrew from the hearing, Mr. Adolphe Rasevych continued to attend at virtually all of the numerous subsequent hearing days and maintained a "watching brief' on behalf of Ginoogaming First Nation.

6. Before proceeding further, a number of observations concerning a number of the par­ties and their identities are in order. LLFP is the alleged successor employer in this matter. As the reader will be reminded shortly, LLFP is owned by Ken Buchanan through a holding company; it is one of a number of apparently associated companies operating within the forestry industry. It will not be necessary for us to inquire in any detail into any of the operations of companies other than LLFP. For ease of reference, however, (and we note that this is not an application under sec­tion 1(4) and neither did any of the parties raise any issues or seek any relief relative to that section of the Act) we, as the parties did, shall refer to these companies collectively as the "Buchanan group". We also note that although the applicant union in this matter is "IWA Canada, Local 2693", a collective agreement filed and having some importance in this matter lists the union party as "The Lumber and Sawmill Workers' Union, Local 2693 of the United Brotherhood of Carpen­ters and Joiners of America". To the extent this discrepancy was adverted to (not at all directly) it was implicit in the evidence of at least one union witness that IWA Canada, Local 2693 was a suc­cessor union to that referred to as listed in the collective agreement. No one suggested anything to the contrary and we have proceeded on that basis. Finally, we note that the same collective agree­ment identifies "Kimberly Clark of Canada Limited" as the company party to the agreement. The transaction which gives rise to the instant proceedings involved "Kimberly Clark Forest Products Inc." (and a numbered company). This discrepancy was adverted to by LLFP in the documents it initially filed in these proceedings. However, as union counsel reminded us in final argument, counsel for Kimberly Clark, at the initial hearing day in Toronto on December 20, 1993 advised the Board that, for the purposes of this hearing there was no issue of substance arising from what was characterized as, in essence, a name change. LLFP did not subsequently raise the issue and, for example, when Mr. Mannisto indicated any required witnesses could be provided, did not indi­cate it wished to hear more about this issue. In final argument, however, a fleeting comment in respect of this discrepancy was made. We do not view it as having been seriously pursued and we have, for the purposes of this case treated "Kimberly Clark of Canada Limited" and "Kimberly Clark Forest Products Inc." as one and the same person.

7. For reasons the Board is frankly unable to firmly grasp, hearing in this matter con­sumed 11 days of Board hearing time. Ultimately, and subject only to a few marginal exceptions none of which has any significant impact on the outcome of this case, there is virtually no dispute regarding the salient facts giving rise to this application.

8. Up until May of 1987 Kimberly Clark owned and operated a sawmill in Longlac in the north-western portion of the province. The union was the bargaining agent in respect of the mill operation and, in a separate bargaining unit, in respect of certain Kimberly Clark woodlands oper­ations. In May of 1987 Kimberly Clark ceased operating the mill. Although there was no direct evi­dence establishing the causal link, we heard testimony that the closure of the mill was contempora­neous with an industry slump as well as the imposition of a 15% export tax on U.S. destined softwood lumber, the type processed at the mill. Until recently the mill remained dormant. Since 1987 various prospective buyers considered purchasing the mill. Indeed LLFP was incorporated in 1987 for the purpose of purchasing the mill. No sale of the mill was consummated, however, until LLFP and Kimberly Clark executed a document styled as an asset purchase agreement on June 23, 1993; the transaction was finalized in September of 1993 when title to the property and assets asso­ciated with the mill were conveyed to LLFP.

II

9. We shall deal first with the issue of abandonment raised by LLFP which asserts that, by the time of the transaction giving rise to this application, the union had abandoned any bargaining rights it may have previously held in respect of the Longlac sawmill operation.

10. Filed as an exhibit in these proceedings was a collective agreement between Kimberly Clark (of Canada Limited) and what was then Local 2693 of the Lumber and Sawmill Workers' Union (the predecessor to the applicant) which covered sawmill employees. The union asserts that this agreement continued to be in force at the time of the sale and is asking the Board to declare that LLFP, as a successor employer, is bound by its terms.

11. The agreement was executed on August 21, 1984; Article II, headed "PERIOD" pro­vides, in part, as follows:

2.01 The Company and the Union agree one with the other that they will abide by the Articles of this Agreement from September 1, 1983 to August 31, 1986 inclusive and from year to year thereafter unless either party desires to change or terminate the Agreement, in which case the party desiring the change or termination shall notify the other party in writing at least 60 days prior to September 1st of that particular year that such is its desire.

[emphasis added]

12. By letter dated April 23, 1986 Fred Miron, on behalf of the union sent the following notice to Dave Linton, Kimberly Clark's then Vice-President Woodlands:

In accordance with, and as provided for in Article II, Period, Section 2.01 of the Agreement between the parties presently in effect, you are hereby informed that we desire to make certain changes to the aforementioned Agreement.

Our proposed changes to the Agreement will follow under separate cover.

13. Without detailing the evidence, it suffices to say that the period between April 1986, when the above notice was sent, and May, 1987, when the mill closed was fairly turbulent for Kim­berly Clark, the union and the affected employees. Events effectively overtook Mr. Miron's notice and no substantive collective bargaining negotiations took place and no new or revised collective agreement was ever physically put together by the parties.

14. Subsequent to the closure of the mill, however, a number of mill employees selected on the basis of seniority were retained by Kimberly Clark for purposes related to the shutdown as well as ongoing security needs. With one notable exception the continuing tenure of those employees in the mill was relatively brief. Lanfranco Bresolin was, prior to the closure, employed as an operator in the mill and was the most senior active employee in the bargaining unit. Subsequent to the clo­sure he assumed the duties of watchman, a classification contemplated in the sawmill agreement; his wage rate was reduced according to the agreement wage schedule. Mr. Bresolin continued in that position until his termination which was effective December 4,1992, some six months prior to the execution of the sale agreement between Kimberly Clark and LLFP. During the entire period of approximately 5 - 1/2 years that Mr. Bresolin was employed as a watchman, union dues were deducted and remitted to the applicant on his behalf. In addition, periodic changes were effected to Mr. Bresolin's wage rate and other benefits. Although the evidence is unclear as to when it hap­pened, sometime between the May 1987 closure and August of 1989, Fred Miron, then president of the union, met with M. A. Penttila, who had taken over the position of Vice-President of Kim­berly Clark's Woodlands operations from Mr. Linton. The two reached an understanding, which was not reduced to writing, that Mr. Bresolin's wage rates (and possibly other benefits) would be determined by those in place for the corresponding classification at the Domtar White River mill where employees were represented by the same union. As a result Mr. Penttila instructed Mr. David Wright, who was Kimberly Clark's Superintendent of Human Resources for Woodlands and who was called to testify in these proceedings by LL~,to monitor and pay the White River watch­man rates to Mr. Bresolin. Accordingly, Bresolin's wage rates and other benefits were adjusted periodically, most recently in March of 1992.

15. In the summer of 1990 there was an exchange of correspondence between Mr. Miron and Mr. Penttila initiated by the latter who, on June 11, 1990 wrote as follows:

As you know, the Longlac Sawmill closed on May 15, 1987 and has not operated since. The last Collective Agreement in effect expired, by its terms, on August 31, 1986.

As a matter of record-keeping, this will notify you that the Company hereby terminates that Collective Agreement.

16. By letter dated June 21, 1990 Mr. Miron responded:

Your letter concerning the Longlac Sawmill Agreement has caught us completely by surprise, as we understand that the Sawmill, although closed, is still in exist[e]nce.

I wish to point out, this is the first notification from your Company on this matter. The Collec­tive Agreement by its terms Article II - Period, 2.01, renews itself from year to year.

We do not accept that the Company can terminate the Collective Agreement and submit that the Collective Agreement is still in effect, and we intend to maintain our rights.

If you wish a meeting to discuss this matter, please notify me to arrange an amicable date

17. Mr. Penttila replied on July 19, 1990:

... If as you suggest the Collective Agreement has renewed itself from year to year, notice of termination of the Agreement is timely under Article 2.01 and has been given. We disagree with your view that the Company cannot terminate the Collective Agreement since the Collective Agreement has either terminated itself in the past or, as a matter of record, our recent letter has terminated it pursuant to Article 2.01.

18. Miron and Penttila met subsequent to this exchange and as a result of what Miron understood to be Penttila's assurances regarding the union's continuing bargaining rights, Miron determined that it was unnecessary to take any further steps such as calling for negotiations or applying for conciliation.

19. In any event, this exchange of correspondence had no impact on the continuing treat­ment of Bresolin as detailed above. We should also advert briefly to other indications of the union's continuing bargaining rights in respect of the mill in the period from its closure to its sale to LLFP. The union, along with others, was involved in a committee set up to help relocate displaced sawmill employees; approximately one year after the closure Kimberly Clark granted a union request, pursuant to the agreement, to allow a number of displaced employees to retain their seniority for a further year; Bresolin continued to appear as a mill employee on successive Kim­berly Clark seniority lists (the company continued, as it had prior to the closure, to generate a sin­gle seniority list including and identifying employees from both the woodlands and sawmill bar­gaining units) until his termination in December 1992.

20. LLFP urges us to conclude that, prior to the sale which is the subject of these proceed­ings, the union abandoned any bargaining rights it may have previously held in respect of the saw­mill operations. In advancing this position LLFP relies principally on the Board decisions in The Belleville and District Builders' Exchange, [1963] OLRB Rep. May 114 and 0. & W. Electronics Limited, [1970] OLRB Rep. Jan. 1213. We have also considered the Board decisions in John Ent­wistle Construction Limited, [1972] OLRB Rep. Oct. 919; The Borden Company Limited, Inger­soll, Ontario, [1976] OLRB Rep. July 379; and Pinkerton's of Canada Limited, [1986] OLRB Rep June 818.

21. The union in response asserts that, at the time of the sale, not only had the union not abandoned its bargaining rights, but there was a subsisting collective agreement in place between it and Kimberly Clark. The union also points us to Board decisions in Cooksville Steel Limited, [1974] OLRB Rep. June 365 and President Motor Hotel, [1985] OLRB Rep. Sept. 1414, cases in which the Board found that the union had abandoned its bargaining rights which it is asserted are readily distinguishable from the facts at hand.

22. In the 0. & W. Electronics case, cited above, the Board made the following general comments about the issue of abandonment (at paragraph 11):

If a trade union fails to act as a bargaining agent and sleeps on its bargaining rights for an extended period of time, it may be said to have abandoned its bargaining rights since it is expected that a trade union will actively promote the bargaining rights it has received. The ques­tion of abandonment is one of fact (or perhaps, more correctly, is a mixed question of fact and law) which must be established from all the evidence. As was stated at the hearing, if all the evi­dence relating to the intervener's bargaining rights was that a collective agreement was entered into in the latter part of 1962 which, on its face, purported to renew itself from time to time thereafter in perpetuity, and there was no other evidence of an active bargaining relationship existing between 1962 and the date of the making of this application [November, 1969] the Board would not hesitate in making a finding of abandonment on the part of the intervener....

Needless to say, however, the fact that the agreement had been entered into in 1962 would not necessarily cause the Board to reach the conclusion of abandonment if there were other extenu­ating circumstances. If, for example, the intervener had continued to hold union meetings with the employees in the bargaining unit, had regularly processed grievances through the extended period involved, had continued to receive union dues, and had maintained its membership among the employees in the bargaining unit, or had taken similar actions to assert its rights as the bargaining agent for the employees, the Board would not make a finding of abandonment because there would not, in fact, be an abandonment in such instance.

23. The Belleville decision, cited above, is part of a line of cases which have posited a "rule" relating to automatic renewal clauses. And while some may view the rule as "quaint", we are prepared, for the purposes of the instant case, to assume that it has continued application. The "rule" is articulated as follows in the Belleville case:

In situations of this kind the Board has said that as a general rule it will have regard to a second automatic renewal but thereafter the onus is on the union to satisfy the Board that it has not abandoned its bargaining rights. This it may do by showing that it maintained an interest through contact with the other party to the agreement. Just what contact is necessary depends on the facts in each particular case. In this case there was none.

24. After considering the evidence, the parties' submissions and the jurisprudence, we are frankly unable to determine which is less compelling - LLFP's argument that the union has aban­doned its bargaining rights or the union's argument that there was a subsisting collective agreement at the time of the sale. We reject both.

25. The union argued that the agreement which was in place was the agreement executed in

1984, which it says continued to renew itself from year to year subject to the oral agreement regarding Bresolin's terms and conditions of employment. We are satisfied that the 1984 agree­ment has been terminated. It is not necessary for us to determine precisely when it terminated, but we note that its automatic renewal is contemplated unless a party gives the type of notice Miron gave Kimberly Clark in 1986. But the real weakness in the union's argument is seen in its attempt to characterize the continuing collective agreement as a kind of hybrid. The effect of an automatic renewal clause, when triggered, is to continue, unchanged, the terms of a collective agreement for a further period of time. Where a party wishes to see changes to the terms of a collective agree­ment, it must usually insure that any automatic clause is not triggered. Where changes are sought and automatic renewal is avoided, one would expect to see any resulting changes embodied in a new collective agreement (an agreement in writing) between the parties. What the union claims to have in this case is an automatically renewing collective agreement which incorporates changes which are not codified in writing and did not form part of the renewing agreement. This defies logic. We are satisfied that, at the time of the sale, there was no collective agreement in place between the union and Kimberly Clark in respect of the sawmill operation.

26. The fact that there was no collective agreement in place is not, however, determinative of the issue of abandonment. Bargaining rights do not simply dissipate with the expiry of a collec­tive agreement. In the circumstances of this case, including an inactive mill, a single bargaining unit employee whose terms and conditions of employment the employer and union have agreed to tie to those in another unionized mill, it is hardly surprising that the union did not feel compelled to negotiate a collective agreement. Furthermore, it is abundantly clear to us that, based on the evidence of the union's continuing interest and activity in relation to the sawmill bargaining unit, it simply cannot be said that the union has abandoned its bargaining rights.

III

27. Returning then to the facts and issues more directly related to "sale of a business" issues, in January of 1993 Kimberly Clark issued a document titled "Longlac Sawmill Sale Bid Package" aimed at prospective buyers. The package called for a minimum bid of $400,000 for the sawmill assets. It also contemplated that an area north of the mill, which the parties referred to as Nakina North, would be a prime area of lumber supply for the mill. The package proposed that, subject to the approval Ministry of Natural Resources ("MNR"), Kimberly Clark would relinquish the cutting rights it held for this area in favour of the purchaser. The document also contemplated certain ongoing mutual obligations as between Kimberly Clark and the purchaser in respect of Kimberly Clark supplying logs to the mill and the mill purchaser supplying resulting wood by-pro­ducts to Kimberly Clark.

28. The asset purchase agreement entered into by LLFP and Kimberly Clark differed in some respects from the terms contemplated by Kimberly Clark's bid package. The purchase price was $450,000 allocated in Section 2.02 of the agreement as follows:

(a) as to the Lands, $ 5,000;

(b) as to the assets referred to in Section 2.01(b)

(i) Sawmill building $15,000 (ii) Planer building $30,000

(iii) Sorter building $30,000

Subtotal: $ 75,000;

(c) as to the equipment; (i) Dry Kilns $ 20,000 (ii) Planer 62,500 (iii) Slasher 7,500 (iii) Sawmill 50,000 (iv) Sorter 167,500 (v) Rolling equipment ~

Subtotal: $369,999;

(d) as to the assets referred to in Section 2.01(d) and (e) [essentially plans, specifications, drawings and other records which may have been in Kimberly Clark's possession at the time of the sale], $1.

In addition Section 2.03 of the agreement provides:

The Purchaser and the Vendor, in filing their respective income tax returns, shall use the alloca­tions of the Purchase Price as set forth in Section 2.02.

29. Unlike Kimberly Clark's initial bid package, the sale document did not contemplate any

ongoing mutual obligations regarding wood supply to the mill or supply of by-products to Kimberly

Clark. The parties to the sale did, however, deal with mill access to the wood supply in Nakina

North (referred to as the "Supply Area" in the sale document) as follows:

ARTICLE FIVE - WOOD SUPPLY

5.01 The parties acknowledge that they have agreed in principle that the source of supply of sawlogs for the sawmill operation on the Lands shall be the north portion of the Vendor's licensed timber limits indicated on the map attached hereto as Schedule E (the "Supply Area"). The exact boundary locations will be determined by forestry representatives of each of the par­ties and will permit the yearly supply of 100,000 cords of softwood commencing upon the trans­fer of the rights in the Supply Area to the Purchaser contemplated by Section 5.02(c).

5.02 The parties further acknowledge that:

(a) the Vendor's timber limits are licensed to it by the Province of Ontario pur­suant to the Crown Timber Act;

(b) the aforesaid timber licenses and rights granted thereunder are not assign­able by the licensee without the prior written consent of the Minister of

Natural Resources of Ontario (the "Minister"); and

(c) the parties will jointly use their best efforts to expedite the required minis­terial consent to sever the Supply Area from the Vendor's licensed timber limits and the transfer by the Minister of the rights in the Supply Area to the Purchaser.

5.03 The Purchaser covenants and agrees that it will not, directly or indirectly, petition the Min­ister or otherwise attempt to require the Vendor to supply sawlogs to the Purchaser from any portion of the Vendor's licensed timber limits other than the Supply Area.

5.04 The inability of the parties to arrange for a satisfactory supply of sawlogs as contemplated herein or any delay in such arrangements shall not affect the agreement of purchase and sale of the Assets provided for herein or the timing thereof.

IV

30. Thomas Inglis is the director of planning and development for various sawmills within what he described as the Buchanan organization. As such his responsibilities relate not only to LLFP but to five other sawmill operations which are all within the same organization (although some, if not all, appear to be distinct legal entities). LLFP, Mr. Inglis advised us, is owned by Ken Buchanan through a holding company. The Buchanan group and the applicant are not strangers to each other; the union holds bargaining rights in respect of 3 other Buchanan group mills.

31. Mr. Inglis testified at length in these proceedings - he spent 4 days giving his evidence. He provided the Board with information regarding LLFP's purchase of the mill and its plans for its future, the involvement of various native communities and their relation with Buchanan and LLFP, as well as the general background regarding the current policy and regulatory framework within which various aspects of the forestry industry are carried on.

32. Buchanan's interest in acquiring the Longlac mill dates back to its closure in 1987, the year LLFP was incorporated for the express purpose of acquiring the mill. Both the mill and LLFP remained dormant until the latter acquired the former in the sale which is the subject of these pro­ceedings.

33. LLFP's stated aims with respect to the operation of the mill are quite straightforward. It intends first to acquire the requisite license to operate the mill. An application in this respect was filed with the Ministry of Natural Resources ("MNR") on October 18, 1993 and although the license is anticipated and nothing the MNR has said would suggest it will not issue, no such license had yet issued at the time of these hearings. Once the mill license issues, LLFP will turn its mind more immediately to the question of wood supply. In this regard it will pursue access to the wood supply in Nakina North and the scenario it and Kimberly Clark contemplated in the sale docu­ment. If these efforts succeed and the MNR accepts the arrangement, LLFP will emerge with a timber license and cutting rights in respect of the Nakina area. The precise status of these efforts is not entirely clear. In chief Mr. Inglis suggested that the Nakina area had been severed from Kim­berly Clark's cutting rights; in cross-examination he said the severance is yet to happen. In either event LLFP has yet to secure cutting rights in the Nakina area and is focusing, at least for the interim, on acquiring the sawmill license. Of further concern, however, since the Nakina area con-sists of entirely undeveloped forest, is the fact that significant development work (relating primar­ily to roads and access) must be done before any timber could be harvested. Mr. Inglis (whose evi­dence again varied somewhat on the point) estimated that it would take between 1 and 2-1/2 years after securing a timber license before any Nakina timber found its way to the mill. Thus, even on the most optimistic scenario from LLFP's perspective, there may be a significant period of time during which any wood supply required for the mill would have to be secured from other sources.

34. It is anticipated that the Nakina Area would be able to supply approximately 100,000 cords of wood to the mill annually. This would have been a sufficient supply for the mill as previ­ously operated by Kimberly Clark. However, LLFP intends to run the mill as a 3 (as opposed to Kimberly Clark's 2) shift operation. As a result of the anticipated increased production Mr. Inglis estimated that 100,000 cords of wood would provide approximately 70% of the mill's require­ments. LLFP, however, has even further ambitions aimed at increasing production at the mill. It intends, on a longer term basis and after the Nakina supply is secured, to add a second line to the mill once again increasing its timber requirements. In respect of these aspirations LLFP is looking to an area north of the Nakina area, the Ogoki Crown Management Unit ("Ogoki"). Discussions, which will be detailed a little more fully, are already underway regarding this area and its develop­ment. The participants have included LLFP, Matawa First Nations ("MFN", a native umbrella group representing some nine native bands including Ginoogaming First Nation) and MNR. By letter dated November 9, 1993, Mr. Inglis, on behalf of LLFP made a formal request of the MNR that a long term (20 year) Orde-In-Council Crown Timber License be granted to LLFP in respect of the Ogoki area. For reasons similar to those at play in Nakina, it would take a significant amount of time before any wood is harvested in Ogoki. In addition, issuance of a license for this area appears more complicated than in respect of Nakina which involves, effectively, the reassign­ment of an existing license in an area the MNR has already previously approved for forestry opera­tions. Cutting rights in Ogoki, as a crown management unit, are currently simply unassigned.

35. Thus while LLFP's plans and goals are relatively clear, it will be some time before all of the various pieces fall into place even assuming everything unfolds as LLFP would like. Time, however, may be something LLFP can take advantage of, in view of both its short and longer term plans. In this regard Mr. Inglis testified that given the general state of the various assets at the time of purchase, it would not have been possible to immediately commence operating the mill. Thus, for example, by the time of the hearings in this matter considerable overhauls and repairs had been effected to the planer mill which is now fully operational.

36. Mr. Inglis testified about various costs including the cost of required repairs and instal­lations in relation to the mill operations. We are required, however, to exercise some caution in accepting Mr. Inglis' evidence in this regard and with respect to various of his cost estimates. We do not mean to suggest that Mr. Inglis was not giving his evidence sincerely and with a desire to tell the truth. The estimates he provided, however, were provided in an extemporaneous manner and without any documentary support. And while we have little doubt that as a result of his consider­able experience in the industry, Mr. Inglis is well positioned to make such cost estimates, the fact of the matter is that (not unlike some of his evidence already referred to regarding various time estimates) there were wide and divergent variations in his own figures at different points during his testimony. For example, his estimate of the total cost of getting the sawmill proper, the planer and the kiln operational varied from $500,000 to $2,000,000 at different points in his evidence; similarly the estimated cost of a new slasher went from $300,000 in chief to $200,000 in cross-examination. However, while we may be unable to confidently arrive at findings regarding the precise costs asso­ciated with various options available to LLFP in regard to overhaul, maintenance, repair or replacement of various equipment, the evidence is clear that the total cost of any such effort (even when the purchase price associated with the sale is folded in) is dramatically less than the cost of constructing a new mill operation. This, of course begs the question, to which we shall return, of whether constructing a new mill could possibly have been a viable option for reasons other than simple cost.

V

37. For several years prior to becoming chief of Ginoogaming First Nation ("GFN"), Gabriel Echum was employed in various capacities by MFN, most recently as economic develop­ment regional consultant. It is unnecessary to outline the activities of this group in great detail. By early in 1993 the MFN's interest in the Ogoki area had crystallized to the point where it had formed a committee to look at various prospects for the area and had formally advised MNR of its interest in a "co-management" arrangement with the ministry as well as its interest in eventually acquiring the timber license for the Ogoki area. In pursuing those objectives and after receiving information that the Buchanan group was also interested in possible development of the Ogoki area, MFN wrote to Buchanan in April and, having received no reply, again in May of 1993 pro­posing a meeting to discuss matters of common interest. A meeting was finally held but not until July, several weeks after LLFP had executed its sale agreement with Kimberly Clark. At that meeting MFN indicated its interest in Ogoki and a possible joint MFN/Buchanan operation with respect to Ogoki. Mr. Inglis, attending on behalf of Buchanan, indicated the possibility of starting up the mill at Longlac and advised that Buchanan would be happy to work together with MFN since they needed the wood supply from Ogoki to support the two lines they intended to eventually have at the mill. Inglis told MFN that Buchanan had already unsuccessfully applied for the Ogoki area. He also testified that he had been told, at least informally, by MNR that a single applicant would be unlikely to acquire Ogoki rights and that a joint application (presumably made on behalf different types of constituencies) would stand a better chance.

38. A second meeting between Buchanan and MFN took place in October. MFN and Buchanan again expressed their interest in an Ogoki license; Mr. Inglis suggested the possibility of some form of joint venture. As of the hearing no further meetings had taken place between Buchanan and MFN. Approximately two weeks after the October meeting, Mr. Inglis wrote to MNR formally requesting that a long term timber license in respect of Ogoki be issued to LLFP. While that application speaks of development, employment and training opportunities for MFN citizens, we cannot help but observe that we find it curious that LLFP chooses to characterize its application for the Ogoki license as some kind of joint venture.

39. There is no doubt, however, that there is more (at least apparent) substance to arrange­ments eventually entered into between LLFP and GFN. Sometime after being elected chief of GFN in August of 1993, Gabriel Echum left his position with MFN. Thereafter Chief Echum and Inglis (with the involvement of others as well) began a series of discussions and negotiations which culminated in an agreement between GFN and LLFP which was executed on November 15, 1993.

40. Again, it is not necessary for us to review the terms of this agreement in great detail. Briefly, it provides for employment and training opportunities for citizens of GEN in the Longlac mill. It also recognizes the importance of various traditional economic activities to citizens of GFN and, in a sub-agreement sets out certain scheduling provisions designed to accommodate those activities. The agreement also obliges GFN to directly or indirectly assist with arrangements between MNR and LLFP for the supply of timber for the mill. There was some controversy, at least in the questioning of some witnesses, as to whether this agreement confers benefits on native persons generally or is limited to citizens of GFN. While it is not necessary for us to resolve this question, we would observe that the agreement is obviously between LLFP and GFN (the latter referred to therein as "FIRST NATION") and Appendix "A" of the agreement explicitly defines "citizen" as a citizen of GFN. Some confusion is clearly generated, however, by the fact that although the agreement explicitly refers to GFN, a party signatory, as "FIRST NATION", the def­inition section also provides that "FIRST NATION" "means a "Band" represented by the "Coun­cil of the Band" as defined in The Indian Act, R.S.C. 1991 C. 1-6..." In any event, even assuming that the agreement confers benefits on only GFN citizens, the evidence was uncontradicted that, in the limited hiring which had taken place by the time of the hearing (limited essentially to the three shift operations of the planer mill), most employees came from GFN but some citizens of a native band other than GFN were hired.

41. Within approximately two weeks of the agreement between GEN and LLFP, LLFP entered into a voluntary recognition agreement with the Association. Six days later, on December 8, 1993 the Association and LLFP executed a document styled "WAGE AGREEMENT". Both of these latter documents were signed on behalf of the Association by Scott Echum, son of Chief

Echum.

VI

42. During the course of argument the Board was referred to numerous of its previous deci­sions including Raymond Cote, [1968] OLRB Rep. Mar. 1211; Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691; Nor]ohn Contracting Limited, [1978] OLRB Rep. May 438; Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193; I.G.A., [1984] OLRB Rep. Apr. 604; Valencia Foods, [1984] OLRB Rep. May 773; Keele-Wilson Supermarket Limited, [1985] OLRB Rep. Mar. 425; Canada Safeway Limited, [1986] OLRB Rep. Mar. 305; New Dominion Stores, [1989] OLRB Rep. May 473; and Accomodex Franchise Management Inc., [1993] OLRB Rep. Apr. 281. We have found the last mentioned case, to which will refer as Accoinodex, to be most useful and instructive since it contains the most recent and comprehensive review of the Board's approach and the evolution of its jurisprudence with respect to the application of section 64 of the Act.

43. LLFP argues that the transaction between it and Kimberly Clark, while undoubtedly a sale of assets, was not the sale of a business. In this respect it relies on the fact that, even apart from any questions of wood supply or licensing requirements, the sawmill was incapable of imme­diate operations without significant maintenance overhaul and capital improvements. From this perspective LLFP bought a mere collection of assets and not a "going concern". LLFP also urges us to consider the significant hiatus, a period in excess of seven years between the closure of the mill, its subsequent sale and current revival. Finally, we are pointed to the agreement/involvement of native groups, in particular GFN, in the enterprise as evidence which distinguishes LLFP's cur­rent from Kimberly Clark's former business.

44. The general nature of the determination performed by the Board in ascertaining whether or not a sale of a business has taken place has been set out in Culverhouse Foods Limited, cited above, at paragraph 16:

we can summarize the principles appropriate for determining whether a particular transaction amounts to a sale of a business under [then] section 55 as follows: In each case the decisive ques­tion is whether or not there is a continuation of the business.... The most appropriate test to be applied in making this determination is whether the nature of the work performed subsequent to the transaction is the same as the nature of the work performed prior to the transaction.

the cases offer a countless variety of factors which might assist the Board in its analysis; among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether or not there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant consider­ations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible consider­ations enjoys an independent life of its own; none will necessarily decide the matter. Each car­ries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same it was before, i.e. whether there has been a continuation of the business.

and in More Groceterias Limited, [1980] OLRB Rep. Apr. 486 at paragraph 17:

The fundamental issue in cases of this kind is the threshold determination of the section: Has a business been sold? The term "sells" is defined to include "leases transfers; and any other money of disposition." This all-embracive definition obviously reflects the labour relations pol­icy considerations discussed generally above. To repeat, collective bargaining rights are not to be treated as co-extensive with commercial ownership and, to this extent, labour law policy seeks to insulate industrial relations from disruption by necessary and inevitable interaction in the market place. The term "business" on the other hand, is simply defined to include "a part or parts thereof." No similar exhaustive definition was attempted by the Legislature in recognition, we think, of the great diversity in commercial affairs and the resulting need for a case by case elaboration of the term in the light of labour law policy. A brief perusal of the many factual situ­ations giving rise to the Board's jurisprudence bears testimony to the wisdom of this legislative choice. Accordingly, at the outset of reviewing a few of the cases that have applied the term ~'business" in the context of retail food stores, it should not be surprising to learn that the Board in determining whether a business has been sold has not deferred to the commercial documenta­tion employed; has not been influenced by the use of intermediary agents to effect transfers; and has not made simple distinctions between asset and business dispositions. Rather, it has tried to make workplace assessments with respect to the continuity of a particular enterprise, activity, or service arriving at conclusions that a court of law in a commercial matter might not arrive at, but conclusions which are fair to both the statute and context under review....

and, more recently in Accomodex:

55. The instrumental approach to successorship suggests that bargaining rights are attached to an economic vehicle - the mechanism, resources or facilities by which the undertaking serves its purpose - rather than the purpose itself, the employees, or their work. Bargaining rights attach to the business undertaking. The Board then tries to determine, from a labour relations perspec­tive, whether the transfer and continuation of some facet or facets of that undertaking, warrants a continuation of bargaining rights - for, of course, when interpreting section 64, the Board has to keep in mind its purpose and effect. The Board tries to reach a result which is fair to both the statute and the context under review - that is, a result that appears to be called for to remedy the mischief for which section 64 was passed. That mischief is not the loss of work or work opportu­nities, but rather the disruption of bargaining rights which would flow from a change in the own­ership but continuation of all or part of the elements that make up the business.

56. As a result of section 64, bargaining rights are not coextensive with commercial ownership or the continuing identity of the owner, nor does it matter how the new owner comes to have pos­session of the instruments necessary to carry on all or part of the functions of the predecessor. Bargaining rights continue with a continuation of the business undertaking or a part of it. The cases explore just what those instruments or elements of the business are, and what can be said to be the essence of the undertaking - land, equipment, location, employee skills, licences, pat­ents, etc. They consider, from a labour relations perspective, whether a sufficiently-coherent grouping of those things has been transferred so as to warrant a continuation of bargaining rights.

45. The questioning of the utility of simple distinctions between asset and business disposi­tions has also been more recently echoed in Accomodex, where the Board observed at paragraph 45:

... we do not think that it advances the analysis very much to describe the transaction under review as a mere "sale of assets". It certainly involves that; but even from a purely commercial law perspective, one way of buying a business is to purchase its assets. As Arthur Scace observed in his text, the Income Tax Law of Canada (5th ed.):

Although businesses may be consolidated in a number of different ways, e.g. by an amalgamation or winding up, there are only two methods by which a business can actually be bought or sold, namely the purchase and sale of either assets or shares.

A commercial lawyer would hardly consider it a novel proposition if it were suggested that a sale of a business could be accomplished by an asset transaction, or that someone could go into busi­ness by acquiring someone else's business capacity. To describe what has occurred here as an asset transfer, simply begs the question of whether there has nevertheless been a "sale" of all or "part" of the [predecessor's] business, for collective bargaining purposes under the Labour Relations Act.

46. What exactly did LLFP purchase? Was it all or part of Kimberly Clark's business? We think so. In arriving at this conclusion we have considered a number of factors. The nature of the work LLFP has been doing and intends to do is virtually indistinguishable from that formerly per­formed by Kimberly Clark. LLFP has demonstrated no intention to operate anything other than a sawmill on the Longlac site. It is perhaps less than surprising to suggest that where all of the remaining assets associated with a sawmill operation in a relatively remote area are purchased, one might well expect less potential for varying the fundamental nature of the enterprise than when, say, a building housing a retail food outlet is purchased in an urban setting.

47. We have considered as well the reality of the transaction in question. Mr. Inglis acknowledged that the values assigned to the various assets in the sale agreement were arrived at by Kimberly Clark. LLFP, in deciding whether or not to enter into the transaction, was more con­cerned with the total purchase price than with the valuation done of the enumerated assets. Thus, it is clear that the particular values assigned to various assets, while no doubt important for income tax purposes, may be less than authoritative. For example, Mr. Inglis testified that the slasher, val­ued at $7500 had absolutely no commercial value. It is clear that LLFP was not concerned with whether or not it was paying a fair price for individual assets, but rather with whether they were content with the purchase price in relation to the total package. In this respect, it is particularly sig­nificant that the asset purchase agreement dealt with something of great importance and value to LLFP, wood supply. And although the agreement contemplates that, subject of course to MNR approval, Kimberly Clark will surrender its cutting rights to Nakina in favour of LLFP, no specific value is assigned to this aspect of the transaction. Mr. Inglis acknowledged that obtaining timber limits is a prime objective of any operator dealing with a sawmill operation.

48. We have also considered the cost to LLFP, including both the purchase price and the contemplated capital improvements, was significantly less than the cost of constructing an entirely new mill. Mr. Inglis also testified that LLFP had determined that, as a failback plan if it was unable to ultimately secure the needed licenses and wood supply, it could remove various equipment from the Longlac site and integrate it into other Buchanan sawmill operations. What was not considered as an option was the construction of a new mill. Mr. Inglis acknowledged that construction of a new mill would not be a viable option; timber supply would be a serious problem; MNR would require that the Longlac mill be supplied first and there is insufficient wood supply for 2 mills in the area. That assessment of MNR policy is corroborated by other evidence; in corre­spondence to MFN an MNR official explicitly advises that any business plan filed by MFN for MNR approval regarding development of the Ogoki area must include a commitment to supply the Longlac sawmill with wood. In other words the capacity to undertake a sawmill operation in the area was wholly dependent on either purchasing or eliminating the Longlac mill.

49. We have also considered LLFP's submission that what it purchased was not a "going concern" and that the hiatus in excess of seven years between the closure and sale is significant. We adopt the following views articulated in Accomodex:

72. In cases which arose when the economy was buoyant, or transactions involved a whole, ongoing business, the Board once tended to focus on the dynamic quality of a business or its operation as a 'going concern". If that dynamic quality was lacking, the Board was inclined to hold that there had been no transfer of a business but merely a disposition of assets. In more recent years and more troubled economic times, the absence of this dynamic quality has been accorded less significance.

73. Quite apart from questions of successorship, it has become much more common in recent years for businesses (or parts of them) to shut down for periods of time and lay off employees, then reopen again when the market improves - without anyone suggesting that the union's bar­gaining rights or the employees' recall rights, for that matter, have disappeared. In this era of corporate "restrncturing", it has also become much more common for businesses to discontinue or hive of portions of their operation or undertaking, which then becomes the nucleus or even the entire undertaking of the "new" business organization. If instead of reopening on its own, or reviving this commercially-moribund portion of the operation, it was transferred to someone else - as increasingly happened through receivers - it was much less clear than it once might have been, that bargaining rights should disappear merely because that portion of the idle undertak­ing was now owned by someone else - especially since the purpose of section 64 is to eliminate the significance of the fact that a new legal entity owns the "things" that have been transferred. Clearly there is a potential tension between commercial law considerations, a layman's view of the "business", and the objectives reflected in the Labour Relations Act, but it has become much less evident in recent years that this tension should be resolved by the Board "reading into" the statute the words "as a going concern", after the word "business" in section 64(2). The concept of a "going concern" and the words "as a going concern" are not unknown in law, but in drafting section 64, the Legislature has not injected that phrase and it is not intuitively obvious that the Board should be doing so as a matter of interpretation. This is not to say that the absence of ongoing activity is irrelevant; merely that it may not be determinative.

74. If a new investor bought the controlling shares in a dormant company with idle assets and brought them to life with an injection of capital, there is little doubt that the union's bargaining rights would continue in respect of that company now that it had become active. A union would not need to invoke section 64 because, although there had to be a "sale of a business" in com­mon parlance and commercial law terms, the legal entity with which it has bargaining rights - the "owner" of the assets - would be unchanged. Bargaining and collective agreement rights would continue. Should the result be different from a collective bargaining point of view, if the same investor used the same funds to purchase the assets themselves rather than controlling shares in the corporate envelope, but, as before, revived the business as a going concern under new own­ership?

50. Similarly, we are not persuaded that the admittedly substantial hiatus between closure and sale in this case is either determinative or as significant as it might be in the context of a differ­ent constellation of facts. As the Board observed at paragraph 22 of the New Dominion Stores case, cited above:

hiatus between closure and opening is not determinative, but only one factor. The fact that the hiatus between the closure of Dominion store #986 and the opening of the A. & P. store was quite long, twenty-two months, does not itself mean that the business of the former has not been transferred to the successor. There is no temporal bright line beyond which bargaining rights will not transfer.

[emphasis added]

51. In considering in particular the impact of the significant hiatus in this case we must not lose sight of the peculiarities of the industry involved in this case and the significant differences between it and the retail food industry, the locus of virtually all the cases relied upon by LLFP in relation to the issue. In this context we again find comments from Accomodex to be instructive:

69. The issue of employer successorship arises out of a seemingly endless variety of factual set­tings, with each new case presenting some of the factors considered relevant to the resolution of prior cases while raising other materially altered, entirely omitted, or newly-added facts which arguably would affect the decision on the merits. Indeed, much of the confusion which attends successorship results from the facility with which each case can be distinguished on its facts from all former cases; and, quite frankly, the results in some of the cases are difficult to reconcile -reflecting, among other things: the quality of the evidence before the Board in particular cases (especially before and after the passage of what is now section 64(13)); the quality of the argu­ment; and the evolution of the Board's jurisprudence as various panels, over the years, have assessed in new factual settings, the "mischief' to which section 64 was directed.

70. But to dismiss the difficulty so lightly would be to disregard the fundamental differences inherent in the various business contexts in which the successorship issue arises. Factors which may be sufficient to support a "sale of a business" finding in one sector of the economy may be insufficient in another. In some industries, a particular configuration of assets - physical plant machinery and equipment - may be of paramount importance; while in others it may be patents, "knowhow", technological expertise or managerial skills which will be significant. Some busi­nesses will rely heavily on goodwill associated with a particular location, company name, prod­uct name or logo; while for other businesses, these factors will be insignificant. T e Labour Relations Act applies equally to primary resource industries, manufacturing, the retail and ser­vice sector, the construction industry and certain public services provided by municipalities and local authorities, and in each of these sectors the nature of the business organization is little dif­ferent. Yet in each case section 64 must be applied in a manner which is sensitive to both the business context and the purpose which the section is intended to accomplish. To cite but one unusual example: in Riverview Manor, [1983] OLRB Rep. Sept. 1564 (application for judicial review dismissed February 5, 1985), the Board found that a licence to run a nursing home busi­ness was a critical part of that business, to which bargaining rights could attach, even though the purchaser of the licence later invested a substantial sum to build its own nursing home across town. In that highly-regulated business, the licence was viewed by the Board in that case as a key asset - as evidenced by the substantial sum that had been paid for it.

52. Hiatus may (or not) be an important factor in the sale of a retail business. Certainly, as the length of any hiatus increases, one would expect the value and importance of any goodwill associated with the predecessor to diminish perhaps to the point of extinction. Similar concerns could apply in respect of the value of the location of a retail sales business. There is no dispute, however, that factors such as goodwill, trademarks, accounts receivable, logos, or established cus­tomers were not significant in the context of the instant transaction. (In respect of the last factor we note that LLFP, like the former Kimberly Clark mill operation, will not be directly involved in marketing or sales of the lumber produced; those functions will be performed by a separate entity within the Buchanan organization.) In the context of the sale of a sawmill operation the absence of these factors is not surprising. The sawmill operation involves the harvesting and processing of pre­cious natural resources in a context where the allocation and development of such resources is sub­ject to strict government control. No one can simply commence to operate sawmill on a whim, something which, at least by comparison, it might be said is possible to do in relation to the opera­tion of retail stores.

53. To the extent that comparisons are possible or helpful, we find the facts of the present case to be more similar to cases like Riverview Manor, cited in the last quoted passage from Accomodex, where the sale of business involved a sale of a licence; or Culverhouse Foods Limited, cited above, where the vendor's agreement to make efforts to insure a transfer of the licences issued by the Farm Products Marketing Board was part of the transaction; or Provincial Fruit Company (Ottawa) Limited, [1976] OLRB Rep. Nov. 830 where the purchase of a lease of floor space at the Ontario Food Terminal was found to be a sale of a business than to the cases involving alleged sales of retail food businesses relied on so heavily by LLFP.

54. In the present case LLFP purchased all of the remaining assets associated with the oper­ation of the Longlac mill. Included in that purchase, of course, was the mill itself and the premises on which it is found. In addition LLFP has purchased, to the extent that Kimberly Clark was capa­ble of selling something it previously held, the timber rights to the Nakina area. More important perhaps, in view of MNR's approach, LLFP, by virtue of its ownership of the mill, has placed itself in a favoured position with respect to access to wood supply not only from Nakina but also from Ogoki. In these circumstances we have no hesitation in concluding, to use the language of many of the Board's cases, that what LLFP has purchased is the capacity to carry on the business formerly conducted by Kimberly Clark in relation to the Longlac mill. In other words, we are persuaded that the transaction between LLFP and Kimberly Clark was a sale of a business within the meaning of section 64.

55. We should comment briefly, since so much hearing time was devoted to it, on the signif­icance of LLFP's dealings with various native groups. We must repeat first of all that any LLFP involvement with those groups did not even commence until after the asset purchase agreement had been executed. Without wishing to belittle the importance LLFP or the native groups may attach to these dealings, we are not satisfied that they are particularly germane to the fundamental nature of LLFP's business, certainly not to the extent that one would even consider a conclusion that, because of these dealings, LLFP's business differs from the former Kimberly Clark sawmill operation. LLFP has simply, as it is entitled to do, recognized that in the current political climate it may to its economic advantage to work in concert or at least be seen to work in concert with vari­ous native groups. Although Mr. Inglis seemed to have some difficulty at times in acknowledging what appears relatively obvious, the support of MFN and/or GFN may well assist LLFP in attain­ing its various objectives related to both sawmill and wood cutting licences. Neither did LLFP waste any time in promoting (or as the union, perhaps not unreasonably, suggests, misrepresenting the nature of) its "partnerships" with the two native groups. For our purposes, however, we find these arrangements of little interest or relevance in determining the issues before us.

VII

56. In summary then, we have not been persuaded that the union, at any point prior to the sale which is the subject of these proceedings, abandoned the bargaining rights it previously held in relation to Kimberly Clark's sawmill operation. There was, however, no collective agreement in force as between the union and Kimberly Clark at the time of the sale. We are satisfied that the transaction in question constitutes a sale of a business within the meaning of section 64 of the Act. Accordingly, we hereby declare that the union continues to be the bargaining agent in respect of the Longlac sawmill operations as if LLFP were Kimberly Clark.

57. The reasons for Board member Shamanski's dissent in this matter are unavailable at this time and will follow in due course at which time they will be distributed in the same fashion as the instant decision.