International Association of Bridge, Structural and Ornamental Iron Workers, Local 765 v. PCL Constructors Eastern Inc., 1995 CanLII 9915

[1995] OLRB Rep. October 1277

4182-93-G; 0484-94-R; 1801-94-R International Association of Bridge, Structural and Ornamental Iron Workers, Local 765, Applicant v. PCL Constructors Eastern Inc., Responding Party; International Association of Bridge, Structural and Ornamental Iron Workers, Local 765, Applicant v. PCL Constructors Eastern Inc.; PCL Construction Limited; PCL Industrial Constructors Inc.; PCL Constructors Inc.; PCL Employees Holdings Ltd.; PCL Construction Holdings Ltd.; PCL Construction Resources Inc.; PCL Construction Group Inc., Responding Parties; International Union of Operating Engineers, Local 793, Applicant v. PCL Constructors Eastern Inc.; PCL Construction Limited; 18127 Alberta Limited; PCL Industrial Constructors Inc.; PCL Constructors Inc.; PCL Civil Constructors (Canada) Inc.; PCL Employees Holdings Ltd.; PCL Construction Holdings Ltd.; PCL Construction Resources Inc.; PCL Construction Group Inc., Responding Parties

BEFORE: G. T. Surdykowski, Vice-Chair, and Board Members W. N. Fraser and H. Kobryn.

APPEARANCES: Gary Caroline, D. Melvin and K. Lew for the applicant; Bruce W. Binning and M. Necula for the responding parties.

DECISION OF THE BOARD; October 13, 1995

I

1. Board File No. 4182-93-G is a referral to the Board of a grievance in the construction industry, under section 126 of the Labour Relations Act. At the first day of hearing in these proceedings, the parties agreed that the hearing of the grievance should be adjourned sine die pending the disposition of the other two applications.

2. Board File No. 1801-94-R and Board File No. 0484-94-R are applications for relief under sections 1(4) and 64 of the Labour Relations Act. In them, the applicants "Operating Engi­neers" and "Iron Workers" respectively seek declarations that the responding parties constitute a single employer for purposes of the Act, or that there has been a sale of a business between them; allegedly to preserve the bargaining rights each trade union holds.

3. In the course of the proceedings, upon request of the applicants and without objection from any employer party, PCL Employees Holdings Ltd., PCL Construction Holdings Ltd., PCL Constructors Inc., PCL Construction Resources Inc. and PCL Construction Group Inc. were added as responding parties in Board File No. 1801-94-R; and PCL Employees Holdings Ltd., PCL Construction Holdings Ltd., PCL Construction Resources Inc. and PCL Construction Group Inc. were added as responding parties in Board File No. 0484-94-R. In addition, the Operating Engineers withdrew its application as against PCL-Braun-Simmons Ltd.

II

4. Section 1(4) of the Labour Relations Act provides that:

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

Section 64 of the Act is commonly known as a "successor employer" or "sale of a business" provi­sion. It applies to transactions involving the transfer of all or part of a business between two or more employer entities.

5. The Operating Engineers and the Iron Workers argued that there has been a sale of business from PCL Construction Limited to PCL Construction Group Inc., and subsequently a transfer of parts of a business from PCL Construction Group Inc. to PCL Construction Inc., PCL Constructors Eastern Inc., PCL Industrial Constructors Inc., and PCL Civil Constructors (Canada) Inc. They argued in the alternative that all the named responding parties carry on associated or related businesses or activities under common direction or control such that they constitute one employer for purposes of the Act.

6. The responding parties deny that there has been any sale of business from PCL Con­struction Limited to any of the PCL companies which operate in Ontario. They concede that there is common financial control and general direction of the operating companies through the PCL holding companies, which latter companies function to protect the interests of the shareholders, but they assert that the day to day direction of the operating companies is independent of both the holding companies and the general service company (PCL Constructors Inc.). The responding par­ties argue that the Board should not apply section 1(4) because the corporate structure of the PCL group of companies is not a product of labour relations "concerns" or of anti-union animus, there is no evidence of any significant interference with the bargaining rights of either applicant trade union, applying the provision would create jurisdictional conflicts for the operating companies and make them "non-competitive", the impact that a section 1(4) declaration could have on the national and international operations of the operating companies, and, in the case of the applica­tion in Board File No. 0484-94-R, because of the Iron Workers history of dealing with the operat­ing companies, including the Iron Workers failure to assert bargaining rights.

III

7. Both section 1(4) and section 64 operate to protect and preserve a trade union's bar­gaining rights from being eliminated or eroded as a result of corporate restructuring or commercial transactions. As the Board put it in Pinecrest-Queensway Health and Community Services, [1992] OLRB Rep. Nov. 1211:

8. Section 1(4) applies to situations in which activities which generate employment relations gov­erned by the Labour Relations Act are carried on through more than legal entity, whether or not at the same time. This provision gives the Board the power to pierce the corporate veil and declare two or more entities to constitute one employer for purposes of the Act where the Board is satisfied that they are engaged in associated or related activities under common direc­tion or control. In that respect, section 1(4) modifies traditional common-law notions which are based upon the separation between legal entities and the privity of contract. It is a remedial pro­vision intended to prevent the intentional or incidental frustration or erosion of established bar­gaining rights consequent upon changes in the structure or form of what is, for labour relations purposes, a single business or activity. To put it another way, whatever separation may exist between two or more entities for corporate, tax or other purposes, the Board is entitled to treat them as being one employer for labour relations purposes if they carry on associated or related activities under common control or direction. The purpose of section 1(4) is to protect the bar­gaining rights of a trade union and the rights of employees to bargain collectively with their employer through that trade union from being undermined by the form, or an alteration of the form, of a business or activity. In applications under section 1(4), the Board is concerned with the functional relationship between entities. Businesses or activities are "related" or "associ­ated" because they are of the same character, serve the same general market, employ the same mode or the means of production, utilize similar employee skills, or are carried on for the bene­fit of related principals (see, for example, Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 and October 1353). Where the Board is satisfied that two or more entities carry on associ­ated or related activities or businesses under common control or direction, which may but does not necessarily include control over employees, the Board may declare that those entities consti­tute one employer for purposes of the Labour Relations Act. The effect of such a declaration is that the affected entities share the rights and obligations of an employer under the Act and any applicable collective agreement.

9. Section 64 has the same purpose and a similar effect. Like section 1(4), it recognizes that a "business" is a concept which does not lend itself to precise definition. Rather, a business is an economic activity (whether for profit or not) which can be conducted through a variety of legal vehicles or arrangements. It is the activity, not its form, which give rise to employee-employer relationships which are regulated by the Act and to which bargaining rights attach. Conse­quently, under the Labour Relations Act, bargaining rights attach to an activity as an employer rather than to a particular employer name or form of employer, and so long as that activity con­tinues bargaining rights continue to exist. As in section 1(4), common-law or commercial law concepts have limited application to section 64 applications. Indeed it is those very concepts which led to the problems which the two provisions are intended to remedy.

10. The term “business" is not limited to a commercial or profit making activity. Sections 1(4) and 64 apply equally to traditional commercial activity and to municipalities, school boards, hos­pitals and other non-profit undertakings which have employees. It is the labour relations aspect of a "business" which is the focus of sections 1(4) and 64. In that respect, it is the continuity of the '~activity" which is significant. "Business" is not necessarily synonymous with a particular group or kind of employees or the "work" they perform. Concomitantly, bargaining rights do not necessarily attach to particular work or employees. Although a continuity of work may be significant, it is not always sufficient to justify a finding that that two or more entities constitute one employer, or that there has been a sale of a business. The focus of the inquiry under both section 1(4) and section 64 is the total economic organization, not just the employees or the work performed (see Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193; British Ameri­can Bank Note Co., 11979] OLRB Rep. Feb. 72; Kitchener-Waterloc Hospital, [1991] OLRB Rep. Oct. 1130).

11. The purpose of sections 1(4) and 64 of the Labour Relations Act is to preserve established bargaining rights, not to extend them or to create bargaining rights where there were none. Fur­ther, though they apply to any business or activity, neither provision can be applied mechani­cally, particularly where the activities under scrutiny are not traditional commercial activities, or where there are parties involved other than the particular entities with respect to which an appli­cation has been made...

12. In sections 1(4) and 64 and the Board's jurisprudence, the focus is on trade union col­lective bargaining rights; and more specifically, on protecting a trade union's bargaining rights from being affected by corporate or commercial activities. Neither section 1(4) nor section 64 is an unfair labour practice provision. Both are concerned with the effects of business decisions or deal­ings on established bargaining rights, rather than with the motivation for such decisions or deal­ings. Sections 1(4) and 64 apply equally to commercial attempts to escape from bargaining rights and to bona fide business transactions which are not improperly motivated but which nevertheless erode established bargaining rights. As the Board pointed out in KNK Limited, [1991] OLRB Rep. Feb. 209, section 1(4) is not a penalty provision. Instead, it operates to allow the Board to deal with business transactions from a labour relations perspective without the constraints imposed by the rules of common or commercial law. The same is true of section 64.

13. Accordingly, it does not matter whether or not any of the business or corporate dealings which have brought the responding parties to where they are today were improperly motivated. Nor does it matter that applying either section 1(4) or section 64 might have impact on the opera­tions of the responding parties or other PCL companies, whether those operations be in Ontario or elsewhere, or that doing so might create corporate jurisdictional problems. Sections 1(4) and 64 are concerned with protecting bargaining rights, not with the effect that bargaining rights or invok­ing sections 1(4) or 64 might have on the corporate entities involved. From the perspective of the Labour Relations Act, it is business dealings which result in a consideration of sections 1(4) or 64, and it would be inappropriate for the Board to consider the effect on those same dealings, or on the parties involved in them, of invoking these provisions as somehow mitigating the impact of those dealings on established bargaining rights. To suggest otherwise is a bit like saying that some­one on a Toyota Tercel budget who chooses to buy a Rolls-Royce automobile should be left with the Rolls-Royce but only have to pay the cost of the Toyota Tercel because of the negative finan­cial or other effects that person or others might suffer if s/he is required to pay the Rolls-Royce price. Further, the Act contains a mechanism specifically designed to deal with work assignment jurisdictional problems which the effected parties are unable to resolve between themselves. To the extent that a section 1(4) or section 64 declaration might result in some sort of inter-corporate jurisdictional problems, these are the consequences of the corporations' own conduct and are for them to resolve.

IV

10. The history of the "PCL family of companies", as they refer to themselves, begins with Poole Construction Limited, a large family owned general contractor which was based in western Canada. In or about 1977, the Poole family sold its interests in Poole Construction Limited to a group of its upper management personnel. This was accomplished through a share purchase trans­action, pursuant to which the name of Poole Construction Limited was changed to PCL Construc­tion Limited, in or about December 1978. On the evidence, PCL Construction Limited and Poole Construction Limited were the same company doing the same business under the same manage­ment, only under different ownership. PCL Industrial Constructors Ltd. and PCL Engineering Construction Ltd. were originally (differently named) wholly-owned subsidiaries of Poole Con­struction Limited. As a result of the share purchase of Poole Construction Limited, they became wholly owned subsidiaries of PCL Construction Limited. Each of these companies owned hard assets including land, buildings, equipment and tools until 1984, when a series of events resulted in a major corporate reorganization and restructuring.

11. For insurance, tax and other business reasons, primarily having to do with limiting potential liability after a 100 million dollar insurance claim arising out of a fire at a project involv­ing PCL companies in Minneapolis, Minnesota, PCL Industrial Constructors Ltd. became PCL Industrial Constructors Inc. The latter (Inc.) carried on the same business as the former (Ltd.). Several new PCL companies were also incorporated, including PCL Constructors Eastern Inc. At the same time, the hard assets owned by PCL Construction Limited, PCL Industrial Constructors Limited and PCL Engineering Construction Ltd. were sold by them to PCL Construction Resources Inc., which it appears was incorporated for that purpose.

12. In addition, PCL Construction Limited sold all of the shares of PCL Industrial Con­structors Inc. and PCL Engineering Construction Ltd. to PCL Construction Group Inc., which also appears to have been incorporated for the purpose of owning, as it still does, the PCL operating companies.

13. This 1984 corporate reorganization was orchestrated by the combined management of PCL Construction Limited, PCL Industrial Constructors Ltd. and PCL Engineering Construction Ltd. For income tax purposes, the Board of Directors of PCL Construction Group Inc. decided that central services provided to the operating company should be reorganized as well and PCL Constructors Inc. was created for that purpose. This was another attempt to limit potential liability and exposure to risk. In the result, all of the operating companies, but apparently not PCL Con­struction Resources Inc. were wholly-owned subsidiaries of PCL Construction Group Inc., but the hard assets were (as they are today) all held by PCL Construction Resources Inc., thereby separat­ing the assets from potential liability.

14. Also in 1984, PCL Construction Limited stopped bidding on new work and essentially discontinued its operations in Ontario. Between 1984 and 1987, PCL Construction Limited com­pleted its existing contracts and was wound down. This was done as part of the overall corporate strategy to "cut off the long tail of liability" with respect to previously completed work. By means of an arms-length share purchase transaction which closed on or about October 1, 1987, PCL Con­struction Limited was sold to Ocelot Industries Ltd. and its name was changed to 18127 Alberta Ltd. All of the decisions in this respect were made by PCL Construction Group Inc. In essence, this was an income tax transaction which benefited both the purchaser and the seller.

15. PCL Civil Constructors (Canada) Inc. has its roots in Eastbrook Sand & Gravel, which was wholly owned by Poole Construction Limited until the purchase and change of name of the lat­ter to PCL Construction Limited. It was renamed PCL Road Constructors Inc. in 1984, then to PCL Civil Constructors Inc. in 1986, and finally to its present name of PCL Civil Constructors (Canada) Inc. in 1989. As part of the corporate reorganization in 1984, the shares of this company were sold to PCL Construction Group Inc.

16. PCL Constructors Inc. is wholly owned by PCL Construction Group Inc., which is in turn wholly owned by PCL Construction Holdings Inc. PCL Construction Resources Inc. is also a wholly owned subsidiary of PCL Construction Holdings Ltd. Originally, PCL Construction Hold

ings Ltd. was created in order to provide a shareholding vehicle for the interest held in the PCL companies by Great-West Life Assurance Company, which interest that insurance company no longer holds.

17. At the pinnacle of the PCL corporate structure is PCL Employees Holdings Inc. This company is a shareholding vehicle for approximately 700 individual shareholders, all of whom are employees of a PCL company. PCL Employees Holdings Ltd. owns 100 per cent of PCL Construc­tion Holdings Ltd. accordingly, PCL Employees Holdings Inc. wholly owns all of the PCL compa­nies with which we are concerned in this case. (We note that the responding parties filed a "PCL family of companies corporate structure chart" dated October 1994 (exhibit 2a) which shows PCL Employees Holdings Ltd. as the ultimate 100 per cent owner of some 30 corporations, and with significant interests in several others, in Canada, the United States and Mexico.) On the evidence, in 1993 the construction work performed by the PCL family of companies had an approximate value of $1,342,000,000.00 dollars. Of this, 10 to 15 per cent was in Ontario, 33 to 35 per cent in the rest of Canada and the rest in the United States.

18. In the result, for purposes of this case, we have PCL Employees Holdings Ltd., a hold­ing company which owns another holding company, PCL Construction Holdings Ltd., which owns PCL Construction Resources Inc. and PCL Construction Inc. which latter company owns PCL Constructors Inc., a central service company which supplies the following Canadian operating companies which PCL Construction Group Inc. also owns: PCL Industrial Constructors Inc., PCL Industrial Construction Ltd., PCL Constructors Western Inc., PCL Constructors Eastern Inc., PCL Civil Constructors (Canada) Inc., PCL Construction Management Inc. and PCL Engineering Construction Inc. That is:

19. As the responding parties point out, each operating company has its own market by area and type of construction work, and each operating company directly employs its own con­struction tradesmen in the field. It also appears that what the responding parties themselves refer to as "PCL's senior management group" in Edmonton, Alberta is composed of seven persons who do not have the time to offer more than general direction to approximately 30 corporate entities in the PCL family of companies, and that the operating companies manage and direct their own day to day affairs. There are also other indications that the operating companies are independent. On the whole, however, the evidence, including the nomenclature used and publications produced by the responding parties themselves, strongly suggest that that is not the case. On the contrary, we are satisfied on the evidence before the Board that for labour relations purposes, and specifically for purposes of the Labour Relations Act, the various PCL companies herein constitute a single employer. In that respect, and as the label itself suggests, the various PCL operating companies act very much as the arms and legs of and for the benefit and bidding of the heart and brains (PCL Construction Group Inc., PCL Construction Holdings Ltd. and PCL Employees Holdings Ltd.) of a single business.

V

20. The fact is that the overall corporate goals, directions, and market areas and strategy for all PCL companies are all established centrally. There is substantial overlap between the direc­tors and officers of the various PCL companies, which directors are appointed centrally by the directors of PCL Construction Group Inc.; there is a core group of employees (referred to as "des­ignated employees") who may be nominally identified as employees of individual operating com­panies but who, on the evidence, are in reality employees of the "PCL family of companies"; many significant human resources and labour relations, construction and operations services and resources are provided centrally; the overall operations of the operating companies are co-ordi­nated centrally; and the very continued operation or existence of each of the operating companies is subject to the wishes of PCL Construction Holdings Ltd., which is itself wholly owned and directed by and for the benefit of PCL Employees Holdings Ltd. and its PCL employee sharehold­ers.

21. Some of the corporate and commercial facts material to these applications were not dis­puted. Consequently, viva voce evidence was not required to establish those facts. However, the Board heard the viva voce evidence of two witnesses called by the responding parties to explain, supplement and expand upon the undisputed facts: Michael Necula, who identified himself as the Manager of Labour Relations for PCL Constructors Inc. and for PCL Constructors Eastern Inc. (and who also acted as the advisor to counsel for all the responding parties in this proceeding); and Gordon Maron, who identified himself as the Vice-President of Finance of PCL Constructors Inc. The interesting thing about this is that these persons, who we found to be quite credible witnesses, demonstrated an intimate and detailed knowledge of the structure and affairs of all the PCL com­panies with which we are concerned in this case. This also suggests a strongly centralized control. The Board also heard the evidence of two witnesses called by the applicants with respect to the bargaining rights issues.

22. We have already described the development and current state of the PCL corporate structure (see paragraph 18 above). Turning now to the Boards' of Directors of the PCL companies, we note first that there is an overlap between the Boards of Directors of PCL Constructors Eastern Inc., PCL Industrial Construction Ltd., PCL Constructors Inc., and PCL Constructors Group Inc. in the person of Ross Grieve. A publication called "Horizons" is produced for what is identified as the "PCL family of companies", a label which appears often in the evidence. Issue 37, Summer 1994 of Horizons contains a page titled "Chief Operating Officers" and subtitled "Executive Appointments" in which Mr. Grieve's is identified as a civil engineer who "joined the PCL companies over 25 years ago...", traces his history with the PCL operations and identifies him as being "...Chief Operating Officer of PCL's Canadian operations... responsible for all PCL building activities in Canada. He continues to have corporate responsibilities for PCL's civil operations in Canada and the United States. As well, Peter Beaupr6, Senior Vice-President, reports to Ross [Grieve] on our Mexican and offshore initiatives." Mr. Grieve is then quoted as saying:

"I see PCL's future to be incredibly bright," says Ross. "Our diversification into virtually all sectors of the construction industry combined with our wide spread geographical coverage and a highly talented, youthful management team positions us well for the future."

23. There is also an overlap between the Boards of Directors of PCL Civil Constructors (Canada) Inc. and PCL Construction Group Inc. in the person of J. D. Thompson, who also hap­pens to be the CEO of PCL Employees Holdings Ltd.

24. Accordingly, Messrs. Grieve and Thompson provide a direct link and overlap, through PCL Construction Group Inc., between the PCL Canadian operating companies with which we are concerned and the holding companies.

25. Further, the directors of PCL Constructors Inc. and of all the operating companies have always been appointed by the Board of Directors of PCL Construction Group Inc. In each case, these appointed directors (who sometimes are the directors of PCL Construction Group Inc. as well) are responsible for representing the interests of the shareholders of PCL Construction Group Inc.; namely, the PCL employees who are the shareholders of PCL Employees Holdings Ltd. (which is the sole owner of PCL Construction Group Inc.). With this responsibility in mind, these directors "advise" the management of each operating company.

26. The evidence before the Board only reveals the identity of the directors of PCL Con­structors Eastern Inc., PCL Industrial Constructors Inc., PCL Civil Constructors (Canada) Inc., PCL Constructors Inc. and PCL Construction Group Inc. At least one of the directors of each of the first four is also a director of PCL Construction Group Inc. and all of the directors of the oper­ating companies are appointed by PCL Construction Group Inc. Having regard to all the evidence before the Board, it seems more probable than not that the same is true for all of the PCL Cana­dian operating companies, including all the ones with which we are concerned in this application. In addition, there is an overlap between the officers of the various PCL companies. For example, at least one of the officers of each of PCL Constructors Eastern Inc., PCL Industrial Constructors Inc. and PCL Civil Constructors (Canada) Inc. is also an officer of PCL Constructors Inc., which the evidence reveals is in effect a central service provider for the operating companies in Canada.

In the case of PCL Construction Group Inc. which owns both PCL Constructors Inc. and all of the Canadian operating companies, all four of its officers are also officers of PCL Constructors Inc. Similarly, the evidence indicates that there is an overlap among the other management and officers of the various companies, and that most if not all such persons are also what are known as "desig­nated employees" of PCL Constructors Inc.

27. The offices of PCL Constructors Inc., PCL Construction Management Inc., PCL Con­struction Resources Inc., PCL Civil Constructors (Canada) Inc., and PCL Industrial Constructors Inc. are all located within very close proximity on 99th Street in Edmonton, Alberta. PCL compa­nies which have more regional interests, like PCL Eastern Constructors Inc. for example, have offices within their target market regions, which is what one would expect.

28. The PCL family of companies has been divided up both geographically and by construction specialty. However, the evidence also reveals that the dividing lines between the areas of responsibility are rather flexible. Further, these lines are drawn by and subject to the wishes of the control and overall authority of PCL Construction Group Inc. where general corporate strategy is developed and through which earnings not retained in an operating company are channelled through to PCL Employees Holdings Inc. In addition, while the operating companies, either alone or in combination through what was described as internal joint ventures, carry out the actual con­struction projects, they do so with significant central support co-ordinated through PCL Construc­tion Resources Inc. and PCL Constructors Inc.

29. As we have already noted (see paragraphs 11 and 13, above), PCL Construction Resources Inc. is the nominal legal owner of all PCL capital assets, including land, buildings, vehi­cles and equipment. These assets are "leased" to the PCL operating companies. It is not apparent that PCL Construction Resources Inc. leases anything to anyone other than other PCL companies, although PCL operating companies do sometimes lease from third parties. The PCL operating companies generally own small tools and equipment with a total value of less than $500.00. This arrangement allows for an efficient use of resources and also separates the assets from potential operating liability.

30. PCL Constructors Inc. provides a significant number of other centralized services to the PCL operating companies, which are known as PCL client companies (and again it does not appear that it has any non-PCL "clients"). These include accounting and bookkeeping services (including payroll and payroll cheques, and benefits administration); business systems and computing ser­vices; quality control, engineering and design, estimating, and construction technologies services; safety and accident prevention advice and training, human resources and labour relations exper­tise, advice and assistance; and remitting field dues to the trade unions as required. PCL Construc­tors Inc. also does a consolidation of the PCL operating companies financial reports for presenta­tion to the parent companies.

31. With respect to the central human resources and labour relations expertise or functions provided by PCL Constructors Inc., Mr. Necula testified that he provides advice and consultation in labour relations matters, and it is apparent that he is involved in grievances, collective agree­ment administration, jurisdictional concerns with the various construction trades and Labour Board matters to and on behalf of all PCL operating companies. In addition, the evidence includes a letter dated July 19, 1994 signed by Mr. Necula in response to an Operating Engineers grievance against PCL Constructors Inc. at the Shekak River Project near Hearst, Ontario. This letter appears to be a response on behalf of both PCL Constructors Inc. and PCL Civil Constructors (Canada) Inc., and also refers to PCL Constructions Eastern Inc. as follows:

For your information, PCL Constructors Inc. is not an employer or operating company within the Province of Ontario. The operating company within the PCL family of companies, which has the contract to perform the heavy engineering construction work on the Shekak River Project in Ontario, is PCL Civil Constructors (Canada) Inc.

My instructions on behalf of PCL Civil Constructors (Canada) Inc. are to deny any violation of your Union's Collective Agreement and to further inform you that their company is not party to your Province-wide agreement. In addition, PCL Civil Constructors (Canada) Inc. reserves the right to object to the arbitrability of this matter.

As you may be aware, PCL Constructors Eastern Inc. is a party to your Operating Engineer Local 793 Provincial Collective Agreement but only for the Industrial/Commercial and Institu­tional (ICI) sector of the Construction Industry in Ontario.

32. PCL Constructors Inc. also plays a general consulting and co-ordinating role with a view to ensuring that the individual PCL operating companies conduct themselves in a manner consis­tent with the overall corporate strategy and objectives developed by PCL Construction Holdings Ltd. Something called the "PCL College of Construction", which operates various management and special skills programs for personnel associated with all PCL operating companies, is also operated centrally, probably by or through PCL Constructors Inc.

33. Similarly, the PCL operating companies set their own financial targets but these are subject to the corporate strategy and goals set by PCL Construction Holdings Ltd. The individual operating companies do their own subcontracting but do so in accordance with and on a standard form referred to generally as a "PCL Subcontract" and containing the same general provisions and "boiler plate" contract language. As Mr. Necula put it, the standard format is used to ensure that all PCL subcontracts contain the proper provisions. Naturally, the particulars of each subcontract differ according to the nature and requirements of each situation. However, we find the similarities to be more telling than the differences.

34. The individual operating companies acquire their own performance bonds or letters of credit, but these are all based on the strength of the PCL family of companies as a whole, and not on what the individual company has to offer. After all, the assets of the PCL family of companies have been separated from the operating companies. In effect, for bonding and credit purposes, PCL Construction Group Inc. gives the bonding company an indemnity based on its equity in all the operating companies and PCL Construction Resources Inc.

35. The PCL family of companies has two groups of employees: one group consists of employees of the "PCL family of companies". These are known as "designated employees". The other group consists of employees of the individual PCL operating companies.

36. There are approximately 575 to 600 designated employees spread across the various PCL companies. In effect, these are the PCL core managerial and staff employees. The concept of the designated employee was developed in or about 1987 as a way of dealing with the confusion and problems which had developed in employment and benefits administration in circumstances where PCL employees moved from one PCL company to another by being "fired" by one and immediately "re-hired" by the other. It was also intended to provide a means which was mutually beneficial to the PCL family of companies and its core employees of providing such employees with better opportunities for career growth and management succession.

37. The evidence of Messrs. Necula and Maron reveals that designated employees, all of whom are non-union, are in effect PCL staff employees, regardless of the PCL corporate entity for which they are nominally working. A designated employee may be recruited by either PCL Con­structors Inc. or by a PCL operating company. In either case, they are placed on the payroll and benefit plans of PCL Constructors Inc. for payroll, pension and benefits administration purposes, all designated employees are employed by PCL Constructors Inc., and, except for designated employees who work directly for PCL Constructors Inc. (including the senior managers of PCL's overall operation, such as its Chief Engineer, Vice-President of Business Development, Vice-Presi­dent of Finance [Mr. Maron] and Vice-President Computer Systems) are then assigned to a PCL operating company pursuant to the service contract the operating company has with PCL Con­structors Inc. PCL Constructors Inc. then charges the operating company for the services of the designated employees. Designated employees are paid salaries within the range established for their classifications by PCL Constructors Inc. (subject to some limited discretion which the operat­ing companies have to pay individuals more, though it is more probable than not that even this must be approved by PCL Constructors Inc.). Designated employees participate in the same pen­sion and benefit plans (subject to some minor differences to accommodate individual circum­stances) in accordance with their classification and years of service with any PCL company. The day to day employment of designated employees is controlled and directed by the operating company to which they are assigned. There was some suggestion that the individual companies have the power to hire and fire designated employees but we are satisfied that this is primarily a book­keeping matter which accommodates the transfers of designated employees (of which there are 20 or so each year) between PCL companies, since it is PCL Constructors Inc. which controls and oversees all of the human resources functions (including issuing T-4 slips for income tax purposes, dealing with personnel requests, requests for relocation to the United States and employment pol­icy matters in addition to payroll and benefits administration), and PCL Constructors Inc. is the actual employer of designated employees. Service, benefits and pension credits are all transferable between PCL companies.

38. The second group of employees consists primarily of what might be referred to as field employees. These are the employees who performed the actual construction work; that is, who "work with the tools", and the foremen and some of the construction superintendents who super­vise their work. This seems to be a natural extension of the PCL structure which divides up operat­ing companies by geographic area and type of construction, thereby creating different manpower needs. As a general matter, there is no interchange of construction field employees, partly because of the way in which applicable collective agreements operate, and partly because of the nature of the construction projects and the needs of the individual operating companies. However, even for field employees, service is transferable in much the same way as it is for designated employees. For example, the PCL "Horizons" publication Issue 37 Summer 1994 refers to laborers [sic], a crane operator, a labor [sic] foreman and to project superintendents, with various PCL companies, as new members to the PCL "Quarter Century Club". Not only is there a single such "club" for all PCL companies as a group, but none of the PCL companies have existed as such for that long. Sim­ilarly, as the section titled "Did You Know?" on the second last page of this Horizons' issue indi­cates, there are 83 PCL employees, undifferentiated by an individual company~ listed as having 20 or more years of service with PCL as of May 1994, again longer than any PCL company has existed.

39. Accordingly, as a practical matter, a person may work for an individual PCL company at any given time, but his/her employment is really with the whole PCL family of companies.

40. In reality, the PCL family of companies takes a co-ordinated and unified approach to business and employment. That is also how it presents itself to the world, through its own promo­tional material.

41. Each PCL operating company has its own promotional brochure. What is most striking about these are the similarities between them. There are differences, of course, particularly in the brochure for PCL Industrial Constructors Inc. (which is no longer operating in Ontario), but the colour scheme, format and style, and the contents are substantially the same. The overall presenta­tion leaves one with the impression that the various PCL operating vehicles are part of one big company. This is hardly surprising because even though the material is ostensibly prepared under the direction of each individual operating company, this is done with the "assistance" of "head office", for the express purpose of maintaining quality and consistency in approach.

42. In the result, each operating company's brochure has a picture of a PCL project on the cover page with a solid green border at the top and the distinctive PCL yellow logo in the upper right hand corner. With the exception of PCL Pacific Inc., there is no mention or identification of the individual operating company until the last page. Except for PCL Industrial Construction Ltd., each brochure begins with a reference to PCL and then to the city or region out of which the oper­ating company operates. Except for PCL Industrial Construction Ltd. and PCL Civil Constructors (Canada) Inc., each has a section subtitled "what sets PCL apart from other contractors?" with substantially the same points listed underneath. Even PCL Civil Constructors (Canada) Inc.'s bro­chure makes substantially the same points in the same place but presents them in a slightly differ­ent format. Each also contains the pictures and short biographies of the particular operating com­panies "key personnel" and presents pictures of various projects it has been involved in. Even PCL Industrial Constructors Inc.'s brochure follows the same general format and presents the same kind of information.

VI

43. In the result, the "PCL family of companies" operates and presents itself as a single large business made up of complimentary components, which components are structured in a way which is designed to maximize business efficiency while offering a structured damage control in the form of reduced tax and liability exposure. There is a strongly centralized structure which provides physical and management resources, including personnel, and a strong central direction. What local or individual autonomy there is is structured and is essential to the successful operation of such a large enterprise. The business is simply too large for the central control to extend to the daily operations of each operating company. What began still begins in the centre also comes back to it so that in the end the PCL business is operated by and for the benefit of the 700 odd share­holders of PCL Employees Holdings Ltd. What PCL has done, for very good business reasons, ts constructed a series of corporate veils designed to maximize efficiency and return on investment at the least exposure to risk. This is precisely the kind of corporate structuring which sections 1(4) and 64 of the Act are intended to permit the Board to cut through in order to protect established bargaining rights.

44. It is clear that the "PCL family of companies" is under common ownership and control, and is under common overall management, has many important functions highly centralized (in­cluding human resources and labour relations). The operations of the various PCL entities are fully integrated, and the PCL family of companies operates and presents itself as a single business enter­prise, and carries on business with a common purpose and for the benefit of those who own and control it. The responding parties (except for 18127 Alberta Limited) are corporate parts of a sin­gle construction business activity.

45. It is also readily apparent that the purchase of Poole Construction Limited by PCL Con­struction Limited constitutes a sale of a business within the meaning of section 64 of the Act. PCL Construction Limited was effectively the same company carrying on the same business under the same management, only under a different name and ownership. What subsequently became PCL Industrial Constructors Ltd. and PCL Engineering Construction Ltd. were part of the same sale. The subsequent corporate reorganization of the PCL business in 1984 dispersed that business among the various PCL corporate entities in an attempt to limit and compartmentalize exposure to various liabilities. Since then, each PCL compartment is operated as a severable cohesive business unit, but each is equally clearly a part of the single PCL business. Although the PCL field opera­tions appendages enjoy certain autonomy, it is within parameters established and controlled cen­trally by PCL Construction Group Inc. directly, and indirectly, through the interconnected Boards of Directors and Officers, and centralized services, including human resources and labour relations functions, provided to the operating companies by PCL Constructors Inc. In addition, the assets of the PCL business are held in PCL Construction Resources Inc. Accordingly, the 1984 corporate restructuring amounted to a transfer of parts of the PCL business to the various new PCL entities and also constitutes a sale of business within the meaning of section 64 of the Act.

VII

46. Among the reasons offered by the responding parties for their submission that these applications should be dismissed were their assertions that, particularly with respect to the Iron Workers, the applicants had abandoned their bargaining rights, or had unduly delayed in asserting their bargaining rights, or should be estopped from asserting their bargaining rights.

47. That bargaining rights can be abandoned by a trade union is a well established concept in the Board's jurisprudence, and the Board's approach in that respect has been accepted by the courts (see, for example, Re Carpenters District Council and Hugh Murray, (1974) Ltd., 1980 CanLII 1826 (ON HCJ), 33 OR. (2d) 670 (Divisional Court) dismissing an application for judicial review of the Board's deci­sion in Hugh Murray Limited, [1979] OLRB Rep. July 664 and in another, similar case). That is, bargaining rights can be extinguished by the unilateral voluntary abandonment of those rights. Whether or not a trade union has abandoned bargaining rights is a question of fact. To establish abandonment, the Board requires that there be unequivocal evidence that the trade union has walked away from the bargaining rights in question. In determining whether bargaining rights have been abandoned, the Board will consider the length of time during which a trade union was inac­tive with respect to those rights, its attempts to negotiate or renew collective agreements in that respect, its administration or enforcement of its bargaining rights in any applicable collective agreement, and any other relevant factors which may be peculiar to the case before the Board.

48. As a general matter, it is not very easy to prove abandonment. It is even more difficult in the industrial, commercial and institutional ("ICI") sector of the construction industry. In Lorne's Electric, [1987] OLRB Rep. Nov. 1405, the Board described why it is difficult to establish that an affiliated bargaining agent (which both of the applicants are) has abandoned ICI sector bar­gaining rights under the provincial bargaining scheme established under the Act for that sector. Subsequent decisions have demonstrated the Board's willingness to give serious consideration to assertions that construction industry bargaining rights, including bargaining rights in the ICI sector, have been abandoned, but also serve to underline how difficult it can be to establish abandonment, particularly in the ICI sector (see, for example, Toronto-Dominion Bank, [1995] OLRB Rep. May 686, The Hudson's Bay Company, [1993] OLRB Rep. June 563, Marineland of Canada Inc., [1990] OLRB Rep. Dec. 1298.

49. In cases in which abandonment is asserted, one will also often find an argument that the Board should take into account a trade union's delay in pursuing the particular application, or that the trade union is estopped from enforcing some or all of its bargaining rights or collective agree­ment in that respect.

50. Until 1991, the Board considered "delay" as a factor in section 1(4) proceedings by injecting a kind "fault" notion which required a trade union to act with due diligence in pursuing and enforcing collective agreement and bargaining rights generally, and specifically in pursuing a section 1(4) application. That is, where a trade union delayed unduly in bringing such an applica­tion in circumstances where it knew or ought to have known of the facts material to its application, and particularly the alleged erosion of its bargaining rights, the Board would exercise its discretion under section 1(4) (a discretion the Board appears not to have under section 64) to dismiss the application.

51. However, in KNK Limited, supra, a decision with which we respectfully agree, and which the Board has consistently followed, the Board concluded that where the legal requirements for a section 1(4) declaration and the mischief which the provision is directed at have been estab­lished, a declaration should issue unless there is some labour relations prejudice or compelling labour relations policy reason which makes such a declaration inappropriate in a particular case. Accordingly, the Board will not dismiss a section 1(4) application on the basis of a trade union's delay except in exceptional circumstances when it is clearly appropriate to do so, and where there is no other alternative.

52. In effect then, the Board will not dismiss a section 1(4) application because of a trade union's conduct unless the Board is satisfied that that conduct amounts to an abandonment of bar­gaining rights. However, the Board will adjust the effective date or circumstances on or in which the declaration will be effective, in order to balance the relevant applicable labour relations inter­ests and circumstances which fall short of justifying dismissal but which call for some adjustment. Delay and estoppel, which are overlapping concepts, are two of the factors which the Board will consider in that respect.

53. In Toronto-Dominion Bank, supra, the Board described the difference between aban­donment and estoppel. Estoppel is a well-established equitable concept which has been applied by statutory administrative tribunals, including this Board, in circumstances where it would be "un­fair" to permit a party to enforce its strict legal rights because of representations it has made to the party against which it seeks to enforce those rights~ and upon which representations the latter has relied to its detriment.

54. In this case, the evidence reveals that Poole Construction Limited entered into a volun­tary recognition agreement with Iron Workers Local 759 (the Thunder Bay Local) on or about Jan­uary 8, 1973. Pursuant to this voluntary recognition agreement, Poole agreed to be bound by the collective agreement between Local 759 and the Thunder Bay Construction Association in an area of Northwestern Ontario which includes what have since been established as Board Areas 22, 23, 24 and 25. The Thunder Bay Construction Association collective agreement in effect at the time predates provincial bargaining in the ICI sector, and is not limited to any particular sector(s) of the construction industry. Subsequently, pursuant to a certificate of accreditation issued to the Ontario Erectors Association with respect to the Iron Workers Local 759, Poole Construction Limited became one of the employers for which the Ontario Erectors Association held bargaining rights in the same geographic area in the ICI and the heavy engineering sectors of the construction industry. There is no cogent evidence that any part of these bargaining rights were abandoned either prior to the sale of Poole Construction Limited to PCL Construction Limited, the introduction of provin­cial bargaining in the ICI sector, or the corporate restructuring of the PCL business. Accordingly, these bargaining rights flowed through to the various PCL entities. Further, Poole Construction Limited also became bound to the collective agreement between the Ontario Erectors Association and Iron Workers Locals 700, 721, 736, 759, 765 and 786 prior to the sale of the PCL Construction Limited and provincial bargaining. There is no cogent evidence that any of these bargaining rights were abandoned either, and they too flowed through the various PCL entities. Indeed, on the responding parties own evidence, the Iron Workers hold bargaining rights for iron workers employed by PCL Industrial Constructors Inc. in the ICI sector. In that respect, PCL Industrial Constructors Inc. became a member of the Ontario Erectors Association in 1986.

55. The responding parties have also conceded that the agreement between the Operating Engineers and the Toronto Construction Association prior to 1978 covered the ICI sector, and arguably covered the heavy engineering sector in what is now Board Area 8. In addition, in a sec­tion 126 construction industry arbitration proceeding in Board File No. 1603-92-G, PCL Construc­tors Eastern Inc. agreed that it is bound by the Operating Engineers' Provincial Agreement for the ICI sector. We note that the Letter of Understanding in that respect was signed on behalf of PCL Constructors Eastern Inc. by Mr. Necula. Similarly, the evidence includes a Memorandum of Agreement dated December 15, 1986 between PCL Industrial Constructors Inc. and the Operating Engineers in which PCL Industrial Constructors Inc. agreed to be bound to the Operating Engi­neers Provincial Agreement in the ICI sector. Accordingly, the Board is satisfied that as recently as March 1993, PCL Constructors Eastern Inc. has conceded that the Operating Engineers hold ICI bargaining rights for its employees in that trade.

56. Having regard to our conclusions that the responding parties constitute a single employer within the meaning of section 1(4) and purposes of the Labour Relations Act, and that there has been a sale of a business first from Poole Construction Limited to PCL Construction Limited and then from PCL Construction Limited to PCL Construction Group Inc. and the rest of the responding parties, we find it unnecessary to deal further into the bargaining rights question (indeed, on the evidence before the Board it would be difficult to do so).

57. Further, the Board is satisfied that no bargaining rights which either applicant has obtained with respect to the PCL family of companies, either directly or through Poole Construc­tion Limited have been abandoned or otherwise extinguished.

58. The evidence does reveal some inconsistencies in the Iron Workers approach to bar­gaining rights with the various PCL entities. In that respect, PCL Constructors Eastern Inc. has used non-union subcontractors in Ontario (something which is inconsistent with the Iron Workers provincial ICI Agreement) and there has been some lack of enforcement, by Local 765 for exam­ple, of bargaining rights. In addition, there is correspondence from 1990 with respect to a construc­tion grievance proceeding before the Board to the effect that Iron Workers Local 721 agreed that PCL Constructors Eastern Inc. did not have a collective bargaining relationship with that Local. However, it is also apparent that PCL Constructors Eastern Inc. has used many union subcontrac­tors; indeed, probably more union than non-union subcontractors, and that Iron Workers Local 759 in Thunder Bay has quite consistently sought to enforce the Iron Workers bargaining rights with any PCL entity. Iron Workers Local 721 has also sought to enforce bargaining rights in Toronto. In that respect, the 1990 correspondence is anomalous, appears to reflect positions taken with a narrow view of the question having regard to the particular proceedings, and is clearly wrong, even on the evidence of the responding parties in this case. This and the other apparent inconsistencies in the approach of the Iron Workers union as a whole to its bargaining rights with the PCL family of companies indicates some confusion within the Iron Workers in that respect, but does not suggest any voluntary abandonment of bargaining rights. Taken as a whole, the evidence falls far short of establishing abandonment. Indeed, there is no cogent evidence that either of the Iron Workers or Operating Engineers have voluntarily given up any bargaining rights with any PCL entity. On the contrary, the evidence indicates that both applicants have pursued these bar­gaining rights albeit somewhat irregularly.

59. Further, unlike in the Toronto-Dominion Bank, supra, case, the Board is not satisfied that either applicant has made any representation that it would not enforce its bargaining rights to any PCL entity, either by word or by conduct, which was intended to be or which was relied upon by any PCL entity to its or the PCL family of companies' detriment. To the extent that the January 1990 correspondence referred to in the preceding paragraph could be taken as such a representa­tion by the Iron Workers, there is nothing in the evidence which indicates that PCL Constructors Eastern Inc. relied upon to its detriment. In fact, subsequent events, as demonstrated by the evi­dence before the Board in these proceedings, suggests that it did not.

VIII

60. The mischief which sections 1(4) and 64 are directed against is manifest in this case. The responding parties (quite rightly given the evidence) conceded that the Operating Engineers bar­gaining rights could be eroded if the declarations were not granted. In our view, it is more proba­ble than not that that would be the result. For example, for the Valerie Falls Project, PCL Con­structors Eastern Inc. bid the job and the contract is in its name. However, PCL Civil Constructors (Canada) Inc. actually managed the project and PCL Constructors Eastern Inc.'s personnel were not involved. In doing so, PCL Civil Constructors (Canada) Inc. borrowed and availed itself of PCL Constructors Eastern Inc.'s collective bargaining relationship with the Operating Engineers. The Shekak River Project dispute between the parties is another example where the potential for erosion of bargaining rights is clear. Similarly, the Thunder Bay Airport and Sears Store jobs dem­onstrate the danger to the Iron Workers' bargaining rights.

61. PCL Industrial Constructors Inc. and PCL Constructors Eastern Inc. have both oper­ated in the ICI sector in Ontario. PCL Constructors Eastern Inc. filled the PCL void when it was decided, centrally, that PCL Industrial Constructors Inc. would cease its Ontario operations. PCL Constructors Eastern Inc. and PCL Civil Constructors (Canada) Inc. have jointly bid on projects in Ontario in the Ottawa area. PCL Constructors Prairie Inc., although not a responding party in this case, has in effect taken over PCL Constructors Eastern Inc.'s territory in Northwestern Ontario (including Thunder Bay).

62. Finally, the lines of demarcation between the operations of the various PCL entities which have a direct presence in Ontario overlap and are flexible. They are also subject to change at any time but the central management resident in PCL Employees Holdings Ltd., PCL Construc­tion Holdings Ltd. and PCL Construction Group Inc. either directly or through the central service company PCL Constructors Inc. The Board is also satisfied that PCL Construction Resources Inc. should be included because it has a presence, albeit an indirect one, in Ontario. To the extent that it or any other responding party does not, it will not be effected. The Board's jurisdiction is limited to Ontario.

IX

63. In the result, both of the these applications are allowed. However, even the applicants submitted that the declaration should only be effective March 2, 1994. The responding parties argued that if declarations did issue they should be limited in scope and only be effective from the date of this decision. In the circumstances of this case, the Board finds that neither of the suggested results is appropriate. We are satisfied that the declaration should include all of the responding parties to the extent that they operate, directly or indirectly in Ontario, that the declaration be effective May 11, 1994, the date that the first section 1(4)/64 application herein was filed, but that any projects which any responding party had contracted to perform but which was not completed prior to May 11,1994 is exempt from that declaration.

64. The Board therefor declares that:

a) PCL Employees Holdings Ltd., PCL Construction Holdings Ltd., PCL Construction Resources Inc., PCL Construction Group Inc., PCL Constructors Inc., PCL Industrial Constructors Inc., PCL Industrial Construction Ltd., PCL Constructors Western Inc., PCL Constructors Eastern Inc., PCL Civil Constructors (Canada) Inc., PCL Construction Management Inc. and PCL Engineering Construc­tion Inc. constitute a single employer within the meaning of section 1(4) of the Labour Relations Act;

b) That there has been a sale of a business from PCL Construction Lim­ited to PCL Construction Group Inc., and subsequently a sale of a business in the form of a transfer of parts of a business from PCL Construction Group Inc. to PCL Constructors Inc., PCL Constructors Eastern Inc., PCL Industrial Constructors Inc. and PCL Civil Constructors (Canada) Inc.;

c) That PCL Employees Holdings Ltd., PCL Construction Holdings Ltd., PCL Construction Resources Inc., PCL Construction Group Inc., PCL Constructors Inc., PCL Industrial Constructors Inc., PCL Industrial Construction Ltd., PCL Constructors Western Inc., PCL Constructors Eastern Inc., PCL Civil Constructors (Canada) Inc., PCL Construction Management Inc. and PCL Engineering Construc­tion Inc. are bound by the collective agreement between the Ontario Erectors Association, Incorporated et al and the International Asso­ciation of Bridge, Structural and Ornamental Iron Workers et al;

d) That PCL Employees Holdings Ltd., PCL Construction Holdings Ltd., PCL Construction Resources Inc., PCL Construction Group Inc., PCL Constructors Inc., PCL Industrial Constructors Inc., PCL Industrial Construction Ltd., PCL Constructors Western Inc., PCL Constructors Eastern Inc., PCL Civil Constructors (Canada) Inc., PCL Construction Management Inc. and PCL Engineering Construc­tion Inc. are bound by the collective agreement between the Operat­ing Engineers Employer and Employee Bargaining Agencies effec­tive from May 1, 1992 to April 30, 1995;

e) The aforesaid declarations are effective May 11, 1994;

f) Any projects which any employer party effected by the declarations herein contracted to perform but which was not completed prior to May 11, 1994 is exempt from these declarations.