National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) and its Local 1008 v. Vulcan Containers Ltd., 1997 CanLII 15587

[1997] OLRB REP. JULY/AUGUST 765

0691-97-U; 0692-97-U National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) and its Local 1008, Applicant v. Vulcan Containers Ltd. and Vulcan Containers (Ontario) Ltd., Vulcan Packaging Inc., Re­sponding Parties

BEFORE: Robert Herman, Alternate Chair.

APPEARANCES: Judith McCormack and Dick Charleton for the applicant; Michael Horan, Jamie Knight, Kristin Taylor, Alex Telfer, D'Arcy Bird and Howard Kaplan for the responding parties.

DECISION OF THE BOARD; August 21, 1997

1. This is an application under section 96 of the Labour Relations Act, 1995, alleging that the responding employers breached sections 17, 70, 72, 76, 79, 82 and 83 of the Act, and a related application under section 101 of the Act, alleging that the responding employers have engaged in an unlawful lock-out. The applicant also pleads there has been a "sale of a business", as contemplated by section 69 of the Act, from Vulcan Packaging Inc. (also referred to as "Packaging") to Vulcan Containers Ltd. ("Containers") and Vulcan Containers (Ontario) Ltd. ("Ontario"), and as well, that all three responding parties are a single employer, within the meaning of section 1(4) of the Act.

2. This matter was scheduled and heard in an expedited fashion, as the plant in question remains closed and the entire bargaining unit remains out of work. For this reason, the Board issued a short decision on June 23, 1997, approximately 10 days after the hearing concluded, as follows:

3. For reasons that will issue later, the Board concludes that there has been a "sale" of a business, within the meaning of section 69 of the Labour Relations Act, 1995, from Vulcan Packaging Inc. to the two other responding parties, Vulcan Containers Ltd. and Vulcan Containers (Ontario) Ltd.

4. The Board also finds that the three companies are a single employer for purposes of the Act, pursuant to section 1(4) of the Act.

5. The collective agreement between the applicant and Vulcan Packaging Inc. is therefore binding upon the two other responding parties.

6. With respect to the unfair labour practice complaints, the Board finds no breach of the Act by any of the responding parties in the entering into of the "Side Agreement" or in the filling out and/ or forwarding of the Records of Employment for employees of Vulcan Packaging Inc., nor a breach of section 17 of the Act in the failure of Vulcan Packaging Inc. in bargaining to disclose certain information.

7. Finally, while there may technically be an unlawful lockout ongoing, in the circumstances the Board does not consider it inappropriate that the responding parties be able to continue to engage in the discussions with the CAW which they had engaged in prior to the sale, over whether concessions will be forthcoming, or whether the Petrolia facility will remain closed. Accordingly, no cease and desist relief will issue in respect of the unlawful lockout.

8. We now provide our reasons.

The Facts

4. Packaging is a company that supplied custom decorated sheet metal to other fabricators of metal products. At the time that these events occurred, Packaging employed approximately 283 employees, at three manufacturing facilities in Ontario and one manufacturing and one warehouse facility in Quebec. One of these manufacturing facilities is a Drum Manufacturing Plant in Petrolia, Ontario, which employs about 60 to 65 employees. The employees of Packaging at this location are represented by the applicant, CAW Local 1008 (also referred to as "Local 1008" of "CAW"). There are also salaried non-union employees and managerial employees working at Petrolia.

5. Of the other four facilities or sites, none of which is in Petrolia, the United Steelwork­ers("USW") is the bargaining agent for two bargaining units, the Graphic Communications International Union ("GCIU") for one bargaining unit, and the Communications, Energy and Paperworkers Union ("CEP") for one.

6. The company had been in serious financial difficulty for some period of time, beginning as early as 1987. Nevertheless, it was able to continue in business, largely through financing from the National Bank (the "Bank"). In 1993 and 1994, Packaging was forced to sell some of its divisions, in order to reduce Bank indebtedness. One such division was its Vulsay Division, sold to D'Arcy Bird (the dominant force and the individual with the largest financial interest in the group that eventually bought Packaging referred to generally as the "Purchasing Group"). Bird became Vulsay's Chairman and Chief Executive Officer.

7. Even after selling these assets, the company was unable to keep its credit with the Bank in good standing. Reflective of this, in October, 1994, the Bank gave notice to Packaging that it was in default on its banking covenants.

8. Also in 1994, Alex Telfer, the President and Chief Operating Officer of Packaging since 1984, bought all the outstanding shares and debt of Packaging, thus becoming its sole shareholder and director, along with continuing to act as President and Chief Operating Officer. Telfer would later join Bird as a key member of the group that eventually bought Packaging.

9. In the fall of 1995, Bird approached Telfer to see if he was interested in becoming a part of the Purchasing Group, a group of investors being put together to buy Packaging, but Telfer did not at that time join the Purchasing Group. By May, 1996, the group was in serious negotiations with the Bank and Packaging about a potential sale of the company to the Purchasing Group. In June, 1996, Bird signed a Letter of Intent with the Bank to purchase the assets of Packaging. There followed a long period of negotiations between these three parties, the Bank, the Purchasing Group, and Packaging. During this period, Packaging continued to lose substantial amounts of money, and its debt continued to mount.

10. Around October 1, 1996, the Bank notified Packaging that it was in default of its obligations, and the Bank demanded payment of approximately 43 million dollars, the amount that it appears was by then owing to it by Packaging. This demand was made while the Bank was still negotiating with Bird and the Purchasing Group over the sale of Packaging to the Purchasing Group. The Bank was quite desirous of closing this deal, as the Purchasing Group wanted to operate all the Packaging facilities as "going concerns", and the Bank's chances of recovering a greater percentage of the money owed to it were significantly enhanced if Packaging was able to continue to operate as a business. The only other alternative was to liquidate all or some of its assets, and in such circumstances, the Bank was likely to recover substantially less of the money it was owed.

11. While these negotiations over a potential sale to Bird's Purchasing Group continued, Packaging was negotiating with the CAW a renewal of its collective agreement covering the Petrolia facility. These negotiations took place in the fall of 1996. During negotiations, Packaging was not asked about and did not disclose the details of its then shaky financial status, nor the existence of the Purchasing Group and the negotiations between it and the Bank. The company did tell the CAW that it was in financial difficulty and could not afford raises. Unfortunately, no more details of the negotiations were placed before the Board, and beyond this limited glimpse, the evidence provides little further information about what took place. A collective agreement was successfully negotiated, signed, and ratified, around the end of October, 1996.

12. By late March, 1997, the Purchasing Group and the Bank had agreed on terms and conditions of a sale of Packaging to the Purchasing Group, and the goal was to close the deal by April 4, 1997.

13. The Purchasing Group had set up a number of corporate entities including the two re­sponding parties, Containers and Ontario, to buy different components of Packaging. When the purchase eventually occurred, only Containers and Ontario obtained any interest in Petrolia, and the other companies are not in issue in the instant proceedings.

14. There had been a number of alternatives for structuring the sale transaction, but ultimately the practical insolvency of Packaging effectively dictated the route chosen by the Bank and the Purchasing Group. It was agreed that Packaging would go through the assignment in bankruptcy and immediately thereafter seek court approval for a sale to the Purchasing Group. This would have the effect of enabling the Purchasing Group to shed most of the debt load of Packaging. Both the Bank, the motivating force in the restructuring and sale, and the Purchasing Group were desirous of the business continuing without hiatus, and without the bankruptcy and immediate sale, they were of the opinion that the business (at any of its facilities or locations) could not continue to operate.

15. One key point remained for the Purchasing Group, securing an agreement with Packaging's steel supplier, Dofasco, so that Dofasco would continue to supply Packaging with steel, or more accurately, would begin to supply the new owners of Packaging with steel. Securing other suppliers of steel was not feasible, both because of the three month lead time necessary for any other supplier to be able to manufacture the product to the specifications of Packaging, and because the market at this time was characterized by a scarcity of steel. Steel manufacturers like Dofasco had more customers than they could satisfy, and were generally allocating to existing customers less steel than they had ordered. They were also not readily taking on new customers.

16. A meeting with Dofasco officials was set up for April 3, 1997 to disclose these plans and to secure Dofasco's commitment to supply steel. Had Dofasco agreed to supply the steel, the bankruptcy and the sale of Packaging would have been effected. But Dofasco refused. It told the Purchasing Group that it would only supply steel if there was a commitment from the new company (the new corporate entities that purchased Packaging are sometimes, for convenience sake, referred to in the singular) that Dofasco would be paid the approximately 1.2 million dollars it was still owed by Packaging. This response presented a serious problem for the Purchasing Group. In order to go through with the sale, it needed Dofasco's support and commitment, but it now knew it could not get that commitment without an undertaking in return, backed up by solid financial guarantees, that the predecessor's debt to Dofasco would be paid by the Purchasing Group.

17. The Purchasing Group did not have the ability to come up with the additional 1.2 million dollars, and more than that, it felt that these extra monies rendered its potential purchase uneconomical and unsound. With such a debt load burdening the new company, Bird concluded that the new company would not be able to make an operating profit. Without Dofasco's steel product, on the other hand, the new company would be unable to operate at all.

18. The proposed deal was in danger of fast unravelling. At the Bank's insistence, the day after the meeting with Dofasco, Packaging filed a notice of intention to make a proposal, and Ernst & Young Inc. ("EYI") was appointed as Interim Receiver, thus imposing a stay of proceedings against the company for a period of thirty days. As Interim Receiver, EYI monitored receipts and disbursements of the company, but the day-to-day operation of Packaging remained in the control of Telfer and Packag­ing's other managers and officials. EYI subsequently made an arrangement with Dofasco for the short term continuing supply of steel, under terms whereby FYI guaranteed payment in a manner satisfactory to Dofasco. These steps bought some measure of additional time to find a way to make the deal still work.

19. At this point, Bird and the rest of his Purchasing Group were not confident that the deal would close. Bird was only interested in buying Packaging as an on-going business, but was not prepared to buy without a guarantee of steel supply. Yet he could not afford to pay an additional 1 .2 million dollars, the payment required by Dofasco before it would supply more steel. Bird needed to quickly find another source of funds or the deal would not close, and the Bank would impose a bankruptcy on Packaging, with its five facilities, and would liquidate the assets of the company. Bird concluded that a source of funds could be found through wage concessions from the unions that represented the employees of Packaging. Without these concessions, he felt all the employees, unionized and non-unionized, would be out of work, since without them the company would have to close and liquidate its assets.

20. Around April 9, 1997, Bird directed the General Manager (of some of the divisions of Packaging) to contact all four of the unions to explain what was happening, and to arrange for a meeting with Bird and other members of the Purchasing Group. A letter was sent to the four unions, CAW, USW, GCIU and CEP, the next day outlining the concessions being sought by the Purchasing Group, and indicating that the concessions were to apply to all employees: salaried, hourly (i.e. unionized), and management. Bird, Telfer (by now a member of the Purchasing Group), and a third member of the Purchasing Group. John Rea, met on April 14, 1997 with the unions. Financial data was supplied to the unions (after each had signed confidentiality agreements), including the details of Dofasco's demands. Attending for the CAW were the CAW staff representative for Local 1008, Dick Charleton, and CAW counsel. The unions all rejected the concessions then being sought by the Purchasing Group. They agreed to meet again soon for further discussions.

21. A second meeting was scheduled with the unions for April 17, 1997. Again, Bird, Telfer and Rea attended on behalf of the Purchasing Group. The four unions met by themselves prior to the meeting with the Purchasing Group. At this union meeting, the CAW advised the other unions that it was not willing to participate with them in the discussions, but would be speaking directly, and on its own, with the Purchasing Group.

22. That is what happened that day. The CAW met first with the Purchasing Group, while the other unions waited. Full financial data was again made available to the CAW. The CAW told the Purchasing Group it would neither participate with the other unions nor enter into any wage concessions with the Purchasing Group.

23. The Purchasing Group then met with the other three unions. This meeting continued well into the evening. By the end of it, all three unions had reviewed the financial data and were apparently satisfied with the need for concessions to enable the Purchasing Group to buy Packaging, which in turn meant that the company could continue to be operated as an on-going business. Concession agreements were signed by the three unions and by "Vulcan Containers Ltd. (New Purchasing Group)". The three agreements were identical in substance, and were all subject to ratification. In the agreements were clauses requiring the concessions to apply to all employees of the Purchasing Group, and clauses whereby the Purchasing Group agreed to continue to operate all of the company's facilities. This latter clause encompassed Petrolia, where the CAW, which had made no agreement, was the bargaining agent.

24. The bargaining units of the three unions subsequently ratified these agreements.

25. The Bank was still pressuring Bird to complete the deal. After obtaining concessions from the three unions, Bird approached the Bank and suggested that the Purchasing Group buy the company and its assets except for its Petrolia facility. The Bank refused to allow Petrolia to be carved out of the sale arrangement.

26. On April 24, 1997, Local 1008 conducted a vote of its membership. The CAW made known its opposition to the granting of concessions. The membership rejected the proposals for concessions. The next day, the Purchasing Group provided the employees of Petrolia with copies of the concession agreement signed by the other unions, as well as by non-union and management personnel. Another vote was held of the members in the bargaining unit on April 30, 1997. The proposals for concessions were again rejected by a large majority of the membership.

27. In a letter sent April 30, 1997 to Charleton, Bird again made clear to the CAW his position. He wrote that the Purchasing Group was going to proceed to purchase all of the divisions and facilities of Packaging. He noted that all employees at the other facilities had agreed to be employees in the "new" company, by accepting the concessions. Accordingly, those facilities were to continue to operate. Since the CAW would not accept the same concessions, Bird advised that the Purchasing Group was unable to operate Petrolia. The Purchasing Group would therefore either liquidate or relocate the Petrolia assets unless the bargaining unit members of the CAW agreed to the same concessions as agreed to by the other employees. At this point, of course, the Purchasing Group was not the employer, nor was it bound to any collective agreement with the CAW.

28. In this letter, Bird also commented on statements he noted had been made by the CAW at the April 17th meeting with the other unions, where it stated that unemployment insurance "may be a better option than accepting a wage concession". Bird stated his view of the inadequacy of unemploy­ment insurance, and indicated that the Petrolia employees, having rejected the concessions, might be disqualified or delayed in their receipt of unemployment insurance benefits.

29. In a response the next day, Charleton advised Bird of the two votes the membership had taken, and of the rejection of the proposals by large majorities each time. The CAW also advised that it was willing to continue to meet with the company and to discuss alternative proposals that might provide cost reductions and savings to the new company. It listed some suggestions to this end. It is not apparent that the CAW suggestions would have saved meaningful amounts of money, but in any event, the concession agreements signed with the other unions required that the CAW grant the same concessions. The CAW proposals for savings did not include any wage or benefits concessions by its members, except an offer to work one Saturday overtime shift per month, for three months, at straight time wages.

30. The 30 day period during which EYI had been appointed Interim Receiver was due to expire shortly, which would end the stay of proceedings against Packaging by creditors. Bird was not yet in a position to close, as he and the Purchasing Group had only obtained concessions from three of the four unions, covering four of the five Packaging facilities, and from the salaried management employees. Because of the terms under which concessions were obtained, that all employees and unions must agree to grant the same concessions, the Purchasing Group could not exempt the Petrolia bargaining unit from the concessions requirement, while still holding the other unions to those concessions. The Purchasing Group needed more time, so on May 2, 1997 it obtained a 45 day extension of the stay.

31. Bird continued to try to obtain concessions from the CAW. Re asked for a meeting with the head of the CAW, Buzz Hargrove, but was turned down. On Monday, May 12, 1997, Bird, Telfer and Rea met directly with the bargaining unit members and CAW officials to make a plea to them that they agree to the concessions, as had the other unions. Bird told the employees that the facility would close without the concessions. No agreement was reached at this meeting.

32. The Bank continued to pressure the Purchasing Group to close, as the continued operation of Packaging increased the costs and risks to the Bank, as customers of Packaging became aware of its precarious financial status. The customer base was beginning to erode.

33. Finally, on May 14, 1997, it was agreed between the Purchasing Group and the Bank that an assignment in bankruptcy would be made the next day, in order to effect an immediate subsequent sale of Packaging to the Purchasing Group. The deal would proceed without any CAW agreement to concessions, but with an agreement between the Bank and the Purchasing Group that gave the Purchasing Group 14 days from the assignment in bankruptcy to obtain concessions from the CAW, failing which the Petrolia facility was to be liquidated. This contractual arrangement was to be the subject of a separate agreement between the Purchasing Group and the Bank, labelled the "Side Agreement". The applicant asserts that this Side Agreement was itself an unfair labour practice, and a breach of various sections of the Act. It asserts that agreeing to a requirement to seek concessions from the CAW, during the term of the collective agreement, failing which the Purchasing Group was to close the facility, is an agreement to engage in an unlawful lock-out, and as such contravenes the Act.

34. Telfer, as President and Chief Operating Officer of Packaging, was also a member of the Purchasing Group, and was therefore fully aware that an assignment in bankruptcy would be made the next day. He asked the company's General Manager to phone officials of Local 1008 the evening of May 14, 1997, to ask them to tell their members not to come into work the next day, as there would be an assignment in bankruptcy, and the company would no longer be operating. The salaried employees were phoned by company officials to the same effect. For employees who did attend the next day at the plant, they encountered the closed gates of the company, and were handed a letter by a security guard that advised them that Packaging was in the process of making an assignment in bankruptcy, and that Petrolia was shutting down. This letter stated that employment with the company ceased with the close of business on May 14,1997.

35. Around 8:30 a.m. on May 15, 1997, the company made a voluntary assignment in bank­ruptcy. Several hours later, around 10:30 a.m., Packaging appeared before Mr. Justice Roulden of the Ontario Court (General Division) in Bankruptcy on a motion for an order approving, prior to the first meeting of creditors and appointment of inspectors, the sale of the company to Containers and Ontario and to the several other corporate entities created by the Purchasing Group to effect the sale. Virtually all of the assets, tangible and intangible, and property, real and personal, which had been owned by Packaging were to be purchased by the Purchasing Group companies. The Purchasing Group essentially bought the entire business of Packaging: its facilities, machinery and equipment, raw material, finished product, customer lists, goodwill, trademark rights, and so on. The Purchasing Group also signed the "Side Agreement" referred to above.

36. Notice of the motion before the Court was not provided to the CAW, or to any of the potentially affected unions. Mr. Justice Houlden approved the purchase and sale agreements (again, there were several such agreements, as different corporate entities, were utilized by the Purchasing Group to effect the purchase), and ordered that upon completion of the transactions contemplated by the purchase and sale agreements, all rights of the trustee in bankruptcy would vest in the various corporate entities (of the Purchasing Group) free from all unsecured claims. The Court also ordered and declared that "all Vulcan's employees have been terminated at the time of Vulcan's assignment in bankruptcy and that the Trustee shall not be nor be deemed to be a successor employer of Vulcan under the Labour Relations Act, 1995 (Ontario), the Employment Standards Act (Ontario) ... or under any other provincial or federal legislation applicable to employees or pensions, or otherwise.". The Order of Mr. Justice Houlden ended by requesting "the aid and recognition of any Court or administrative body in any province of Canada ... to carry out the terms of this Order ...".

37. The Purchasing Group now owned Packaging, lock, stock and barrel, including the closed Petrolia facility and the four other facilities where the sites remained opened and operating, where employees continued to work without interruption. The Side Agreement required concessions from the CAW by May 29, 1997, or the assets of Petrolia were to be liquidated.

38. The Purchasing Group, now the owner of Packaging, continued to seek concessions, writing the CAW on May 21, 1997, to tell it that Petrolia would open only if the employees ratified the changes to the collective agreement being sought by the new owners. Clearly, Containers and Ontario were of the view that the CAW still held bargaining rights for the Petrolia site, and that the collective agreement would apply if the facility re-opened.

39. Records of Employment were issued to the employees of Petrolia. The Record of Employ­ment filed at the hearing, which the Board takes to be typical of those issued to all employees of Petrolia, lists Packaging as the employer, and May 14, 1997 as the last day worked. In the "Comments" section, the Record notes "Refused offer of employment - 'See attached"', and attached is a page which read:

RECORD OF EMPLOYMENT - COMMENTS SECTION

Petrolia Steel Containers was a division of Vulcan Packaging Inc.

On April 4, 1997, Vulcan Packaging Inc. went into interim receivership.

An Investment Group was interested in acquiring the assets of Vulcan Packaging Inc. and operate them on a "going concern" basis. They made an offer of employment to all the employees, to participate in a restructuring proposal, through the acceptance of temporary wage concessions.

Four of the five unions within the Vulcan organization, p1us all salaries staff, accepted the temporary wage concessions. That is approximately 223 our to 280 employees.

The exception was the hourly workers at the Petrolia plant, represented by the CAW. Canada, Local 1008. Apparently there was an overwhelming majority that rejected the request for temporary wage concessions which would amount to approximately 4.6% per annum.

On May 15, 1997, the assets of Vulcan Packaging Inc. were purchased by the Investment Group out of an Assignment of Bankruptcy.

As the wage concessions, ratified by the other 223 employees in Vulcan were contingent on all unions and salaried staff being treated on an equal basis, the Investment Group could not operate the assets at Petrolia. The other four plants of Vulcan are operating under the new company, Vulcan Containers Ltd.

Accordingly, by the majority of hourly workers (CAW, Local 1008) at Petrolia Steel Containers rejecting the restructuring proposal, they, thereby, are rejecting the offer of employment.

40. The applicant submits that the issuance of such Records of Employment, filled out in this manner, constitute breaches of the Act, in that the responding parties were attempting to mislead Employment Canada, by stating that the employee had "refused offer of employment", with the intention of delaying their entitlement to unemployment insurance benefits, in order to pressure them to agree to the concessions.

41. Another meeting of Petrolia employees was held on May 27, 1997, attending by Bird, Charleton and officials of Local 1008. Bird spoke to employees, again asking that they accept conces­sions. A vote to hold another vote on the issue was defeated.

42. On or about June 2, 1997, the concessions were implemented at locations other than Petrolia. Employees at these locations continued to work as they normally had, without any interruption related to the assignment in bankruptcy or the sale. Employees were not asked to apply or re-apply for employment with the new owners. The same employees went to work at the same facilities, performing the same jobs, and the businesses there were not changed in any meaningful respect. Between May 15th, when the sale closed, and June 2nd, when the concessions were implemented, the terms and conditions of the employees were exactly as they had been prior to the sale. Many of the same managers continued to perform the same jobs they had previously. The bargaining agent at each location continued to act as bargaining agent, without hiatus or change.

43. Finally, some further detail of the individuals who played roles in the various corporate entities is appropriate. The key investors in Containers, the company established by the Purchasing Group to be the parent company for purposes of the purchase of Packaging, were Bird, Rea, Telfer, Bob Pell, and Derrick D'Netto. Bird was the owner of Vulsay, having purchased in 1994 this former division of Packaging, Telfer had been President and Chief Operating Officer of Packaging, Pell had been General Manager of the Montreal Steel Container Division of Packaging, and D'Netto had been Comptroller of Packaging. Pell and D'Netto were performing the same job for Containers. Telfer was the President of Containers, as he had been at Packaging. Packaging's General Manager (Kaplan), was now General Manager of two of the Packaging divisions.

44. Containers owned all shares in the subsidiary companies, including Ontario. The directors of Containers were Bird, Rea, a lawyer from the firm that had been retained by Bird on behalf of the Purchasing Group, Telfer, and an official from the National Bank. The Chairman and Chief Executive Officer of Containers was Bird.

45. The instant applications were filed on May 26, 1997, and the first hearing date was Friday, May 30, 1997. Notwithstanding the terms of the Side Agreement, which required concessions from the CAW by May 29, 1997 failing which the liquidation of assets of Petrolia were to commence, no liquidation of assets had begun by May 30, 1997, nor for that matter by the time of the last hearing date, June 13, 1997.

Decision

46. The first issues are whether there has been a "sale" to Containers and Ontario, within the meaning of section 69 of the Act, and/or whether they are a single employer, along with Packaging, within the meaning of section 1(4) of the Act. The relevant parts of these sections of the Act read as follows:

47. (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.

48. (1) In this section, "business" includes a part or parts thereof; ("entreprise")

"sells" includes leases, transfers and any other manner of disposition, and "sold" and "sale" have corresponding meanings. ("vend", 'vendu", "vente")

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his, her or its business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if the person had been a party thereto and, where an employer sells his, her or its business while an application for certification or termination of bargaining rights to which the employer is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if the person were named as the employer in the application.

47. We turn first to the question of whether a "sale" took place. As the Board said in Deloite & Touche, [1993] OLRB Rep. Feb. 109:

48. As has been observed in many of the cases, the definition of sale is quite a broad one including specific reference to the word lease and the very broad phrase "any other manner of disposition". The Board, with judicial approval, has held that in the labour relations context and given the broad wording of the statute, an expanded meaning of the word sale is warranted. In Thorco Manufactur­ing Ltd., 65 C.L.L.C., para. 16,052, the Board said as follows:

According to its strict signification, the term sells is usually taken to describe a transac­tion involving the disposal of property by one to another in consideration of a sum paid or agreed to be paid by the recipient in money or its equivalent. As used in section 69, however, the word sells has been given a wide definition which includes lease, transfers and any other manner of disposition of the business or part thereof. In legal parlance the word lease generally denotes a specific kind of contract by which one party, called the lessor, for a consideration in money or its equivalent, confers on another, called the lessee, the exclusive possession of certain property for a period of time.

The word transfers, however, is obviously a term of wide significance and unless restricted by the context is capable of describing a multitude of transactions whether by sale, exchange, gift, trust or otherwise by which property, rights, or interests, etc. are transmitted absolutely, conditionally etc. or by operation of law from one person to another. We are unable to find anything in the language of the section to denote any legislative intention to restrict the meaning of the word transfers to any particular kind of transfer. Also, having regard to the particular language used and the remedial object sought to be attained by and the wide meaning which must be attributed to the preceding word transfers, it is our opinion that the generality of the words any other manner of disposition is not intended to be in any way limited or interpreted ejusdem generis with the words leases, or transfers. In our opinion, it is more in harmony with the language of and the remedy envisaged by the enactment to interpret the words and any other manner of disposition as an omnibus or saving provision intended to include dispositions of the business or a part or parts thereof by any mode or means whatever which are not appropriately described by the preceding words which state that sells includes leases or transfers.

It is a rudimentary principle applicable to the construction of remedial legislation that, consistent with the language of the enactment, the interpretation which must be adopted is the one which best serves to advance the remedy and to suppress the mischief contemplated by the legislation. (See also section 10 of The Interpretation Act R.S.O. 160 c. 191). Having regard to this principle and to the fact that the language of the section is entirely susceptible of and in agreement with such a meaning, we are impelled to give the section a large and liberal rather than a narrow or restrictive construction.

16. In writing for the Divisional Court in Re Hughes Boat Works Inc. and U.A.W, 1979 CanLII 1853 (ON HCJ), 26 OR. (2d) 420 at 432, Mr. Justice Reid commented as follows:

Was the interpretation made of s. 69 by the Ontario Labour Relations Board unreason­able? There were two factors to which the Board made special reference. The first was the expanded meaning of the word "sale". "Sale" is used in the statute in a special sense, a much wider sense than it is ordinarily accorded. In ordinary parlance a lease is not a sale. As used in s. 69, however, sale includes lease. The inclusion of a meaning that is in a sense the very opposite to the ordinary meaning of the word "sale" suggests to me that the Legislature intended a very broad meaning indeed for the word "sale" in s. 69. This makes irrelevant a good many of the decisions relied on by [the] applicant in which Courts were called on to interpret the word "sale" in other contexts.

Thus, "sale or other manner of disposition" means something very different in the labour relations context of a sale of a business than it does in its ordinary or commercial law sense. Labour relations considerations must govern when interpreting section 69.

17. It is clear then that, in applying the section to the facts before us, the labour relations purpose must be kept in mind. This was discussed in C.U.P.E. v. Metropolitan Parking Inc., [1980] 1 Can. LRBR 206, in part, as follows:

It is important to emphasize, however, that section [69] of the Act has never been regarded merely as an "unfair labour practice" provision, directed at schemes" designed to subvert bargaining rights. The section is also intended to preserve bargaining rights in the case of bona fide business transactions (i.e., transactions undertaken for purely commercial reasons and untainted by any anti-union motivation) which incidentally undermine the industrial relations status quo. This two-fold purpose was discussed by the Board in Aircraft Metal Specialists Ltd., [1970] OLRB Rep. Sept. 703:

The purpose of section [69] becomes important in assessing the various fact situations that arise. Section [69] operates on a number of levels. The first level, of course, is to prevent the subversion of bargaining rights by transac­tions which are designed to get rid of the union. We have encountered situa­tions where there are transactions between various corporate entities which are in effect "paper transactions", and are a form of corporate charade engaged in for the purpose of eliminating the trade union. In this type of case the Board has liberally interpreted section 69 to preserve the bargaining rights and has attempted to look beyond "paper transactions" to achieve that purpose. See e.g. Ken's Masonry, December 1964, OLRB Mthly. Rep. 382 and Trenton Riverside Dairy, September 1964 (1964) 2 C.L.S. 76-IOOS.

A further and important purpose of section [69] is to preserve the bargaining rights with respect to work which has accrued to the benefit of the employees as a result of their union becoming the bargaining agent through certification or voluntary recognition. Once the union had been recognized with respect to a particular business the union then obtains a right to bargain with respect to wages, hours and other conditions of employment in that business. The right to participate in the business and its functions in that manner is in the nature of a vested right and section [69] allows the union to pursue the bargaining right when all or part of the business is sold. In making determinations under section 1691 therefore, the Board is interested in maintaining bargaining rights where the sale involves a continuum of the business.

In recent years most of the litigation before the Board has involved increasingly complex, but bona tide, business transfers which result in the same kind of dislocation as a simple bilateral sale. Collusive arrangements, or transactions explicitly designed to subvert bargaining rights, have become much less common; and can, in any event, be dealt with under sections [72], [73], and [76] of the Act.

48. Packaging made an assignment in bankruptcy, and within hours, sought and obtained court approval for a sale of the business to the Purchasing Group, which included both Containers, the parent company for the various other corporate entities set up by the Purchasing Group, and a subsidiary entity, Ontario. The bankruptcy was a vehicle for divesting Packaging of its debts, to the extent effectuated by the assignment. The debts extinguished or nullified included all monies owed to unsecured creditors. The sale was the culmination of a set of restructuring transactions, beginning in April with the appointment of FYI as Interim Receiver, and ending with the court approved sale from the Trustee to Containers and Ontario.

49. Most of the key players who composed the Purchasing Group became key people with Containers and Ontario, and had previously been key players with Packaging. Telfer had been the sole shareholder and director of Packaging, and had been its Chief Executive Officer and President. He became a shareholder and director of Containers, and the first President of the new company. Bird had purchased and still owned one of the former divisions of Packaging, Vulsay. Pell and D'Netto had been officers of Packaging and were now officers of Containers or one of the subsidiary companies. Nearly all the key officers of Packaging continued as officers of Containers or one of the subsidiary companies.

50. The Purchasing Group bought Packaging as an ongoing business, with the intention of continuing to operate the company as it had operated in the past. The Purchasing Group intended that at all five locations or facilities the same employees would do the same work, producing the same product, for (at least) the same customers, using the same steel supplier. Indeed, the Purchasing Group could not have secured the steel supply without making good on the predecessor's debt obligations to it. For four of the locations the intended plan prevailed. The business continued as it always had, with no hiatus and no meaningful change in employees, management, or the key players who had operated the predecessor. Telfer still ran the company, albeit subject to Bird's overriding supervision and control, aided by the former key officers of Packaging - Pell, D'Netto and Kaplan.

51. EYI, which acted at different times as Interim Receiver or Trustee, is not named as a responding party, nor is it asserted that it is a successor or related employer. No remedy is sought against it. The CAW asserts that the business essentially transferred from Packaging to the Purchasing Group, with a momentary bankruptcy designed to eliminate some of the debt structure of the re­invented company, while leaving the true ownership of the company in many respects unchanged. EYI was merely a temporary stepping stone between corporate structurings.

52. The Purchasing Group itself believed that the collective agreements would still apply (prior to this litigation commencing), and it continued to apply them to all locations other than Petrolia. It continued to recognize the unions as the bargaining agents at all locations. It cannot seriously be maintained, on the facts, that employees at the four locations that continued in business as before were somehow "new employees", who somehow re-applied for employment, nor can it be maintained that the responding parties merely voluntarily recognized bargaining rights in the unions. All participants in the transactions, the Purchasing Group and its constituent corporations, the unions and the employees, acted as if the bargaining rights and labour relations obligations continued through the sale.

53. Containers and Ontario assert, however, that there was no "sale" with respect to the Petrolia facility. The employees there were terminated, they submit, by operation of law consequent upon the assignment of bankruptcy, and the collective agreement was inoperative for the same reason. All that the Purchasing Group "bought" in Petrolia was a closed and dormant facility. Containers had no employees, it asserts, at that location and there was no "sale" of an ongoing business at that site, only of the assets of a already closed down business.

54. Dealing first with the argument that there was a sale only of a dormant site, the short answer is that if there was a sale of the business from Packaging to the Purchasing Group, then on the facts the "sale" included the Petrolia location, whether it was open for business or dormant at the time of the sale. Bird tried to obtain permission from the Bank to purchase Packaging except for its Petrolia facility, given the unwillingness of the bargaining unit there to agree to the concessions already agreed to by the other unions, and without which, he believed, the continuation of the Petrolia facility as an ongoing concern was impossible. The Bank refused to exempt Petrolia from the deal, so the Packaging Group bought the business at that location also. The new owner still continues to want to re-open Petrolia and continue Packaging's business there, in the same manner as it conducted that business before. If a "sale" has occurred, then the Petrolia location is part of that sale, part of the "business" bought by the Purchasing Group.

55. Unless it can be said that the provisions of the Bankruptcy and Insolvency Act, the assign­ment in bankruptcy itself or the Court order approving the sale to the Purchasing Group, ousts the jurisdiction of this Board to decide whether there has been a "sale", or requires a finding by this Board that a sale has not occurred, then the Board is satisfied that a "sale" did occur within the meaning of section 69 of the Act, and both Ontario and Containers are successor employers. The ongoing business of Packaging, all its meaningful assets, tangible and intangible, have been purchased with the intention of continuing to run the business that operated before. And that is what the purchasers have done. Except for Petrolia, the balance of the business continues to run in the same manner, in virtually all meaningful respects, under the new owners. This is a classic case of a "sale".

56. Do any aspects of the bankruptcy events negate this conclusion? The assignment in bank­ruptcy was a legal artifice for purposes of cancelling or reducing debt liabilities. What motivated the transaction was the intent of Packaging, the Purchasing Group and the Bank, that the Purchasing Group buy and operate the business of Packaging. EYI as Interim Receiver actively dealt only with the financial aspects of the business of Packaging, including supervision of accounts receivable and payable, and securing a continued short term steel supply from Dofasco pending the sale. In other respects, it served a monitoring function. Subsequently, as Trustee in Bankruptcy, it occupied that position for a brief period measured in hours, and only in order to facilitate the sale to the Purchasing Group. It played no role as such in the operation of the company. From the perspective of section 69 of the Act, and the labour relations issues at play in the circumstances, the Purchasing Group for practical purposes bought the company from Packaging and the Bank.

57. The responding parties did not assert that the Board has no jurisdiction. The Court orders (assuming the court in the circumstances here would have the jurisdiction to make an order binding upon the Board with respect to the exercise of the Board's exclusive jurisdiction under sections 1(4) and 69 of the Act) only precluded an order that the Trustee be found to be a successor employer. As noted, the Trustee is not a responding party, nor is an order sought against it.

58. The responding parties do assert however, that the Board cannot find that a "sale of a business" occurred at Petrolia, since the assignment in bankruptcy terminated the employees and the collective agreement applicable to that location. At most, they submit, only a dormant facility was bought, a sale of a closed facility without employees and without individuals who retained any employment relationship there, and without a collective agreement which applied to that facility (it is noteworthy that this same argument, that there were no employees and no collective agreements in effect, was not maintained with respect to the other facilities). If the responding parties are correct, and there is no collective agreement in effect, that fact may have relevance for whether the Board will find that a "sale" has occurred, and for whether bat-gaining rights continue to exist.

59. In St. Marys Paper Inc., 1994 CanLII 1232 (ON CA), 26 C.B.R. (3d) 273 (1994), the Ontario Court of Appeal had to consider an issue under the Pension Benefits Act (Ontario), and determine whether the Trustee in Bankruptcy became an "employer" of the workers in question for purposes of the Pension Benefits Act. In considering this question, the majority (Arbour and Osborne, JJ.A.) stated that "the bankruptcy had terminated their employment" (at page 277) and that the Trustee had "sought to hire" the former employees (page 278). Both statements were made in passing, with no analysis or explanation of how or why the assignment in bankruptcy would have this effect. In dissent, Madam Justice Abella stated her view that (a) the Ontario Labour Relations Board has exclusive jurisdiction to deal with the issue of successor employer, and (b), that "contracts of employment with employees, including collective agreements, terminate with a bankruptcy" (at page 291). As with the majority statements, no analysis or support for this proposition was provided. It is therefore unclear, with respect, whether the majority decision stands for the proposition that employees are terminated by an assignment. The comment to this purpose was not part of the ratio and was not a finding made by the court. As well, the majority made no comment on whether the collective agreement terminated because of the bankruptcy.

60. A different panel of the Court of Appeal issued a decision in Rizzo & Rizzo Shoes Ltd. (1995) 30 C.B.R. (3d) I. This dispute was over a claim under the Employment Standards Act, and the unanimous Court concluded that employment ended upon a receiving order in bankruptcy issuing against the employer, after a petition from one of its creditors. The bankruptcy in question there was the result of creditor actions and not a voluntary bankruptcy sought by the employer itself. At page 9 therein, the Court stated:

In Re Kemp Products Ltd. (1978), 27 C.B.R. (N.S.) I (Ont. S.C.), Registrar Ferron heard an appeal from a trustee's disallowance of a claim for severance pay as an ordinary unsecured creditor, as in the case now before the court. At p. 4 he said:

In addition, I am of the opinion that the bankruptcy of the company at the instance of a creditor does not constitute a dismissal although the employment relationship is thereby terminated.

I agree with that statement. He went on to say:

It might be otherwise if the bankruptcy had resulted from an assignment in bankruptcy at the instance of the company.

As the case before us does not involve a voluntary assignment. there is no need to comment on that additional statement.

The Court made no comment about the earlier decision in St. Marys Paper Inc. This case is not therefore of particular assistance.

61. In Grosvenor Health Care Partnership (No. 2) 1995 CanLII 7375 (ON CTGD), 33 C.B.R. (3d) 28, the Ontario Court of Justice (General Division) in Bankruptcy, per Spence J., did comment on St. Marys Paper. A Trustee in Bankruptcy had been appointed to three companies involved in the operation of a nursing home. The union representing employees sought leave of the Court to continue certification proceedings that had been initiated against the Trustee, under the Labour Relations Act, 1995 and the Hospital Labour Disputes Arbitration Act (Ontario). Mr. Justice Spence had to consider the Board's jurisdiction under what is now section 69 of the Act and its apparent (to the Court) conflict with the provisions of the Bankruptcy and insolvency Act. He wrote (at page 32):

A determination to that effect would be apparently inconsistent with the rule in bankruptcy law that the collective agreement terminates on the occurrence of the bankruptcy: Re St. Marys Paper Inc. (1994), 1994 CanLII 1232 (ON CA), 26 C.B.R. (3d) 273 (Ont. CA.), at p. 291 per Abella JA.: "Contracts of employment with employees, including collective agreements, terminate with a bankruptcy." Such a determination would also be apparently inconsistent with the provision in the order of Mr. Justice Houlden of December 14, 1994 which provides that the trustee is not to be, and is not to be deemed to be a successor employer under the OLRA.

With respect to the request for leave. I think a delicate balancing of the relevant considerations is required. The Board clearly has jurisdiction under the OLRA to make a determination that there has been a sale of a business and that PMTI is a successor employer. The considerations which have been raised here concerning the apparent inconsistencies between a positive determination to that effect and bankruptcy principles and the order of December 14, 1994 could presumably be considered in those proceedings to the extent germane and in any other proceedings that may be taken in this matter. The courts should ordinarily defer to the Board on a matter clearly within its statutory jurisdiction. On the other hand, if a decision were taken by the Board against the trustee, it would involve the inconsistencies mentioned above. It would be incompatible with the termination of the collective agreement as a result of the bankruptcy and the limited role of a trustee in bankruptcy in carrying on a business.

62. The Court appears to adopt Abella, J.'s dissent on the point as law, with no apparent recognition that she wrote her comments in dissent. It is unclear whether the Court in applying her statements realized that they were the dissenting views. In any event, the applicant there was seeking leave to continue or bring an application against the Trustee, which is not the case here. We do not find this decision to be authority for the proposition being proffered, that a voluntary assignment in bankruptcy, by operation of law, terminates all employees and the collective agreement.

63. In Associated Freezers of Canada Inc. 1995 CanLII 4412 (NS SC), 36 C.B.R. (3d) 36, the Nova Scotia Supreme Court (In Bankruptcy) dealt with the same question, whether a Trustee was a successor. That Court did clearly hold that upon bankruptcy all employment was terminated, relying on Rizzo, (above, where the Court specifically declined to comment on the consequences of a voluntary bankruptcy), and stating that "with no employment there can be no collective agreement". Under Ontario labour relations law, this proposition is clearly wrong. The lack of employees at any point in time does not terminate, nullify, or invalidate a collective agreement. It is difficult, therefore, to give any weight to this statement of the court.

64. It is upon these authorities that the responding parties base their argument that the bank­ruptcy of Packaging terminated the employees of Packaging based at Petrolia and terminated the collective agreement covering Petrolia. With respect, however, in our view those decisions do not mandate such a conclusion, nor does the Board reach such a conclusion.

65. There are several reasons for this. First, the employees at Petrolia had already been termi­nated by Packaging, effective the evening of May 14, 1997, a time prior to the assignment in bankruptcy. There appears to have been no legal impediment to their termination that evening by Packaging, although such termination would have been subject to the terms of the collective agreement and the requirements of any applicable legislation. Second, the cases relied upon above do not arise in the context of a voluntary assignment of bankruptcy, the bankruptcy that occurred here, and the Court in Rizzo (above) specifically declined to comment on the effect of such an assignment. Third, the Court's views in Grosvenor (above) appeared to be based on the misconception that Abella J. spoke for the Court in St. Marys Paper (above) rather than writing in dissent. Fourth, the statements made by the various courts referred to above offer no analysis to justify the conclusion that the bankruptcy terminates employees or the collective agreement. There is no reference to a relevant section of the Bankruptcy and Insolvency Act or any other legislation which would suggest, require or justify such a finding.

66. This latter point is of significance. The Bankruptcy and Insolvency Act is a federal statute dealing with rights and obligations involving debtors and creditors. Its thrust is directed towards commercial events, and it deals with situations where financial obligations to creditors are suspended or cancelled, and debtors are protected from claims for monies owed. Bankruptcy itself creates a situation where, by operation of law under that statute, a debtor may be able to continue in business after discarding some or all of its prior financial burdens.

67. The Labour Relations Act, 1995 deals with statutory rights in a labour relations environment, not contractually based commercial rights, and the Act establishes a series of statutory obligations and protections which are designed to grant rights to employees, unions, and employers. These rights include the right of a union to apply to be the exclusive bargaining agent for a group of employees, and the right of employees to freely choose whether they wish to be so represented. Employees are protected from actions by their employers that penalize them for exercising or purporting to exercise their rights under this Act. Generally speaking, commercial matters and the collection of money from debtors, or the extinguishment of debts, are not matters within the purview of the Act.

68. The two very different statutory purposes in these two pieces of legislation may collide, but it is neither apparent that they do, in a general sense, nor that they have in the particular scenario here. Any "sale" or "related employer" finding would serve to further the statutory purposes of the Labour Relations Act, 1995. A declaration in this respect would not appear to detract in any manner from the Bankruptcy and Insolvency Act, for there does not appear to be any operating inconsistency between the two statutory regimes. The bankruptcy is still effective, and Packaging remains, to our understanding, a company in bankruptcy, and its creditors remain subject to the terms of the bankruptcy. A decision that a "sale" took place would not render Packaging liable for debts which were suspended or nullified by its petition into bankruptcy, nor would a finding under section 1(4) render Packaging liable for debts from which it had been absolved, since such a declaration would mean that the responding parties were "one employer for purposes of this Act" (i.e. Labour Relations Act, 1995), not for purposes of the Bankruptcy and Insolvency Act. While Ontario and Containers would be liable for Packaging's labour relations debts, by virtue of such declarations, such liability is not incompatible with the bankruptcy proceedings or the effect of the provisions of the Bankruptcy and Insolvency Act.

69. Or at least there is no intuitive or obvious labour relations reason why such an inconsistency or conflict would exist. The complete lack of analysis or explanation by any of the courts quoted above as to why or how the fact of bankruptcy nullifies the employment status of every employee and terminates all collective agreements under the Labour Relations Act, 1995, sheds no light on this debate. The courts merely asserted this to be so, and this bald assertion, that bankruptcy automatically has such an effect under this Board's constituent statute, in an area over which this Board is statutorily given exclusive jurisdiction, is not particularly helpful.

70. Even if, for purposes of the Bankruptcy and Insolvency Act, a voluntary assignment in bankruptcy has the result that employees are terminated, it does not follow, and we reject the contention, that an employee in those circumstances would also be terminated for purposes of the Labour Relations Act, 1995. This latter finding falls within the Board's exclusive jurisdiction to determine, as does the question of whether a "sale" occurred under our Act. We can see no sound labour relations rationale for concluding that a bankruptcy ends employment status under the Act. Such a finding would effectively nullify all rights under section 69 of the Act, where bankruptcy occurs, a result quite inconsistent with the thrust and purpose of the section, and the statutory rights created therein, and unnecessary to protect the creditor rights and asset distribution features of the bankruptcy insolvency legislation.

71. Finally, on this point, the Board does not find that the specific order of Mr. Justice Houlden terminated the employment of the already terminated employees of Petrolia, for purposes of the Labour Relations Act, 1995. As the Board in Deloite (above) said:

72. Some attention was given to paragraph 5 of the order which reads as follows:

73. THIS COURT ORDERS that the Receiver shall be at liberty to appoint an agent or agents (including an independent manager of the Property) and such assistants (including barristers and solicitors, and any of the servants, employees, officers and directors of the Defendant) from time to time as it may consider necessary for the purpose of preserving the Property and carrying on the business of the Defendant relating to the Property and performing any of its duties and powers hereunder, provided however that the employ­ment or retention of any employee of the Defendant shall not constitute the Receiver as a “successor employer" to the Defendant or any of its affiliates or otherwise make the Receiver liable for obligations of the Defendant or any of its affiliates to their employees.

[emphasis added]

It is our view that this provision cannot be determinative in this case. It is the Board's exclusive jurisdiction to determine whether there has been a sale for labour relations purposes. The respondent cannot be relieved of its statutory obligations under the Act by the above term of the Order, and it is not apparent that was the intended effect. In any event, the Board would not be of the view that retention of any employee or employees (which is the extent of the above provision) would alone constitute the receiver and manager a successor employer in any event. The retention of employees is a factor to be considered, particularly on the question of whether the business has continued. (See also the comments of the Board in CUPE v. Metropolitan Parking, supra, to the effect that the retention of employees is only one factor to be considered and is not necessary to a finding of a sale. If it were otherwise, the simple expedient of not retaining employees would avoid the section). In any event, as noted above, it is conceded that the business has continued, and thus the question of the retention of employees is not central to the current case.

72. The Board therefore concludes that there has been a "sale" of a business, within the meaning of section 69 of the Act, from Packaging to the two other responding parties. Nothing in the Bankruptcy and Insolvency Act, the assignment in bankruptcy, or the orders of Mr. Justice Roulden, leads the Board to a different conclusion. Both Containers and Ontario are therefore bound to the applicable collective agreement and "step into the shoes" of the predecessor. As the Board said in Emrick Plastics Inc., [1982] OLRB Rep. June 861:

73. The interpretation given to its successorship legislation by the British Columbia Labour Relations Board makes eminent good sense to this Board as well. Collective bargaining legislation is designed primarily for the benefit of employees, not trade unions. Can it really be said that the Legislature in enacting section [69] of our own Act intended that the rights of the bargaining agent selected by the employees would "run with the business" (cf.. for example, Marvel Jewelry, [1975] OLRB Rep. Sept. 733), that the collective agreement bargained for and ratified by those employees would run with the business, but that the very employees who had made these choices would not? The Board would need unmistakable language in its statute to come to that conclusion. The only tangible difference in the language of the B.C. Code in its material provisions is that the British Columbia statute says:

…..where a collective agreement is in force, it continues to bind the purchaser ... to the same extent as if it had been signed by him.

whereas our own statute says:

……the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement, as if he had been a party thereto.

But the words of the Ontario Supreme Court in Cassin-Remco, supra paraphrasing our statute to say that “the purchaser of a business shall be deemed to be the original signatory to the collective agreement" leave no doubt (if there was any) that this is a distinction without a difference.

18. We conclude, similar to the British Columbia Labour Relations Board, that section 69 of our own Act continues the effect of a collective agreement over a sale transaction without hiatus, and that the purchaser stands literally in the shoes of its predecessor with respect to any rights or obligations under that agreement. The purchaser, in other words is given no opportunity to "weed out undesirable employees" contrary to the provisions of the collective agreement, nor to decline to recognize any of the seniority or other rights accrued by employees under the collective agreement during their tenure with the predecessor employer. We agree with counsel for the respondent that the purchaser takes the business exactly as he receives it from the vendor. Even if, for example, employees have been given notice of termination by the vendor, the purchaser is no more entitled to start that business up without regard to the recall rights of employees under the collective agreement than the vendor would have been. The obligations of neither employer are determined by whether the employer on its own chose to treat a severance at a given point in time as a termination or a lay-off.

19. We turn next to a consideration of whether the responding parties Containers and Ontario are a single employer, along with Packaging, for purposes of the Act. In Roy Brandon Construction, [1981] OLRB Rep. Feb. 219, the Board wrote as follows:

20. The two businesses, in other words, although unrelated in time, may be so identical in their essential makeup as to be considered "associated or related" within the purpose and meaning of section 1(4) (although there may be a point at which the hiatus is so significant that it would be inappropriate to say that the section applies). As the Board also noted in Bronx Erecting, the presence of bad faith, or the intention to avoid bargaining rights, is not a pre-requisite to the section applying. The absence of bad faith is, rather, something which the Board may take into account in deciding the extent to which it finds it appropriate to exercise its discretion, having regard to the labour relations purposes of the section.

21. In the Brant Erecting case the predecessor company was dissolved without any formal act of bankruptcy. The Board in the present case, therefore, must decide whether the intercession of an assignment in bankruptcy has any effect on the application of section 1(4). Since section 1(4) does not turn on any flow-through or transfer of assets or goodwill, or even on continuity of operation, the answer appears tube that it does not. Were it otherwise, the principals of a company by declaring bankruptcy (with whatever loss to creditors) would find themselves in a better position vis-a-vis the union than if they had not. The language of the section does not appear to contemplate or support such a distinction. In a bankruptcy, of course, certain rights are extinguished by the Court's final order of discharge. It is doubtful, though, whether even the final order of discharge, any more than the winding-up or dissolution of a corporation (with its limited liability), would prevent the operation of section 1(4). The present case, however, need not decide that. Here Roy Brandon Construction and Roy Brandon Limited in fact commenced to carrying on business before the final order of discharge for Brandon General Contractors Limited was made. The Board, having regard to the "essential unity and identity" of their economic organizations, together with their common direction and control, is prepared to treat Roy Brandon Limited, Roy Brandon Construction, and Brandon General Contractors Limited as one employer for the purposes of the Act.

22. In Economy Store Fixtures Limited, [1992] OLRB Rep. May 575 the Board wrote:

23. 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.

(emphasis added)

Section 1(4) is a remedial provision intended to prevent the intentional or incidental erosion of bargaining rights consequent upon changes in structure or form of what is, for labour relations purposes, a single business activity. To put it another way, whatever separation may exist between two or more entities for corporate, tax or other purposes, this Board is entitled to treat them as one employer for purposes of the Labour Relations Act where such entities carry on associated or related activities or businesses under common control or direction. The purpose of the provision is to prevent form, or an alteration in form, from undermining a trade union's bargaining rights and the rights of employees to bargain collectively with their employer through that trade union. As the Board observed in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 and October 1353, section 1(4) extends to situations where one business entity is actively carrying on business and another is not:

15. ... It is not necessary to have shared participation in a common business endeavour or even contemporaneous economic activity. The relationship between the business entities is a functional rather than a temporal one. Businesses or activities are "related" or "associated" because they are of the same character, serve the same general market, employ the same mode and means of production, utilize similar employee skills, and are carried on for the benefit of related principals. If these criteria are met, two businesses may be "related" within the meaning of section 1(4) even though their activities are carried on through different or corporate vehicles and are not carried on simultaneously. It is evident that the Legislature has created a regime of collective bargaining law which significantly modifies the common law notions of "privity of contract" or "the corporate veil".

(See also, Metro Century Construction Ltd., [1983] OLRB Rep. July 1122.)

14. The fact that there was a hiatus between the time Frid controlled and directed Economy and the birth of Flair does not detract from the fact that Economy and Flair are more than one entity engaged in a related activity or business under common control and direction, the key in that latter respect being Frid. As we have already noted, section 1(4) of the Act specifically provides that associated or related activities or businesses can be treated as constituting one employer for purposes of the Act even when they are not operating at the same time. The mere fact that an employer for whose employees a trade union holds bargaining rights ceases to operate will not cause those bargaining rights to disappear or become inert. If another entity controlled or directed by a person (or other entity) which exercised control or direction over the first one subsequently becomes engaged in an associated or related activity or business, the bargaining rights which attached to the first employer will also attach to the second, unless there are compelling labour relations reasons why they should not. Under the Labour Relations Act, bargaining rights attach to an activity or business, not merely to the legal vehicle through which the activity or business is carried on. Alterations in legal form, whatever the reasons or motivation for them, are not allowed to undermine or frustrate existing bargaining rights, either directly or incidentally.

15. On the evidence before the Board, Frid appears to be the key player in Flair. It appears that for all practical labour relations purposes he controls and directs that company (indeed, there was no real suggestion that he does not). In our view, Flair is, in effect, Economy reborn. And Flair, like Economy, is the vehicle for Frid's business activity, an activity in which others have joined but primarily his nonetheless. Although it operates on a smaller scale, Flair is objectively indistinguish­able from Economy for labour relations purposes. It is in the same business, operates from the same location, uses the same equipment, and its customers, with a few very minor exceptions, are the same as Economy's. And, just as Economy was under Frid's managerial control, so now is Flair.

16. Finally, the applicant/complainant's bargaining rights are at risk of disappearing along with Economy. This is precisely the sort of erosion of bargaining rights which section 1(4) of the Act is designed to prevent.

17. Here, given the fact that many of the key people are the same for Packaging and the Purchasing Group, (Containers and Ontario), both as operating officers of the three companies and as directors, given that the 100% shareholder of Packaging (Telfer) is a key member of the Purchasing Group and given that the business has not changed in any material respect, it is apparent that these corporations have acted together as one employer. While the legal ownership of Packaging has changed, in the sense that the majority shareholder has changed from Telfer to Bird, the key people structured the sale through a bankruptcy, and the same group of people still operate what in essence is the same business. Although Packaging was the legal employer prior to the bankruptcy and sale, the Bank was effectively dictating how it operated, with the meaningful input of the Purchasing Group. It was the Purchasing Group that was negotiating concessions with the unions, not Packaging, at a time when the Purchasing Group was not the employer. For practical purposes, it was the Purchasing Group (as prompted by the Bank) that would have initiated the termination of the Petrolia employees by Packaging on May 14, 1997. The three named responding parties are intertwined in their labour relations activities and in the manner in which they conducted their businesses. These businesses were one and the same, and the business of Packaging and now that of Containers and Ontario, were under the common control and direction of Bird, Telfer and the rest of the Purchasing Group, for some considerable time prior to the assignment in bankruptcy and sale of May IS, 1997, and after the sale was completed.

18. The Board therefore finds that Packaging, Containers, and Ontario are a single employer within the meaning of section 1(4) of the Act.

19. The Board turns now to the unfair labour practices. The relevant sections of the Act read as follows:

20. (1) In this Act,

"lock-out" includes the closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of employees, with a view to compel or induce the employees, or to aid another employer to compel or induce that employer's employees, to refrain from exercising any rights or privileges under this Act or to agree to provisions or changes in provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer, an employers' organization, the trade union, or the employees.

17. The parties shall meet within 15 days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

18. No employer or employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administra­tion of a trade union or the representation of employees by a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of the employer's freedom to express views so long as the employer does not use coercion, intimidation, threats, promises or undue influence.

19. No employer, employers' organization or person acting on behalf of an employer or an employers' organization,

(a) shall refuse to employ or to continue to employ a person, or discriminate against a person in regard to employment or any term or condition of employ­ment because the person was or is a member of a trade union or was or is exercising any other rights under this Act;

(b) shall impose any condition in a contract of employment or propose the imposition of any condition in a contract of employment that seeks to restrain an employee or a person seeking employment from becoming a member of a trade union or exercising any other rights under this Act; or

(c) shall seek by threat of dismissal, or by any other kind of threat, or by the imposition of a pecuniary or other penalty, or by any other means to compel an employee to become or refrain from becoming or to continue to be or to cease to be a member or officer or representative of a trade union or to cease to exercise any other rights under this Act.

76. No person, trade union or employers' organization shall seek by intimidation or coercion to compel any person to become or refrain from becoming or to continue to be or to cease to be a member of a trade union or of an employers' organization or to refrain from exercising any other rights under this Act or from performing any obligations under this Act.

77. (1) Where a collective agreement is in operation, no employee bound by the agreement shall strike and no employer bound by the agreement shall lock out such an employee.

(2) Where no collective agreement is in operation, no employee shall strike and no employer shall lock out an employee until the Minister has appointed a conciliation officer or a mediator under this Act and,

(a) seven days have elapsed after the day the Minister has released or is deemed pursuant to subsection 122(2) to have released to the parties the report of a conciliation board or mediator; or

(b) 14 days have elapsed after the day the Minister has released or is deemed pursuant to subsection 122(2) to have released to the parties a notice that he or she does not consider it advisable to appoint a conciliation board.

(3) If a collective agreement is or has been in operation, no employee shall strike unless a strike vote is taken 30 days or less before the collective agreement expires or at any time after the agreement expires and more than 50 per cent of those voting vote in favour of a strike.

(4) If no collective agreement has been in operation, no employee shall strike unless a strike vote is taken on or after the day on which a conciliation officer is appointed and more than 50 per cent of those voting vote in favour of a strike.

(5) Subsections (3) and (4) do not apply to an employee in the construction industry.

(6) No employee shall threaten an unlawful strike and no employer shall threaten an unlawful lock­out of an employee.

(7) A strike vote or a vote to ratify a proposed collective agreement or memorandum of settlement taken by a trade union shall be by ballots cast in such a manner that persons expressing their choice cannot be identified with the choice expressed.

(8) All employees in a bargaining unit, whether or not the employees are members of the trade union or of any constituent union of a council of trade unions, shall be entitled to participate in a strike vote or a vote to ratify a proposed collective agreement or memorandum of settlement.

(9) Any vote mentioned in subsection (7) shall be conducted in such a manner that those entitled to vote have ample opportunity to cast their ballots. If the vote taken is otherwise than by mail, the time and place for voting must be reasonably convenient.

82. No employer or employers' organization shall call or authorize or threaten to call or authorize an unlawful lock-out and no officer, official or agent of an employer or employers' organization shall counsel, procure, support or encourage an unlawful lock-out or threaten an unlawful lock-out.

83. (1) No person shall do any act if the person knows or ought to know that, as a probable and reasonable consequence of the act, another person or persons will engage in an unlawful strike or an unlawful lock-out.

(2) Subsection (I) does not apply to any act done in connection with a lawful strike or lawful lock­out.

78. There are four actions or series of actions engaged in by the responding parties which are said to be unfair labour practices. First, the failure of Packaging, during negotiations with the CAW in the fall of 1996, to disclose to the applicant its serious financial problems, the fact that a sale was being contemplated, and the fact that bankruptcy was a potential option, constituted breaches of section 17 of the Act. Second, the statements made by Packaging on the Records of Employment for terminated employees, that employees had "refused offers of employment", breached numerous sections of the Act. Third, the signing of the Side Agreement between Containers and Ontario, and the Bank, under which the Petrolia assets were to be liquidated within six months of closing, unless concessions were obtained from the CAW within 14 days of the sale, constituted a breach of numerous sections of the Act. Fourth, the closure of Petrolia was an "unlawful lock-out", since it was designed to compel the employees and the union to agree to changes in the terms and conditions of the collective agreement at a time when a lock-out was not timely and was therefore not permitted. The applicant asserts that the failure of the new owners to re-open the facility constitutes part of the same unlawful lock-out.

79. The first aspect focuses on the negotiations leading up to the current collective agreement. There was very little evidence of the negotiations, presumably because the parties were focused on the ~'lock-out" or closure events. The Board had no evidence of the number of negotiating sessions, when they occurred, who was present for Packaging, the detail of most of the statements made, including statements about financial information and financial issues. The allegation rests upon the company's lack of disclosure, but with little context on content of the negotiations provided to the Board.

80. At the time negotiations were taking place, Packaging had been in serious financial difficulty for many years, and the CAW was aware at least of some of those difficulties. For example, the CAW had become aware of the company's attempts to financially re-organize itself in 1993 and 1994, and had been aware of the company's very serious and tenuous financial stability.

81. In negotiations, the company told the CAW that it could not give wage increases, as it could not afford them. It said nothing about any re-structuring, bankruptcy, sale, or closing. At that point, Packaging had no intention of closing Petrolia. To the contrary, the negotiations the Purchasing Group was having with the Bank were designed to allow Petrolia to continue to operate, without any temporary closures or loss of employment. There was no contemplation of bankruptcy at that point, only an avid interest from the Purchasing Group, reinforced by the Letter of Intent the Purchasing Group had signed with the Bank in June, 1996. Negotiations between the Purchasing Group and the Bank were taking place throughout this period, and continued over the same period that negotiations for renewal of the collective agreement were taking place. Packaging was continuing to lose money during this period, and its debts continued to mount, but this had been true for a considerable number of years, and as noted, had been known to the CAW since at least the early 90's. On the evidence, the logical inference is that the CAW was or should have been aware of the company's financial position at the time.

82. In all these circumstances, and given the paucity of evidence in this area, the Board does not find a violation of section 17 of the Act.

83. The applicant next submits that the manner in which the Records of Employment were filled out constitute breaches of the Act. The Records of Employment indicate that the employees had "Refused Offer of Employment" "See attached". The attachment is fully set out as paragraph 39 above.

84. The full commentary provided by Packaging was generally an accurate statement of the events. The statement at the end of it that the employees who rejected concessions were, in the circumstances, "rejecting the offer of employment" was merely stating the company's position, its subjective characterization of the events. There is nothing impermissible or unlawful in this. It is Employment Canada which will have to determine how to characterize the events, for purposes of entitlement to unemployment insurance benefits, and all that Packaging did was to provide its position on the point. Doing so is not a breach of the Act.

85. This brings us to the two remaining aspects of the complaint, whether the Side Agreement is in contravention of the Act and whether the closure of, or failure to re-open, the Petrolia plant, because the employees there would not agree to concessions, is an unlawful lock-out. We will deal with both of these aspects together. Both involve the propriety of the conduct of the new companies in linking concessions from the CAW employees to the continued closure or re-opening of the Petrolia facility.

86. As noted, the definition of lock-out in section 1(1) reads as follows:

"lock-out" includes the closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of employees, with a view to compel or induce the employees, or to aid another employer to compel or induce that employer's employees, to refrain from exercising any rights or privileges under this Act or to agree to provisions or changes in provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer, an employers' organization, the trade union, or the employees.

87. In Preston Springs Gardens Retirement Home, [1984] OLRB Rep. Sept. 1241, the Board wrote as follows:

88. A "lock-out" is a form of economic sanction undertaken by an employer to modify his employees' behaviour. It is a bargaining posture with both subjective and objective elements. In the first place, there must be a withholding of work opportunities: "a closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of his employees". Secondly, (although often much more difficult to determine), there must be a subjective intention to compel or induce his employees (or some of them) to refrain from exercising rights or privileges which they enjoy under the Labour Relations Act, or to agree to changes in their terms and conditions of employment. Both elements must be present if the conduct in question is to be characterized, legally, as a "lock-out".

89. The termination or lay-off of employees does not, in itself, constitute a lock-out even though the consequences for employees may be the same, nor is it sufficient that the employer was motivated by anti-union animus, if his intention was not to preserve the employment relationship of at least some of his employees on terms more favourable to himself. As the Board noted in Doral Construction Limited [1980] OLRB Rep. March 310, a mass termination of employees in favour of sub-contracting the work (there in response to a union organizing campaign) may be clearly illegal, yet still not constitute a "lock-out". What is critical, is the specific motive behind the employer's action, and, in particular, whether his intention is to preserve the relationship with his employees (or some of them) on different and more favourable terms. In the absence of such specific intent, the employer's conduct is not a "lock-out" even though it may be an unfair labour practice or contrary to the terms of a collective agreement. That is why the Board has often held that a clear, final, unequivocal, and irrevocable decision to dispense with the services of some employees would not be a "lock-out" because the employer has no intention of preserving existing employment relationships on different terms or inducing employees to give up established rights. To reiterate: it may be an unfair labour practice, but it will not be an unlawful lock-out.

90. The applicant argues that both the objective element, the "closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of his employees", and the subjective element, are obvious and self-evident. The responding parties have closed down the Petrolia facility entirely, and have repeatedly stated that it will remain closed unless employees agree to concessions to the current collective agreement. Because the responding parties are all bound to the collective agreement (by operation of law, given the Board's findings above under sections 1(4) and 69 of the Act), any "lock-out" is untimely and therefore unlawful. The CAW submits this is the classic case of an employer bound to a collective agreement insisting in mid-term on concessions or the plant will be or will remain closed.

91. The employer argues that there has been no "lock-out", lawful or otherwise. There has been no "closing of a place of employment, [nor] a suspension of work or a refusal by an employer to continue to employ a number of employees ...". Containers is not refusing to employ the Petrolia workers. It is not the "employer" of those individuals, and never has been, it submits. These employees, argue the responding parties, were terminated by Packaging, before the sale, and in any event, were terminated by operation of law by the assignment in bankruptcy. Containers is not therefore refusing to "continue to employ" them, as it never did employ them. The necessary continuity of employment is lacking, in the submission of the responding parties.

92. There is no question on the facts that the Purchasing Group, both when it was prospective buyer, and now as new owner (through the vehicles of Containers and Ontario), is demanding conces­sions under the collective agreement or it will not open Petrolia. There is no question that the Purchasing Group is trying to induce the employees to agree to changes in the collective agreement and the continued closure of the facility is a powerful incentive to secure those concessions.

93. It is important to assess the events in context. This is not a typical lock-out scenario. We are dealing here with a sale of a business, where the prospective purchasers concluded that it was not economically viable to purchase the predecessor without concessions, because without them the business could not, in their view, be economically viable and they would be unable to continue the business on an operating basis. Packaging was virtually insolvent and was not likely to have survived much longer without a sale, as the Bank continually emphasized. The Purchasing Group would not have bought Packaging, and its five facilities, without the concessions it received from the other three unions, which represented the employees at the four other company facilities. The Purchasing Group was unable to obtain these concessions from these other unions without a commitment that required it to obtain the same concessions from all the unions, including the CAW.

94. Even before the Purchasing Group was legally required to recognize or bargain with the unions, it commenced negotiations with them. It provided them with full access to its financial data. The other three unions were obviously satisfied that the company was in serious financial trouble and that it needed the concessions in order for the sale to close, in order for the plants or warehouses to continue operating, and in order for the employees they represented to retain their jobs. There was a legitimate economic necessity for the concessions.

95. The Board has encountered somewhat similar contexts in prior cases. In Preston Springs, (above), the Board wrote as follows:

96. The determination of the employer's intention, while critical in this legal context, can often be very difficult. In a volatile economic environment, occasions will inevitably arise when employers will be required to adjust their utilization of labour, alter hours of work, institute lay-offs, introduce job-destroying technological change, or even shut down part of their operation. Such decisions will necessarily have an adverse impact on employees, and will be of concern to their trade union; moreover, experience has shown that a candid discussion of these problems by labour and manage­ment can sometimes result in their resolution with attendant benefits to all concerned. Indeed, in Consolidated Bathurst, [1983] OLRB Rep. Sept. 1411, the Board suggested that responsible employers should seek to involve their employees' bargaining agent in this often painful and difficult decision-making process. Certainly, from a public policy point of view, it would be a curious result if an employer who refused to discuss these matters with a trade union were immune from criticism, while an employer who engages in a full and frank discussion of his economic problems, his options, and the potential employee impact were to find himself guilty of a threatened "lock-out". One would not lightly embrace an interpretation of a collective bargaining statute which so clearly encouraged unilateral decision-making and discouraged joint discussion of mutual problems. Should the "message" to employers be that they may face a lock-out allegation unless they act unilaterally, avoid consultation, adhere rigidly to their established course, and under no circumstances engage in discussion with the union which might be construed as "bargaining"? In CE. Lummus Canada Ltd., [1983] OLRB Rep. Oct. 1688, the Board observed:

97. The point raised is a difficult one. Given the definition of "lock-out", an employer who speaks during the term of a collective agreement of the need for concessions as a condition of further employment must be mindful of the basic structure of our Labour Relations Act. During the term of a collective agreement, an employer is not entitled to simply say, "I want a better deal, and I'm not going to continue to use your services, or part of your services, until I get it". That is prohibited as an untimely "lock-out", just as the opposite conduct on the part of employees and a trade union is prohibited as a “strike". On the other hand, an employer may, from time to time, find himself in a position where economic necessity has raised the spectre of management decisions which will significantly impact on the employment opportunities of his employees. In such circumstances it would seem to make labour relations sense to permit the employer to invite the bargaining agent to engage in meaningful discussion designed to avoid or minimize such impact, and indeed, this has been a main theme of the Board's "bargaining in bad faith" cases in recent times. Compare Westinghouse Canada Limited, [1980] OLRB Rep. April 577; Sunnycrest Nursing Home, [1982] OLRB Rep. Feb. 261; and Consolidated Bathurst, [1983] OLRB Rep. Sept. 1411. The Board's interpretation of the law ought not simply to deny the employees, through their trade union, (or employee bargaining agency, as the case may be) this opportunity for input in every case where the problem comes to a head during the term of the collective agreement itself. But, as noted, a fundamental prohibition exists against "lock-outs" or threatened "lock-outs" during the term of the collective agreement, just as it does for "strikes", and the Board must be scrupulous in its analysis of each case, lest a plea of "economic circumstance" be used to mask an attempt simply to obtain better terms and conditions than have been agreed upon in the collective agreement. The Board recognizes that the issue of "economic necessity" can be a complex one, making a judgment on the employer's true motivation difficult; but the Board cannot shy away from making such judgments, if employees through their bargaining agent are to be permitted an opportunity to exercise some degree of control over their economic lives, on the one hand, and the identification and control of unfair labour practices, engaged in under a cloak of "economic necessity", is to be achieved on the other.

98. However, in our view, these questions of high principle or delicate balancing need not be debated here. The circumstances of the instant case provide a classic example of what is not a lock­out - whatever else it may be.

99. The evidence establishes, without doubt, that the employer's enterprise was awash in a sea of economic troubles, which threatened its continuing viability. Operating losses were escalating - in large measure because of rising labour costs which even the union conceded were substantially 'out of line" with those of competitors. Equivalent services could be purchased in the market for much less, and the employer decided to take that opportunity. There is no doubt whatsoever that this decision was based solely upon economics and was intended to be final and irrevocable, nor we might add were there any of the classic indicia of anti-union animus which prompted the Board to draw the distinction between an unlawful lock-out and other unfair labour practices. In any case. as Mr. McCormack saw it, the employer was seeking to "bury the bargaining unit". It was not seeking concessions. Its discussions with the union were solely in accordance with Article 25 of the collective agreement.

100. There was no intention on the part of the employer or expectation on the part of the union that modification of the terms established in the collective agreement could stave off the proposed lay­off. The only contrary suggestion came from an official of the Ministry of Labour who, upon the request of the union, requested a "proposal" from the employer which might result in some modification of its decision. Even then, the employer's response was that it had made its decision on economic grounds and that if it could realize equivalent cost savings in to her ways, there would be no reason to sub-contract the employees' work. There was no "concession bargaining" on the employer's part, and no intention to do so prior to the prompting of the Ministry of Labour official at the request of the trade union. In the circumstances the employer could not reasonably refuse to repeat what was obviously the case: so long as its labour costs were significantly above those payable to a sub-contractor, it was in its economic interest to sub-contract the work. We do not think that this interchange is sufficient ground for finding that there has been a threat of an unlawful lock-out: and, even if we were to find that the technical requirements for a "lock-out" have been met, we would be reluctant to grant relief for the allegedly culpable conduct on the employer's part is merely an honest response to the union's inquiry about what might he done to avoid the consequences of the course upon which the employer had embarked.

101. Finally, there is a recent decision of the British Columbia Labour Relations Board that is remarkably on point. In Imperial Optical Company Limited, BCLRB No. B148/94, Case No. 13483 (April 11, 1994), that Board wrote:

102. BACKGROUND

IOCO carried on business at a number of sites in Canada. One of these was in Burnaby. Employees in Burnaby were represented by the Union. IOCO and the Union were parties to a collective agreement with a term of August 1, 1991 to July 31, 1993. At least two other IOCO sites in Canada were unionized; however, most of IOCO's operations were not unionized.

On December 14, 1992 CIBC exercised its rights under a security instrument provided to CIBC by IOCO. Pursuant to these rights, CIBC appointed PMT as the Receiver and Manager for the business of IOCO. CIBC also filed a court petition in Ontario seeking an order that IOCO was bankrupt. It was not disputed that as of December 14, 1992 IOCO was unable to meet its liabilities as they came due and was thus insolvent.

Also on December 14, 1992 PMT sent a letter to all employees of IOCO, including those at the Burnaby location. It stated:

We regret to inform you that as a result of the financial difficulties of Imperial Optical Company Ltd. ("IOCO"), IOCO is unable to fund its payroll requirements. Peat Marwick Thorne Inc. has been appointed Receiver and Manager (the "Receiver") by a secured creditor to take possession of and realize upon certain of the assets and property of IOCO. The Receiver will be meeting with your union representatives to discuss certain matters including your status with IOCO. Do not report to work after today until notified to do so by either your union or the Receiver.

PMT decided that the preferred method of disposition of IOCO was to sell it as a going concern. Consistent with this decision PMT obtained a line of credit that was available to fund the ongoing operation of IOCO. The line of credit was obtained on the basis of a business plan that included reduced terms and conditions of employment.

In a letter dated December 15, 1992 PMT confirmed with the Union that changes to the existing collective agreement were being sought. That letter stated:

Further to our recent telephone conversation, I enclose a proposed interim amending agreement in respect of the CAW Collective Agreement with Imperial Optical Company Ltd. ("IOCO"). Please note that this Agreement pertains to the Collective Agreements with United Headwear Optical and Allied Workers, Local 4 and will have to be amended to accord with the CAW; however the Agreement does reflect the position of Peat Marwick Thorne Inc. with respect to the CAW Collective Agreement. In addition, Paragraph 2 of this agreement will be amended, for the purpose of the exclusion, to include all health and welfare benefits provided for in the CAW Agreement.

As you are aware this is a matter of urgency. Please call me to discuss this matter later this afternoon at (416) 777-8857 or Heather Elson at (416) 777-8998.

Later on December 15, 1992 PMT sent the Union an interim amendment agreement, an employee acknowledgment and union release specific to the collective agreement between IOCO and the Union. The proposed terms of the interim agreement significantly altered the terms of the collective agreement. Article 14 of this proposed interim agreement stated that it would expire "...when all of the employees that have been recalled are no loner required and have been laid off but no later than six months from the date hereof...". Similar offers were made to the other unionized operations. At non-unionized sites, the terms and conditions of employment were varied unilaterally.

There was no production at the Burnaby plant after December 14, 1992. One of IOCO's area managers was rehired on December 16, 1992 to deal with work in progress. He returned completed work to customers; work not yet started was also returned to customers. Incomplete work remained on the site. Other branches of IOCO, including other unionized branches, did return to operation under the interim terms and conditions of employment. Some of them re-opened almost immedi­ately.

Others re-opened after agreement was reached wit the particular union. Eventually all the employ­ees, both union and non-union, except those at the Burnaby location returned to work under the interim conditions of employment.

In Burnaby, there were a series of communications between PMT and the Union from December 14, 1992 onward regarding the proposed terms and conditions of employment. The Union did not accept the proposed interim agreement and on December 22, 1992 filed a grievance alleging violations of the collective agreement, including allegation of illegal lockout.

On December 23, 1992 the Ontario Court of Justice determined that IOCO was bankrupt and made a receiving order against IOCO. PMT was appointed the trustee of the estate. On March 18, 1993 IOCO was sold. The Burnaby site was not included in the sale and has never re-opened.

V. ANALYSIS

(i) Unfair Labour Practice Allegation

The Union argues that PMT as a receiver and manager by instrument is an agent for IOCO and is liable in its own right for violations of the Code or collective agreement violations which occurred during the period that PMT was so acting. In addressing this issue the parties were in agreement that the appointment of a receiver and manager by instrument does not involve a disposition of the business; thus, a receiver and manager by instrument is not a successor employer under the Code. Likewise it was not in dispute that the appointment of a receiver and manager by instrument does not extinguish the collective agreement nor the rights and obligations under the Code. Finally, the Union agreed that if the Burnaby site had simply been closed on March 14, 1992 and no further activity had occurred then no violation of the Code would have had occurred. What is in dispute is whether the actions of PMT in seeking to obtain an interim agreement that would lead to a re­opening of the Burnaby site constitute violations of the Code for which PMT is liable in its own right.

The Union says that when PMT put forward the proposal for interim terms and conditions of employment as a necessary condition for re-opening the Burnaby site the employer engaged in an unfair labour practice.

I do not find the Union's argument persuasive. It was not disputed that IOCO was insolvent at the time of appointment of PMT. Nor was it suggested that the decision by PMT to try to dispose of the IOCO operations as ongoing businesses was improper or wrongful. In addition, it was not disputed that the line of credit necessary to maintain IOCO as an ongoing entity was obtained upon the understanding that modified terms and conditions of employment were to be applied. Finally, and significantly, the Union agreed that if it had made a proposal to PMT containing the same terms and conditions as that proposed by PMT to the Union, there would have been no violation of the Code.

The Union's position effectively means that PMT's error was to insist that it would not re-open without a change to the terms and conditions of employment. I fail to find a labour relations rationale that would support the Union's position. To demand that a receiver and manager not be allowed to pursue an initiative of this sort runs a very teal risk of reducing or even eliminating the possibility of disposing of the business as an ongoing entity. As long as factors that would point to anti-union animus such as the bona fides of the insolvency, or the objectives of the proposal are not present the simple act of a receiver and manager putting forward a proposal to re-open conditional upon acceptance of modified terms and conditions of employment is not contrary to the Code.

The fact that IOCO operated multiple locations does not change the analysis. On the evidence the Burnaby location received no better or worse an option than did the other IOCO locations. Lacking evidence that the Burnaby site has been singled out for negative discriminatory consequences, I find no violation of the Code.

(ii) Illegal Lockout

I do not find that the evidence supports a finding of an illegal lockout. For reasons identical to those set out in the analysis with regard to the unfair labour practices, I find that the bona fides of the circumstances surrounding the insolvency and the subsequent behaviour of PMT are conclusive. The bona fide legal suspension from employment of the employees of IOCO is not converted into an illegal lockout simply because PMT did not return them to work following the Union's refusal to accept the interim terms and conditions of employment.

(iii) Did the Appointment of PMT as the Trustee in Bankruptcy make it a Successor Em­ployer?

As previously stated, it was not disputed that PMT as a receiver and manager by instrument was an agent and not a successor. The question is whether the subsequently appointment of PMT as the trustee in bankruptcy had the effect of making PMT a successor employer. This issue has not been previously decided by the Board. The board has however determined that a court appointed receiver and manager may be a successor employer: RASL Ventures Ltd. et al.. BCLRB No. 209/87, (1988), 17 CLRBR (NS) 1 ("RASL"). As stated by the Board:

…..we have concluded that a court appointed receiver-manager can be found to be a successor employer. The appointment can properly be characterized as a transfer or other disposition within the meaning of Section S3 of the Labour Code. A court appointed receiver-manager obtains possession and control of the assets of the corporation and, to the extent it operates the business, it does so as a principal. Thereafter, there is an employment relationship between the receiver-manager and the employees of the busi­ness. (pp. 20-21)

The fact that a disposition occurs when a receiver and manager obtains possession or control by way of a court appointment is not definitive in determining that a successorship exits. It is only one of the necessary conditions. The second condition is that there be a "discernible continuity" of the business. The continued operation or re-opening of the business by the trustee in bankruptcy would provide such a discernible continuity.

The Union submits that an analogous policy be applied to a court appointment of a trustee in bankruptcy. Implicit in the Union's argument is the assertion that both of the necessary conditions have been met in this case. Assuming, without deciding, that the analogous test urged by the Union is appropriate, I am not convinced that the facts support the existence of both of the necessary conditions.

The Union does not dispute the fact that the Burnaby operation once closed on December 14, 1992 never returned to production. Consistent with this, the Union does not rely on the Burnaby operation to establish the necessary "discernible continuity". Rather, it says that it is the overall business of IOCO that must be considered and that it is the re-opening of the other IOCO sites by the Receiver and Manager that demonstrates the continuity of the business.

I do not agree that the ~'business" referred to in the words of the successor provisions of the code is the overall business of IOCO. The business, or part thereof, referred to in the successor provisions is a business subject to proceedings or rights under the Code. Rights under the Code attached to the Burnaby site. There was no evidence that rights under the Code attached to any other site. Thus, I conclude that the ~'business" at issue in this application is the business which operated at the Burnaby site.

As previously stated, it is not disputed that the Burnaby site never re-opened. Accordingly, I find that there is not a "discernible continuity" of the business. Lacking the necessary condition of a discernible continuity of the business, I find that there was not a successorship in relation to the appointment of PMT as the trustee in bankruptcy. The application must fail. Given this conclusion, it is not necessary to determine whether the second necessary condition was established on the facts. More specifically, it is not necessary to decide whether the court appointment of a trustee in bankruptcy constitutes a disposition of the business the same way it does when the court appoints a receiver and manager.

VI. CONCLUSION

The unfair labour practice, illegal lockout and successorship aspects of this application are dis­missed.

95. There is no suggestion that the closure of the plant on the evening of May 14, 1997 was itself an unlawful lock-out (whether the manner of its closure breached the collective agreement is not in issue here), nor any suggestion that the Purchasing Group engaging in negotiations over concessions, prior to the sale, was unlawful in any respect. The company was able to obtain concessions from enough of the unions that it decided to close the deal, even absent those same concessions from the CAW, having unsuccessfully tried to obtain from the Bank permission to drop the Petrolia facility from the purchase. The deal was closed on the basis that the Purchasing Group was required to obtain concessions from the CAW or the plant in Petrolia was to remain closed. In effect, the Purchasing Group, Containers and Ontario, had made an irrevocable decision that the plant would not open without concessions. After the sale, they continued to try to obtain concessions, continuing to tell the CAW and the members of the bargaining unit what they had been telling them since negotiations began: the facility would not open without concessions, and the assets at Petrolia would be liquidated.

96. Such conduct may amount to a technical "unlawful lock-out", in that the new "employer", by virtue of the declarations under sections 1(4) and 69 of the Act, is insisting on concessions before it will open the plant. If so, however, the unlawful activity lies not in the closure of the facility or in the refusal of the Purchasing Group or the new owners to re-open it, but in their continued attempts to try to obtain concessions as a condition of re-opening the plant. If any cease and desist remedy were to issue, it would logically require the responding parties to cease and desist from continuing with negotiations or any other conduct, interaction or communication with the CAW or its members that seeks to obtain concessions from them.

97. Apart from the considerable artificiality of such a remedy, which would permit and encour­age bargaining over the issue of concessions prior to the sate, but would prohibit the continuation of these negotiations after the sale, it is a far more sensible result, from a labour relations perspective, that bargaining over the issue be allowed to continue. As the Board stated in Lummus:

In such circumstances, it would seem to make labour relations sense to permit the employer to invite the bargaining agent to engage in meaningful discussion designed to avoid or minimize such impact

It is highly unlikely that an order precluding further bargaining, during which time the plant remains closed, is an order even sought by the applicant, but in any event, to allow continued bargaining over these difficult issues at least enhances the possibility that the parties will be able to reach some accommodation that leads the employer to re-open the plant, and which preserves the jobs of the employees there. This is a far more sensible and preferable course of action than if the Board directed cessation of all discussion.

98. As the British Columbia Labour Relations Board said in Imperial Optical, "the union's position effectively means that PMT's error was to insist that it would not re-open without a change to the terms and conditions of employment. I fail to find a labour relations rationale that would support the union's position.".

99. We agree with these comments, and accordingly decline to issue any remedial relief with respect to the closure of the plant, the failure to re-open it, or the continued discussions with the CAW and/or its members over the need for concessions.

100. Since we have concluded that no relief will issue, and that the continued negotiations over the concessions are not to be proscribed, it follows that the Side Agreement was also not unlawful. In the circumstances here, the Purchasing Group was entitled to agree to liquidate the assets of Petrolia if it could not obtain the concessions it sought. Similarly, as with the lock-out" aspect of the application, there may be a technical breach of sections 70, 72 or 76 of the Act, but we would not, in the unique circumstances here, issue remedial relief. Again, this is not a typical "lock-out" or unfair labour practice scenario. Here, the Purchasing Group did not attempt to undermine the exclusive bargaining authority of the CAW. It recognized its representative rights before legally required to do so, and it dealt openly and honestly with the union throughout. The employer did not decide to close a plant to extract concessions, when it was not permissible to do so; rather, the prospective purchaser for bona fide economic reasons decided that concessions were needed, or closure, in order to effect the sale by which it first became bound to a bargaining relationship with the CAW. Had the facility at Petrolia not closed, given the decision of the bargaining unit there not to grant concessions, it is unlikely that the sale would have taken place, and unlikely therefore that any employee would still be employed. This is not a course of conduct that justifies a finding that the Act has been breached.

101. For these reasons, the Board issued the decision it did on June 23, 1997.