1338-93-U International Brotherhood of Electrical Workers, Local Union 1687, Applicant v. Grant Development Corporation, Grant Forest Products Corp., Wabi Development Corporation, Unicorn Electrical Inc., Peter Grant, Dario Rocca and John Terry Elliott, Responding Parties.

1339-93-G International Brotherhood of Electrical Workers, Local Union 1687, Applicant v. Grant Forest Products Corp., Grant Development Corporation, Wabi Development Corporation and Unicorn Electrical Inc., Responding Parties.

1340-93-R International Brotherhood of Electrical Workers, Local Union 1687, Applicant v. Grant Development Corporation, Grant Forest Products Corp., Wabi Development Corporation and Unicorn Electrical Inc., Responding Parties.

BEFORE: Ken Petryshen, Vice-Chair.

APPEARANCES: L. A. Richmond and L. Lineham for the applicant; Michael G. Horan and Peter Lynch for Grant Development Corporation and Grant Forest Products Corp. and Peter Grant; Robert Bayne and Dario Rocca for Wabi Development Corporation; David Turner and Terry Elliott for Unicorn Electrical Inc.

DECISION OF THE BOARD; March 22, 2000

1. The International Brotherhood of Electrical Workers, Local 1687 (the “IBEW”) has filed three applications with the Board. In Board File No. 1340-93-R, the IBEW seeks relief under sections 1(4) and what is now section 69 of the Labour Relations Act (the “Act”) against Grant Development Corporation (“GDC”), Grant Forest Products Corp. (“GFP”), Wabi Development Corporation (“Wabi”) and Unicorn Electrical Inc. (“Unicorn”). Board File No. 1338-93-U is an application under what is now section 96 of the Act in which the IBEW alleges that GDC, GFP, Wabi, Unicorn, Peter Grant, Dario Rocca and Terry Elliott contravened various sections of the Act, including what is currently section 96(7) of the Act. Board File No. 1339‑93‑G represents a referral of a grievance to arbitration pursuant to what is now section 133 of the Act.

2. When these applications first came on for hearing before another panel of the Board, they were adjourned in order to give the Communication, Energy and Paper Workers’ Union and its Local 99 (the “CEP”) notice of this proceeding. The CEP represents employees of GFP who may be affected by this proceeding. Prior to the next scheduled hearing date, counsel for CEP advised the Board and the parties to these applications that his client elected not to participate in the proceeding. Counsel for the CEP noted that any Board declaration or order should be made subject to the CEP’s subsisting bargaining rights and collective agreement.

3. These applications were heard by a construction panel of the Board. At some point after the completion of the hearing of these applications, which incidentally required twelve days of hearing, the union sidesperson became ill and was absent for a period of time. Eventually he returned to the Board but after a relatively brief period of time, he unfortunately passed away. In such circumstances, the Act provides that the Vice-Chair hearing an application may sit alone to hear and determine the application and may exercise all of the jurisdiction and powers of the Board when doing so. The Act also provides that the Vice-Chair shall decide whether to sit alone in the circumstances. The Vice-Chair determined that it was appropriate in the circumstances of these applications to sit alone.

4. On March 9, 1993, GDC and the IBEW entered into Minutes of Settlement in which the IBEW agreed to withdraw an application for certification and an unfair labour practice complaint and GDC agreed to recognize the IBEW as the bargaining agent for electricians and electricians’ apprentices and also agreed to sign and be bound by the IBEW Principal Agreement. At the outset of the hearing, GDC took the position that as a matter of law, no bargaining rights were validly created for the IBEW with GDC. After entertaining the evidence and the representations of the parties with respect to this issue, the Board ruled orally at the hearing that the Minutes of Settlement established a binding legal obligation on GDC to execute and be bound by the IBEW Principal Agreement and the Board directed GDC to execute the IBEW Principal Agreement. In its description of the facts set out below, the Board will include those facts that are relevant to the preliminary issue.

5. GFP operates a wafer board plant in Englehart, Ontario. The wafer board, a popular substitute for plywood, is produced in eight foot by four foot sheets. Construction of the GFP plant commenced in 1980 and it was completed in 1982. As the industry grew, so did the business of GFP. In the early 1980’s GFP produced 350,000 tons per day. In order to remain competitive and meet the demand for its product, GFP determined that it was necessary for the business to grow and for the plant to expand. In 1987, GFP initiated the expansion of a second line and dryers. This significant capital project was completed in 1989 and it was financed by term loans from the CIBC. By the end of the 1980’s, as a result of expansion and a faster process, GFP produced 900,000 to 1,000,000 tons per day. The plant operates twenty-four hours a day, seven days a week. Gross sales in 1994 were approximately $140,000,000 a year and approximately 80 to 85 per cent of GFP’s product is exported to the United States. Mr. Peter Grant is the sole shareholder of GFP.

6. During the relevant period, GFP employed 245 employees, including 60 staff persons. The CEP became the bargaining agent for GFP’s hourly employees in 1991. Out of 180 bargaining unit employees, 60 are employed in the maintenance group. The maintenance group, which performs maintenance and repair work, is comprised of employees from various trades, including twelve electricians. Maintenance is critical to the successful operation of GFP’s plant. As part of the maintenance program, a line or lines are closed down for one shift a week to permit a crew to perform maintenance work. If GFP is unable to perform the required maintenance with its own employees, it engages the services of contractors to perform the extra work.

7. GDC was incorporated in 1986 to fill a market need for a general contractor in northeastern Ontario. Its head office is located in Earlton, Ontario, and Mr. Peter Grant is its sole shareholder. One of the reasons for the creation of GDC was to provide construction services to GFP. GDC was involved with the plant expansion which began in 1987 and it repaired the new line after a major fire in 1990. In 1991, GDC installed a flaker. In addition to the construction work it performed for GFP, GDC also provided employees to GFP to supplement its maintenance crew. As the general manager of GFP explained in his testimony, GDC, with its civil, mechanical and electrical divisions, was able to conveniently provide GFP with many of its construction and maintenance requirements.

8. GDC was also involved in many projects unrelated to GFP. By 1989, it began to expand and develop at a good rate. By 1991, it had grown to the point where it had recorded $30,000,000 in sales. By this time, approximately 80 per cent of its volume related to non-GFP work. At its height, GDC employed over 200 hourly employees, with 30 to 40 staff persons. Although there was good volume in the early 1990’s, profitability did not materialize. By the later part of 1992, GDC began to experience serious financial difficulties. This led ultimately to its ceasing to operate as a general contractor in March, 1993.

9. On August 12, 1991, the IBEW filed an application for certification against GDC under the construction industry provisions of the Act for its standard bargaining unit in the ICI sector and all other sectors in Board Areas 17 and 20. On September 20, 1991, it also filed an unfair labour practice complaint against GDC and it requested that it be certified without a vote. On August 1, 1991, the Labourers’ International Brotherhood of North America, Local 607 (the “Labourers”) made an application for certification against GDC under the construction industry provisions of the Act and it also filed an unfair labour practice complaint against GDC. In a decision dated January 28, 1993, the Board found that the Labourers were entitled to certification under both sections 7(2) and what was then section 8 of the Act. After addressing certain challenges to the list filed by GDC in the IBEW application, the Board concluded that the bargaining unit consisted of twelve persons and that the IBEW had filed membership evidence on behalf of six of those persons. On the eve of the hearing that would have entertained the evidence and the parties’ positions on the section 8 allegations, the parties entered into the Minutes of Settlement dated March 9, 1993. It was by the terms of this settlement that GDC agreed to be bound by the IBEW Principal Agreement. Before canvassing what occurred at the meeting giving rise to the Minutes of Settlement, the Board will review certain developments relating to GDC between the fall of 1992 and March, 1993.

10. The evidence concerning the business of GDC came primarily from Mr. Peter Lynch and Mr. Scott Pearson. Mr. Pearson was hired as a project engineer by GDC in 1989 and then became a project supervisor. In November 1992, Mr. Pearson started to estimate a budget and plan work on a third dryer project for GFP. This project had a estimated value of $7,000,000 and represented a significant capital expenditure for GFP. As with previous capital projects at GFP, it was assumed that GDC would operate as the general contractor on the third dryer project. In early 1993, Mr. Pearson became the General Manager of GDC upon Mr. Des Burke’s departure. Mr. Lynch had been involved with GFP since its inception, initially as its solicitor and then as a Director and Officer. He was also an Officer for GDC. Mr. Lynch testified that the decisions of GFP and GDC were made by an informal committee consisting of Peter Grant, Mr. McLeod, Vice-President of Finance for GFP and Mr. Lynch. Mr. Peter Grant did not testify in this proceeding.

11. The Board will not review in detail the evidence relating to the financial position of GDC and its demise as a general contractor. Suffice it to say that 1992 was not a particularly good year for GDC and its financial situation deteriorated further in 1993. As a result of a decrease in the volume of work by 1992 and the fact that certain projects were not proceeding as anticipated, GDC experienced pressure from its banker. In the fall of 1992, its bonding company expressed concerns that ultimately resulted in a representative of the bonding company becoming involved in analyzing projects and reporting on their status. There were strong expressions from the bonding company of a lack of confidence in GDC. By February, 1993, it was evident that GDC would experience losses and shortly thereafter the bonding company took over the remaining projects. A new bank account was established that was controlled by the bonding company and all payments to GDC went into this account. As projects were completed, employees were laid off. In February, 1993, GDC was approximately $4.5 million in debt, $2 million to the bank, $2.5 million to the bonding company and a certain amount to unsecured creditors. By March 1993, GDC experienced a negative cash flow, had ten to eleven bonded jobs under the control of the bonding company and continued to provide some employees to GFP to perform overflow maintenance work.

12. As noted earlier, Mr. Pearson began on the third dryer project in the fall of 1992. Up until March, 1993, Mr. Pearson assumed that GDC would be the general contractor on the project, using its own forces where possible. Initially, he defined the scope of work, assigned man hours and obtained quotes for different parts of the project. He developed working schedules and overhead costs. Under Mr. Pearson’s direction, GDC sent out tender packages to mechanical and electrical contractors. Mr. Elliott was largely responsible for the preparation of the electrical tender packages. As a result of the financial position confronting GDC, GDC did not receive any tenders from electrical contractors. GFP contracted with a company the Board will simply refer to as Schenkmann & Piel to design and supply the major components for the third dryer system. This contract alone represented approximately one third of the value of the project. Mr. Pearson provided a final budget to Mr. Lynch in early March, 1993 and both GFP and GDC waited for the bank to approve the project.

13. Mr. Lynch was aware of the outstanding labour relations issues with the IBEW. Although he had left GDC earlier in the year, Mr. Lynch asked Mr. Burke to attend at the March 1993 labour board proceeding in North Bay, along with outside counsel, Mr. Braithwaite. Mr. Lynch instructed the GDC representatives to negotiate a settlement in order to avoid a further deterioration in the financial situation confronting GDC. At the time of the meeting in North Bay, GDC did not employ any construction electricians and it had not done so since the fall of 1992. Mr. Lynch testified that he talked to Mr. Burke by phone on March 9, 1993 and told him that GDC had no future in the construction business, but he could not specifically recall telling Mr. Burke that GDC would no longer hire individuals in certain trades.

14. The IBEW was represented at the March 9, 1993 meeting by Mr. Mark Lewis, counsel, and Mr. Lineham. Mr. Lewis was the only witness who gave first hand testimony concerning what occurred between the parties in North Bay on March 9, 1993. Mr. Lewis testified that there was a general discussion of a shortage of construction work and that the GDC representatives advised them that there was no electrical construction work being performed at that time. The IBEW was advised of two sources of work, one at the North Bay airport where the job was put on hold and there was no start time, and the other the on-going need for construction electricians in the GFP plant. Mr. Lewis testified that there was no indication that GDC was going out of business, but rather there was a clear indication that GDC intended to hire electricians in the near future. Although they did not guarantee it, the GDC representatives indicated that there soon would be work at GFP. Mr. Lewis testified that GDC wanted some exemptions from the strict operation of the collective agreement in order that GDC could name hire persons to fill a specialized need. Although Mr. Lineham was initially opposed to this, the IBEW eventually agreed that GDC could name hire and that the IBEW would take these persons into membership. GDC indicated that they wanted to use electricians who had previously worked for GDC. Since the IBEW did not have a copy of the Principal Agreement at the time, the parties entered into the following Minutes of Settlement:

Between:

International Brotherhood of Electrical Workers, Local Union 1687

(The Union)

‑ and ‑

Grant Development Corporation,

(The Company)

OLRB File #’s 1629-91-R and 2020-91-U

1. The union will request leave of the Board to withdraw its application for certification (OLRB file #1629-91-R) and its Unfair Labour Practice Complaint (OLRB file #2020-91-U).

2. The Company acknowledges that it is not currently employing construction electricians performing electrical construction work.

3. The Company recognizes the Union as the bargaining agent for all electricians and electricians apprentices in the construction industry, save and except non-working foremen and persons above the rank of non-working foreman. The Company agrees that it will sign and be bound to the current IBEW-CCO Principal Agreement in order to be supplied with members of the Union for work covered by this collective agreement.

4. These Minutes of Settlement are without prejudice to any position that the parties may take concerning the relationship between the Company and any other Company, or entity.

Dated this 9th day of March 1993 at North Bay.

15. At the same meeting in North Bay, the parties executed a second document which reads as follows:

To Grant Development Corporation

The IBEW, Local 1687 confirms that under its current collective agreement the company may name hire one person of at least the rank of sub-foreman for each job. Each person so hired is laid off at the end of the job he was name hired for but may be name hired again at any time to serve at least in the rank of sub-foreman on any other project in accordance with the collective agreement.

Dated this 9th day of March, 1993.

16. Pursuant to the Minutes of Settlement, the IBEW did withdraw its application for certification and the unfair labour practice complaint. GDC, however, did not sign the IBEW Principal Agreement.

17. Within a couple of days after agreeing to the Minutes of Settlement, GDC decided it would no longer operate as a general contractor. Confronted for some time with no new business, a significant debt that was continually increasing and the loss of its bonding credibility, GDC instructed Mr. Pearson to lay off its construction forces and to end the maintenance services it provided to GFP. Further to the direction from the informal executive committee, Mr. Pearson laid off 40 hourly employees. Given its financial situation and concerns from its bank, Mr. Lynch testified that it was no longer feasible for GDC to be involved with the third dryer project as a general contractor.

Mr. Lynch also testified that the presence of the IBEW was not a factor in GDC’s decision to discontinue GDC as a general contractor.

18. Once GDC was no longer an option as a general contractor for the third dryer project, GFP considered other options. The option of securing the services of another general contractor was rejected because there was no general contractor in the area with the expertise required for such a project. In the circumstances, GFP decided that it would undertake the construction of the third dryer by itself, utilizing GDC as a project manager. Mr. Lynch directed Mr. Pearson to do what was necessary to get the project underway.

19. There was no formal contractual arrangement between GDC and GFP for GDC to act as project manager on the third dryer project. It was GDC’s responsibility, and specifically the responsibility of Mr. Pearson, to ensure that the project came in on or under budget. Apart from GFP’s dealings with Schenkmann & Piel, which Mr. Lynch was involved with, Mr. Pearson was in complete charge of the remaining two thirds of the project. Apart from a few items which engineering wanted to review, Mr. Pearson had the authority to purchase the equipment and labour required for the project. Mr. Pearson’s contract at GFP was Mr. K. Fletcher, Maintenance and Engineering Manager.

20. GDC had a trailer at the GFP site which housed its engineering and drafting and accounting departments. GDC acted as one would expect a project manager to act. On behalf of GFP, it secured the services of contractors, issued purchase orders in GFP’s name, scheduled the work and ensured that the work was performed properly. Invoices would be sent to GDC and if approved, would be sent to GFP for payment. GFP paid GDC $300,000 for its services. In addition to the work on the third dryer project, Mr. Pearson was engaged in attempting to sell GDC equipment and supplies since they were no longer of any use to GDC. Mr. Pearson entered into an arrangement with Wabi to install the third dryer and with Unicorn to provide electrical services for the project.

21. Wabi operates as a mechanical contractor. Mr. D. Rocca, a mechanical engineer, owns Wabi and is President of the company. At one time, Mr. Rocca was employed by GDC. He oversaw the mechanical installation of the 1987-1989 capital project at GFP and, in 1989, he became GDC’s General Manager. With the hiring of

Mr. Burke in 1991, Mr. Rocca’s responsibilities changed in the early part of 1991 in that he would only be in charge of the mechanical end of the business. He viewed this change as a demotion and he began to think of leaving GDC. He retained counsel to discuss his termination from GDC and to assist him in starting a new business. When unable to purchase Wabi Iron Works, Mr. Rocca incorporated Wabi on October 15, 1991. Mr. Rocca was unaware of the IBEW application for certification.

22. Wabi has been active as a mechanical contractor in northern Ontario since the fall of 1991. It purchased the equipment it needed in 1991 and has been using it since that time. Wabi was a competitor of GDC and it has no ownership links to GDC or GFP. Wabi acted as a representative for Schenkmann & Piel with respect to its interests in the third dryer project. Wabi did not submit a tender on the third dryer project but later did make a proposal to Mr. Pearson after the lay offs. Mr. Pearson negotiated with Mr. Rocca for approximately five days and eventually they agreed on what work Wabi would perform and at what hourly rate. Wabi started to work on the project shortly after the bank approved the project in early April 1993. The value of the mechanical installation performed by Wabi was approximately $2,000,000, approximately eight times the value of the electrical portion of the project. Wabi purchased approximately $23,000 worth of welding and millwright tools from GDC, as well as approximately $2,000 worth of office equipment. Wabi did supply two electricians for two weeks to GFP to perform maintenance work.

23. Mr. T. Elliott owns Unicorn which was incorporated on April 29, 1993. It started work as an electrical contractor during the week of May 3, 1993. Mr. Elliott did work for GDC for a number of years. His status was in dispute during the labour board proceeding and the Board concluded that he was employed by GDC as a working foreman and that he was in the bargaining unit. During the fall of 1992 and early 1993, Mr. Elliott performed work relating to the third dryer project. As noted earlier, he prepared an electrical budget and he also prepared the tender packages for the electrical portion of the job. In mid-February 1993, Mr. Elliott became quite ill and he was off work for a number of weeks, which included the time when the lay offs occurred. Mr. Pearson believed he could have used Mr. Elliott’s assistance on the third dryer project and it was not inevitable that he would be laid off. After contacting a lawyer, Mr. Elliott approached Mr. Pearson with a proposal to perform the electrical portion of the third dryer project. After a relatively brief negotiation, Mr. Pearson and Mr. Elliott agreed to a rate and GDC started to issue purchase orders for GFP for Unicorn to perform electrical work on the project.

24. Mr. Elliott saw that the demise of GDC as a general contractor as an opportunity for him to start his own electrical contracting business. Upon establishing Unicorn, Mr. Elliott hired his own employees, some of whom had worked for either GDC or GFP previously. Unicorn pays its employees an hourly rate, has an incentive program and pays benefits. Unicorn did purchase some tools and equipment from GDC for which it paid approximately $15,000, on terms. Unicorn has no ownership links to GDC or GFP. In addition to work on the third dryer project, Unicorn provided electricians to GFP to perform maintenance work. The value of the electrical portion of the third dryer project obtained by Unicorn was approximately $265,000.

25. In its unfair labour practice complaint, the IBEW alleges that GDC, GFP, Wabi, Unicorn, Peter Grant, Terry Elliott and Dario Rocca interfered with the IBEW’s bargaining rights. The IBEW also relied upon section 91(7) of the Act because of GDC’s failure to sign the Principal Agreement in contravention of the Minutes of Settlement dated March 9, 1993. In the sections 64 and 1(4) application, the IBEW asserts that there has been a sale of a business from GDC to GFP, Wabi and Unicorn and that these entities constitute one employer for purposes of the Act. The IBEW requests a determination from the Board that the responding parties are bound to its Principal Agreement. With respect to its grievance, the IBEW alleges that GDC, GFP, Wabi and Unicorn contravened the Principal Agreement and requests an order for damages. Before addressing the merits of these applications, the Board will deal with the preliminary motion made by GDC.

Preliminary Motion

26. In its replies to the IBEW applications, GDC acknowledged that it entered into Minutes of Settlement on March 9, 1993, wherein it agreed to sign the IBEW Principal Agreement. It noted that the execution of the collective agreement was a mere formality, although such execution had not taken place when it filed its reply. GDC indicated that it was prepared to sign the collective agreement and that it was bound to it. At the hearing, counsel for GDC took the position that no bargaining rights were created as a matter of law, even though GDC believed that it was bound to the collective agreement. Counsel argued that no collective bargaining relationship was created by the Minutes of Settlement because there were no electricians in the employ of GDC when the agreement was executed and because GDC had no expectation of hiring electricians in the future and did not do so. Counsel argued that GDC’s agreement to sign the Principal Agreement constitutes employer support invalidating GDC’s commitment. Counsel relied upon the principles in Eighty-Five Electric, [1987] OLRB Rep. June 833, Sunrise Paving, 72 CLLC 793 and C. Strauss (1973) Ltd., [1975] OLRB Rep. July 581.

27. Relying on a number of authorities, counsel for the IBEW argued that the principles in the cases referred to by GDC were inapplicable because the facts in this case were distinguishable. The Board found in favour of the IBEW and it dismissed GDC’s motion at the hearing for the following reasons.

28. The Minutes of Settlement dated March 9, 1993, settled the IBEW’s application for certification, in which the IBEW was seeking certification without a vote, and the IBEW’s unfair labour practice complaint. By March 9, 1993, the parties had been involved in that proceeding for over one and a half years and they were about to commence a hearing to inquire into whether the IBEW should be certified without a vote. With the settlement, the parties avoided the costs and uncertainties of litigation. Section 97(7) provides that a settlement of this type is binding upon the parties, shall be complied with according to its terms and a complaint that a party to the settlement has not complied with the terms of the settlement shall be deemed to be a complaint under section 96(1) of the Act. The fact that the parties agreed that GDC would be bound to the IBEW Principal Agreement as part of a settlement governed by section 96 of the Act provides a factual context which is not present in the cases relied upon by GDC. Although there were no employees in the proposed bargaining unit when the settlement was reached, the settlement is with respect to an application for certification which was filed when there were twelve employees in the proposed bargaining unit. In the Board’s view, there was no reason advanced by GDC which would have caused the Board not to require compliance with the Minutes of Settlement. The resolution of a protracted proceeding at the meeting on March 9, 1993, which lasted several hours and dealt with contentious issues, cannot be characterized as one which was obtained by employer support. The Board is also not unmindful that a failure to enforce settlements of this type would encourage parties to litigate disputes rather than settle them, an undesirable result in labour relations terms.

29. In Eight-Five Electric, the Board concluded that the signing of the collective agreement when there were no employees in the bargaining unit did not create a valid collective agreement because there was no immediate or realistic expectation that employees would be employed in the immediate future. The panel in that case concluded that the ratio in Nicholls-Radtke, [1982] OLRB Rep. July 1028, was inapplicable. In Nicholls-Radtke the Board determined that, having regard to the nature of the construction industry, pre-hire agreements can be valid in certain circumstances. What appears to be critical for the validity of pre-hire agreements is the mind set of the parties when they entered into the agreement, and in particular, whether they had a reasonable expectation that employees would be hired. Whether or not employees are actually hired is not determinative of whether there has been employer support. Apart from what Mr. Lynch told his representative at the North Bay meeting, the facts disclose that the participants at the March 9, 1993 meeting concluded the settlement with the reasonable expectation that electricians would be hired in the near future. The subject of name hiring would have been a non-issue if the GDC representatives understood that GDC would no longer be operating as a general contractor in the way it had in the past. The nature of the negotiations in North Bay and what appear to be the expectations of the representatives who negotiated the settlement support the conclusion that the parties negotiated a legally binding resolution of their differences and one which falls within the ratio of the Nicholls-Radtke decision.

30. Accordingly, the Board reiterates its oral ruling that GDC is bound to the IBEW’s Principal Agreement and its direction to GDC to execute the Principal Agreement. The unfair labour practice complaint, at least to the extent it relied upon section 96(7) of the Act, is allowed.

The Unfair Labour Practice Complaint

31. The IBEW argued that GDC’s failure to call Mr. Peter Grant, the sole shareholder of both GDC and GFP, to testify in this proceeding should lead the Board to conclude that GDC has not met its onus. In its view, the failure to call the individual who has the ultimate authority to direct both companies is fatal to their case.

32. Although Mr. Grant may have the final say on issues, the evidence from Mr. Lynch is that GDC and GFP operate by means of an informal executive committee of three, which includes Mr. Lynch. His evidence was that the decisions which are at issue in this case were made by the informal executive committee, and not by Mr. Grant alone. Although there may be circumstances in which the failure of a party to call a person to testify may have an impact on whether that party has met its onus, those circumstances are not present here. As part of the informal executive committee, Mr. Lynch is in a position to give evidence concerning why GDC and GFP did what they did and why. The decision not to call Mr. Peter Grant to testify is not fatal in the circumstances.

33. As noted earlier, the IBEW asserts that GDC, GFP, Wabi and Unicorn, and the principals of these companies, contravened the Act when they interfered with the rights of the IBEW. In particular, the IBEW claims that the decisions to have GDC cease operating as a general contractor and to have certain work previously performed by GDC performed by Wabi and Unicorn were made with an anti-union animus.

34. Upon reviewing all of the evidence, the Board is satisfied that the above decisions were not made, even in part, to interfere with the rights of the IBEW. Although the timing of the decision to close down GDC’s general contracting business and the earlier determination of the Board with respect to the Labourers’ application for certification do raise suspicions about GDC’s motive, the overwhelming evidence supports the conclusion that the decision at issue was dictated solely by the financial situation confronting GDC. Beginning in the fall of 1992, GDC began to experience financial pressures which led inevitably to the decisions in early March 1993. The bonding company had taken over its existing jobs, there had been no new work for some time and GDC was in considerable debt. The Board agrees with Mr. Lynch’s assessment that, in these circumstances, GDC could no longer operate in the way that it did in the past. The financial position of GDC had deteriorated to the point where GDC had no option but to cease business as a general contractor. The Board accepts Mr. Lynch’s testimony that the IBEW’s presence was not a factor in GDC’s decision. It is quite unlikely that GDC would close down its general contracting operation because the IBEW had bargaining rights for a relatively small number of electricians in a work force dominated by other trades. There was no evidence to suggest that the certification of the Labourers in January 1993 caused GDC to alter its operations because some of its employees were now covered by a collective agreement. Although Wabi and Unicorn benefited in the circumstances, the decisions to subcontract work to them were not motivated by anti-union considerations. Accordingly, and but for the section 96(7) aspect of the application dealt with earlier, the application in Board File No. 1338-93-U is dismissed.

Sale and Related Employer Applications

35. The relevant provisions of the Act relating to these applications are as follows:

36. (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.

37. (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.

36. In Pinecrest-Queensway Health and Community Services, [1992] OLRB Rep. Nov. 1211, the Board described both the purpose and effect of section 64 and 1(4) of the Act as follows:

37. Section 1(4) applies to situations in which activities which generate employment relations governed by the Labour Relations Act are carried on through more than [one] legal entity, whether or not at the same time.

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

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

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

9. In Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193, the Board wrote that:

10. There need not be a transfer of the entire business before section [64] comes into play. The successor rights provisions may also be triggered by the transfer of "part of a business." [See section 64(1).] This language suggests that bargaining rights continue when something considerably less than "the totality of the undertaking" has been transferred. Presumably the Legislature envisaged the preservation of bargaining rights where there is a severance and transfer of a discrete, cohesive portion of the economic organization or activities which comprise the totality of "the business." The Board has found a transfer of "part of a business", where one of a chain of retail stores has been sold to a competitor (Supercity Discount Foods, [1979] OLRB Rep. Apr. 119; Loblaws Groceterias Ltd., [1973] OLRB Rep. Jan. 73); where there is a transfer of the right and means to produce one of the products formerly produced by the predecessor's business; (Canac Shock Absorbers, [1973] OLRB Rep. Oct. 508); where there was a transfer of certain milk delivery routes in a particular geographic area (Borden Co. Ltd., [1970] OLRB Rep. Jan. 1244), and where there was a transfer of the oil burner installation and service branch of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Ltd., [1971] OLRB Rep. May 515.) In each of these cases the Board found that the predecessor had transferred a coherent and severable part of its economic organization - managerial or employee skills, plant, equipment, "know how" and goodwill - thereby allowing the successor to serve the market formerly served by the predecessor. This economic organization undertook activities which gave rise to employment, and the terms of employment, together with the union's right to bargain about them, were preserved. The part of the predecessor's business which it no longer wished to continue provided the business opportunity which the successor was able to pursue to its own advantage. It was otherwise in Woodway Structural Components, [1971] OLRB Rep. Nov. 732, Canada Cement LaFarge Ltd., [1975] OLRB Rep. Dec. 905, and Dufferin Steel, [1976] OLRB Rep. Mar. 81. In these cases there was a significant change in the character of the work, product or market so that the Board concluded that what had been transferred was not the predecessor's business. The successor had merely incorporated incidental elements of that business into his own economic organization - even though each of the elements acquired could previously be found in the predecessor's business organization and, in that sense, were "part" of the predecessor's business. What was transferred lacked that dynamic quality which distinguishes an idle collection of surplus assets from an active, severable and coherent part of a going concern.

11. This distinction is easily stated, but the problem is, and always has been, to draw the line between a transfer of a "business", or "a part of a business" and the transfer of "incidental" assets or items. In case after case the line has been drawn, but no single litmus test has ever emerged. Essentially the decision is a factual one, and it is impossible to abstract from the cases any single factor which is always decisive, or any principle so clear and explicit that it provides an unequivocal guideline for the way in which the issue will be decided. Thus, an apparent continuity of the business may not be significant if the alleged successor has already been engaged in a similar business, or has set up a "new" business which resembles the "old" one in many respects. In Ralph Ford Electrical, [1974] OLRB Rep. June 388, for example, several key employees of the alleged predecessor became dissatisfied and struck out on their own in competition with their former employer. In that case the Board found that there was not a transfer of a business, but rather the creation of a new "parallel" business which only incidentally made use of some of the tangible elements of the predecessor's business organization. Similarly, in Sunnybrook Food Mkt., [1974] OLRB Rep. Jan. 47 the continuation of a grocery business on the same premises, and with some of the same fixtures, was not enough to support a successorship finding. The Board was not satisfied that there had been a transfer and continuation of the predecessor’s business (i.e., the business that he owns and operates) but simply the continuation of a like business. It is recognizable that so long as there is a market for a product, some entrepreneur is likely to appear who will produce for that market and, in so doing, he may share many of the characteristics of his alleged predecessor.

12. The claim by the IBEW that there has been a sale of a business from GDC to GFP, Wabi and Unicorn has not been established on facts before the Board. Wabi has been operating as a mechanical contractor since 1991. In 1993, Wabi succeeded in obtaining mechanical work with respect to the installation of the third dryer. Although Wabi purchased some assets from GDC to supplement its existing supply of tools and office equipment, the circumstances with respect to Wabi demonstrate that there has not been a transfer of the mechanical portion of GDC’s business from GDC to Wabi.

13. The facts as they relate to Unicorn are different, but not materially so.

Mr. Elliott had been employed for a number of years by GDC as an electrician until 1993. The Board determined that Mr. Elliott was not employed in a managerial capacity, but rather as a working foreman. Even considering the work Mr. Elliott did with respect to the electrical tender packages for the third dryer project, Mr. Elliott is not a “key person” as that term has been used in the Board’s jurisprudence. The electrical contracting business of GDC with respect to electrical construction had not been operating for some time. Taking advantage of an opportunity, Mr. Elliott incorporated his own company and after purchasing some tools and equipment from GDC, Unicorn was able to secure an electrical subcontract for the third dryer project from GFP. These facts also fail to demonstrate that there had been a transfer of GDC’s electrical business from GDC to Unicorn.

40. When GDC ceased operating as a general contractor, it did not transfer this aspect of its business to GFP. Both the construction and maintenance work at GFP was under GFP’s control and it decided not to utilize GDC as a general contractor, but rather as a project manager. There is no evidence to suggest that any assets of GDC were transferred from GDC to GFP in March, 1993, or subsequently. As the Board has often noted, the circumstances here are best analyzed in the context of the related employer provision.

41. As the provision set out above discloses, section 1(4) of the Act grants a discretion to the Board to treat two or more entities as constituting one employer for the purpose of the Act if:

(a) more than one corporation, firm, individual, association or syndicate is involved;

(b) the entities are engaged in associated or related businesses or activities, whether or nor simultaneously; and

(c) the entities are under common control or direction

42. The facts here do not support the conclusion that Wabi or Unicorn are related to GDC or GFP. Mr. Rocca left the employ of GDC in 1991 and since that time he has operated his own business as a competitor to GDC. There is no common direction or control between Wabi, GDC or GFP. Although there was one instance when Wabi supplied two electricians to GFP for a brief period, the mechanical work performed by Wabi does not fall within the scope of the IBEW Provincial Agreement. Therefore, even if the pre-conditions were satisfied, this is not a case where the Board would exercise its discretion in favour of the IBEW. The Board notes that at the end of counsel for the IBEW’s submissions, the Board advised counsel for Wabi that it was not necessary to hear submissions from Wabi.

43. As noted earlier, Mr. Elliott was not a key person while employed with GDC. Unicorn’s relationship to GFP is typical of an owner/subcontractor relationship. Here as well, the facts do not disclose that there is common direction and control between Unicorn, GDC and GFP.

44. The IBEW asserts that a determination that GDC and GFP constitute one employer is warranted and necessary to protect its bargaining rights. It claims that the work which its members would have performed through GDC, namely the electrical work associated with the third dryer project and overflow maintenance work at GFP, should be preserved for its members by means of a single employer declaration. In determining whether it is appropriate to grant a single employer declaration in these circumstances, it is important to recognize that GDC obtained its work from various sources, only one of them being GFP. Since its creation, GDC was provided with some maintenance work at GFP and was also provided with construction work on occasion. The facts disclose that GFP did use other contractors, as well as its own employees represented by the CEP, to perform maintenance and construction work at its facility. When GDC ceased operating as a general contractor for financial reasons, GFP had no choice but to obtain construction and maintenance services from a source other than GDC. Rather than use the services of another general contractor, GFP elected to subcontract out the construction work on the third dryer project to entities like Wabi and Unicorn, with the assistance of management services from GDC. Although it was anticipated that GDC would obtain a contract relating to the third dryer project, it never did obtain this work because it went out of business as a general contractor for reasons which the Board has found were not tainted by anti-union animus. Even if GDC had continued as a general contractor, there is no reason why GFP, for good business reasons, could not have contracted with another entity to perform the construction work relating to the third dryer project. In essence, the IBEW is attempting to obtain bargaining rights with GFP because GFP is the source of some of the work previously performed by GDC, an entity which no longer operates as a general contractor. Assuming that GDC and GFP were engaged in related activities, which they dispute, an order granting the IBEW the relief it seeks would have the effect of extending rather than preserving the IBEW’s bargaining rights. The granting of the relief the IBEW seeks would also raise a conflict with the CEP’s bargaining rights with respect to the maintenance work its members perform. This is another factor which the Board has taken into account in determining that it would be inappropriate to exercise its discretion in favour of the IBEW in this case.

Grievance Referral

45. The grievance filed by the IBEW is very much dependent on the IBEW succeeding in its sections 1(4) and 69 applications. The dismissal of these applications, in effect, also leads in large part to the failure of the grievances. Even if one were to characterize the grievance as one which alleges that GDC contravened the subcontracting provision of the IBEW Principal Agreement, the circumstances here do not support the conclusion that GDC contravened this provision. Although GDC provided management services to GFP and was involved in the subcontracting of certain work, including electrical construction work, the subcontracts were ultimately let by GFP, not GDC.

Summary

46. Having regard to the above, the section 96 application, insofar as it relates to the allegation raised under subsection 96(7), is allowed. In all other respects, the applications are dismissed.

“Ken Petryshen”

for the Board