Ontario Labour Relations Board
File No.: 1278-98-R; 1282-98-G Date: August 9, 2000
Between: International Brotherhood of Painters and Allied Trades, Local 200, Applicant v. Peter Curkovic Limited, Burnkirk B.C.A. Construction Inc., and Branko Curkovic carrying on business as BCA Construction, Responding Parties.
Before: David A. McKee, Vice-Chair, and Board Members J. G. Knight and G. McMenemy.
Appearances: Elizabeth Mitchell and Robert Desjardins for the applicant; Peter Vice and Peter Curkovic for Peter Curkovic Limited; Andrew Tremayne and Branko Curkovic for Burnkirk B.C.A. Construction Inc.
DECISION OF THE BOARD
1This is an application under subsection 1(4) and section 69 of the Labour Relations Act, 1995, S.O. 1995, ch. 1 ("the Act"). The first responding party is Peter Curkovic Limited ("PCL"). This is a corporation incorporated in 1971 by Peter Curkovic. It ceased to do business in 1990. The second responding party is in fact two entities, the first being B.C.A. Construction, a sole proprietorship which was established in 1988 by Branko Curkovic, and which was added as a party to these applications during the hearing. B.C.A. Consrtuction became incorporated in January of 1989 under the name Burnkirk B.C.A. Construction Inc. There is no distinction between the two forms of the business and they will be referred to collectively as "B.C.A.". B.C.A. is the vehicle of Branko Curkovic. Branko Curkovic is Peter Curkovic's son. The applicant (the "Union" or the "Painters") seeks a declaration from this Board that PCL has transferred its business to B.C.A., or alternatively, that PCL and B.C.A. carry on associated or related activities under common direction and control. PCL was for many years bound to the Painters' provincial collective agreement. The effect of such an order would be to bind B.C.A. to that same collective agreement.
2PCL represents an immigrant success story. Peter Curkovic came from a town in Bosnia. He testified that he is Croatian and is still very involved in the Croatian community in Ottawa. He settled in Ottawa and established a successful painting business. This business never grew very large. Peter Curkovic's education was described as a "Grade 4 level" and he did not feel comfortable when his business grew beyond 6-8 employees; nevertheless he was able to support his family and amass a certain number of profitable investments over the 20 years he was in business.
3PCL was exclusively a painting contractor. While PCL might, as a favour to a customer or as a necessary extra to obtain a contract, take on a small amount of trim carpentry or drywall work (or perhaps drywall repair) in the course of a painting contract, PCL did not seek out types of work other than painting work. In 1990 Peter Curkovic's health suffered a marked deterioration. He decided that he had enough money to live on and would prefer to spend his remaining years enjoying what he had built up. He therefore wound up his business.
4The Board has often commented on how it is possible to carry on business in the construction industry with very little capital. This was very much so in PCL's case. PCL's office was located wherever Peter Curkovic's home was located from time to time. He had no vehicles other than a truck which served as his personal vehicle. His equipment consisted of a few ladders and a spray-gun. The value of his equipment never exceeded $1500 and was stored in his home garage. Winding up his business consisted of finishing existing contracts and ceasing to look for any more contracts.
5Branko Curkovic is Peter Curkovic's son. He began working in his father's company on a part-time basis at an early age. He denied that he ever did more than "joe jobs" and labouring work for PCL. He testified, without contradiction, that he did no estimating, no running of the business, no supervising of employees, and no solicitation of work. His only contact with customers was to deliver the customary Christmas bottle once a year. Branko Curkovic attended the University of Ottawa. After completing a degree in Business Administration, he decided that he did not want to pursue any of the professional careers that his parents wished him to pursue. He decided to go into the construction business. His evidence, and that of his father, was that Peter Curkovic was unhappy with this decision. However, Branko Curkovic determined that that was what he was going to do and his family accepted that decision with some reluctance.
6Branko Curkovic has lived at home all his life. He is now thirty-three. His attributes his continued residence in the home of his parents to the values of the Croatian community of which he is very much a part. He lives there to this day.
7After completing his degree, Branko Curkovic took a few courses at Algonquin College related to small business management and building construction estimating. He then set up his business, hoping to find work as a general contractor. However, a review of the contracts he was able to obtain from 1988-1998 indicates that he functioned primarily as a painting contractor. Like his father, he had no significant capital investment. His only vehicle was a truck, which he drove himself. He purchased a few ladders and a spray-gun from a Glidden paint store (itself a store which was different from the one which supplied his father's business). His evidence was that he prepared all the bids himself, and operated the business entirely on his own from his office in the basement of his parent's house. He denied that his father played any role whatsoever in the business at any time. He testified that he and his father never discussed anything about business, even when they sat down at the supper table on a regular basis to eat their evening meal. Peter Curkovic's evidence was to the same effect.
8A comparison of the customers of PCL and B.C.A. (to the extent they could be identified) does show some overlap, but not much. Further, to say that both companies performed a number of small contracts for Public Works Canada says nothing more than that they were both painting contractors in the Ottawa area.
9Most of the employees of PCL, as indicated on the remittance sheets filed with the union between 1988 and 1990 by PCL also at one time or another worked for B.C.A.. Branko Curkovic testified that none of them came to work for him directly from employment with his father's company. The earliest records he had for B.C.A. went back to 1993 and he said that that was likely the first year when any of his father's former employees came to work for him. Branko Curkovic gave evidence about how each of them came to be hired. Generally, he was approached through his church or otherwise in the Croatian community by persons seeking work, or by relatives acting on potential employees' behalf. When he was able to hire them, he did. Two "subcontractors" who were not of Croatian extraction who worked for PCL also worked for Burnkirk B.C.A., but not before 1996. The T4 records of B.C.A. indicate that of the employees who were employed by both PCL and B.C.A, only four of them were so employed in 1993, building up to nine in 1997.
10These employees were members of the union when they were employed by PCL. Several of them continued to maintain their union membership even after they commenced work for B.C.A.. One of them was in receipt of a pension from the Painters Union after he retired from employment with B.C.A. and is in receipt of that pension to this day. Another of them remained a member of the union until 1998. In the absence of any explanation as to why these persons could not be called as witnesses, the Board accepts the evidence of Branko Curkovic.
11Branko Curkovic testified that he received nothing from his father's company. He received no equipment, no employees were transferred, no contracts were transferred, no goodwill or customer contacts were transferred. The Board heard no evidence to the contrary.
12Certain other evidence was called or commented upon which we need deal with only briefly. The two corporations are "related corporations" for the purposes of section 252 of the Income Tax Act. This is because the two shareholders are father and son. For the same reason, Part 1.3 of the Income Tax Act requires certain capital depreciation costs to be allocated between the two corporations. These two sections of the Income Tax Act would apply if one corporation were engaged in mining in British Columbia and the other operated a flower shop in Halifax. This is of no significance under the Labour Relations Act, 1995.
13Branko Curkovic became a shareholder of PCL in 1997, long after PCL had gone out of business. The reason given for this acquisition of certain preferred shares was that this was part of an "estate freeze". The transaction itself has had no effect on the operation of the business of either corporation, and by itself has no bearing on the issues raised by subsection 1(4) or section 69. Further, they are not symbolic of any common direction or control of PCL by Branko and Peter Curkovic.
14PCL and Branko have the same corporate lawyers and financial advisors, but this appears to have had no impact on the day-to-day business of either one of them. After it ceased to do business, PCL continued to claim advertising and promotion expenses on its Income Tax return. We heard no evidence as to what those activities might be, although PCL acts as an investment company holding Peter Curkovic's investments (including a partial share of a brewery). The absence of an explanation might leave PCL vulnerable to inferences to be drawn from that evidence. However, there is no evidence to support the union's theory that this was promotion expenses related to the business of B.C.A. (in which case it would not be a lawful deduction from income earned by PCL and therefore a violation of the Income Tax Act). Accordingly, we decline to make that finding.
15The union believed that Peter Curkovic had been seen in the area of Carleton University on two occasions when B.C.A. was performing painting work at that site. The union concluded that Peter Curkovic was involved in the running of painting jobs for B.C.A.. However, the evidence called by the union did not establish that he was doing any such thing. At most, he was in the same general area at the same time, and his presence was equally consistent with attending at a physical fitness centre on the University campus.
16The Board can certainly understand why the Painters Union filed this application. On the surface, it appears that there is much to link the two businesses. Both carry on business as painting contractors (exclusively or primarily) from the same address. Branko Curkovic's general work experience came only from his father's business (with some brief work in a company run by his uncle). Branko Curkovic went into business some two years before his father got out of the business and did so quite successfully. As the Board said in Tri-Corps Industrial Contractors Inc., [1994] OLRB Rep. Oct. 1446:
Certainly in instances where a business has been started from scratch (as is the assertion in the case before us) it is difficult to imagine anyone who does not have some experience, skill or expertise. A complete novice to the construction industry is not likely to start up his/her business in the industry. (para. 63)
However, this is precisely what Branko Curkovic testified he did. In his first year of business, he made a net profit of $86,000.00 on a gross income of $349,000.00, with virtually no capital investment. In addition, it was clear that some of the employees of PCL came to work for B.C.A. during the 1990's.
17Further, some of the evidence given by Branko Curkovic and Peter Curkovic is simply not credible. Peter Curkovic stated that not once did he and his son Branko discuss business, not even over the dinner table they shared on a daily basis. Since the two gentlemen were on sufficiently good terms to share the same house, this evidence is highly improbable. Branko Curkovic claimed that he learned nothing at all from his father's business, insisting that he performed only unskilled "joe jobs" when he worked for his father, and that all of his business expertise derives from a few courses at Algonquin College. With all due respect to that educational institution, it does not seem to this Board to be at all probable that this was his only source of knowledge or expertise.
18However, there is simply no evidence of either a sale or a transfer of business between PCL and B.C.A., nor is there any suggestion that the companies carry on associated or related business or activities under common control or direction. There is no evidence that Branko Curkovic represented a key-person at all in his father's business. He does not represent any of the organizational or business skills or acumen in PCL which was transferred to B.C.A.. Similarly, at no time does the evidence demonstrate that the businesses were anything other than separate businesses carried on by father and son in the same area of the construction industry.
19In Frank Plastina Investments Ltd., [1986] OLRB Rep. June 720, the Board dealt with a situation in which a son "grew up" in a business sense in his father's business and developed a portion of that business which he then operated somewhat independently of his father's business. The Board in that case found that the two businesses were associated or related because of the facts of the interrelationship of the two companies, not because of the relationship between its principals:
- ... Moreover, while "common control or direction" may be a separate element in the section 1(4) test, it is difficult to say here that the business or activities of Sherwood are unrelated to those of FPI when Peter Plastina plays such a prominent role in both businesses and Sherwood draws so heavily upon elements of FPI's business. This is not a case in which Peter Plastina has struck out on his own and developed his own business entirely independent of that of his father with whom he only has occasional subcontracting relationships. Without at this point repeating the agreed facts, it is apparent that Sherwood and FPI (and indeed the other "Peter Plastina companies") are in a symbiotic relationship. No doubt Sherwood might have been established independently without using the banking facilities, premises, employees etc. of FPI; but the reality here is a family business in which Peter Plastina is intimately involved and of which Sherwood is a related part. The fact that FPI is a sewer and watermain contractor while Sherwood is a builder is not, in our view, significant. Not only are these both parts of the construction industry, but the FPI collective agreement specifically recognizes the possibility of doing that kind of work. ...
20The family relationship between Peter and Frank Plastina may explain why they became involved in associated or related businesses or activities, but it does not constitute the relatedness. It was the operation of the businesses and the roles of the principals that did that.
21One decision of the Board which deals with facts much closer to the instant case is Joe Pantalone Masonry Company Ltd. (unreported Board File 3130-94-R, July 3, 1996). In that case the Board said:
A close relative of the principal of an employer, even a son, can go into business on his own without necessarily attracting the application of section 1(4). Indeed, just as a familial relationship between the principals of two or more business entities may attract Board scrutiny in an application under section 1(4) or section 69 of the Act, it can also serve to explain events which might otherwise cause the Board to invoke one or both of those provisions. In the circumstances of this case, for example, the fact that Steve Pantalone had a phone line put into Joe and Rosa Pantalone's home for Stevco did not happen because there was any relationship between Rosto and Stevco, but because it was also his home until he married Kimberly Pantalone and moved out. In the circumstances, I do not consider this to be an indicator of common control or direction.
In this case also, it was a combination of Joe Pantalone's age and health which caused Rosto's business to decline and eventually stop. With a decline of his father's health, Steve Pantalone was moved to consider his future. He never considered taking over his father's company and I am satisfied that he did not in fact do so. Neither Joe Pantalone nor Rusto has made any direct financial contribution to or participated in the management of Stevco. While it is true, as the applicants point out, that Rosto and Stevco didn't enter into or even consider a non-competition agreement, I do not find that particularly surprising in the circumstances.
There was no intermingling of employees, nor any transfer of employees from Rosto to Stevco. While a few former Rosto employees did end up work for Stevco, there is nothing in the evidence which suggests that this was because of the relationship between Rosto and Stevco. It is not clear how many, but Stevco has had other employees. All of its employees, whether they have previously worked for Rosto or not were unemployed when they sought or were offered employment by Stevco. With respect to former Rosto employees who have been employed by Rosto, one is Steve Pantalone's brother and is a person who would not otherwise be employed, one had not worked for Rosto for nearly 10 years, one did not begin to work for Stevco until 4 years after he stopped working for Rosto, and one worked for Stevco for only six months. (And one, of course, is Steve Pantalone himself.) This does not suggest a common control or direction situation.
Section 1(4) does not preclude the hiring of former employees of another employer. In that respect also, Robert Pantalone was effectively transferred from Rosto to Stevco, and Steve Pantalone took over responsibility for his brother from their father. In the circumstances, this does not attract section 1(4) consequences. Similarly, Joe Pantalone's appearance at Stevco jobs is not indicative of a section 1(4) relationship in this case. In effect, Joe Pantalone's working life is over and he is having some difficulty coming to terms with this. He appears at Stevco job sites intermittently rather than staying home. He contributes nothing of substance to Stevco's work or business. His presence and occasional pitching in on the job site is tolerated because he is Steve Pantalone's father. The fact that he has occasionally signed for the delivery of equipment or materials is not significant in the context of small construction employer. With respect to the crane rental situation as described above, I am satisfied that this resulted from a misunderstanding and mistake by the crane rental company which lead the invoice initially being put in Masonry's name, something which was corrected immediately.
In this case, unlike in cases like the recent Duron Ottawa Ltd. et al case (Board File No. 3374-93-R, decision dated October 26, 1994, unreported), Stevco's existence or development has never depended on or been directly contributed to by Rosto or Joe Pantalone. Stevco has not traded on or benefited from Rosto's or Joe Pantalone's names, knowledge, contacts or expertise. Joe Pantalone is the key man in Rosto. Without Joe Pantalone there is no Rosto. Steve Pantalone is the key man in Stevco. Without him there is no Stevco. But, as was the case in Merit Contractors of Niagara, [1994] OLRB Rep. Feb. 152, Steve Pantalone was not "key" to the business of Rosto, and Joe Pantalone is not, and never has been, "key" to the business of Stevco. Stevco has obtained its business from the efforts of the hard work, expertise and persistence of Steve Pantalone and the able assistance of his wife Kimberly.
22Similarly here, there is simply no evidence before the Board to lead it to the conclusions urged upon it by the applicant under either sub-section 1(4) or section 69. The applicant argued that because some of the evidence given by Peter and Branko Curkovic was not credible, the Board should reject all of their evidence and assume that the opposite of what they say is always true. We decline to do so. Credibility issues certainly affect the weight the Board gives to evidence or how conflicts in the evidence are to be resolved. They do not cause the Board to assume the existence of all of the facts necessary for proof of the union's case without any evidence at all. The absence of certain business records and documents from 1988 to 1992 (and indeed any third-party witnesses from that time) no doubt hampers the union in its ability to prove its case, but that is simply a function of the passage of time. Neither the provisions of subsection 1(5) or subsection 69(13), nor any of the Board's jurisprudence, suggest that the Board is entitled to "assume" evidence "must" exist when there is simply nothing before the Board.
23Accordingly, the application in Board File 1278-98-R is dismissed. Board File 1282-98-G is a grievance referred to arbitration pursuant to section 133 of the Act. Although the parties did not address this in argument, it appears that the grievance is predicated on the successful outcome of the earlier file. Accordingly, that application too is dismissed, although the applicant may request reconsideration within 15 days of the date of this decision if it chooses to do so.
"David A. McKee"
for the Board