4546-97-R International Brotherhood of Painters and Allied Trades, Applicant v. Bruno Facchin Interiors Ltd. and R & B Painting Ltd., Responding Parties.
BEFORE: Harry Freedman, Vice-Chair, and Board Members J. G. Knight and A. Haward.
APPEARANCES: Elizabeth Mitchell and Yves Tessier for the applicant; David Dwoskin and Bruno Facchin for Bruno Facchin Interiors Ltd.; no one appearing for R & B Painting Ltd.
DECISION OF HARRY FREEDMAN, VICE-CHAIR, AND BOARD MEMBER J.G. KNIGHT; March 22, 2000
This is an application under sections 69 and 1(4) of the Labour Relations Act, 1995, S.O. 1995, c. 1 (the "Act") for declaratory and other relief in respect of the business carried on by Bruno Facchin Interiors Ltd. (“Facchin Interiors”). The applicant claims that Facchin Interiors is bound by the collective agreement by which the applicant is bound either by reason of a sale of a business from R & B Painting Ltd. (“R & B”) to the predecessor of Facchin Interiors or because R & B and Facchin Interiors carried on related activities or businesses under common control or direction.
Bruno Facchin, the principal of Facchin Interiors, formed R & B Painting as a partnership with Rolf Schindler in 1968. In March 1978, according to the corporation income tax return filed in this proceeding, R & B was incorporated. Mr. Schindler and Mr. Facchin were equal shareholders in R & B. According to Mr. Facchin, Mr. Schindler ran the business of R & B, and R & B Painting before the incorporation of R & B. Mr. Schindler was not a painter He looked after the office, prepared the estimates, did the banking, contacted the clients and prepared all of paperwork associated with carrying on their painting business. Mr. Schindler had the principal responsibility of dealing with the general contractors and was the only one who dealt with the customers while Mr. Facchin dealt with painters R & B hired, and if there were problems on the job, with the general contractor only if Mr. Schindler was not available to do so. Mr. Schindler was also responsible for negotiating the prices with the general contractors and R & B’s customers.
Mr. Facchin ran the painting jobs their company obtained, which were for the most part commercial painting work and some small residential work from time to time. When R & B had more than one job, Mr. Facchin would find a responsible person to appoint as foreman for that second job. Mr. Schindler did not do work in the field; rather he did the estimating for the jobs, reviewing the plans and on occasion, attending at the projects to mark or measure the rooms where work was to be done. It was clear from Mr. Facchin’s evidence that there was a distinct division of labour between Mr. Schindler and Mr. Facchin, with Mr. Facchin’s expertise used to run the actual painting work, while Mr. Schindler carried out the sales and administrative work necessary for R & B to carry on its business.
R & B signed a recognition agreement with the applicant on May 25, 1979. Mr. Facchin signed that agreement on behalf of R&B. On January 7, 1981, R & B signed another recognition agreement with the applicant that was executed by Mr. Schindler on behalf of R & B. At about that time, the applicant had grieved that R & B had violated the collective agreement. That grievance was settled on January 6, 1981 by an agreement reached between the applicant and R & B that was also signed by Mr. Schindler on behalf of R & B.
R & B continued to carry on its business until Mr. Schindler advised Mr. Facchin sometime in 1981 that he wanted to get out of the business. Mr. Facchin testified that Mr. Schindler had obtained a position with Revenue Canada. The decision was made to cease carrying on the business of R & B effective in May 1981.
Mr. Facchin and Mr. Schindler entered into an agreement of purchase and sale with Martin Rothman who purchased the assets of R & B, including stock-in-trade, trade fixtures, furnishings and equipment used by R & B in its business, the accounts receivable of R & B, the accounts payable by R & B and the contracts and work in progress of R & B. It was clear that Messrs. Schindler and Facchin ceased carrying on their painting business through R & B in May 1981. That business was sold to Mr. Rothman who carried on business as a painting contractor through Rothman Painting Ltd. The agreement of purchase and sale with Mr. Rothman did originally contain a provision prohibiting both Mr. Schindler and Mr. Facchin for a period of five years from the date of the agreement “…either in their own name or in the name of any other person, company or otherwise, howsoever be engaged in or beneficially interested in or in any way be connected with or carry on a similar business within the Regional Municipality of Ottawa-Carleton….” That provision was struck from the agreement before the agreement was executed by the three parties to it. After the transaction with Messrs. Schindler and Facchin, Rothman Painting Ltd. carried on business as a painting contractor for over two years, but ceased carrying on business because it went into bankruptcy.
At the time of the sale of the assets of R & B to Mr. Rothman in May 1981, counsel for R & B advised the applicant by letter dated May 8, 1981 that R & B had ceased carrying on business as of May 8, 1981. That letter went on to state that Mr. Facchin had advised counsel that R & B “…will be dissolved or wound up as soon as the claims of all outstanding creditors have been satisfied.” The applicant understood that letter to mean that business of R & B had ceased. In fact, the agreement of purchase and sale between Messrs. Facchin and Schindler on one hand and Mr. Rothman on the other clearly provided that virtually all of the assets, accounts receivable, contracts and work in progress of R & B were purchased by Mr. Rothman. Thus, there can be no doubt that there was a sale of the R & B business within the meaning of section 69 of the Act from Messrs. Facchin and Schindler to Mr. Rothman. The applicant was not advised of that sale by either Mr. Facchin or Mr. Schindler (nor was it asserted before us that there was an obligation to do so) and therefore the applicant did not immediately seek to exercise the bargaining rights it held for R & B in relation to Rothman Painting Ltd. It appears that the applicant was unaware of the sale and assumed that R & B ceased carrying on business. It did not discover that the business of R & B had been acquired by Rothman Painting Ltd.
After the sale to Mr. Rothman, Mr. Facchin did not engage in the painting contracting business for some time. He left Canada for about a year between 1982 and 1983, and resumed carrying on business in the construction industry as a renovation and painting contractor in early 1983. Since the sale of the business to Mr. Rothman, Mr. Facchin has had nothing to do with either Rothman Painting Ltd. or with R & B, which was ultimately dissolved in April 1982.
Apparently, Mr. Schindler did have some connection with Rothman Painting Ltd. after the sale. In a letter from Mr. Schindler to Revenue Canada dated September 27, 1983 (Exhibit 1, tab 10) Mr. Schindler wrote:
“Attached you will find a dissolution of the above noted company [R &B] effective April 13, 1982, however the company ceased to exist as of April, 1981 and I began working for the [sic] Rothman Painting Ltd. in Ottawa, for which I have filed a return….” [emphasis added]
When Mr. Facchin started his painting and renovation business upon returning to Canada, he did not use anything that had formerly been associated with R & B. His accountant, lawyer, address and phone number were all different. He also retained an estimator to assist in the pricing of jobs. At R & B, Mr. Schindler did what the estimator retained by Mr. Facchin does for Facchin Interiors. Mr. Facchin also explained that the work of Facchin Interiors is divided equally between painting and renovation. His clientele has been built up since he started Facchin Interiors, with some residential but principally commercial work.
The application before us was made under both sections 69 and 1(4) of the Act. It is clear to us that there was no disposition of a business between R & B and Facchin Interiors. R & B sold its business to Rothman Painting Ltd. and subsequently Rothman Painting Ltd. went bankrupt. Following the bankruptcy, there was nothing that flowed to Facchin Interiors from Rothman Painting Ltd. that had been with R & B. As there was no disposition from R & B to Facchin Interiors, either direct or indirect, the application under section 69 of the Act is dismissed.
Counsel for the applicant submitted that the circumstances of this case warranted a declaration under section 1(4) of the Act that R & B and Facchin Interiors were one employer for purposes of the Act. Section 1 (4) of the Act provides:
“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.”
It is clear that there was more than one corporation (R & B and Facchin Interiors) and that they both carried on related activities or businesses since both were engaged in the painting contracting business in the construction industry. Facchin Interiors takes the position that the businesses were not carried on under common control or direction, but if they were, the Board should not exercise its discretion to grant the relief sought. The applicant contends that Mr. Facchin exercised control in respect of R & B as one of its two principals and clearly exercises control and direction over Facchin Interiors, as he is the principal of that business.
Despite the attempt by counsel for Facchin Interiors to minimize the role Mr. Facchin had in R & B, it is clear to us that he shared control and direction over the business of R & B with Mr. Schindler. Although Mr. Schindler was responsible for the pricing of the work that R & B did, prepared the estimates, managed the paperwork and dealt with the customers and contractors for whom R & B did work, Mr. Facchin, who was the skilled painter, was responsible for the actual work done by R & B. Mr. Facchin and Mr. Schindler were equal partners in that business. Mr. Facchin was responsible for the quality of the work performed, appointed the foreman for a crew, hired the painters and did everything necessary to ensure that the work undertaken by R & B was done in accordance with the specifications for their jobs in a timely way. There was a division of labour, but we are satisfied that the division of labour did not amount to Mr. Facchin being under the supervision of Mr. Schindler. Mr. Facchin had the authority to purchase supplies and equipment and to bind R & B to contractual obligations. Indeed, it was Mr. Facchin who signed the voluntary recognition agreement with the applicant in May, 1979, although Mr. Schindler was the signatory on behalf of R & B to the 1981 memorandum of agreement with the applicant and the grievance settlement executed at that time. Thus, we are persuaded that all of the conditions precedent for the Board issuing a single employer declaration have been established by the applicant.
Granting relief under section 1(4) by issuing a single employer declaration is discretionary. The exercise of the Board’s discretion to declare two or more related employers who carry on business under common control direction a single employer is, in our view, a matter of assessing whether the purpose of that section is served by issuing a declaration in the circumstances of the particular case before the Board.
Section 69 and section 1(4) of the Act complement each other to ensure that a trade union’s bargaining rights which attach to a business are not lost when that business is carried on by a different entity. There are innumerable commercial and institutional forms through which an entity can carry on its business and an infinite variety of commercial or institutional transactions by which a business may move from entity to another. Where there is a transfer of a business for which a trade union holds bargaining rights from one entity to another as a result of a disposition, section 69 of the Act provides that the bargaining rights secured by a trade union for that business continue to attach to that business while it is carried on by the entity that acquired the business. Nevertheless, because a business may move from one entity to another without a disposition having occurred, section 1 (4) of the Act “fills the gap” to ensure that bargaining rights are not ephemeral when a business for which bargaining rights were acquired by a trade union continues to exist in a different form or in a new entity. The Act, in our view, is structured to provide that those bargaining rights continue to apply to that business now being carried on by that different entity.
An important purpose of section 1 (4) of the Act is to maintain the bargaining rights held by a trade union in respect of a business, regardless of the legal form which carries on that business. The Board interprets and applies section 1 (4) of the Act so that the continued existence of a trade union’s bargaining rights in relation to a business are not subject to the vagaries of corporate or institutional restructuring or reorganizations.
The Board in Roy Brandon Construction, [1981] OLRB Rep. February 219 suggested that where the claim of bargaining rights did not arise from a transfer of any tangible assets, but rather rested on the movement of the principal of the business, it is more appropriate to analyze the situation under section 1 (4) of the Act. In that case, the applicant union argued “…that Roy Brandon himself was the business, and that the business therefore followed him as he moved from company to company.” (See paragraph 7.) The Board in Roy Brandon Construction, supra, at paragraph 8 relied on the following comments made by the Board in Brant Erecting and Hoisting, [1980] OLRB Rep. July 945 at paragraph 13:
“…business may be effectively transferred from one corporate entity to another, without any of the indicia of a ‘transfer of a business’ which might trigger the application of section 55 [now 69]. This is especially the case in the construction industry where many of the employers will not have the permanence or investment in fixed plant and equipment characteristic of a manufacturing concern. A small construction company can move from jobsite or to jobsite or place to place, assembling tools, equipment and a labour force as required after it has made a successful bid. There may be no established economic organization, labour force or configuration of assets. A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of business between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. Similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed, there may be good commercial reasons for doing so unrelated to any express desire to undermine the union’s bargaining rights. The earlier company may have run into financial difficulties, or lost its reputation, or there may be legal, accounting or tax advantages in establishing anew vehicle through which the business, or related business activities can be conducted…. To ensure that the industrial relations status quo is preserved, the Legislature has provided that where two employers carry on related economic activities, under common control and direction, whether or not simultaneously, they can be treated as one for the purposes of the Act….”
The exercise of our discretion to grant a single employer declaration is, in our view, informed by the purpose of section 1 (4) of the Act, as articulated by the Board in the following passage from Brant Erecting and Hoisting, supra, at paragraphs 12 and 13:
“Section 1 (4) ensures that the institutional rights of a trade union, and the contractual rights of its members, will attach to a definable commercial activity, rather than the legal vehicle(s) through which that activity is carried on. Legal form is not permitted to dictate or fragment a collective bargaining structure; nor will alterations in legal form undermine established bargaining rights. In this respect the purpose of section 1 (4) is similar to that of section 55 [now section 69] which preserves the established bargaining rights and collective agreement when a ‘business’ is transferred from one employer to another. Section 55 has been part of the scheme of the Act since the mid 1960’s. Neither remedial provision requires a finding of anti-union animus; their primary application is to bona fide business transactions which incidentally undermine or frustrate established statutory rights….
Section 1 (4) does not require that related business activities under common control or direction be carried on simultaneously or contemporaneously. This issue was clarified in 1975 by the addition to section 1 (4) of the phrase ‘whether or not simultaneously”. The amendment reflects a legislative recognition that the essential unity and identity of an economic activity (which gives rise to employment) may be preserved even though the legal vehicles through which the activity is carried on will not operate simultaneously; and, business may be effectively transferred from one corporate entity to another, without any of the indicia of a ‘transfer of a business’ which might trigger the application of section 55 [now 69].
Thus, the Board’s focus must be on the “business”, that is, the “definable commercial activity” to which the union’s bargaining rights attached in deciding whether that business is being carried on by another means which would warrant a single employer declaration being issued by the Board.
The applicant in Roy Brandon Construction, supra, submitted that an individual might, in some circumstances, constitute the business so that when that individual moves, the business moves with him or her. It appears that the Board accepted that submission. The proposition that a “key man” or “key person” is synonymous with a business in the construction industry has been accepted by the Board in appropriate circumstances both before and after the decision in Roy Brandon Construction, supra. See, for example, Base Electric Co. Ltd., [1978] OLRB Rep. Feb. 140; Ian Somerville Construction Ltd., [1988] OLRB Rep. Oct. 1022; Kent Acoustics Limited, [1990] OLRB Rep. Aug. 855; Steeles Electric, [1994] OLRB Rep. May 603; Stucor Construction Ltd., [1987] OLRB Rep. April 614; Gallant Painting, [1991] OLRB Rep. Sept. 1051 and Ably Concrete Floor Limited, [1991] OLRB Rep. May 579.
Whether a key person is so synonymous with the business for which a union holds bargaining rights that the business moves with that person wherever he or she moves requires some understanding of what a “business” is, particularly in the construction industry. In Gallant Painting, supra, the Board discussed the concept of the term “business” and at page 1060, relied on the following description of a transaction that would constitute a sale of a business found in the Canada Labour Relations Board decision in Radio CJYC Ltd. et al, [1978] 1 Can. L.R.B.R. 565 at paragraph 44:
“For a transaction to be considered a ‘sale of a business’ there must be more than the performance of a like function by another business entity. There must be a transfer from the predecessor of the essential elements of the business as a block or as a “going concern”. A business is not synonymous with its customers or the work it performs or its employees. Rather, it is the economic organization which is used to attract customers or perform the work. The Legislature could have provided for the continuation of bargaining rights whenever there is a continuity of the work performed, but it did not do so. Bargaining rights are only continued when the employer transfers his business. The use of the active verb and possessive pronoun is not insignificant.”
The Board, at page 1060 of Gallant Painting, supra, described the “essential elements” or “economic organization” of the maintenance painting business in that case in the following terms:
“…the maintenance painting business is a bid oriented business. In this type of business the essence of the business resides in the experience and expertise of its management personnel. To be financially successful the essential elements of the maintenance painting business are the expertise to price and bid upon jobs, and the skill and ability of personnel who can perform the job within the limits of a successful bid…. It is not the tools or physical assets which are the ‘essence’ of the painting maintenance business. It is the skill, experience and expertise of its key management personnel.”
A construction industry “business” is often so rooted in the identity of the principals of the business that the business and its principals are indistinguishable. In those situations, their continuing to be engaged in a business in the construction industry similar to their previous business, even after a significant hiatus, is properly viewed as the principals carrying on or continuing with their prior business through a different entity. That circumstance ought to result in the Board issuing a single employer declaration in order preserve a union’s bargaining rights.
- A union’s bargaining rights attach to the business and not to the individual who carries on that business. The economic organization of an enterprise that comprises a business in the construction industry is more than the managerial expertise of its principals or key employees. If it were only managerial expertise, then any movement of key employees from one business to another would result in the Board always concluding that the business for which a trade union held bargaining rights had moved with those key employees. That is simply not the case. See for example Ralph Ford Electric, [1974] OLRB Rep. June 388; Merit Contractors of Niagara, [1994] OLRB Rep. Feb. 152; Highview Plumbing & Heating Ltd., unreported decision dated May 8, 1997, Board File Nos. 1588-96-R, 1877-95-R, 1878-95-G, [1997] OLRD. No 1791; Inplant Contractors Inc., [1993] OLRB Rep. May 421 and Tri-Corps Industrial Contractors, [1994] OLRB Rep. Oct. 1446. The Board articulated the rationale for not simply equating the transfer of key managerial personnel with the movement of a business in Tri-Corps Industrial Contractors, supra, at paragraph 63:
“…the bargaining rights attached to a ‘business’ and not to an individual. It is only where the key person is so identified with the ‘business’ that it is realistic to view his/her movement to be a transfer of all or part of a ‘business’ that a declaration pursuant to section 64 [now 69]will be made. To hold otherwise would result in a ‘sale’ whenever an expert, experienced manager, estimator, field supervisor or similar managerial personnel left the unionized company to join another. Within the construction industry it is not unusual to find persons who have obtained specific expertise or management knowledge and experience, who have developed entrepreneurial skills, or who have otherwise acquired specialized abilities by reason of their employment history or association within the industry. It is inevitably these types of attributes which enable persons within the industry to either attract offers of employment from other companies or individuals, or which permit them to start up their own business enterprise either alone or in conjunction with others who may have similar or complimentary expertise, knowledge and skills. Certainly, instances where a business has 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 own business in the industry.”
The Board expressed a similar view in Highview Plumbing & Heating Ltd., supra, at paragraph 60, where the Board, after referring to Tri-Corps Industrial Contractors, supra, stated:
“If bargaining rights attached to individuals, a sale of a business for the purpose of the Act would ALWAYS be the result of a senior employee’s departure from a successful business. The Act does not permit for such a conclusion. The Act, instead of focusing upon the individuals, work, employees or customers, focuses on THE BUSINESS. If, however, the business is, for all intents and purposes, the individual, the sale provisions of the Act can apply to that individual’s departure and commencement of operations elsewhere.”
While the Board in Tri-Corps Industrial Contractors, supra and Highview Plumbing and Heating Ltd., supra, was considering the notion of a business in the context of a “sale of a business” case, we think that the principles articulated in those decisions apply equally in assessing whether the business has moved with the “key man” so as to warrant a single employer declaration.
Mr. Facchin and Mr. Schindler sold their interest in the business of R & B to Mr. Rothman. The business of R & B was transferred to Rothman Painting Ltd. who continued on with R & B’s business, under the name Rothman Painting Ltd. until it went bankrupt. Mr. Facchin had nothing to do with that business after it had been acquired by Mr. Rothman. (There is some evidence that Mr. Schindler had some continuing involvement with it.) Thus, it appears to us that Mr. Facchin ceased carrying on the business he had carried on with Mr. Schindler through R & B. More importantly we are unable to conclude that the business of R & B was so closely identified with Mr. Facchin that he and R & B’s business were indistinguishable. It was Mr. Schindler who did the estimating, negotiated with the contractors and dealt with the customers. Mr. Facchin’s role was that of a skilled tradesman, ensuring that the work undertaken by R & B was done efficiently. While Mr. Facchin had an important role in R & B’s business, and exercised direction and control (albeit not exclusively) over it, the business of R & B was much more than just Bruno Facchin.
Also, R & B was only a painting contractor. Mr. Facchin, when he resumed doing work in the construction industry after having returned from Europe, started back in business by trying to pick up drywall work and then moved into interior renovations and painting. The work of Facchin Interiors is split evenly between renovations and painting. There was no suggestion in any of the evidence that Mr. Facchin, upon resuming his work in the construction industry, sought out his previous customers or suppliers or hired any employees who had worked with him at R & B. Mr. Facchin explained that his new business built up a clientele in both the residential sector and commercial sector doing residential and commercial renovation work and only commercial painting. There was no evidence that the contacts, customers or suppliers with whom R & B did business were approached by Mr. Facchin when he began trying to pick up drywall work or that Facchin Interiors has filled the void that was created when either R & B ceased carrying on business or Rothman Painting Ltd. went bankrupt.
The deletion of the non-competition provision in the agreement of purchase and sale does raise some concern. Had that provision remained in the agreement of purchase and sale, the applicant’s argument would have been considerably weaker. Nevertheless, the fact that it was taken out of the agreement does not inevitably lead to the conclusion that Mr. Facchin did not give up his business. In our opinion, Mr. Facchin did not participate in the same business that had been transferred to Rothman Painting Ltd. When he returned to Canada, Mr. Facchin undertook a new business, a drywall, interior renovation and painting business which was not rooted in R & B. The applicant’s bargaining rights attached to the business of R & B. That business was carried on after the sale to Mr. Rothman by Rothman Painting Ltd. Mr. Facchin did not, in our opinion, carry on the business of R & B under some other form or through some other entity at any time after the transaction with Mr. Rothman.
It is also clear that the applicant’s bargaining rights were adversely affected by the bankruptcy of Rothman Painting Ltd. There was no suggestion that Mr. Facchin or Facchin Interiors obtained anything by reason of that bankruptcy or had anything to do with it. We are of the view that section 1 (4) of the Act is not intended to protect a trade union’s bargaining rights from the bankruptcy of a business when the principal of the bankrupt business does not undertake business once again. In this case, it appears to us that the applicant seeks to use section 1 (4) to obtain the bargaining rights it lost because it was not aware of the sale of the business and as a result of the bankruptcy of the entity that carried on that business. In our view, the fact that one of the principals of the predecessor of the bankrupt business has established a business carrying on related activities does not, by itself, warrant the granting of a single employer declaration.
We are satisfied that the business of Facchin Interiors, although related to R & B in the sense that both were engaged in the painting contracting business and were under common control and direction in the sense that Mr. Facchin exercised some degree of control over R & B and is the principal of Facchin Interiors, are not the same commercial activity that gave rise to employment. In other words, the applicant’s bargaining rights attached to the business of R & B, they did not attach to Mr. Facchin personally and, more importantly, the business of Facchin Interiors is not the business in which Mr. Facchin engaged when he was a principal of R & B. Therefore, the Board, in the exercise of its discretion under section 1 (4) of the Act, declines to issue a single employer declaration.
This application is therefore dismissed.
“Harry Freedman”
for the majority
DECISION OF BOARD MEMBER, A. HAWARD; March 22, 2000
After having carefully read the majority’s reasons, I must dissent from their conclusion that the Board should not exercise its discretion to declare Bruno Facchin Interiors Ltd. and R & B Painting Ltd. a single employer for purposes of the Labour Relations Act 1995, S.O. 1995, c.1 (the “Act”).
This application was brought under sections 69 and 1(4) of the Act. The Board was asked by the applicant to find that either a sale of business took place between R & B Painting Ltd. (“R & B”) and Bruno Facchin Interiors Ltd. (Facchin Interiors) or that the those two related businesses were operating under common control and direction (although not simultaneously) and should be treated as a single employer.
I agree with the majority that no sale of a business took place between R & B and Facchin Interiors. I also agree with the majority’s conclusion that those two employers carried on related businesses or activities under common control or direction. I cannot however agree with their decision not to exercise the Board’s discretion to declare that they are a single employer for purposes of the Act and grant relief under section 1(4) of the Act for the following reasons:
a) Bruno Facchin was a 50% shareholder of R & B. The other 50% of the shares were held by Rolf Schindler, Mr. Facchin’s partner in R & B.
b) Mr. Facchin had equal signing authority with Mr. Schindler. In fact it was Mr. Facchin himself who alone that signed the first voluntary recognition agreement with the applicant.
c) Mr. Facchin exercised most, if not all of the labour relations control over R&B. Mr. Facchin hired the painters, assigned them work, appointed foreman. Mr. Facchin made it abundantly clear in his testimony that Mr. Schindler “was no painter”.
d) Mr. Facchin in his testimony stated that he was in charge of the actual work done by R & B. He did the quality control and ensured that the specifications were adhered to.
Mr. Facchin’s role with Facchin Interiors differs only that he is now the 100% shareholder of that company and has taken on the additional duties that were once performed by Mr. Schindler.
Counsel for R & B argued that the work of R & B and Facchin Interiors is substantially different. On that basis he submitted that the Board should not exercise its discretion and grant a 1(4) declaration. I strongly disagree with that position because it is simply wrong. Those businesses were not substantially different. The evidence presented showed that R & B was strictly a painting company. Mr. Facchin’s evidence was that Facchin Interiors does all facets of decorating and renovation including painting and drywall installation. All that may very well be. However, through the evidence it was also pointed out that at least 50% of the work of Facchin Interiors is painting. I acknowledge that Mr. Facchin lived outside of Canada for approximately one year. On his return, he started up what he claimed was his new business in 1983. That “new business” was operated under the name of and was known as Bruno Facchin Painting and Decorating Ltd. The name did not change to Bruno Facchin Interiors Ltd. until 1991. If the business was not going to rely on painting, as the responding party contends then why did Mr. Facchin name his new company Bruno Facchin Painting & Decorating? A name like that suggests to the public that Mr. Facchin was carrying on business as a painting company first and foremost. There is nothing in the name that suggests that his new company did interior renovations such as carpentry and drywall installation.
The respondents claim that everything tangible from R & B was sold to Martin Rothman and that if there was to be a transfer of bargaining rights, it should have taken place at the time of that sale to Mr. Rothman. Had the sale to Mr. Rothman not taken place and had Mr. Facchin opened Facchin Painting and Decorating less than 2 years after the dissolution of R & B the majority I believe, would have exercised their discretion under section 1 (4) and granted the relief sought by the applicant. It is my contention that the sale of the R & B business to Rothman was designed to shield those three parties (Mr. Rothman, Mr. Schindler and Mr. Facchin) from the obligations of the applicant’s collective agreement. I think that it is very significant that the “Agreement of Purchase and Sale” with Mr. Rothman states in the first paragraph that “ a portion of the assets of the business known as R & B Painting Ltd.” was the subject of the transaction. R & B was a corporation with the stock split evenly between Mr. Facchin & Mr. Schindler , but there is no mention in the purchase agreement of any transfer of stock from them to Mr. Rothman. There is no mention in the agreement to purchase of the transfer of the name R&B Painting. Finally and most important is that the “non-competition clause” is not just omitted from the agreement, it was specifically struck from it. This leads me to conclude that only possible reason for this is that it reserves the right for Mr. Facchin or Mr. Schindler to have the option of carrying on in the painting business, immediately if they wished (and that is what Mr. Facchin did within 2 years) in competition with Mr. Rothman. This is further enforced by the fact that all the parties to the agreement to purchase were represented by counsel, coupled with the fact that counsel for R &B sent the applicant a very misleading letter advising them that R & B ceased to carry on business as of May 1, 1981 and that the corporation would be dissolved, NOT that the business had been sold!
The respondent contends that section 1(4) was not meant to bind independent or unrelated companies, and so it wasn’t. However in this instance stating that R & B and Facchin Interiors are independent and unrelated is a stretch when one considers the circumstances I have described in paragraphs 3, 4 and 5 above.
As for the claim by Mr. Facchin that his new business used none of the same customers and or suppliers, in the construction industry for a new painting venture to be successful, there a few key ingredients necessary. One of which is the ability to get on bid lists. Another is the ability to purchase materials on credit and at the best possible price. While its entirely possible for Mr. Schindler not to have worked for the same customers that R & B had and not to have used the same suppliers, it is hard to imagine that he did not use his reputation garnered through R & B to have Facchin Painting and Decorating placed on bid lists and to negotiate favorable terms with suppliers, although I do acknowledge that there was no evidence on that point.
It is clear through the evidence that Mr. Facchin is a very skilled tradesman, with the ability to run the jobs, oversee quality control and handle the labour relations functions of a painting contractor. In my opinion these functions and abilities are the key and core function of any painting contracting business. In a construction company such as electrical or mechanical, the estimating and pricing (paperwork as described by Mr. Facchin) is of much more value than that that paperwork is to a painting contractor. While Mr. Schindler was an important party at R & B, Mr. Facchin was the Key person in that company, coupled with the fact Mr. Facchin was 50% owner, there should be no doubt about his role and responsibility at R & B.
For all of the above reasons, I would have exercised the Board’s discretion under section 1 (4) of the Act and granted the relief sought by the applicant in this application.
“A. Haward”