Ontario Labour Relations Board
1038-96-G Drywall Acoustic Lathing and Insulation Local 675 of the United Brotherhood of Carpenters and Joiners of America, Applicant v. Waltex Drywall Systems Ltd., Shore Drywall Ltd. and C. T. Interiors, Tony Morelli Responding Parties.
1039-96-G Drywall Acoustic Lathing and Insulation Local 675 of the United Brotherhood of Carpenters and Joiners of America, Applicant v. Waltex Drywall Systems Ltd., Shore Drywall Ltd. and C. T. Interiors, Tony Morelli Responding Parties.
1040-96-R Drywall Acoustic Lathing and Insulation Local 675 of the United Brotherhood of Carpenters and Joiners of America, Applicant v. Waltex Drywall Systems Ltd., Shore Drywall Ltd., and C. T. Interiors, Tony Morelli, Responding Parties v. International Brotherhood of Painters & Allied Trades, Local Union 1891, Intervenor.
BEFORE: Inge M. Stamp, Vice-Chair.
APPEARANCES: Mike McCreary and Yvon Therrien for the applicant; Jack Morelli for Waltex Drywall Systems Ltd. and E. C. Carla Zabek for C. T Interiors and Shore Drywall Ltd.; Ivan Ivankovic and Joseph Russo for the intervenor.
DECISION OF THE BOARD; August 2, 2001
These are related matters. Board File 1040-96-R is an application under section 69 and subsection 1(4) of the Labour Relations Act, 1995 (the “Act”) alleging the responding parties are under common control or direction and/or that there has been a sale of a business by Waltex Drywall Systems Ltd. (“Waltex”) to Shore Drywall Ltd. (“Shore”). Board Files 1039-96-G and 1038-96-G are referrals of grievance to arbitration under section 133 of the Act. These matters were first scheduled for hearing in March 1997 and were heard over a period of three years. The parties adjourned a number of hearing dates on agreement.
At the first day of hearing Mr. Jack Morelli, the principal of the responding party Waltex Drywall Systems Ltd. agreed that Waltex is bound to the Carpenters ICI provincial agreement as well as the applicant Local 675’s residential agreement. Jack Morelli advised there are four Waltex companies; Waltex Drywall Systems Ltd., Waltex Construction Ltd., Waltex Contracting Ltd. and Waltex Ltd. (“Waltex group of companies”). It is further agreed that all of the Waltex companies are bound to the applicant’s provincial and residential collective agreements. Unless otherwise indicated in this decision, references to “Waltex” refer to Waltex Drywall Systems Ltd.
The Waltex group of companies are also bound to the Painters provincial collective agreement.
The intervenor, Painters Local 1891, is seeking the same relief under section 1(4)/69 of the Act as the Applicant. Further the intervenor is relying on the documents filed by the applicant in the related employer/sale of a business application in Board File No. 1040-96-R.
The Board heard the evidence of Jack, Tony and Claudio Morelli. Jack Moores and Caesar Rodrigues testified on behalf of the applicant. No evidence was called on behalf of Waltex or the Waltex group of companies.
Waltex operated as a drywall contractor from 1980 to approximately the beginning of 1996. Giacomo (Jack) Morelli was the president, officer and director of Waltex.
Until 1981 Rocco Maola and Jack Morelli were partners. The first business address for Waltex was Mr. Maola’s home address. In 1981 that changed to Jack Morelli’s home address and subsequently the business address for Waltex became 91 Fruili Court.
In 1993 Jack Morelli signed two voluntary recognition agreements, one with the Carpenters’ provincial council and one with Local 675. In 1994 Jack Morelli did general contracting work and drywall work with Waltex Construction.
A new company, Waltex Contracting Ltd. was incorporated on the advice of Jack Morelli’s accountant, Howard Goldberg. In 1995 Jack Morelli decided to pursue general contracting and development work and get out of the drywall business. At this time Jack Morelli decided to pursue general contracting and development business through Waltex Ltd. The development business uses different companies for each property it develops. Waltex Ltd. operates as a general contractor. It does not perform any drywall work. The last drywall work performed by Waltex was at the end of 1995 or the beginning of 1996.
Tony Morelli worked for Waltex for 16 years, from 1980 to 1996, performing drywall work and in due course becoming a working foreman. Tony did quantity take-offs for Waltex. Claudio Morelli, Darren Schisson and Dan Reichert also worked for Waltex doing drywall work. During cross examination by counsel for the applicant Jack Morelli agreed that Claudio Morelli, Tony Morelli and Dan Reichert were “key men” in the field for Waltex. Jack Morelli testified that his brothers Tony and Claudio, and Schisson and Reichert were sub-contractors to Waltex.
Jack Morelli denies playing any role in CT Interiors (“CT”) or in Shore Drywall Ltd. (“Shore”). Jack testified he did not discuss Tony’s personal business with him and Tony did not ask him for his opinion with respect to Shore.
Waltex used Future Accoustic & Drywall Supply Ltd. (“Future Supply”) as its supplier. Jack Morelli’s father-in-law is part owner of Future Supply.
Jack Morelli could not remember when asked by counsel for the applicant whether he owned 716676 Ontario Ltd. At the continuation of these matters, Jack Morelli confirmed that he did in fact own that numbered company which at the time owned a blue truck #6879CA. The truck was rented by the numbered company to Shore pursuant to a verbal agreement from 1977 to 1999. This took place after the application date. The numbered company is a holding company which owns eight vehicles. There was no record of payment or rental agreement put into evidence.
While working full time with Waltex, Tony Morelli started up C.T. in 1985. This was to be a partnership but ended up as a one man operation. The business was registered in February 25, 1985. The business address, 1 Edenrock, is the home address of Tony Morelli’s parents. The work was performed by Tony evenings and weekends. Work was obtained through word of mouth and through friends. The business was operated from home. Tony and his wife Jessica had signing authority for any cheques for CT.
CT purchased all of its own equipment needed to do drywall work including scaffolding, ladders, extension cords, etc. None of the CT’s equipment came from Waltex. CT used the TD Bank in Maple and the CIBC.
In 1996 Tony Morelli started Shore. Shore was incorporated on the advise of Tony’s accountant, Howard Goldberg. There had been some income tax problems with CT. Waltex had ceased doing drywall work at this time.
Shore was incorporated February 21, 1996 with Tony Morelli as its sole director and president. Shore’s clients include Northam Construction Corporation, Tanurb Developments Inc., Canus Construction and Jasper. Northam is Shore’s largest client. Tony Morelli split the contract for Northam between Shore and CT to avoid the bonding requirement for the job. Contact with Northam was made through Tony Suppa, a neighbour of Tony Morelli.
The work at Tanurb came through a contact with a friend who did electrical work. All of the work obtained by Shore came about as a result to Tony Morelli’s personal connections. There is no evidence that any of this work was obtained through or with the assistance of Jack Morelli. None of the clients of Shore were clients of Waltex.
Shore obtained CT’s equipment and it purchases or rents any additional equipment needed. In addition Shore purchased $20,970.94 worth of start up equipment and materials from Future Supplies in March of 1996.
Tony Morelli hired Howard Goldberg, a family friend for 15 years, to do the accounting work for Shore.
Claudio Morelli and Darren Schisson work for Shore. Tony Morelli hired them after they ceased working for Waltex. Tony hires any additional drywallers as needed. Tony Morelli does the hiring for Shore. Tony has a list and tradesmen call him looking for work.
There was a series of questions in cross examination of Tony Morelli with respect to a signature on a purchase order for the Trafalgar Ridge Shopping Centre. At the continuation the next day Tony Morelli recalled that his brother Claudio had signed the purchase order on his behalf .
At the Trafalgar Ridge Shopping Centre jobsite Claudio Morelli, Darren Schisson, Tony Soave and Brian Schisson worked for Shore in 1996.
There are no source deductions for Shore employees as they are considered sub-contractors.
There was evidence with respect to a B. Ficket who had worked for Northam, the general contractor at the Trafalgar job. Jack Morelli testified that he hired B. Ficket without having any discussions with his brother Tony who was doing work at Trafalgar with Shore. B. Ficket was working as a superintendent at a plaza for Waltex Ltd. in Keswick.
Tony Morelli described himself as “the top foreman” with authority on the jobsite. Tony described Darren Schisson and his brother Claudio as his “core people” with Shore. Tony denies that Darren was classified as a foreman for Waltex.
During his time with Waltex when Jack Morelli was away on vacation Tony Morelli took care of the ongoing jobs including ordering materials if needed. Tony collected the mail. He had a key to the office of Waltex.
Claudio Morelli testified that Future Supplies was the supplier for Waltex and that Shore used Commercial as a supplier. He stated that he did not know that Shore used Future Supplies.
Jack Moores, an organizer for Carpenters Local 18 from August 1997 to June 1999 testified on behalf of the applicant. Mr. Moores stated that the blue pick-up truck No. 687 9CA was parked all day on July 14, 1998, at the Shore project at a strip plaza in Niagara Falls. The general contractor was Northam. The responding party Shore stipulated that a blue pick-up truck is used by Shore for business.
Caesar Rodrigues, business agent for Local 675, testified with respect to his drive-bys of the Waltex offices on Friuli Court. He testified he saw the blue pick-up truck parked on more than one occasion in front of the Waltex office.
At the Newmarket job, Mr. Rodrigues testified, he talked to Jack and Tony to discuss the matter about signing with the union. Tony Morelli said he had to talk to his brother. He did not say which brother. Claudio was beside him and in Mr. Rodrigues’ view he thought it was Jack. Counsel for Shore objected to this evidence as it had not been put to either Jack or Tony during their cross examination or examination in chief while called by the applicant.
Argument of the Parties
The applicant takes the position that the Board should find the responding parties are under common direction and control and/or there has been a sale of a business from Waltex to Shore.
The applicant submits that the evidence discloses that Tony was a key man of Waltex and that the three Waltex employees, Tony, Claudio and Darren were in fact the core group of employees and that one of the essential elements of the drywall business, namely its core group of employees, moved from Waltex to Shore.
The applicant points to the transfer of an asset, the blue pick-up truck, by Jack Morelli through the numbered company and that it was used by Shore in Niagara Falls on a Shore jobsite.
Counsel for the applicant urges the Board to find that there has been a sale of a business as there has been a transfer of a key man or key men. The Board should interpret “business” liberally by concluding that the transfer of the core group of employees from Waltex to Shore is a “business” within the meaning of section 69 of the Act.
The applicant submits there is as well common direction and control. The two entities use the same chartered accountant who advises them how to set up their companies. Waltex and Shore both use Future Supplies as their main supplier. Jack Morelli’s father-in-law is a part owner of Future Supplies.
The applicant relies on the fact that in a bid oriented business such as this a name is very important and asks the Board to infer that Tony Morelli was able to get work by being able to draw on the goodwill of Jack Morelli’s name and the family relationship.
The applicant submits the evidence of the three Morelli brothers, Jack, Tony and Claudio is not reliable. Their evidence was self-serving and simply not credible in a number of instances.
The applicant referred the Board to a number of cases in support of its position that there has been both a sale of a business and that a related employer declaration should issue.
The Board should find a sale of a business and declare that Waltex and Shore are related employers for the purposes of the Act and that as a result Shore is bound to the collective agreements to which Waltex is bound.
Counsel for the responding party Shore submits that the length of service in and of itself is not sufficient to establish that Tony Morelli had intimate knowledge of Waltex business as asserted by he applicant.
The length of time Tony worked at Waltex does not lead to the conclusion that he was a key man at Waltex. The evidence before the Board shows Tony played no role in the administration or running of Waltex.
The key employee in the field is a working foreman. Counsel submits Tony and Claudio did not read the Board’s jurisprudence on “key men”. It does not mean that they meant “key men” as it is used in the Board’s case law. It does not mean that Tony and Jack believed they were key men for Waltex as it is applied by the Board.
Counsel for the responding party Shore submits the evidence shows Tony had a key to the office when Jack was away on vacation for the sole purpose to pick up the mail and put it on Jack’s desk. Tony did not perform any other functions.
Counsel submits that the evidence does not disclose that Tony ran the business while Jack was away. The evidence must be viewed as a whole. The evidence is that Tony was looking after the jobsite including ordering materials. There was no evidence that he ran the office.
The responding party takes the position that doing quantity take offs is consistent with what a working foreman does.
Tony was paid well but that does not lead to a conclusion that he was a key man for Waltex. He was paid as an employee and sometimes through CT.
Counsel submits the evidence with respect to the blue truck is completely irrelevant to the issues before the Board. The blue truck was not owned by Waltex but by a numbered company. That is not a transfer of an asset from Waltex to Shore.
The words used by Tony Morelli to “branch out” were corrected immediately by saying that was not the words he meant to use. He decided to use his own company CT going from part time to full time when Waltex closed down.
If there is a continuation of a business it is the continuation of CT not of Waltex. The equipment purchased for CT was transferred to Shore.
Counsel acknowledges that Shore employed some of the same men as Waltex but submits there was no transfer of employees.
By the time Waltex went out of the drywall business Tony Morelli was an experienced drywaller and experienced in the business through his own company CT.
Counsel for Shore submits it makes sense that Tony would hire people he knew were experienced however that does not mean that the guts of the Waltex business moved to Shore.
Counsel asserts Shore was successful because of Tony Morelli. Tony Morelli got the contracts for Shore through his own connections. It was through Tony’s neighbour that Shore got the Northam jobs. It had nothing to do with Waltex. None of the jobs Shore obtained flowed from Waltex. With respect to trading on the good name of Waltex and the name of Morelli, counsel points out that the name of Tony’s company is “Shore” and not Morelli’s Drywall.
With respect to B. Ficket, the evidence is clear. He was hired by Waltex after he was fired by Northam. Since he was hired after he left there could not have been any discussions.
Counsel for Shore submits the brothers are all drywallers. Of course they discussed the drywall industry or business. What they did not discuss was Jack Morelli telling Tony Morelli what to do and vice versa. They were owners of their own companies making their own decisions.
Counsel for the responding party submits the only issue is whether or not the companies are under common direction and control.
Counsel submits there is no common direction and control between Waltex and CT or between Waltex and Shore. Jack Morelli runs Waltex and Tony Morelli runs Shore.
Tony’s involvement with Waltex was that of a Labourer first and then as a working foreman. CT was a one man show.
There is no evidence before the Board that Jack Morelli had any involvement in Shore, except for the blue truck. That truck was owned by a numbered company. The evidence relates to what happened two years after this application. Even if the Board were to find it is relevant it is not sufficient to find there is common direction and control.
The evidence is clear that it was Tony who ran Shore and made all of the business decisions, prepared the quotes, contacted suppliers, ran the day-to-day operations. Except for a laser lent by a friend all other equipment was owned by Shore before the date of the application.
There are different bank accounts, some different employees and significantly different clients.
Waltex did not do any work for any of Shore’s clients. All of Shore’s clients came through Tony’s contacts, not contacts of Jack.
The only common factors are the same accountant, the supplier Future Supplies, and some of the same employees, which is not unique in these circumstances. Future Supplies is one of the biggest suppliers. The accountant is a long term (15 years) family friend of the Morellis. None of these factors are determinative. Counsel submits the evidence is not sufficient to conclude that the companies are under common direction and control.
Counsel for Shore submits there is no evidence that the applicant’s bargaining rights have been eroded or diluted by diverting work from the union company to a non-union company.
There is no evidence of a scheme to defeat bargaining rights.
Jack Morelli did not want to do drywall any more. There was no more drywall work being done by any of the Waltex companies.
Counsel submits the Board should consider whether the applicant is trying to expand its bargaining rights or to avoid the certification process.
With respect to the sale of a business, counsel for Shore submits there is no evidence to support a sale of a business from Waltex to CT or to Shore.
Leaving aside the blue truck there has been no transfer of anything. The truck occurred after the application date. The only other thing the applicant can point to is some of the same employees. Counsel submits the Charterway decision is irrelevant in the construction industry and refers the Board to Rivard Mechanical, [1981] OLRB Rep. May 550 – i.e. continuation of the work done is not sufficient.
Counsel for Shore submits Tony Morelli is not a key man that was transferred and refers to Rivard Mechanical, supra, paragraph 14 for the proposition that there has not been a transfer.
Counsel for Shore asserts the applicant has engaged in a fishing expedition. A big issue was made out of a missing page 2 of a document. The document was obtained from the applicant’s documents. During cross-examination the applicant asked extensive questions with respect to a minutes of settlement regarding the Trafalgar job and Waltex involvement. Subsequently it was discovered that the settlement did not include the Trafalgar job.
Counsel for Shore submits the union’s cases are distinguishable and relies on the cases it provided for the responding party’s position that there has been no sale and no related employer declaration should issue. The evidence does not support such a finding or declaration.
Reply argument – applicant.
Counsel for Shore Drywall and C.T. Interiors refers to Tony Morelli as a working foreman during his 16 years at Waltex. On Tony’s own evidence he was one of the most important people and on Jack’s evidence, he was one of the three most important people at Waltex.
Counsel urges the Board to apply common sense and find that in 16 years Tony acquired intimate knowledge of the affairs of Waltex.
Tony used the key to the office when Jack was on vacation. Counsel asserts it is not to be believed that all he did was to leave the mail in the office. He said he ran the business while Jack was on vacation.
Counsel for the applicant submits in determining Tony’s involvement it is not the frequency but whether he had the authority to run the business or order materials.
Counsel for the applicant submits in certification application the Board when determining who is management wants to know whether an individual has the authority to hire or fire not whether they have exercised it or not. Tony had the authority to run the business in Jack’s absence. It may have been infrequent but he had the authority and was a key person.
The applicant submits that when Tony Morelli used the term “branching out” he was talking about branching out from Waltex not from CT Interiors. The tax problem with CT occurred in 94/95. The letter from Revenue Canada (exhibit 5) is dated March 1995. CT is out of business in 1995. There has been no return filed for CT for three years. There is nothing to branch out from CT.
Counsel refers to paragraph 20, page 443 of the Donald A. Foley Limited, [1980] OLRB Rep. Apr. 436 which is a precursor to the Charterways Transport Ltd., [1998] OLRB Rep. Sept./Oct. 897, and Motive Leasing Services, [1999] OLRB Rep. May/June 451. That case law says the transfer of employees is enough to satisfy the sale of a business under section 69 of the Act. This is backed up by Ably Concrete Floor Limited, [1991] OLRB Rep. May 579; Gallant Painting, [1991] OLRB Rep. Sept. 105 and Kepic Wrecking Inc., [1993] OLRB Rep. June 516. These cases go beyond the physical assets to look at what is the business. In the construction industry it is the skill.
The Board has a discretion. Counsel submits in the exercise of its discretion the Board should look at what happened when Waltex shut down. Within 2 months Shore is up and running as a viable business. The four core group of employees of Waltex are now working for Shore. They were covered by the collective agreement in December 1995 and in March of 1996 they are working non-union for Tony Morelli who was the working foreman for Waltex.
This case is not about the union trying to avoid the certification process but rather it is about whether the union obligations under the collective agreement have been avoided if the Board finds there is common direction and control.
Decision
In making the findings and reaching the conclusions in this decision the Board has considered all of the oral and documentary evidence, the cases cited and the submissions of the parties. The evidence of the Morelli brothers was not forthright with respect to some events. However the evidence that was less than credible was not determinative of the issues before the Board. The evidence as a whole did not support the inferences suggested by the applicant. The relevant facts the Board considered in reaching this decision are either not in dispute or are facts that are uncontradicted by the evidence.
Dealing first with the section 69 application. Has there been a sale of a business as alleged by the applicant? Section 69(1) and (2) of the Act provides as follows:
(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.
The applicant relies on the “key man” or “key person” jurisprudence for its assertion that there has been “a sale of the business” from Waltex to Shore. Counsel for the applicant referred to the following of “key man” cases: Base Electric Co. Ltd., [1978] OLRB Rep. Feb. 140; Stucor Construction Ltd., [1987] OLRB Rep. Apr. 614; Deluxe Electric Contractor Ltd., [1990] OLRB Rep. Nov. 1135; Ably Concrete Floor Limited [1991] OLRB Rep. May 579; Gallant Painting, [1991] OLRB Rep. Sept. 1051; Kepic Wrecking Inc., [1993] OLRB Rep. Jun. 516; Charterways Transport Ltd., supra; and Motive Leasing Services, supra.
The applicant also relies on what was described as a transfer of a blue truck from a numbered company owned by Jack Morelli to Shore. The applicant relied on this as an indication of a transfer of an asset. This transfer took place after the application date and was not a transfer as between Waltex and Shore. The numbered company is one of a number of companies owned by Jack Morelli. That evidence does not support a finding that a sale took place as between Waltex and Shore. In this case the truck was not an essential element of the business of Waltex.
The Morelli brothers’ evidence was not forthright on a number of points. Some of the evidence was not credible such as, Tony not remembering that his brother Claudio signed a contract on his behalf or Jack Morelli forgetting which companies he owns. It is also not credible that the brothers did not discuss their business with each other. However that is not sufficient to infer that a sale of a business has taken place from Waltex to Shore or to disregard the remaining evidence.
This case turns on whether Tony Morelli was a key man within the Board’s jurisprudence such that it can be said that the very essence of Waltex’ business moved with Tony Morelli to Shore. There was no evidence that Tony Morelli was involved in obtaining or bidding work for Waltex. As the Board said in Metropolitan Parking, in para. 36, “In exceptional circumstances the accumulated skills, ability, know how or business contacts of the employee may be so crucial, or irreplaceable, that their loss would mean the demise of all or part of the business as a going concern; but these cases are rare. For the most part the continued employment of the predecessor’s employees is only one factor to be considered”.
Jack Morelli was the “key man” and officer and director of Waltex. Tony Morelli is the officer and director and “key man” for Shore. There is no evidence that Shore acquired any equipment from Waltex. Nor is there any evidence that Shore acquired any of Waltex’ customers. In fact the evidence establishes that any work obtained by Shore was obtained through Tony Morelli’s personal contacts.
Tony Morelli was a working foreman who ran the jobsites. While his brother Jack was away on vacation Tony looked after the jobs. He had a key to the office. There was no evidence to support the assertion that Tony Morelli ran the business of Waltex in Jack’s absence.
Jack Morelli ceased operating Waltex. It appears that Jack Morelli has decided to change the focus of his business to general contracting and development of properties.
The evidence shows that Tony Morelli started up his drywall business obtaining contracts without any assistance from Jack. There is no doubt that by the time Tony Morelli started up Shore, he was an experienced drywaller. He also had some experience in running his earlier business CT Interiors.
The Board in Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193 noted at paragraphs 36 and 44, that the sale provisions do not attach bargaining rights to the work being performed by a business, or to the customers or the employees of the alleged predecessor business. Instead, the Act focuses upon the business entity as a whole – what was described by the Board in Metropolitan Parking Inc. as “the employer’s total economic organization”. In Tri-Corps Industrial Contractors, [1994] OLRB Rep. Oct. 1446, the Board made this same point in the context of an application asserting a sale of a business through the vehicle of a “key person” (at para. 63):
Thus it can be seen that not every movement of managerial personnel from one business to another will constitute a sale of a business within the meaning of section [69]. In addition, the cases indicate that 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 [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, in 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’s determination of whether a sale has taken place takes into account a number of factors of which the transfer of a key person is one such factor. However each case is determined on its own particular set of facts. In the instant case the evidence does not support a finding that Tony Morelli’s skills and know-how were so crucial or irreplaceable that leaving Waltex would mean the demise of the business as a going concern.
The transfer the blue truck from a numbered company owned by Jack Morelli, the principal of Waltex, is not an essential element of the business of Waltex such that it would support the finding of a sale of a business.
The individuals who were employed by Waltex, some of whom were working foremen, in the circumstances of this case, are not the essential element of the business of Waltex that has been transferred. Unlike Charterways, supra, where a stable employee complement was found to be the predecessor employer’s most valuable asset in the context of the municipality’s decision to take back the transit service it had contracted out, in the unionized construction industry employees routinely work for a number of different contractors through the hiring hall system.
As in Rivard Mechanical, supra there was no work transferred from Waltex to Shore. Shore did not receive any assistance from Waltex in obtaining its jobs. There is no evidence that Waltex and/or the Waltex group of companies and/or Jack Morelli benefited from any of the work obtained by Shore.
The fact that both brothers have the same last name and therefore Tony may derive a benefit from the “goodwill” of the Morelli name is not significant in these particular circumstances. Each brother used a different corporate name.
Jack Morelli at all relevant times ran the business of Waltex. There is no evidence that Tony had any decision making authority with respect to the running of Waltex or had any input into Jack’s decision to get out of the drywall business. In similar circumstances in Rivard Mechanical, supra the majority of the Board dismissed both the section 69 and 1(4) applications.
Based on the evidence and having considered the cases cited by the parties, the Board finds that there has not been a sale of a business under section 69 of the Act.
That leaves the application for a declaration that the responding parties are under common direction and control for the purposes of the Labour Relations Act.
Section 1(4) of the Act provides:
(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.
The applicant relies on a number of factors for its assertion that the responding parties are under common direction and control. It is not disputed that Waltex and Shore use the same accountant, Howard Goldberg. The responding parties use the same supplier, Future Supplies. Jack Morelli’s father-in-law is a part owner of Future Supplies. The core group of employees of Waltex, Claudio Morelli, Darren Schiasson and Tony Morelli became employees of Shore. The applicant also relies on the use of the family name and that Tony Morelli asked for his brother Jack’s opinion. The applicant relied on evidence that B. Ficket, who is employed as a superintendent by Waltex in its capacity as a general contractor, had also worked for Northam Construction at the Trafalgar Road job where Shore was hired as a sub-contractor by Northam. The applicant asks the Board to infer that there was some communication between the Morelli brothers and Ficket with respect to Shore obtaining the Trafalgar Road job. Assuming there was such communication it is not sufficient to find the responding parties are under common direction and control.
The transfer of the blue truck from a numbered company to Shore is not enough to infer common control and direction under section 1(4) of the Act.
There is no evidence that Tony Morelli had any involvement in the running of Waltex or that Jack Morelli had any involvement in the running of Shore. There is no evidence that the two businesses are carried on the benefit of the related principals.
The effective control and direction over the Waltex group of companies is exercised by Jack Morelli. Tony Morelli exercises effective control and direction over CT and Shore. It was as a result of Jack Morelli changing the focus of his business that there was no longer any drywall work being done by Waltex. There is no evidence that Shore services the same clients as Waltex or that Shore purchased its equipment form Waltex or that it received any assistance, financial or otherwise, from Waltex.
As in Rivard Mechanical, supra, there are two brothers. Jack runs Waltex and Tony runs Shore and CT Interiors before that. The evidence with respect to B. Ficket does not support making the inferences suggested by the applicant.
Are the factors relied on by the applicant sufficient to find common control and direction in these circumstances? The supplier is a large drywall supplier in the industry. That by itself is not significant. The accountant has been used by the Morelli family for a number of years. While it is one factor to be considered, in the context of these specific circumstances it is not sufficient to make a finding of common direction and control in the absence of some other significant factors. There is no evidence that Tony Morelli had any labour relations involvement in the Waltex company or companies. There is no evidence that Jack Morelli had any labour relations involvement in CT or Shore.
Having considered all of the evidence the board does not find that it is sufficient to establish that Waltex and Shore are under common control or direction.
For the foregoing reasons the applications under section 69 and 1(4) are dismissed.
Having regard to the determination of the applications under section 69 and 1(4), the section 133 referrals of grievances are dismissed.
“Inge M. Stamp”
for the Board