Power Workers’ Union, Canadian Union of Public Employees, Local 1000 v. The Goldman Group, Murray Goldman Real Estate Limited, Goldman Hotels Inc. and Ontario Hydro, 2001 CanLII 5945

Power Workers’ Union, Canadian Union of Public Employees, Local 1000 v. The Goldman Group, Murray Goldman Real Estate Limited, Goldman Hotels Inc. and Ontario Hydro

File No.: 3237-98-R Date: April 18, 2001

BEFORE: Patrick Kelly, Vice-Chair, and Board Members J. A. Ronson and H. Peacock.

APPEARANCES: Andrew Lokan, Gary Collins and Karen Borden for the applicant; Donald B. Jarvis, Paul H. Meier, Murray Goldman, Jo-Anne Azzarello, Phil Weinstein and Ian Maxwell for The Goldman Group, Murray Goldman Real Estate Limited and Goldman Hotels Inc.; no one appearing for Ontario Hydro.

DECISION OF PATRICK KELLY, VICE-CHAIR, AND BOARD MEMBER H. PEACOCK; April 18, 2001

1This is an application under section 69 and 1(4) of the Labour Relations Act, 1995, S.O. 1995, c.1 (“the Act”).

2At the commencement of the hearing in this matter, the applicant informed the Board that it was not pursuing the section 1(4) related-employer portion of the application. Thus, this matter proceeded solely as a section 69 application alleging a sale of part of a business by Ontario Hydro to Goldman Hotels Inc. Insofar as it pertains to The Goldman Group and Murray Goldman Real Estate Limited, the application is accordingly dismissed. In addition, the style of cause is amended to include the name of the alleged predecessor responding party, “Ontario Hydro”.

3The transaction giving rise to the dispute between the parties concerned the purchase of a property (together with associated equipment, fixtures and chattels) known as the Glen Cross Conference and Training Centre (“the Glen Cross Centre”) by Goldman Hotels Inc. from Ontario Hydro. The transaction included the additional feature of leases of parts of the property back to Ontario Hydro for fixed periods of time. Those leases, about which more will be said later, had expired either before the hearing commenced or some time during its continuation.

4Ontario Hydro did not file a response, nor did it appear at the hearing, although it was provided notice of the application and of the scheduled hearing dates.

The evidence

(i) General

5The Board heard from three witnesses. For Goldman Hotels Inc. (who, for convenience, we will also refer to simply as “Goldman Hotels” or “the purchaser”), Murray Goldman testified chiefly with respect to the transaction between Ontario Hydro and the purchaser concerning the Glen Cross Centre. Mr. Goldman is the chair of the Goldman Group which operates a number of businesses including Goldman Hotels. Also on behalf of the purchaser, we heard from Joanne Azzarello, Vice-President of fourteen years with The Goldman Group, whose testimony related mainly to the efforts of the purchaser to transform the Glen Cross Centre into an entity which became known, and continues to operate, as Hockley Highlands Inn & Conference Centre (“Hockley Highlands”). Finally, Gary Collins, an employee of Ontario Hydro and trade union official who represented Ontario Hydro employees at the Glen Cross Centre, testified on behalf of the applicant. The bulk of Mr. Collins’ evidence pertained to the history of the Glen Cross Centre leading up to its transfer to the purchaser.

6The Board was also referred to voluminous documentary evidence, with the assistance of the witnesses referred to above.

7Most of the material facts were not in dispute, although the parties asked the Board to draw different, sometimes conflicting inferences in relation to those facts. We shall identify the areas of disagreement between the parties as we summarize the evidence. In doing so, we find it useful to set out first the evidence concerning the history and operation of the Glen Cross Centre prior to its transfer to the purchaser.

(ii) Background: the Glen Cross Centre and its operation by Ontario Hydro

8As we have indicated, Mr. Collins was the only witness produced at the hearing who had direct and substantive knowledge regarding Ontario Hydro and its operation of the Glen Cross Centre.

9Ontario Hydro, as it then was, generated and distributed electricity as its core business activity. It distributed electricity to 306 local utilities and directly to a million residential customers throughout Ontario. Ontario Hydro was also involved in a number of significant business activities related to its core business activity. The Glen Cross Centre, owned and operated by Ontario Hydro, was utilized mainly for the purpose of training of employees of Ontario Hydro in support of its various business activities.

10The Glen Cross Centre was located in the Township of Mono, at a location north of Highway 9, south of Highway 89 and west of Airport Road (the same location now occupied by Hockley Highlands). This was a convenient location for Ontario Hydro employees making use of the site, as it was equidistant from both Ontario Hydro’s Bruce and Pickering nuclear generating plants.

11Mr. Collins has been employed by Ontario Hydro from 1979, and as a lineman since 1980. In his capacity as an apprentice lineman he attended the Glen Cross Centre for four to six weeks’ apprenticeship training per year until 1984. After completing his apprenticeship in 1984, Mr. Collins would routinely attend at the Glen Cross Centre one to two weeks per year until 1988. Commencing in 1988, he worked as a training instructor at the site.

12In 1990, Mr. Collins became a local steward for the applicant in the Orangeville area of Ontario Hydro’s operation. In 1993, he was appointed acting chief steward by the applicant, which position he held until 1996 when he was elected by the members of the bargaining unit to the position of chief steward for a four-year term. During the period from 1993 to the date of the sale in this matter, Mr. Collins has been responsible for the day-to-day labour relations advocacy of employees in the applicant’s bargaining unit at the Glen Cross Centre. He estimated that at one point, there were roughly 100 bargaining unit members at the Glen Cross Centre, 50 employees in what was referred to as the “hospitality” section, and 50 more in the “training” portion. In his capacity as a union official from 1993, he was at the Glen Cross Centre about twice a week. He continued to visit the site even after the acquisition by Mr. Goldman of the Glen Cross Centre, until February 2000, although the nature of his post-transfer business at Hockley Highlands was not entirely clear. It was Mr. Collins’s evidence that throughout his association with the Glen Cross Centre he rarely stayed overnight at the facility, although he frequently took meals there.

13As chief steward, Mr. Collins was made privy to Ontario Hydro plans concerning the ongoing management and operation of the Glen Cross Centre. This was done in the form of regular meetings of Ontario Hydro management and union representatives. Sometime around 1994, Mr. Collins was informed by management that the facilities and services of the Glen Cross Centre, heretofore a facility for the nearly exclusive use of Ontario Hydro employees, would be marketed to non-Ontario Hydro entities. According to Mr. Collins, Ontario Hydro was determined to commercialize the Glen Cross Centre and endeavour to realize revenue from its operation. Indeed, around the same time, Mr. Collins noticed non-Ontario Hydro individuals using the site.

14According to Mr. Collins, the Glen Cross Centre was used equally for training and for conference purposes. Various classifications and disciplines within the Ontario Hydro organization (linemen, mechanics, machinists, carpenters) received technical training there. It was not entirely clear who delivered this type of training, but given Mr. Collins’s involvement as a trainer, it is evident that at least some Ontario Hydro personnel provided training. In addition, the Glen Cross Centre was the site of more general training in health & safety, customer service and computer technology, as well as management training.

15Training occurred in the Ontario Hydro Nuclear Building (“the Nuclear Building”), in two trades buildings and surrounding lands, as well as in two other facilities referred to as Phase I and Phase II. Initially, the Phase I facility was for management training, the Phase II facility for technical training, but some overlap between the two developed over the years. Both Phase I and Phase II buildings housed residential rooms for overnight guests. There was also an outdoor training area contiguous to the two trades buildings in which elevated hydro lines were erected for the purpose of simulating the work environment of technical employees such as linemen. The purchaser maintained this outdoor training area for the two year period of a lease, described below, in which Ontario Hydro was the lessee of the two trades buildings.

16According to Mr. Collins, the Glen Cross Centre was at various points in time used by members of the Ontario Municipal Electrical Association (referred to herein as “OMEA”, an association of municipal electric utilities) for similar technical and general training; by members of the Electrical Utility Safety Association (referred to herein as “EUSA”, and consisting of health and safety representatives from various municipal electric utilities throughout Ontario) for health and safety training; by the Army until the late 1980’s; by unspecified local school boards, including Dufferin Peel Separate; by the Ministry of Agriculture; by the Township of Mono; by Johnson Controls ( a car seat manufacturing plant in Orangeville); by the OPP; and by the Ontario Cattleman’s Association. Apart from the training described in respect of OMEA and EUSA, it was not clear what specific use the other entities made of the Glen Cross Centre. Mr. Collins estimated the use of the facility by Ontario Hydro and electrical-related organizations to range between 80% to 100% of the total use by all entities.

17Although the focus of the Glen Cross Centre was primarily on training, it did occasionally make itself available to employees or former employees for other purposes. The Board was informed that once every year, a weekend was reserved for a social gathering of Ontario Hydro retirees. Mr. Collins also recalled several occasions on which the Glen Cross Centre was the site for wedding receptions, one of which was for an Ontario Hydro employee, and another of which was for the relative of an employee of Ontario Hydro.

18With respect to the hours of operations of the Glen Cross Centre, the purchaser tendered evidence in the form of a written letter from an Ontario Hydro executive which maintains that the Glen Cross Centre operated Monday to Friday. Mr. Collins disputed the letter insofar as it purported to establish the Glen Cross Centre’s hours of operation, although he conceded that the Glen Cross Centre was not a seven day operation. His testimony was that the Glen Cross Centre generally opened Sunday afternoon (to receive trainees arriving for training commencing the following Monday) and operated until 2:00 p.m. on Friday, when trainees had departed. There were occasional exceptions such as the retirees’ weekend, described above.

19In terms of meals offered by the Glen Cross Centre, Mr. Collins described a food service provided in a cafeteria style, with a menu on the wall of the dining area setting out the available daily fare. Typically, users of the dining area lined up and placed an order, and then brought their meal on a tray to a table of their choice. Attendants would bring water to, and remove trays from, the tables.

20Around 1994 or 1995, Ontario Hydro began providing a bar service to attendees of the Glen Cross Centre.

21The Glen Cross Centre had a number of other leisure amenities, including a fitness room, an outdoor swimming pool, billiard tables, hiking trails, baseball diamond, a volleyball court, and so forth.

22In terms of staffing, the Glen Cross Centre was headed by a Conference Centre Manager, and divided along functional lines: administration, food services and facility/site maintenance.

23The administration group consisted of a hospitality/administration supervisor overseeing the work of administrative service clerks (who answered the phone, took reservations, and completed some account paperwork); a receptionist; a stockkeeper; and a shift services supervisor. The clerks, receptionist, and stockkeeper were classifications covered by the applicant’s collective agreement with Ontario Hydro.

24The food services group too was headed by a supervisor, to whom a variety of six bargaining unit chefs, a day and an evening dining room attendant (responsible for pouring water and coffee, picking up dishes and trays in the dining area), a part-time lounge administrator and “cookies” (helpers to some of the chefs) reported.

25The facility/site maintenance component of the operation comprised outdoor and indoor functions, which appear to have been under the supervision of a trades management supervisor. This part of the organization of the Glen Cross Centre utilized bargaining unit members of the applicant such as a security guard, eleven domestic cleaners (who cleaned both residential and common rooms), a laundry/kitchen helper (responsible for laundry, and for cleaning in the kitchen), an electrician, two “regional maintainers – mechanical”, a “regional maintainer – civil”, and seven janitors who were responsible for all set-up of tables, chairs and dishes, and all physical aspects of preparing for an event. The janitors were also expected to pitch in on grounds maintenance when necessary.

26We now turn to a brief review of the decline of the Glen Cross Centre. Ontario Hydro adopted an internal policy change in 1990 whereby it was no longer mandatory that Ontario Hydro training be conducted at the Glen Cross Centre. Indeed, thereafter certain Ontario Hydro divisions started to book their training sessions with other external organizations. Then in the mid-1990’s, as noted above, Ontario Hydro engaged in a strategy of marketing the Glen Cross Centre to non-Ontario Hydro entities. Apparently, that strategy failed to generate the anticipated level of business, and was very short lived. The Glen Cross Centre’s occupancy rate declined, resulting in significant financial losses. Thus, in December of 1996, Ontario Hydro announced that it was “divesting” itself of the Glen Cross Centre. According to Mr. Collins, the Glen Cross Centre continued to take on new bookings after the December announcement. Some time after the December 1996 announcement, the property was put up for sale, and thereafter rumours permeated the workplace concerning potential buyers. Preparation for the closure of Glen Cross Centre took place from July to September 1997. By October 1997, the facility was closed.

27Ultimately, all of the Ontario Hydro employees of the Glen Cross Centre had their association with the facility terminated, some sooner than later following the December 1996 announcement. By the time the facility ceased operating, the number of employees at the site had dwindled from a peak of around 93 to 49 staff. Some of the applicant’s bargaining unit members were offered or found other jobs within Ontario Hydro, while others exited the corporation pursuant to a severance program. None of them ended up working for Hockley Highlands, a fact that no doubt owes something to the purchaser’s insistence that the transaction involving the Glen Cross Centre not involve the transfer of any unionized employees. We will return to that later.

(iii) The transaction between Ontario Hydro and Goldman Holdings Inc.

28The Goldman Group is a trade name for a number of companies in Mr. Goldman’s building development business which has been in existence since 1953. Mr. Goldman’s business routinely involves the purchase of real estate properties for the purpose of developing the properties into commercially viable enterprises. Mr. Goldman testified concerning his previous involvement in the hospitality sector, namely the purchase and/or construction of two hotels in the Toronto area.

29Mr. Goldman was the key individual on behalf of the purchaser in the acquisition of the Glen Cross Centre from, and the negotiation of the two leases with, Ontario Hydro. His interest in acquiring the Glen Cross Centre began in mid-1997, when a Royal LePage listing agent, who knew of that interest, suggested the purchase of the property to Mr. Goldman. The document offering the Glen Cross Centre for sale characterized the facility as a “fully functional self contained conference and training centre”. Mr. Goldman was aware of that characterization, but claimed that the Glen Cross Centre was marketed merely as a property with a number of potential uses. At the time, he claims he was not interested in operating the facility as a conference and training centre, although he conceded that he understood that to be one of his options. (Indeed, the evidence suggests that leading up to the ultimate date of closing of the transaction in August 1998, Mr. Goldman had still not made up his mind about how to, or even whether to, operate the property. One of the options he considered shortly after agreeing to purchase the property was simply becoming a landlord and leasing the facility to nearby Hockley Valley Resort. That option was eventually discarded before the transaction closed in August 1998).

30Mr. Goldman toured the property. His evidence is that at the time of his tour, the Glen Cross Centre was not operating, but that some maintenance staff of Ontario Hydro were on site to keep the property from deteriorating. This is consistent with Mr. Collins’s evidence that at around this time, preparations for the closure of the Glen Cross Centre were underway.

31Mr. Goldman had settled on the notion of developing the property as a residential retirement community, and, through one of his business entities, made an offer to purchase conditional upon obtaining the appropriate municipal zoning for just such a project. However, he was frustrated in that endeavour, having been informed by municipal officials that the property, located squarely on the Niagara escarpment, would not likely be approved by the local municipal council for the use proposed by Mr. Goldman. He withdrew his offer to purchase.

32Subsequently, Ontario Hydro, through its Royal LePage listing agent, continued its attempt to sell the Glen Cross Centre. Apparently, a number of rather diverse organizations, including a hockey school, made inquiries (thus supporting Mr. Goldman’s contention that the property was being marketed under a number of potential uses), but no deal satisfactory to Ontario Hydro emerged. In the spring of 1998, Mr. Goldman learned that Ontario Hydro was very anxious to sell, and would consider a lower price in return for an unconditional offer to purchase. Mr. Goldman decided that at the right price, he could do something with the property. He had recently sold his own residence nearby, and he thought that at the very least, he could possibly live on the Glen Cross Centre, lease back parts of it to Ontario Hydro, and consider how to develop the property. As it turned out, he did not take up residence on the property. Mr. Goldman’s uncontradicted evidence is that in the spring of 1998, he had not formed the intent to develop the property as an inn and conference centre. But again, he was fully aware that that remained an option available to him.

33With the assistance of the listing real estate agent, Ontario Hydro and a corporate entity, Katmandu Investment Corporation (“Katmandu”) entered into an agreement of purchase and sale (“the agreement”) dated April 7, 1998. Katmandu was created (and solely owned) by Mr. Goldman for the sole purpose of facilitating the transaction. Following the execution of the agreement but before closing, Katmandu, having served that purpose, directed Ontario Hydro to transfer title in the property to Goldman Hotels. There was some limited contact between Mr. Goldman and a representative of Ontario Hydro, in the presence of the listing agent, during negotiations preceding execution of the agreement, and afterward.

34The purchase price of $3.3 million was allocated as follows: $1 million for the land and $2.3 for buildings and equipment, including three motor vehicles, one a 1988 dump truck with plow, (the truck turned out to be unusable, and was later replaced by the purchaser with a new vehicle); a 1985 GM flat deck vehicle for transporting sundry items (which, like the dump truck, also failed), and a still operating 1971 Massey Ferguson farm tractor. No value was attributed in the agreement to certain chattels which were part of the transaction. Most of these chattels apparently were of no interest to Ontario Hydro (although some other items were, and those were specifically identified in the agreement and subsequently removed by Ontario Hydro), nor was Ontario Hydro inclined to bear the cost of removing them. Mr. Goldman testified that the chattels were of no value to him in terms of operating the property, but he agreed to let them remain because he had been told by an advisor that he might sell the chattels at auction for approximately $100,000.00 As it turned out, Ontario Hydro inadvertently removed some of the chattels covered by the agreement, and upon being informed of this error by Mr. Goldman, discounted the agreed purchase price by $70,000 in Mr. Goldman’s favour.

35The chattels that remained with the purchaser were items such as lawnmowers, chairs, desks, sofas, lamps, dishwashers, beer glasses, ice machines, two pool tables, exercise equipment and so forth. Ontario Hydro, on the other hand, retained possession of its computer systems and telephones, among other things.

36Other features included in the transaction, of interest for the purposes of this case, were as follows:

(i) the transfer of Ontario Hydro’s liquor license which Mr. Goldman accepted rather than risk any problem trying to get a new one;

(ii) the right to use the Glen Cross name which, Mr. Goldman and Ms. Azzarello testified, was never actually used in the Hockley Highlands operation;

(iii) two leaseback provisions, one to cover the lease by Ontario Hydro of the Nuclear Building site for a mere thirteen days after the closing date of August 18, 1998, following which Ontario Hydro vacated the Nuclear building; the other to provide Ontario Hydro a lease of two trades buildings, as well as a workshop, a storage building and training fields contiguous to the two trades buildings, for a period of a further two years from the date of closing.

37With respect to the leases, Mr. Goldman testified that the second leaseback involving the two trades buildings used by Ontario Hydro for trades training, was key to both sides. Mr. Goldman needed the lease proceeds to offset the property’s carrying charges, and he admitted that, once he later (following the closing of the transaction) determined to operate the property as an inn and conference centre, he relied upon base business from Ontario Hydro for the two year lease period, including room bookings, in arriving at that determination. Ontario Hydro, on the other hand, required the trades buildings temporarily while it completed arrangements for an alternative training facility for its technical staff.

38The sale did not include the transfer of goodwill (but for the right to use the Glen Cross name), know-how or employees of Ontario Hydro, customer lists, marketing or business plans, financial statements or records, accounts receivable lists, computer reservation lists, supplier lists or commercial contacts. As we indicated earlier in the decision, as a condition of closing, the purchaser insisted that the purchase not contain the transfer of any unionized employees of Ontario Hydro. That condition took the form of a statutory declaration by a representative of Ontario Hydro to the effect that Ontario Hydro had “removed/relocated off-site all its employees involved with the operation of the property.” Mr. Goldman explained that his legal counsel advised him to insist on the declaration.

39The transaction closed on August 18, 1998. Half the purchase price was financed by a mortgage in favour of Ontario Hydro.

(iv) The purchaser’s activities after the transfer of the Glen Cross Centre

40Shortly after the closing of the transaction, the purchaser took steps toward developing the property. Within a month the name of the new organization, Hockley Highlands, had been registered. At about the same time, the purchaser engaged the services of Horwath Consultants to conduct a feasibility study with regard to operating the property as an inn and conference centre, and to prepare a report (which we will refer to as “the Horwath report”) suitable for submission to financial institutions. A second feasibility study and report was prepared by another entity, the Collier Group for the specific purpose of submission to the Business Development Bank of Canada (“the BDBC”), which it was hoped, would provide financing for the development of a start-up business. Indeed, BDBC’s core purpose is to fund start-up businesses. As it turned out, the BDBC funded the Hockley Highlands venture, and, in Ontario Hydro’s place, became the purchaser’s mortgagee. Finally, the purchaser also prepared its own business plan for the operation of the Hockley Highlands facility.

41Some analysis of the Horwath report and the purchaser’s business plan is warranted at this point. The Horwath report points out that the purchaser was anticipating an Ontario Hydro “bulk booking” which would provide “a strong base of demand” for the new business. It states that the purchaser’s site “would be attractive to primarily middle management for training”. The Horwath report lists as the main competitors of the purchaser’s facility, certain well-known resorts, and describes the positioning of Hockley Highlands in the market “as a mid-range dedicated conference, training and outdoor education facility”. It goes on to suggest that Hockley Highlands will be “necessarily reliant on [Ontario] Hydro for base business”, and that only after stabilization is achieved (i.e. broader diversification of the client base) will Ontario Hydro’s training power lines and towers be removed and the trades training building converted to a gymnasium and fitness facility. The Horwath report refers to the purchased site as being in “excellent condition” and suggests “upgrading” and making “improvements including resurfacing the exterior of the Phase 1 and Phase 2 buildings and softening the colours of the interior” in order to “enhance the attractiveness of the property”.

42The business plan is of even greater significance in our view, as that document was prepared solely for the internal use of the purchaser, and not for the purpose of influencing potential third party funders. The business plan commences by referring to “A new beginning…a new entity…”. Its entire emphasis is on fulfillment of customer expectations, thereby generating repeat and new word-of-mouth business, and contributing ultimately to profitability.

43Ontario Hydro figures prominently in the business plan’s overall strategy. (There is also much smaller mention of building a relationship with an entity known as Outward Bound, which had previously made use of the Glen Cross Centre.) For example, the marketing objectives section refers to the need to, “[b]uild repeat business by developing meaningful relationship with Ontario Hydro, and other major corporations through he [sic] development and implementation of a strategic account management program”. Ontario Hydro, the Ontario Government and the education sector are identified as the top three primary business markets for Hockley Highlands. The projected business mix for the first year of Hockley Highlands’ operation anticipates Ontario Hydro providing about one third of the room occupation. The business plan contemplates the re-design of a large number of the residential rooms, “unless we can secure a long-term contract with [Ontario] Hydro for the use of those rooms”. At one point in the business plan, the author states that, “[i]n the pursuit of establishing and building a client base and an occupancy of 50%, it is absolutely necessary that every effort be made to reinforce solid relationships with our existing clientele… From existing clientele (Ontario Hydro) comes the opportunity for business referrals, contacts within professional associations as well as introductions to companies and suppliers who service Ontario Hydro”. While there is in the business plan a heavy emphasis on building on existing relationships, the document also appears to recognize that Ontario Hydro’s business cannot be anticipated as a mere given, but must be actively solicited by the purchaser.

44The business plan speaks to the type of employee to be utilized in the responding party’s’ venture: “Employees are salespeople. Their personality, manner, dress and business actions contribute to the conference centre’s reputation of hospitality. Standards for hospitality should be part of the Policies & Guidelines for Employees”.

45Finally, the business plan identifies the major obstacles to success of the responding party’s’ venture as, “[s]ystems, procedure and facilities including parking, access and internal environment that are not user-friendly, comfortable and complimentary to [sic] why our clients use us”. The author goes on to suggest rather emphatically that, “WE MUST MOVE FROM AN INSITUTIONAL [sic] LOOK AND FEEL TO THAT OF WARMTH AND HOSPITALITY”.

46At around the same time as the preparation of the business plan, the purchaser undertook to renovate the property and obtain equipment. According to the evidence of the purchaser, by April 30, 1999, $1,324,386.01 had been spent on renovations, and $566,676.01 on equipment. The total final cost was $2,047,803.00 Counsel for the applicant pointed out that some of the items listed by the purchaser under the heading of renovations were not properly characterized as such. While we accept that there were some irregularities, we find that they were of a minor nature, and that the renovation costs herein described are more or less reflective of the true costs.

47Among the equipment expenses were a new customized phone system ($95,000.00), computers and specialized hotel management software linked to the new phone system ($236,944.00), a photocopy machine ($34,000.00), and a shuttle bus, the cost of which was not disclosed. The purchaser also had to install a new fire protection system valued at $141,672.19. It was not disputed that phone and computer systems are integral to the purchaser’s operation as an inn and conference centre.

48The nature of the outside renovations to the Phase I (renamed “the Peaks”, and containing 83 residential rooms) and Phase II (renamed “the Valley”, and containing 112 residential rooms) buildings were as follows: power washing of exterior, roof repair, extensive landscaping, parking lot repairs, driveway and parking lot lighting installation. The indoor renovations involved: room reconfiguration (tearing down and erecting of walls in the common rooms and culinary rooms); the creation of a proper lobby and reception; the design of lobby furnishings; the cleaning and staining of antiquated cedar interiors; reconfiguration of the kitchen; conversion of an auditorium into a grand ballroom; some repairs of residential room plumbing; corridor lighting; the painting of all interiors; room numbering, and the provision of updated linens and towels. In addition, the Phase II building required installation of all new windows.

49There were less substantial renovations to the Nuclear Building (renamed “the Pavilion” by the purchaser) involving outdoor landscaping and indoor systems repairs, painting and cleaning.

50The general grounds were enhanced by extensive landscaping, the installation of reflective posts on the driveway, and re-striping of the driveway and parking lot.

51The purchaser made significant efforts to attract customers to its 24-hour a day, seven days a week operation. It created a sophisticated brochure and an internet web site describing Hockley Highlands’ various amenities. It attended trade shows, established an advertising program, and developed target market databases. Elaborate menus were designed for its restaurant service. Common rooms were named, and interior and exterior signage installed. An expansion of the existing liquor license was approved, thus extending liquor service to the Phase II building. Every conceivable manner of contact with prospective customers was pursued, including newspaper advertising, direct mail, organized site tours of the facility, attendance at trade shows and conferences, the hosting of community and charitable events. Even Ontario Hydro’s business was aggressively sought (and won) through a number of meetings with company officials, some of whom had indicated dissatisfaction with the Glen Cross Centre and reluctance to use the site in future.

52The Glen Cross Centre’s leisure infrastructure (the pool, hiking trails and other features discussed earlier) remained unchanged. It was made available to guests and users of Hockley Highlands. In addition, Hockley Highlands offered to its customers the opportunity to play golf, pursuant to arrangements made with the nearby Hockley Valley Resort which owned and operated a golf course on its site.

53With respect to the establishment of support services, the purchaser retained new accounting, legal, insurance and structural engineering expertise. It developed - “from scratch” - relationships with a large number of equipment and food & beverage suppliers, maintenance service firms and interior designers.

54Perhaps most critical to the hopes of Hockley Highlands’ success was its new organizational structure and staffing. At the time of the hearing, Hockley Highlands employed between 40 and 45 full time employees, about 20 part-time employees, and 15 casual staff. The senior management ranks consist of a general manager, director of sales, controller, director of food and beverage, director of maintenance operations, front office manager, executive housekeeper, and human resource manager. The number and variety of senior management suggests a far more complex, specialized and functionally diverse structure than that which existed at the Glen Cross Centre, which, it will be recalled, was organized along three functional areas (administration, food services and facility/site maintenance), each headed by a supervisor.

55The next line of management comprises an executive chef, sous chef and assistant manager conference services and outdoor maintenance manager. This level of management is followed by first-line restaurant supervisors and a stewarding supervisor, guest services supervisors and floor supervisors.

56The staff providing front-line, direct service are: maintenance engineers, groundskeepers, cooks, stewards, a catering co-ordinator, a sales co-ordinator, an accounting clerk, banquet porters, bartenders, restaurant servers, maintenance helpers, guest service agents, reservation agents, night auditors, laundry attendants, a house person and room attendants. It is in this level of the organization where there appeared to be the greatest overlap with the applicant’s bargaining unit jobs described earlier in this decision, although the overlap is by no means complete. The Glen Cross Centre did not employ restaurant servers as such i.e. staff who take complete meal and beverage orders at the customer’s table and serve meals. Nor was there an equivalent position at the Glen Cross Centre to that of the Hockley Highland’s night auditor, a late-night position largely responsible for the front desk computer system. But with the other possible exception of the sous chef, the day-to-day duties and activities of the Hockley Highlands staff at this level of the organization were largely the same as those undertaken by the applicant’s bargaining unit members. It may well be (although we cannot be sure, given the lack of evidence) that the front-line Hockley Highlands staff have an entirely different approach to customer service, which may manifest itself in distinct values, attitudes and behaviors, but the essential tasks – room cleaning, food preparation and general kitchen assistance, telephone interaction, reservation booking, facility maintenance - do not appear to be significantly distinguished from those of the applicant’s bargaining unit members.

57All employees of Hockley Highlands were hired through job fairs, advertising in local newspapers, or through word of mouth. All the senior management positions were filled by individuals with considerable experience in the hospitality industry. It is not clear whether Ontario Hydro employees associated with the Glen Cross Centre applied or were considered for positions with Hockley Highlands, but it is clear that none were employed by Hockley Highlands at the time the evidence was given in this matter.

(v) The sources of, and their contribution to, Hockley Highlands’ business

58Hockley Highlands began taking clients as early as November 1998, although the official opening to the public was not until some time in January 1999. As of Hockley Highlands’ first “year-end” on April 30, 1999, it had generated revenue from its trades buildings lease with Ontario Hydro in the amount of $198,125.00, representing about 26% of total revenues. Ontario Hydro and other former Glen Cross Centre clients generated approximately 15% of Hockley Highlands’ room booking revenue in that period. Hockley Highlands earned significant revenue through “one-off” cash or credit card purchases, including alcohol purchases, made by the guests and users of the Hockley Highlands facility (we refer to this as the “other” category of revenue). There was no evidence concerning the extent to which the former Glen Cross Centre customers contributed to that account. Despite the first operating period’s total revenues, Hockley Highlands still suffered a net loss.

59The next fiscal year, May 1, 1999 to April 30, 2000 tells a different financial story, but with the same conclusion, a net loss. Overall revenue nearly quadrupled. Accordingly, Ontario Hydro’s lease payments, which remained fixed, played a much smaller role in Hockley Highlands’ overall revenue, only about 11%. However, as a percentage of room-booking sales, the old Glen Cross Centre clients now contributed a larger share, about 34% of those revenues (and nearly 20% of all revenue streams.) The other category of revenue accounted for approximately 25% of total revenues, but again, there was no evidence of the extent of former Glen Cross Centre clients’ contribution to that account.

60Somewhat problematic are the rather large “other” amounts of revenue for which there was no explanation in terms of the identity of the contributors. Counsel for the applicant attempted to suggest that Ontario Hydro users of the Hockley Highlands may have contributed substantially to that type of revenue, and further, that we should draw a negative inference from the purchaser’s failure to explain that account in more detail. We decline to do so. We think the more appropriate conclusion to draw, in the absence of this rather specific information (and for which no specific production request was apparently made), is that the Ontario Hydro and other former Glen Cross Centre users contributed to the “other” category in proportion to their room-booking contributions in each of the periods outlined above. Thus, as of April 30, 1999, the former customers would have generated 15% of the “other” revenue stream; as of April 30, 2000, the figure is 34%.

Decision

(i) Section 69 and the Board’s approach in sale of business applications

61.The relevant provisions of Section 69 of the Act are as follows:

69. (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.

(5) The Board may, upon the application of any person, trade union or council of trade unions concerned, made within 60 days after the successor employer referred to in subsection (2) becomes bound by the collective agreement, or within 60 days after the trade union or council of trade unions has given a notice under subsection (3), terminate the bargaining rights of the trade union or council of trade unions bound by the collective agreement or that has given notice, as the case may be, if, in the opinion of the Board, the person to whom the business was sold has changed its character so that it is substantially different from the business of the predecessor employer.

The jurisprudence with respect to the statute’s sale of business provisions is substantial. The Ontario Court of Appeal in Charterways Transportation Limited, [1998] OLRB Rep. Sept./Oct 897 offers a recent observation concerning the nature and purpose of section 64 (now section 69) in a decision whose reasons were adopted in substance by the majority of the Supreme Court of Canada ([2000] OLRB Rep. Mar./Apr. 413). At paragraph 24, the Court of Appeal noted:

…The statutory definition is inclusive: “‘sells’ includes leases, transfers and any other manner of disposition”. Because of the remedial purpose of s.64 [now s.69], namely the preservation of bargaining rights, this definition is to be given a broad and liberal interpretation. Moreover, it is not required that the transfer take any particular legal form nor take place by way of a legal transaction. In W.W. Lester, supra, at 674-75, McLachlin J. put it this way:

Ten of the labour acts have provisions similarly worded to s.89 of the Newfoundland Act, referring to transactions such as sale, lease, transfer or disposition. (The Quebec Act also contains a successorship provision but the section uses the phrase “alienation or operation”.) Although the terms “sale” and “lease” may have restricted meanings, the words “transfer” and other “disposition” have been broadly interpreted to include several types of transactions, including exchange, gift, trust, take overs, mergers, and amalgamation.

In keeping with the purpose of successorship provision – to protect the permanence of bargaining rights – labour boards have interpreted “disposition” broadly to include almost any mode of transfer and have not relied on technical legal forms of business transactions. As explained by the Ontario Board in United Steelworkers of America v. Thorco Manufacturing Ltd. (1965), 65 CLLC ¶16,052, an expansive definition accords with the purpose of the section – to preserve bargaining rights regardless of the legal form of the transaction which puts bargaining rights in jeopardy.

62Thus, the Board has traditionally been far less concerned with the form, and much more interested in the substance of the transaction or transactions in question, when making determinations under the sale of business provisions of the Act.

63Vaunclair Meats Limited [1981] OLRB Rep. May 581 establishes at paragraph 28 that “part of a business”, as those words now appear in section 69(1), need not be interpreted to refer to the core of the business, but rather encompass in their meaning,

…a coherent and severable part of … [the] economic organization managerial or employee skills, plant, equipment, ‘know-how’ or goodwill, thereby allowing the successor to perform a definable part of the economic functions formerly performed by the predecessor.

The case before us was framed as a sale of part of a business. Counsel for the applicant argued that what passed from Ontario Hydro to the purchaser was, indeed, a coherent and severable part of Ontario Hydro’s overall business. Counsel for the purchaser, on the other hand, endeavoured to cast doubt that the Glen Cross Centre was an identifiable, much less a coherent and severable part of an organization whose core business at the relevant times was the generation and distribution of electricity. In any event, he certainly disputed that the transfer between Ontario Hydro and the purchaser permitted the latter to perform a definable part of the economic functions formerly performed by the former. In that regard, counsel’s contention was that it was the considerable efforts of the principals of the purchaser, and not the collection of “idle assets” formerly owned by Ontario Hydro, that enabled the purchaser to function as a training and conference centre.

64Both parties in this matter spent considerable time arguing about the application of Accomodex Franchise Management Inc., [1993] OLRB Rep. April 281 in this matter. The applicant argued that the facts in Accomodex case were very similar to those before us, and that we should therefore apply the reasoning of that case to this one. Counsel for the purchaser did not appear to take any issue with the legal principles and reasoning articulated in Accomodex, but argued that the facts there were sufficiently distinguishable from those established in this matter. We shall return to a discussion of the factual underpinnings of that case, but we think it helpful at this point to set out the approach the Board took there in the analysis of the statutory principles behind section 69 of the Act.

65The Board in Accomodex articulated what has become commonly known as the instrumental approach to successorship. What follows are several extracts from the decision which explain this approach, and the factors to be weighed in applying it:

A ‘business’ is a commercial vehicle which has been rationally constructed to produce certain goods or services for a defined market; and over the years, the Board has come to what might be described as an “operational” or “instrumental” interpretation of that term…. [paragraph 54]

The instrumental approach to successorship suggests that bargaining rights are attached to an economic vehicle – the mechanism, resources or facilities by which the undertaking serves its purpose – rather than the purpose itself, the employees, or their work. The Board then tries to determine, from a labour relations perspective, whether the transfer and continuation of some facet or facets of that undertaking, warrants a continuation of bargaining rights – for, of course, when interpreting section 64 [now section 69], the Board has to keep in mind its purpose and effect. The Board tries to reach a result which is fair to both the statute and the context under review – that is, a result that appears to be called for to remedy the mischief for which section 64 was passed. That mischief is not the loss of work or work opportunities, but rather the disruption of bargaining rights which would flow from a change in the ownership but continuation of all or part of the elements that make up the business. [paragraph 55]

… The more the transferee’s ability to carry on his business is derived from or dependent upon things acquired from the proprietor of the predecessor business, the stronger the inference [of a sale of business] will be – particularly if the predecessor has ceased to carry on its business or has withdrawn from the relevant market… [paragraph 58]

… in determining whether there has been a “sale” within the meaning of the Act, the Board attaches particular significance to the nature of the work performed in, and by, the business, before and after the alleged transfer. If the nature of the work performed subsequent to the transfer is substantially similar to the work performed prior to that transaction (and if the employees, or types of employees, are the same) this would normally support an inference that there has been a transfer of a business or part of a business with in the meaning of section 64 [now section 69]. [paragraph 59]

In considering whether a part of a business has been transferred, the Board must find that what has been transferred is “a coherent and severable ‘part’ of [the predecessor’s] economic organization – managerial, or employee skills, plant, equipment, know-how, or goodwill – thereby allowing the successor to perform a definable part of the economic function formerly performed by the predecessor”. [paragraph 66]

66The Board in Accomodex pointed out that the factors which support a finding of a sale in one industry or economic sector may not be sufficient to support a finding in another. Moreover, the Board suggests that the general economic context in which the impugned transaction occurs should be taken into account in assessing the importance or weight to be given to the dynamic quality of the business said to be transferred:

In cases which arose when the economy was buoyant, or transactions involved a whole, ongoing business, the Board once tended to focus on the dynamic quality of a business or its operations as a ‘going concern’. If that dynamic quality was lacking, the Board was inclined to hold that there had been no transfer of a business but merely a disposition of assets. In more recent years and more troubled economic times, the absence of this dynamic quality has been accorded less significance. [paragraph 72]

In this era of corporate “restructuring”, it has…become much more common for businesses to discontinue or hive off portions of their operation or undertaking, which then become the nucleus or even the entire undertaking of the “new” business organization. If instead of reopening on its own, or reviving this commercially-moribund portion of the operation, it was transferred to someone else – as increasingly happened through receivers – it was much less clear than it once might have been, that bargaining rights should disappear merely because that portion of the idle undertaking was now owned by someone else – especially since the purpose of section 64 [now section 69] is to eliminate the significance of the fact that a new legal entity owns the “things” that have been transferred…[paragraph 73]

The Board’s approach to the determination of sale-of-business applications was more recently articulated in Lincoln Hydro Electric Commission, [1999] OLRB Rep. May/June 397. There, at paragraph 103, the Board stated:

… If many of the elements of the predecessor’s organization can be found in the hands of the successor, or if there is a definable part which is used for the same business purposes, then there is an inference that there has been a transfer of a business or part of a business to which section 69 applies. The more the transferee’s ability to carry on this business (or part of a business) is derived from, or dependent upon, things acquired from the owner of the predecessor business, the stronger the inference will be – particularly if the predecessor has ceased to carry on its business or that part of the business, or the predecessor has withdrawn from the relevant market.

The Board then went on to observe that in looking at what passes between the business entities, certain aspects of the transfer, in the context of the protections afforded by the Act, take on greater significance than others. At paragraphs 109-111, the Board noted:

109. As might be expected in a labour relations statute, the Board pays particular attention to the characteristics of the employer-employee relationships, because, from a labour relations point of view, the importance of the business is that it generates work opportunities for employees…A business is not its employees (although in very special circumstance they may still be a ‘part’ of the business…) but their work and a continuation of that work are important elements to look at when applying section 69.

110. Accordingly, in determining whether there has been a “sale”, etc. within the meaning of the Act, the Board attaches particular significance to the nature of the work performed before and after the alleged transfer. If the nature of the work performed subsequent to the transfer is substantially similar to the work performed prior to the transaction (and if the employees, or types of employees are the same), this would normally support an inference that there has been a transfer of a business (or part of a business) within the meaning of the labour relations statute …

111. Unless there is a continuation of work and jobs, it would make little sense to preserve the collective-bargaining relationship or collective agreement. Conversely, if the work, jobs, or employees are the same or substantially similar, it is easier to conclude that the transaction is one to which section 69 was intended to apply – and that is especially so if the work is being performed in the same context, at the same location, with the same equipment, or in respect of the same clientele.

67The Lincoln Hydro case does not suggest that the mere finding of a continuity of the work done is by itself determinative of whether a sale of business under section 69 of the Act has taken place. It is simply a factor, albeit a significant one, that the Board takes into account. Indeed, in Crown Packers & Realties Ltd., [1988] OLRB Rep. Aug. 752, the Board quoted with approval from a decision of the Canada Labour Relations Board (“the CLRB”) in N.A.B.E.T. v. Radio CJYC Ltd. et al., (1978) 1 Can. LRBR 565 in which the CLRB made the following comments about continuity of work in a sale of business context:

But continuity of the work done is not sufficient alone to satisfy section 144 [the federal sale-of-business provision]. There must be some nexus between two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successorship. There must be some continuity in the employing enterprise for which a union holds bargaining rights as well as continuity in the nature of the work. The two go hand in hand.

68We believe that the above analysis, particularly the approaches articulated in the Lincoln Hydro, Accomodex, and Radio CJYC cases is appropriate for our purposes in this case. With our main focus on the continuity of the work and the continuity of enterprise, we turn to a consideration of the parties’ arguments and the authorities cited in support thereof.

(ii) The argument of the purchaser

69Counsel for the purchaser relied heavily upon what might be referred to as the “supermarket” line of cases. We were referred to Keele-Wilson Supermarket Limited, [1985] OLRB Rep. Mar. 425; Super Tops Holdings Inc., [1986] OLRB Rep. Jan. 168; Steinberg Inc., [1990] OLRB Rep. June 794 and Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan. 47. In the first three cases cited, the Board found that there was no sale of a business within the meaning of the Act, notwithstanding that the “purchaser” in each case operated the business as a grocery store or supermarket as did the predecessor, and occupied the same premises at the same location as that of the predecessor. The common thread weaving through these cases, and pivotal to the Board’s determination in each, was the finding that the “purchaser” held itself out to an entirely different market than the predecessor, which was reflected in a completely distinct set and display of goods offered via the efforts of a new group of employees conversant with the language and culture of the “ethnic” population now served. Also of significance was the fact the purchaser in those cases had developed the ethnic market before the transactions giving rise to the applications. Thus, the Board viewed those cases, in part, from the point of view of an expansion of an already well-established business.

70The Sunnybrook Food Market case rounds out the supermarket decisions to which we were referred. It was not a case involving distinctly different markets. Rather it was cited by counsel for the purchaser as an example of how an arm’s length purchase of certain fixtures, leasehold improvements and equipment by the purchaser from the predecessor - which sale was incidental to, and not a condition by which the purchaser obtained the right to operate in the predecessor’s leased premises – was not construed by the Board to constitute a sale of a business, or part thereof. The purchaser first acquired the leased premises not from the predecessor, but independently from the landlord. The predecessor vacated the premises at the conclusion of its lease, and the purchaser moved in and purchased its own stock. The fixtures bought from the predecessor were largely unwanted, but they were tied to the other assets as a package. In the circumstances, the Board found no sale of a business, notwithstanding that essentially the same business of selling foods to the public continued unabated following the transaction.

71Counsel for the purchaser then referred us to a line of decisions which stand for the principle that, where the purchaser is merely expanding a well-established pre-existing business through the impugned transaction, the Board will not find a sale of business under the Act.

72In Hilton Canada Inc. [1997] OLRB Rep. May/June 452, a Trader Vic’s restaurant moved out of its leased premises in a hotel location. Following a hiatus of 18 months in which the hotel attempted to find another tenant, a steakhouse known as Ruth’s Chris inquired into the location, and following completion of its feasibility studies, leased the vacated premises and completed substantial renovations in preparation for the opening of its restaurant. The Board concluded that Ruth’s Chris, an established chain of restaurants, was merely expanding its business when it acquired Trader Vic’s leased premises, and therefore there had been no sale of a business within the meaning of the Act.

73The next case in this line cited by counsel for the purchaser was Calmil Enterprises [1980] OLRB Rep. April 401. There, the Skyline Hotel (“Skyline”) ended its lease with its landlord, Campeau Corporation (“Campeau”) which then acquired some of its former tenant’s restaurant assets. Calmil Enterprises (“Calmil”) subsequently occupied the premises formerly leased by Skyline. In so doing, Calmil had had no direct dealings with Skyline, but the Skyline restaurant assets obtained by Campeau formed a component of Calmil’s lease with Campeau. Nevertheless, the Board was not persuaded that a sale of business had occurred, finding it was Calmil’s entrepreneurial enterprise, managerial skills and operating personnel that constituted the business, none of which was traceable to Skyline. Calmil had merely expanded its pre-existing business. The Skyline assets were described by Board as “surplus”, and were merely incorporated into Calmil’s existing business organization.

74Finally, we were referred to Crown Packers & Realties Ltd., previously cited above, which involved a transaction in the meat packing business. Louis Levine, an owner of such a business in Toronto, purchased all the property and assets of Royal Dressed Meats Inc. in Guelph, Ontario. That business was substantially larger than anything operated by Mr. Levine previously. The predecessor had experienced a tainted meat controversy prior to the sale, and as a result, Mr. Levine endeavoured to disassociate his new acquisition from the name and image of the predecessor. Mr. Levine did not obtain the predecessor’s customer list, logos or trademarks. The Board concluded that there had been no transfer of a “business” within the meaning of the Act. First, the Board could find no indicia of the transfer of any good will of the predecessor, and accepted that any goodwill had been destroyed as a result of the tainted meat scandal. Secondly, the Board concluded that the roots of the Guelph operations were found in Mr. Levine’s Toronto business. Mr. Levine’s success in Toronto and his concomitant efforts to generate new and additional customers for the Guelph site, more than anything, contributed to the success of the Guelph operation, as opposed to the land and the assets obtained in the transaction.

75We turn now to the third and final thrust of the purchaser’s argument. In contending that there was no section 69 sale of part of a business, counsel for the purchaser submitted the case of Sanford’s Roadhouse Restaurant, [1994] OLRB Rep. July 897, for the principle that, notwithstanding some overlap in some aspects of the business of the predecessor and successor businesses, where the business focus of each is such that the Board concludes the businesses are distinct, there will be no finding of a sale as contemplated by the statute.

76In the Sanford’s Roadhouse case, the predecessor, Waverly Hotel (“Waverly”) in Thunder Bay, operating out of leased premises, was licensed to sell liquor and provided rented rooms on a daily per diem basis. Waverly was primarily focussed on the sale of liquor, and provision of entertainment to its drinking patrons. It also provided a food service as required by its liquor license, but the food service was incidental and generated next to no revenue.

77Waverly was taken over by a creditor, who bought the property and closed down the business, laying off the employees. The creditor sold the building and premises (including fixtures and chattels) but not the inventory, the goodwill, the business name, or the licenses, to an individual, Mr. Sellers (“Sellers”). When Sellers entered into the transaction, he did not attempt to avoid bargaining with the trade union that had bargaining rights at Waverly. As a condition of his initial attempt to purchase and operate Waverly as it had always been operated, Sellers simply asked for amendments to the collective agreement so that his wife and he could work in a “hands-on” capacity in the business (without being members of the bargaining unit), which request was turned down by the union. Only after he could not reach an understanding with the union did Sellers consider turning the Waverly into a restaurant. Sellers spent almost as much as the sale price in renovating the building into a restaurant. Much of the chattels and fixtures were of no use, so Sellers bought new goods, including some from an O’Toole’s restaurant, which became central to the operation of the converted restaurant (“Sanford’s”).

78There was a 13-month hiatus between the closing of Waverly and the re-opening of Sanford’s. In the meantime, Sellers hired a manager with experience in restaurant management, and advertised for staff who the manager trained in the restaurant business, including one former employee of Waverly. As part of its business, Sanford’s also offered food catering.

79Like Waverly, Sellers rented the rooms, not on a per diem basis, but rather as a landlord, and supplied the rooms with equipment for cooking and maintaining food. Tenants of Sanford’s, unlike those of Waverly, cleaned their own rooms, and supplied own bedding.

80Sellers did not provide the type of live entertainment that Waverly did.

81The Board found no sale within the meaning of the Act. There was an overlap in some aspects of the two businesses, but the Board differentiated the two by the distinctive business focus of each: Waverly focussed on liquor consumption and hotel-type accommodation, while Sanford’s targeted food consumption and room leasing over extended periods of time. The Board found these entities to be “two distinct businesses”. Counsel for the purchaser urged us to make a similar finding in this matter.

82Before we turn to the application of the cases cited in support of the position that there was no sale of business in the matter before us, we note that counsel for the purchaser also dealt in some detail with the Accomodex decision, cited earlier, a case that ostensibly supports the position of the applicant. Counsel for the purchaser referred to the distinguishing factual differences between the situation in the Accomodex case and the matter before us. We shall return to a discussion of those differences in the portion of this decision entitled “Conclusions”.

83The position taken by the purchaser, in light of the cases reviewed above, is that Hockley Highlands was entirely the creation of the purchaser, and is properly viewed as a start-up business. Counsel suggested that the facts do not support the notion that Ontario Hydro transferred even part of a business to the Goldman Group, in the sense that the buildings, land and chattels comprising Glen Cross Centre cannot be viewed as an identifiable, coherent and dynamic part of the business of Ontario Hydro which was easily converted into a dynamic business by the purchaser. Counsel pointed to the extensive hiatus between the time Glen Cross Centre ceased effectively to operate and the purchaser opened for business, in addition to the extent to which the purchaser went in terms of physical renovation, specialized staffing, advertising, marketing, the introduction of new business systems and so forth, as evidence that the purchase of Glen Cross Centre was a purchase of a mere piece of property, and not the sale of the dynamism or organizational means of an existing business. The organizational means, counsel argued, was entirely the creation of the purchaser. Counsel conceded there was some, but not substantial continuity between the Glen Cross Centre and the purchaser' business. Superficially, they looked somewhat the same, operating on the same land and within the same physical structures. But the same was true in the supermarket line of cases, cited above. In those cases, there was continuity in terms of location and premises. What was once a supermarket remained a supermarket following the transfer of assets and interests. Still, the Board in the Keele-Wilson Supermarket, Super Tops Holding and Steinberg cases found no sale of business from a labour relations perspective, and the common rationale linking these cases appears to be grounded in the evidence concerning the new and distinct markets served by the successor entities (It is noteworthy that in each, the respective purchasers were already firmly entrenched in their own unique supermarket business at the time of the transactions.)

84Counsel for the purchaser asked us to consider what was actually transferred - and conversely, what was not transferred - from Ontario Hydro to the purchaser, through the intervention of a third party real estate agent. In his view, what was transferred was a mere collection of assets, including land and buildings valued at $3.3 million, and incidental chattels, including a liquor license, which had no sale value at all, which were simply “throw-ins”, of little or no use to the purchaser, in his capacity as a land developer. According to counsel, it so happened that the purchaser in this case had the wherewithal, expertise and resources to develop the property as an inn and conference centre, and market it to the public as such. It could just as easily have been developed and marketed differently, as evidenced by the apparently varied and diverse organizations that inquired into Ontario Hydro’s offer to sell the Glen Cross Centre.

85Of even greater significance, counsel for the purchaser argued, are the items, interests or rights that were not part of the transaction. He contended that the evidence disclosed there was no transfer of any goodwill, organizational or managerial know-how (including employees), personnel or other business records and files, customer or supplier/contractor lists, marketing or business plans, benchmark studies, financial records, accounts receivable or payable, computer systems, trade marks or logos. In short, counsel argued, the purchaser was not provided with the organizational means or delivery system by which to get things done. The organizational means or delivery system was entirely the initiative and creation of the purchaser. All that was obtained in the transaction was the “bricks and mortar” of the operation, not the life-blood of a hospitality business. The latter was assembled and injected into the business after the transaction was completed, and after considering several possibilities as to what to do with the transferred land, buildings and chattels. When it was finally decided to run the property as an inn and conference centre (a possibility that existed in Mr. Goldman’s mind before completion of the purchase), the financing for the capital improvements - an amount characterized by counsel as 62% of the purchase price of the Glen Cross Centre - was obtained not from the purchaser’s traditional banking source, but from the Business Development Bank of Canada, an entity whose primary purpose is to fund start-up Canadian businesses.

(iii) The argument of the applicant

86In his response to the argument put by counsel for the purchaser, counsel for the applicant asked us to consider not what the responding party purchaser could have done, or intended to do with the property, but what it actually did do. In that regard, counsel submitted, Mr. Goldman acquired a fully functional training and conference centre complete with all the things necessary to run it as such, and most crucially, he obtained two “anchor” clients of the predecessor, that being Ontario Hydro itself and members of the OMEA. The two-year leaseback arrangement with Ontario Hydro was described by the applicant as integral to the purchase in that it provided the purchaser both significant rental revenue and a concomitant stream of potential Ontario Hydro and OMEA customers for what turned out to be Hockley Highlands.

87Contrary to the assertions of the purchaser, counsel for the applicant contended that it was a vast overstatement to characterize the transaction between Ontario Hydro and the Goldman Group as a sale of idle assets. First, counsel for the applicant urged us to consider not just the items that changed hands from Ontario Hydro to the Goldman Group, but the context in which the transfer occurred. In this regard, the land and buildings obtained by the purchaser were offered as “a fully functional, self contained Conference and Training Centre”, and were, and are now, marketed as being conveniently located not far from Toronto and other major urban centres, in a natural setting on the Niagara escarpment, in close proximity to, and accessed by, public highways.

88Next, counsel for the applicant argued that the purchaser acquired a customer base from the predecessor. Entities who were familiar with, and had used the Glen Cross Centre, also patronized Hockley Highlands.

89Counsel for the applicant went on to suggest that the purchaser also obtained information on previous bookings at the Glen Cross Centre, if not a customer list. He pointed out that the business plan created for the Goldman Group in respect of the property projected a business mix suggesting that the writer of the business plan was aware of the existence of customers of the Glen Cross Centre. We are not convinced by that argument, because the business plan was completed after the transaction closing date, and, on the face of it, does not disclose whether the author had knowledge of Glen Cross Centre customers prior to the closing date. There is simply no evidence to suggest that the purchaser obtained from Ontario Hydro this kind of information as consideration when title in the Glen Cross Centre passed to Goldman Hotels.

90A significant acquisition in the transaction involving the Glen Cross Centre, argued counsel for the applicant, was the liquor license. Whether or not Mr. Goldman was indifferent to the inclusion of the license in the sale, it was not disputed that the license enabled Hockley Highlands to generate revenue from the sale of alcohol.

91Similarly, counsel for the applicant argued that the Board should consider what the purchaser did with the so-called “worthless” chattels that Mr. Goldman agreed, with apparently little or no enthusiasm, to take in the transaction. The list includes traditional training tools such as flip charts, televisions, and VCR’s, significant quantities of kitchen equipment and furniture, bar equipment, drinking glasses, a leased bank machine, a couple of pool tables and the vehicles described earlier. Counsel for the applicant argued that, regardless of what Mr. Goldman’s intentions were at the time of the transaction, he in fact had acquired in these chattels (together with the land, buildings, location, liquor license and customer base) the means to run a training and conference centre at a time when Ontario Hydro was getting out of this kind of business. In addition, but of less significance, counsel pointed to the fact that the sale transaction included the right to use the Glen Cross name, and that some thought was given by the purchaser to the use of that name.

92Contrary to the characterization of Hockley Highlands as a “start up” business, counsel for the applicant suggested that the more accurate view of the evidence, particularly the documentary evidence (the business plan, the Horwath report, and so forth), suggests that the purchaser simply built on an existing business. The clearest example cited by the applicant was the very high priority these documents placed on securing traditional Glen Cross Centre clients such as Ontario Hydro and Outward Bound.

93In terms of the purchaser’s defenses to the section 69 application, counsel for the applicant urged us to reject them, for the following reasons. First, the fact that no employees of Ontario Hydro were transferred to the purchaser does not assist the purchaser’s position, especially in light of the condition contained in the sale agreement that specifically and effectively prevented such a transfer. Second, it does not matter whether the Glen Cross Centre was part of the core business of Ontario Hydro; the Act does not impose such a distinction, and in any event, the Glen Cross Centre can be viewed as a distinct and identifiable “sideline” of the Ontario Hydro business. Third, a hiatus between the closing of the predecessor’s business and the opening of Hockley Highlands is not determinative generally in section 69 cases, and should not be a significant factor in this matter because of the existence of the two-year lease in favour of Ontario Hydro, which guaranteed that the Glen Cross Centre client base would not entirely evaporate during the hiatus. Fourth, no great significance should attach to the fact that a third party real estate agent oversaw the transaction, because there was evidence of direct dialogue between representatives of Ontario Hydro and of the purchaser. Fifth, the Board should not view this matter as an expansion of the purchaser’s existing business. Finally, and perhaps most significantly, counsel for the applicant cautioned the Board not to place great weight on the physical and business changes occasioned by the purchaser following the sale. Properly viewed through a labour relations lens, counsel for the applicant contended that the picture which emerges suggests an evolution towards an upscale training and conference centre, rather than a radical break from the past. Notwithstanding the substantial renovations, the improvements in business processes, the management restructuring, and the focus on customer needs satisfaction, the work previously performed by Ontario Hydro bargaining unit employees was work that continued to be performed at Hockley Highlands on behalf of its customers, a number of whom used to be Glen Cross Centre customers. Viewed in that light, the Board was urged to find a section 69 sale of part of a business.

94In support of its position, counsel referred us to a number of cases. Chief among them was the decision of the Board in the Accomodex case, referred to previously. As counsel for purchaser also spent a considerable amount of time dealing with the Accomodex case, a close examination of the facts and the legal analysis therein contained is warranted.

95The sale of the hotel at the heart of the dispute in Accomodex occurred in 1992. Three years prior, the predecessor undertook substantial renovations which effectively doubled the hotel’s room capacity.

96The predecessor engaged 216 employees occupying typical hotel positions, represented by the Hotel Employees Restaurant Employees union (“HERE”).

97The hotel closed on July 19, 1991 without notice, apparently for financial reasons; from that point until the hotel’s reopening on December 1, 1992, the hotel was under the control of a receiver and/or a trustee in bankruptcy (“the receiver”). Throughout that period HERE attempted to deal with the predecessor and the receiver concerning the fate of its bargaining unit members.

98On September 9, 1992, a sale of the hotel was effected to Kelloryn Consulting Inc., which acquired the lands, buildings and all tangible assets, including room furnishings, equipment, and telephone system, all of which were used in the new operation, with some refurbishing and upgrading. The new owner modified the security and fire systems, changed the décor in the bars and restaurants and major meeting rooms, made a few alterations to the hotel exterior, replaced some windows, refurbished kitchen equipment, and added a health club with new gym equipment. Further changes were introduced in terms of room amenities, wallpaper, and food menus. The layout of the hotel remained essentially the same. Rooms were re-named, and the signage altered accordingly.

99Personnel and other business records of the predecessor remained on the property for use by the new owner, including client and supplier lists, although the new owner claimed these records were not particularly useful.

100The new owner established business relationships with a number of the predecessor’s customers, on much the same terms as had the predecessor.

101The “new” hotel operated as a “Howard Johnson”, a recognized name brand, but was not owned by the Howard Johnson chain. Any goodwill contained in the name of the predecessor was not a factor in the sale, but the location remained.

102The hotel’s new owner provided much the same service as the predecessor, competing and serving in the same market, and attracting the local clientele. One hundred and fifty employees were hired through various methods. The new owner did not try to attract the former employees, but did end up hiring about ten such workers. Duties of the new employees were essentially the same as those of the predecessor’s employees.

103The new owner signed a voluntary recognition agreement with the United Food and Commercial Workers (“UFCW”), although there was no evidence that the employees wished to be represented by the UFCW. The union classifications in the new collective agreement with UFCW mirrored the classification configuration in the HERE collective agreement, but wages negotiated with the UFCW were lower.

104The Board found a sale of business. The elements of a hotel business were purchased intact, and used in much the same fashion as the predecessor. As the Board noted at paragraph 78 of the decision, “The respondents did not assemble these elements or put the package together – they bought them largely intact”. The fact that the new owner endeavoured to acquire customers not previously served by the predecessor was not viewed as insignificant, but the Board observed at paragraph 80 of the decision that “it would be a most unusual “sale of a business” transaction, in which the new owner did not put his own imprint on the organization by undertaking new business initiatives, or introducing at least some new directions in management”. No significant change in the character of the business had occurred following the sale, notwithstanding the cosmetic alterations described above. And lastly, the hiatus between the cessation of operations by the predecessor and the re-opening of the hotel was not determinative in light of the fact that the asset base had remained intact and was used by the successor.

105In addition to the Accomodex decision, the applicant placed significant reliance upon a series of “tavern” cases in support of its position in this matter (much the same as purchaser relied upon the “supermarket” cases). In Vivace Tavern Inc., [1982] OLRB Rep. Aug. 1224, the sale comprised real property, chattels, licenses (except an adult entertainment license, which was not transferable, but the existence of which permitted the purchaser to apply for its own) and inventory of a tavern. A number of the employees of the predecessor were employed in the new organization, and assigned similar functions i.e. the preparation and service of alcoholic beverages. The purchaser made some physical changes to the tavern, and attempted to provide a higher quality service to patrons. The purchaser had previously operated a strip club, and wanted the tavern for its new location, operating under the name it had previously used, House of Lancaster. For five weeks following the sale, the purchaser continued to operate the business as a tavern featuring burlesque dancing and other entertainment, then closed it briefly and re-opened it as a strip club in which the dancers also served the customers drinks.

106The Board found a sale within the meaning of the Act. Of critical importance were the licenses: the liquor licenses which allowed the tavern to continue to operate in the short term, and the adult entertainment license which permitted the purchaser to seek approval for, and ultimately obtain its own adult entertainment license. The focus of the business remained the sale of alcohol.

107In The Horseshoe Tavern, [1981] OLRB Rep. Sept. 1237, a tavern was sold as a tavern, and run as a tavern by the successor, but with a change in clientele type. The impugned transaction included the transfer of a liquor license. The successor closed the tavern briefly in order to carry out major renovations. No employees of the predecessor were transferred to the successor.

108The Board concluded that a sale of business as contemplated by the Act had occurred. The work of the employees was essentially unchanged. Following the sale, the business continued at the same location under the same name, and derived its revenue from the same source i.e. the sale of alcohol. The Board found that a mere change in décor and entertainment was not a change in the character of the business, as contemplated by section 69(5) of the Act.

109Krush, [1987] OLRB Rep. June 859 was a case involving a bar which had defaulted on its mortgage. The mortgagee took possession, and sold the premises, including chattels to the purchaser. It was a condition of sale that the mortgagee apply for a transfer to the purchaser of the existing liquor license, which condition was met. The bar was closed for several months, and major renovations undertaken by the purchaser. The purchaser also changed the name of the establishment.

110In finding a sale of business, the Board was not impressed by the fact that there was an intervening transaction involving the mortgagee, and not a direct sale from the mortgagor to the purchaser. On the other hand, the transfer of the liquor license to the purchaser was a significant factor in the finding of a sale. The Board was also persuaded by the fact the work done before and after the sale was essentially the same.

111In terms of the application of what is now section 69(5) of the Act, the Board in Accomodex observed at paragraph 26:

While there is no question that there have been considerable changes in the ambiance and clientele of this establishment, the Board has made it abundantly clear that changes of this nature are not those contemplated by section 63(5) [now section 69(5)] so as to attract the relief set out therein….

112And at paragraph 27, the Board stated:

We are not persuaded that the changes in décor and ambiance represent fundamental differences affecting the nature of work and skills performed to the extent that continued representation by the union would be inadequate, inappropriate or unreasonable …

113Finally, counsel for the applicant referred us to Winco Steak N’ Burger Restaurants Limited, [1974] OLRB Rep. Nov. 788. That case was not strictly a tavern case, but it involved the transfer of a liquor license. The offer to purchase included a leasehold interest, leasehold improvements, chattels, equipment and furniture. An additional amount over and above purchase price was paid by the purchaser for the vendor’s alcoholic beverages.

114It was a condition of the offer that the purchaser obtain approval to transfer the existing liquor licenses held by the vendor, and that the vendor assist in that endeavour and preserve the licenses until closing.

115The purchaser ultimately employed a number of the predecessor’s employees in similar occupations.

116At the hearing, the purchaser maintained that there had been no sale of business within the meaning of the Act, but, in the alternative, if there had been such a sale, the business’s character had been fundamentally changed, as contemplated by section 69(5) of the Act, and the union’s bargaining rights should not attach as a result. The changes made by the purchaser, and said by the purchaser to be fundamental, involved the transformation of a general food menu into a specialized food menu, as well as significant changes effected to the décor of the restaurant and bar, all of which contributed to a western atmosphere.

117The Board again found a sale of business, and, in respect of the section 69(5) argument of the successor, made the following comments at paragraph 24:

… the Board takes the view that the words “substantially different” must be viewed by the Board in the formulation of its opinion as involving a fundamental difference affecting the nature of the work requirements and skills involved in the business to the extent that continued representation by the trade union would be inadequate, inappropriate or unreasonable in all the circumstances of the particular case under review…

118Counsel for the applicant also referred us to two cases dealing with the issue of the sale of part of a business: Beef Terminal (1979) Limited, [1980] OLRB Rep. Aug. 1167 and the Vaunclair Meats decision previously referred to above.

119The Beef Terminal case chronicles the winding down of an abattoir/meat packer business in 1979, and the subsequent emergence of a similar but not identical new business. Most employees of the predecessor were terminated except for a few who remained to maintain the building and the sanitary conditions. The registered trademark (much like a license to process meat, granted pursuant to federal inspection regulations) was maintained

120The plant superintendent of the predecessor decided to start up a new business of “custom slaughterhouse” serving resident customers (customers who display their meats and work on-site) and non-resident customers. Unlike the prior business, the new business was designed to operate without an inventory of cattle. Instead, it charged the customers who owned the cattle to be slaughtered a slaughtering fee on a “per head” basis, and provided the necessary meat cooler services to preserve the cuts of meat following slaughter.

121The plant superintendent entered into a lease of the predecessor’s building and all equipment, with an option to buy. Some renovations were undertaken by the new venture. There was no acquisition of the predecessor’s accounts receivable or customer lists or goodwill, although the business signage remained the same. A number of the predecessor’s employees invested in the new business, and were employed in positions identical to those they previously held. Several functions previously performed by the predecessor (such as truck driving and boning) were no longer performed by the new business. The union which had represented the predecessor’s employees was not informed of the emergence of the new business, nor were any union representatives who had held employment with the predecessor asked to participate as employees in the new venture. The new business secured clients with no connection to the predecessor.

122The Board was persuaded that a sale of part of a business had occurred mainly due to the finding that a significant portion of the employee and supervisory complement was preserved, the essential attributes of the employment relationship remained unchanged, and the employees performed similar job functions following the creation of the new business.

123The Board was also impressed by the following factors: the new business was run much like the predecessor’s business many years prior to the predecessor changing its business focus; there was no lengthy hiatus between the cessation of operations and the emergence of the new venture; some employees of the predecessor remained on site throughout the period running up to the transaction; the trademark was maintained and transferred to the successor; the business name and signage used by the predecessor remained for the use of the successor, demonstrating that the new entity received some advantage from its association with the predecessor. Concomitantly, the Board was not inclined to come to a different conclusion by virtue of the fact that the new organization operated with different clients in a different market.

124We turn now to the Vaunclair Meats decision, which in our view, contains some helpful insights as to how to view what is alleged in this matter to be a sale of part of a business.

125The relevant facts in Vaunclair Meats commence with the shutdown of an entity known as Vaunclair Purveyors. Another organization, Cara Foods (“Cara”), became the sole owner of the moribund business, and hoped to lease the property to another meat producer. In the meantime, the employees of Vaunclair Purveyors were laid off.

126Almost immediately, the principals of Vaunclair Purveyors decided to set up as a meat distribution house, rather than continue in the role of a purveyor, and serve some of Vaunclair Purveyors’ former (non-Cara) clientele. Except for salespersons, employees of what became known as Vaughan Meats Ltd. (“Vaunclair Meats”) were all former Vaunclair Purveyors employees, although now in slightly different roles/classifications. Vaunclair Meats operated out of the same location as Vaunclair Purveyors, but occupied only 20% of the predecessor’s space. The monthly rent was payable to Vaunclair Purveyors or Cara; 25 of 39 Vaunclair Meats customers were customers of Vaunclair Purveyors, and all were served by Vaunclair Meats in much the same way as Vaunclair Purveyors; 80% of Vaunclair Meats’ equipment was acquired from Vaunclair Purveyors, although this equipment represented only 5% of Vaunclair Purveyors’ holdings.

127On the facts as set out above, the Board found that there had been a sale of part of Vaunclair Purveyors’ business to Vaunclair Meats. A sale of part of a business, the Board observed at paragraph 28, need not be the core of the predecessor’s business, but rather “a coherent and severable part of … [the] economic organization managerial or employee skills, plant, equipment, ‘know-how’ or goodwill, thereby allowing the successor to perform a definable part of the economic functions formerly performed by the predecessor”. Although the employees did more general duties in the new organization, certain core duties and functions performed by the predecessor continued in the successor’s operation.

128The Board also found that there had been no fundamental change made by the successor to the character of the business of the predecessor, and therefore no reason to apply the provisions of what is now section 69(5) of the Act. The Board’s view of the circumstances warranting the application of section 69(5) are of assistance in this matter. At paragraph 29 of that decision, the Board stated:

… we do not think that we should lightly conclude that there has been a change in the ‘character’ of the business simply because the transferred ‘part’ operates in a new environment, in a somewhat different manner from the way it operated when it was part of the larger organization. This is to be expected of any severed ‘part’, and it would be an unusual entrepreneur who did not initiate any new initiatives, or try to put his own imprint upon his recent acquisition …

129At paragraph 31, the Board continued its analysis of section 69(5) by making the following observations:

Section 55(5) [now section 69(5)] provides for the termination of bargaining rights only where there has been a substantial change in the character of the business occurring within sixty days of the sale. Both the language and the context suggest that this exception to the general rule is intended to be an exceedingly narrow one. The temporal limitation also suggests that section 55(5) should only be applied to exceptional situations in which a person purchases a business organization then turns it into something quite different operating in an entirely unrelated labour and product market (a restaurant into a bowling alley, for example; or a tavern into an emporium for oriental rugs). In those circumstances, the successor is unlikely to have any intention of retaining the predecessor’s employees, and it would make little sense to impose upon a new group of employees doing substantially different jobs, the wages and conditions negotiated with an entirely unrelated predecessor”…

130Counsel for the applicant urged us to apply the reasoning in both the Beef Terminal and Vaunclair Meats cases to the matter before us. Thus, he argued, we need not be troubled by the fact that the Glen Cross Centre may not have been part of Ontario Hydro’s core business. So long as we are satisfied that the Glen Cross Centre was a coherent and severable part of the Ontario Hydro business, which enabled the purchaser to perform a definable part of the economic functions previously performed by Ontario Hydro, we can conclude that the Glen Cross Centre was part of the predecessor’s business. Moreover, counsel argued, if we apply section 69(5) of the Act in the narrow fashion contemplated by the Board in Vaunclair Meats, we must conclude that there has been no fundamental change made by the purchaser to the character of the training and conference centre operated by the predecessor, in the sense that the purchaser does not operate in an “entirely unrelated labour and product market” than did the Glen Cross Centre.

Conclusions

131Counsel for the participating parties in this matter presented their respective positions thoughtfully and thoroughly. A number of the facts in this matter weigh in favour of a finding of a section 69 sale of business, and a number militate against such a finding. None of the cases cited by the parties in this matter deal with the sale of the type of property that was the subject of this proceeding. It is difficult to reconcile some of the cases cited by the purchaser with a number of the cases relied upon by the applicant. In short, this is not a matter that unequivocally favours either side.

132The findings of fact from which we might infer that there was no sale of business within the meaning of the Act are as follows. There was a substantial hiatus between the closing of the Glen Cross Centre and the opening of Hockley Highlands. The purchaser invested very substantial funds and effort in an attempt to transform an essentially in-house, somewhat institutional and financially moribund training and conference centre into a commercially viable, publicly attractive inn and conference centre. The money spent on renovations represented a very significant proportion of the total purchase price of the Glen Cross Centre. The business initiatives (such as the customized computer and telephone systems) and organizational structure introduced by the purchaser were considerable and complex compared with those used by the predecessor. Certainly, the structure of the managerial arm of Hockley Highlands was radically different from its counterpart in the Glen Cross Centre. Certain chattels, such as computers and telephone systems, which are essential to the efficient running of a hospitality business such as Hockley Highlands, were not included in the bundle of assets transferred to the purchaser. The purchaser had to acquire these things, and customize them to the purchaser’s business needs. The purchaser obtained virtually no business documents or records of the predecessor on which to establish or maintain relationships with business clients, contractors and suppliers. With respect to contractors and suppliers, there was no common link to the predecessor. As far as clients are concerned, the purchaser enjoyed the benefits of doing some business with the former clients of the Glen Cross Centre, but it generated a much larger and diverse group of clients than had been previously serviced by Ontario Hydro. Moreover, Hockley Highlands’ business is entirely focused on the satisfaction of customer needs and wants, whereas we think it fair to say that the primary purpose of the Glen Cross Centre through most of its history was the enhancement of employee skills, qualifications and abilities. The contrast is illustrated, for example, by the two entities’ approach to food service. Unlike the Glen Cross Centre, Hockley Highlands operates a restaurant-type food service complete with table waiters and elaborate menus. One could also point to the hours of operation which are all-encompassing in the new venture, and less so in the previous enterprise. All of the above factors suggest the purchaser did not obtain from Ontario Hydro the organizational means of getting things done in the new venture known as Hockley Highlands.

133On the other hand, a number of factors give rise to an inference of a sale of business. First, and perhaps most obvious, is the acquisition of the predecessor’s land, buildings and certain chattels - or, as it was referred to in the hearing, the “bricks and mortar” of the business. The essential integrity of the land and buildings was not altered in the creation of Hockley Highlands, although they were enhanced through the efforts and resources of the purchaser. There was some reconfiguration of the various rooms to suit the purchaser’s particular business and aesthetic purposes, but before and after the sale, there remained living quarters, food preparation facilities, reception areas, common rooms, a fitness room, and so forth, all used in much the same manner as before, albeit on a grander scale in Hockley Highlands. Moreover, with respect to the outside environment, there were virtually no changes made by the purchaser to the leisure facilities offered by the Glen Cross Centre to its guests. There was no evidence suggesting other than that the outdoor swimming pool, baseball diamond and hiking trails continued to be enjoyed by Hockley Highlands users just as they had been by the predecessor’s guests. As far as the chattels are concerned, the nature and kind of items obtained by the purchaser were indeed conducive to the training, entertainment/leisure, and maintenance needs of an inn and conference centre, whether or not the purchaser actually derived much use or benefit from them.

134Counsel for the purchaser acknowledged the significance of the “bricks and mortar” factor in any sale of business application, but argued that that factor is somewhat secondary in the hospitality industry where the quality and skill of the organization’s people are the foremost considerations. While we accept that human interaction and skill are key factors that determine the success of businesses in the hospitality industry, we are of the view that the existence of such businesses is fundamentally tied to a physical asset and location. The land, buildings and facilities, and their location define the business to no small effect.

135The second factor in this matter that gives rise to a strong inference of a sale of business is the nature of the work done by the employees. Viewed as a whole, the work activities, the job qualifications, the expected employee behaviours, the reporting relationships and the organizational structure in the new environment bear little resemblance to the old. However, the appropriate place to start the comparison of the work is at the bargaining unit level, because what is advanced in this case concerns the rights of bargaining unit employees of the predecessor. From that perspective, there are striking similarities between the work done by the union employees at the Glen Cross Centre and the front-line employees at Hockley Highlands. The residential and common rooms at Hockley Highlands are routinely cleaned and maintained just as before. The front-line staff assist in the kitchen and laundry duties, just as the applicant’s bargaining unit members had. Reception, room-booking and bookkeeping activities were carried out in both entities’ operations, although the tools used in those endeavours appear to be more sophisticated and specialized in the new venture. The outside grounds at Hockley Highlands appear to require the same level of upkeep and maintenance as were required at the Glen Cross Centre. All of these enumerated activities and responsibilities account for the bulk of the bargaining unit work once performed by the applicant’s bargaining unit members. The main difference appears to be that Hockley Highlands employs table waiters, whereas the cafeteria-style utilized at the Glen Cross Centre did not warrant the creation of such a classification. That distinction, in our view, does not detract from a finding that the bargaining unit work performed by the employees represented by the applicant was substantially the same as that performed by the front-line non-union staff of Hockley Highlands, and we so find.

136The third factor suggesting a sale concerns the leases given by the Goldman Group in favour of Ontario Hydro. They had the effect of ensuring a guaranteed and not insignificant revenue stream for the purchaser. As well, Ontario Hydro’s continued presence at the site as a lessor benefited Hockley Highlands in other ways as well, through room bookings and incidental spending. We are of the view that the lease and other Ontario Hydro revenue blunts the effect in this application of the hiatus between the closing of the Glen Cross Centre and the opening of Hockley Highlands.

137The fourth factor (related to the third) giving rise to an inference of a sale is the continuity of clientele as illustrated by the continued patronage of the likes of Ontario Hydro and OMEA. It is true that the purchaser made considerable efforts to secure that business and that it did not fall into Hockley Highlands’ lap, as it were. Nevertheless, it links the businesses of the two entities. Moreover, the importance of that link is underscored by the business plan and various business reports commissioned by the purchaser in anticipation of the creation of Hockley Highlands. Those documents suggest the purchaser fully appreciated that the foundation of the new venture lay squarely on the past business generated by the Glen Cross Centre. It bears repeating that, in the period covering approximately the last two years of operation of the Glen Cross Centre, Ontario Hydro made a concerted decision to market the facility to a broader constituency. We cannot know for certain, but it is not unreasonable to assume that that strategic shift was precipitated by concern that the Glen Cross Centre was failing to hold its own fiscally, and that it required an injection of new revenue to remain viable. Notwithstanding Ontario Hydro’s efforts in this regard, and even though there was some success in attracting new users of the Glen Cross Centre, the strategy did not work ultimately. In our view, the purchaser adopted a similar strategy to optimize the commercial potential of its acquisition, utilizing a much more comprehensive and sophisticated approach to that end than apparently had been taken by Ontario Hydro.

138How do the above findings fit within the Board’s jurisprudence? In our view, the purchaser’s contention that this case can be viewed as an expansion of an existing business, as was found in the Hilton Canada, Calmil Enterprises and Crown Packers & Realties cases, is without merit. The Goldman Group’s experience in the development of hospitality sector properties prior to the purchase of the Glen Cross Centre totalled two hotels in the span of 47 years of Mr. Goldman’s involvement in land development. The few forays into the hospitality industry can only be characterized as incidental. Accordingly, the acquisition of the Ontario Hydro property was not an expansion of the purchaser’s business. That leaves the purchaser’s argument that Hockley Highlands was a start-up business. If that is a fair characterization, the “supermarket” jurisprudence is much less helpful to the purchaser, because, as we have noted, a common theme in those cases is the fact that the purchasers had developed pre-existing special niche markets in which the newly acquired businesses were reconfigured to operate. That is not so in this matter.

139The case most helpful to the purchaser’s’ position is the decision in Sanford’s Roadhouse, the facts of which we outlined in some detail earlier. But the scale of the changes made by the buyer, Mr. Sellers, in that case are, in our opinion, more dramatic than those effected by the purchaser in this one. There, Mr. Sellers transformed what was once essentially a tavern/hotel enterprise into a restaurant/apartment rental business. In the instant case, a training and conference centre remained as such after the sale, although it is now described as an inn and conference centre. It is difficult to characterize the new business as operating in an entirely unrelated labour and product market from that of the Glen Cross Centre. The distinction in labour and product markets is much clearer in the Sanford’s Roadhouse case.

140On the other hand, the applicant’s tavern cases, while perhaps more useful to our analysis, do not advance it conclusively. What we take from those cases for the purposes of this decision is that the Board has not typically been persuaded by the purchasers’ renovations to the old business, or changes in commercial “themes” or clientele. Rather, the Board will focus on the essential common components in the operation of both businesses. In the tavern cases, that common component was the licenses. Without those licenses, the new businesses could simply not operate as intended, notwithstanding all the other changes effected by the purchasers. In this case, the liquor license transferred by Ontario Hydro to the purchaser does not have the same weight that such a transfer has in the sale of a tavern. And it would appear further that Hockley Highlands would have been hard-pressed to realize much benefit related to Ontario Hydro’s liquor license as it stood. Indeed, the purchaser had to apply for and did obtain a substantial expansion to that license. In any event, it was not clear to us that the liquor license was essential to the operation of Hockley Highlands as a viable business. The main point to be taken from the tavern cases, for our purposes, is that cosmetic and aesthetic alterations to the physical premises of a business, or shifts in the clientele served, do not necessarily give rise to an inference that there has been no sale within the meaning of the Act. If the main thrust of the business remains the same (and in the tavern cases, the sale of alcohol remained the business focus both before and after the transfers), that will give rise to a strong inference of a section 69 sale.

141That leaves us with the Accomodex decision. In our view, it is the closest of all the cases factually to the matter before us. Counsel for the purchaser went to considerable lengths to attempt to distinguish Accomodex on its facts. Among other things, counsel pointed to the fact that the predecessor in Accomodex completed substantial capital changes to the hotel prior to the sale, all of which figured in the value attaching to the transaction. Of course, in this matter, the purchaser, not the predecessor, undertook the necessary physical renovations and business process changes to facilitate a high-end hospitality business. Counsel also highlighted the fact that in the matter before us, unlike the situation in Accomodex, not all chattels associated with the predecessor’s enterprise were transferred to the purchaser, and in fact a number of significant items, such as computers, were kept by the predecessor. Next, counsel pointed out that, in Accomodex, the Board found that the hotel’s location was a critical element of the transaction. He argued that location is not critical for a training and conference centre, and that there was no evidence that location played any role in the sale. Counsel went on to contend that the Board in Accomodex was influenced by the fact that the market served by the predecessor and successor was virtually identical. The successor did not have to expend great effort to secure business from the predecessor’s market, whereas the principals of the purchaser went to extraordinary measures to attract a much larger and diverse market than previously served by Ontario Hydro. Moreover, the employees of the successor in Accomodex did virtually the same kind of work as that of the employees of the predecessor. Counsel for the purchaser argued that in the present case, the workplace and the activities therein carried out before and after the sale of the Glen Cross Centre were substantially different. Finally counsel noted that the successor in Accomodex obtained from the predecessor business documents and records. In the matter before us, no such documents were exchanged. Rather, the purchaser assembled all records and documents necessary to run the business.

142We acknowledge there are some distinctions between Accomodex and this case. For one thing, that case involved a free-standing hotel business sold in its entirety to, and operated as a hotel by, the successor. In the matter before us, the Glen Cross Centre is a relatively small, arguably incidental, part of a very large operation. Secondly, location perhaps resonates more strongly in the hotel industry than in the inn and conference business. However, we think it reasonable to conclude that at least one of the objectives of Ontario Hydro in establishing the Glen Cross Centre where it did, was to create an environment conducive to learning and reflective thinking. A peaceful, natural setting qualifies as such. It bears repeating that the Glen Cross Centre was marketed for sale partly on the basis of its convenient location vis-a-vis large urban centres and its attractively scenic placement on the Niagara escarpment. While it goes too far to suggest that the Glen Cross Centre’s goodwill was contained in its location, and that that goodwill was transferred to the purchaser, nevertheless, we find that the benefit of the physical location of an inn and conference business, as a marketing feature, should not be completely discounted in this matter.

143More significantly, we can find little to distinguish Accomodex from the matter before us in terms of the bargaining unit work performed before and after the respective transfers. In Accomodex, that work was virtually identical, whereas in this matter, there is substantial continuity of most of the bargaining unit work formerly performed by the Ontario Hydro employees. That is a distinction between the two cases with little difference.

144On the other hand, the single most distinguishing feature between the Accomodex case and this one, in our view, is the considerable effort the purchaser in this matter went to initiate a viable, profit-driven, customer-friendly enterprise attractive to the general public and the corporate sector. There is no question that, apart from the physical renovations, those efforts clearly outstrip anything the purchaser in Accomodex was faced with in essentially re-establishing a hotel business following a lengthy shutdown. However, the thrust of the purchaser’s position in this matter was that no “business” or part thereof was transferred to the purchaser. The purchaser did not strongly advance the position that this was a case of a substantial change in the character of a transferred business, thus bringing the matter within section 69(5) of the Act. Even had it done so, we are doubtful that the result in this decision would be any different.

145The fundamental question is, did some identifiable portion of the enterprise of Ontario Hydro find its way into the hands of the purchaser. We believe that it did. The essence of that part of the business, the Glen Cross Centre, did not exclusively reside in the assets, chattels and land comprising the facility’s physical make-up. The essence of the business in this case, we believe, is to be located in the clientele served and through whom revenue is generated. In what turned out to be the last phase of its operation of the facility, Ontario Hydro decided to promote the Glen Cross Centre to an expanded market, all the while continuing to depend significantly (though no longer exclusively) upon the training and conference centre for its own internal training purposes. Viewing the business in this way, there is no doubt that there was continuity of enterprise between the old and the new entities. That continuity manifested itself in the form of the two-year trades buildings lease with Ontario Hydro and the collateral “through-put” revenue generated by the Ontario Hydro and OMEA room bookings and other spending. Those revenues were significant particularly in the first phases of Hockley Highlands’ operation, and without them, Hockley Highlands’ net losses would have been substantially magnified, if not catastrophic.

146In its business plans and reports, the purchaser expressly recognized the critical importance of the continuing relationship with Ontario Hydro in “making a go” of Hockley Highlands. This is not to suggest that the purchaser’s independent efforts to establish a successful business were not as much, perhaps more, responsible for the emergence of Hockley Highlands than the relationship with Ontario Hydro. The evidence can certainly be interpreted that way to the purchaser’s credit. However, such a conclusion still does not in any way detract from the finding that there was identifiable, coherent, and significant business continuity between the Glen Cross Centre and Hockley Highlands in terms of revenue sources and customers. Over time, no doubt that continuity might become less and less clear, and perhaps vanish completely. Without evidence of that continuity, it may have been more difficult to conclude that there had been a sale of part of a business as contemplated by the Act. With it, together with the other inferences arising from the transfer of the physical components of the Glen Cross Centre, and particularly the continuity of the substance of the bargaining unit work, we conclude that there was such a sale.

147In summary, there was substantial continuity of enterprise through the ongoing association of Hockley Highlands with Ontario Hydro and other former Glen Cross Centre clients following the transfer of the land, buildings and chattels to the purchaser. There was also substantial continuity in the work once performed by bargaining unit members of the applicant and now carried out by the front-line staff of Hockley Highlands. Based on these findings, and for the reasons articulated above, we find that there was a sale of part of a business within the meaning of section 69 of the Act, and that subsection 69(5) has no application in this matter. Accordingly, we declare that the collective agreement, effective from April 1, 1996 until March 31, 2000, between the applicant and Ontario Hydro applies to the purchaser’s’ operation at Hockley Highlands.

148We remain seized to deal with any issues arising from the implementation of this decision.

“Patrick Kelly”

for the majority

DECISION OF J. A. RONSON, BOARD MEMBER; April 18, 2001

I disagree with both the relief granted and the reasoning behind it in the decision of my colleagues. My reasons for dissenting will follow in due course.