Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, 1990 CanLII 22 (SCC), [1990] 3 SCR 644

Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740, [1990] 3 S.C.R. 644

United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 740 Appellant

v.

W.W. Lester (1978) Ltd. and Planet Development Corporation Ltd. Respondents

and

The Labour Relations Board for the Province of Newfoundland Respondent

indexed as: lester (w.w.) (1978) ltd. v. united association of journeymen and apprentices of the plumbing and pipefitting industry, local 740

File No.: 21239.

1990: April 26; 1990: December 7.

Present: Dickson C.J.* and Lamer C.J.** and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.

on appeal from the court of appeal for newfoundland

Administrative law ‑‑ Judicial review ‑‑ Jurisdiction ‑‑ Labour Relations Board ‑‑ Board granting successorship declaration where company carrying on business subject to union contract set up parallel company operating without a union ‑‑ Whether the Board had jurisdiction to enquire into whether or not successorship had occurred ‑‑ If so, whether the Board's exercise of its jurisdiction was patently unreasonable ‑‑ The Labour Relations Act, 1877, S.N. 1977, c. 64, s. 18.

Labour relations ‑‑ Unions ‑‑ Successor rights ‑‑ Company carrying on business subject to union contract setting up parallel company operating without a union ‑‑ Whether Labour Relations Board may grant successorship declaration ‑‑ The Labour Relations Act, 1977, S.N. 1977, c. 64, s. 89(1).

The respondent construction companies possessed similar share structures and principals and operated side by side. They shared the same office, secretary, telephone number and office expenses but had separate employees. While they shared a minor amount of equipment by renting the equipment to each other, each owned or leased its own equipment. The finances of the companies were separate. One of the principals prepared bids on construction projects on behalf of either company, depending on whether the job in question was a union or non‑union construction site in accordance with the practice of "double breasting" whereby one company, which continues to carry on business subject to a union contract, sets up a second parallel company which operates without a union.

The appellant union, which represented Lester's employees, attempted to organize the non‑unionized employees of Planet but withdrew its application for certification before the hearing. In its place, the appellant deposed an application alleging unfair labour practices on the part of the companies and sought a declaration of successorship pursuant to s. 89 of The Labour Relations Act, 1977. At the same time, the respondent companies laid a complaint alleging unfair labour practices on the part of the union. The Labour Relations Board granted the successorship declaration and found it unnecessary to make findings on the other applications. The respondent companies then applied, unsuccessfully, to the Trial Division of the Newfoundland Supreme Court for an order of certiorari to quash the Board's order. The Court of Appeal, in a unanimous decision, held the Board's decision to be patently unreasonable and remitted the matter of the unfair labour practices to the Board.

The issues raised in this appeal are: (1) whether the Board had the jurisdiction to enter into the inquiry as to whether or not successorship had occurred; and (2) if so, whether the exercise of its jurisdiction was patently unreasonable.

Held (Dickson C.J. and Wilson, L'Heureux‑Dubé and Cory JJ. dissenting): The appeal should be dismissed.

Per Lamer C.J. and La Forest, Sopinka, Gonthier and McLachlin JJ.: Section 16.1 of The Labour Relations Act, 1977 renders moot the question of whether the Labour Relations Board has the power to determine whether an employer had disposed of his business or a part of his business under s. 89(1) of the Act, except for the determination of this case. It may be assumed for the purpose of this judgment that the Board had the jurisdiction to consider whether or not there was a sale, lease, transfer or other disposition.

Section 18 of the Act limits judicial review of the Board's decisions to error in interpreting the jurisdictional provisions or excess of jurisdiction by reason of a patently unreasonable error in the performance of its function. Curial deference must extend both to the determination of the facts and the interpretation of the law. The Court can interfere only where the evidence, viewed reasonably, is incapable of supporting a tribunal's findings of fact, or where the interpretation placed on the legislation is patently unreasonable.

Section 89(1) establishes the conditions in which the collective agreement between a union and one employer may be imposed between the union and another employer. The aim of the successorship provision is to protect employees from losing union protection when a business is sold or transferred from one company to another. A discernible part of the business ‑‑ a functional economic vehicle ‑‑ must be transferred in order to establish successorship under s. 89(1). It is not enough that a mere transfer of assets occur because a business is not a mere collection of assets. A finding of successorship, therefore, could not be based on common shareholdings and a common business enterprise or on the fact that the same people owned or worked for both companies. Corporate interrelationship, without some evidence of disposition, would not be enough to trigger the successorship provisions. The evidence as to anti‑union animus was weak and, even if demonstrated, would not establish the necessary transfer.

The absence of evidence establishing a disposition under s. 89 rendered the Board's decision patently unreasonable and, therefore, subject to judicial review. The Board's action in construing the successorship provisions as if they were common employer provisions was contrary to precedent.

Per Dickson C.J. and Wilson and Cory JJ. (dissenting): A court will not exercise judicial review unless the tribunal's decision was patently unreasonable. It is unrealistic given increasingly complex and highly specialized regulatory regimes to expect the courts to have the requisite knowledge and skill to adjudicate properly on some of those regimes.

The test of patent unreasonableness is stringent. The administrative tribunal's interpretation of the legislation will only be considered patently unreasonable if it cannot be rationally supported by the relevant legislation and demands intervention by the court upon review. Judicial review is not available simply because there is disagreement over the tribunal's decision on the basis of conflicting interpretations of the relevant legislation. The privative clause in s. 18 indicates further the limited nature of judicial review.

How an asset is transferred depends on the nature of the asset. Here, the expertise of the two principals and their ability to move between the two companies lay at the very heart of the double breasting scheme. The Board interpreted the phrase "otherwise disposes of" in s. 89(1) so as to include this type of transfer. This interpretation, while broader than that given in other jurisdictions, is consonant with the purpose and intent of the overall legislative scheme, especially in light of the absence of a common employer provision. The decision, therefore, was not patently unreasonable and the Court had to defer to that decision.

Per L'Heureux‑Dubé J. (dissenting): Agreed with Wilson J. on the issue of reasonableness for the reasons she expressed, although the Board's decision here was not patently unreasonable.

Cases Cited

By McLachlin J.

Considered: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, 1979 23 (SCC), [1979] 2 S.C.R. 227; CAIMAW v. Paccar of Canada Ltd., 1989 49 (SCC), [1989] 2 S.C.R. 983; referred to: Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904 (1985), 55 Nfld. & P.E.I.R. 117; Blanchard v. Control Data Canada Ltd., 1984 27 (SCC), [1984] 2 S.C.R. 476; National Bank of Canada v. Retail Clerks' International Union, 1984 2 (SCC), [1984] 1 S.C.R. 269; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, 1973 191 (SCC), [1975] 1 S.C.R. 382; Kelly Douglas & Co. and W.H. Malkin Ltd., [1974] 1 CLRBR 77; United Steelworkers of America v. Thorco Manufacturing Ltd. (1965), 65 CLLC {PP} 16,052; Lyric Theater Ltd. v. International Alliance of Theatrical Stage Employees, [1980] 2 Can LRBR 331; Canadian Union of Public Employees v. Metropolitan Parking Inc., 1979 815 (ON LRB), [1980] 1 Can LRBR 197; International Longshoremen's Assn. v. Terminus Maritime Inc. (1983), 83 CLLC {PP} 16,029; Gibraltar Development Corporation, BCLRB 12 29/82; Rivard Mechanical; Re Plumbers Union, Local 71, [1981] OLRB Rep.May 550; Frank Browne Acoustics Kamloops (1982) Ltd. v. United Brotherhood of Carpenters and Joiners (1984), 6 CLRBR (NS) 247; United Brotherhood of Carpenters & Joiners of America v. Cana Construction Co. (1984), 9 CLRBR (NS) 175; Doran Construction Ltd., Taggart Construction Ltd. and Taggart General Contractors Ltd.; Re Carpenters Union, Local 93, [1984] OLRB Rep.Aug. 1108; Viandes Seficlo Inc. v. Union des Employés de Commerce (1984), 84 CLLC {PP} 14,047; International Brotherhood of Electrical Workers v. Minas Electric Co. (1976), 77 CLLC {PP} 16,075; Labourers' International Union of North America v. Elmont Construction Ltd., [1974] OLRB Rep.June 342; Re International Association of Machinists v. Professional Personnel Services Ltd. and C.P. Personnel Ltd. (Newfoundland Labour Relations Board, unreported, Sept. 1985); United Brotherhood of Carpenters and Joiners v. N. D. Dobin Ltd. and Bradco Ltd. (Newfoundland Labour Relations Board, unreported without written reasons, March 1985); United Brotherhood of Carpenters and Joiners v. Robco Ltd. and Brookfield Investments Ltd. (Newfoundland Labour Relations Board, unreported, May 1985); Brant Erecting and Hoisting; Re Iron Workers' Union, [1980] OLRB Rep.July 945; Concerned Contractors Action Group v. British Columbia and Yukon Territory Building and Construction Trades Council (1986), 13 CLRBR (NS) 121; Mackie Bros. Sand & Gravel Ltd. (1974), BCLRB No. L107/81; International Association of Bridge, Structural and Ornamental Iron Workers v. Empire Iron Works Ltd. (1986), 86 CLLC {PP} 16,027; Tri Power Construction Ltd. v. United Brotherhood of Carpenters and Joiners of America (1984), 8 CLRBR (NS) 332; Re N & L Construction Ltd. (1987), 1987 3974 (NL CA), 64 Nfld. & P.E.I.R. 271.

By Wilson J. (dissenting)

National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, 1979 23 (SCC), [1979] 2 S.C.R. 227; Blanchard v. Control Data Canada Ltd., 1984 27 (SCC), [1984] 2 S.C.R. 476; CAIMAW v. Paccar of Canada Ltd., 1989 49 (SCC), [1989] 2 S.C.R. 983; Teamsters Union, Local 938 v. Massicotte, 1982 18 (SCC), [1982] 1 S.C.R. 710.

By L'Heureux‑Dubé J. (dissenting)

National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324.

Statutes and Regulations Cited

Canada Labour Code, R.S.C. 1970, c. L-1, s. 144 [am. 1972, c. 18, s. 1].

Canada Labour Code, R.S.C., 1985, c. L‑2, ss. 35, 45.

Industrial Relations Act, R.S.B.C. 1979, c. 212, s. 37 [am. 1987, c. 24, s. 25].

Labour Relations Act, R.S.M. 1987, c. L‑10, s. 59.

Labour Relations Act, R.S.O. 1980, c. 228, ss. 1(4), 63.

Labour Relations Act, 1977, S.N. 1977, c. 64, ss. 16.1, 17(k), 18(1), 24, 25, 28 and 89.

Labour Relations Code, S.A. 1988, c. L‑1.2, s. 44.

Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25.

Trade Union Act, R.S.S. 1978, c. T‑17, s. 37.

Trade Union Act, S.N.S. 1972, c. 19, ss. 20, 29.

Authors Cited

Adams, George W. Canadian Labour Law. Aurora: Canada Law Book Inc., 1985.

Newfoundland. Construction Industry Advisory Committee. Report of the Construction Industry Advisory Committee. (Gordon G. Easton, Q.C., Chairperson, Gonzo Gillingham) St. John's, Nfld.: 1985.

Weiler, Paul. Reconcilable Differences: New Directions in Canadian Labour Law. Toronto: Carswells, 1980.

APPEAL from a judgment of the Newfoundland Court of Appeal (1988), 1988 4452 (NL CA), 70 Nfld. & P.E.I.R. 145, 215 A.P.R. 145, reversing the judgment of the Newfoundland Supreme Court, Trial Division (1987), 1987 5088 (NL SC), 67 Nfld. & P.E.I.R. 185, 206 A.P.R. 185, denying the respondents' application for certiorari. Appeal dismissed, Dickson C.J. and Wilson, L'Heureux‑Dubé and Cory JJ. dissenting.

Randell Earle, Q.C., and Stephanie Newell, for the appellant.

Barrie Heywood, for the respondents W.W. Lester (1978) Ltd. and Planet Development Corporation Ltd.

Edward M. Hearn, for the respondent The Labour Relations Board for the Province of Newfoundland.

//Wilson J.//

The reasons of Dickson C.J. and Wilson and Cory JJ. were delivered by

WILSON J. (dissenting) -- I have had the benefit of reading the reasons prepared by my colleague Madame Justice McLachlin and must, for the reason I gave in National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324, respectfully dissent from her approach to the judicial review of the Board's decision. There I sought to re-emphasize the importance of the principle of curial deference to the decisions of administrative tribunals which this Court adopted in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, 1979 23 (SCC), [1979] 2 S.C.R. 227. In my view, the present case is one in which that principle ought to be applied.

The principle of curial deference to decisions of administrative tribunals is grounded not only on sound judicial policy but also on good common sense. It is quite unrealistic in this age of increasingly complex and highly specialized regulatory regimes to expect the courts to have the requisite knowledge and skill to adjudicate properly on some of those regimes. As I noted in National Corn Growers, supra, at p. 1335, if all branches of government are to function effectively and efficiently we must recognize:

(1) that their [the "tribunals'"] decisions are crafted by those with specialized knowledge of the subject matter before them; and (2) that there is value in limiting the extent to which their decisions may be frustrated through an expansive judicial review.

Accordingly, I expressed the view in that case that administrative tribunals must be given the latitude by the courts to fulfil their legislative mandates.

What constitutes the required degree of latitude was addressed by this Court in C.U.P.E., supra, and is reflected in the test to be applied. It is a test which, as Dickson J. (as he then was) noted at p. 237, is founded on the idea of patent unreasonableness. The appropriate question to be asked is:

Did the Board here so misinterpret the provisions of the Act as to embark on an inquiry or answer a question not remitted to it? Put another way, was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review? [Emphasis added.]

As I mentioned in National Corn Growers, there has been a tendency in the post-C.U.P.E. era to return to a less stringent test for judicial review than the one established in C.U.P.E. This backsliding has been largely predicated upon a rather Dicean view of the rule of law and the role that the courts should play in the administration of government. That approach to curial review in the administrative context is, in my opinion, no longer appropriate given the sophisticated role that administrative tribunals play in the modern Canadian state. I think we need to return to C.U.P.E. and the spirit which C.U.P.E. embodies.

Was the Board's Decision Patently Unreasonable?

The only issue that needs to be addressed on this appeal is whether the Newfoundland Labour Relations Board's decision was patently unreasonable. Since my colleague McLachlin J. has set out the relevant statutory provisions, I shall not repeat them here. The key section is s. 89 of the Newfoundland Labour Relations Act, 1977, S.N. 1977, c. 64, as amended. The issue is one of interpretation, more specifically whether the words "Where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of his business or the operations thereof or any part of either of them..." cover the practice of "double breasting".

Section 89 is designed to prevent the loss of union protection by employees whose company's business is sold or transferred to another business concern. This provision, known colloquially as a "successor provision" is found in other labour relations statutes, cf., Alberta, Labour Relations Code, S.A. 1988, c. L-1.2, s. 44; Manitoba, The Labour Relations Act, R.S.M. 1987, c. L10, s. 59; Nova Scotia, Trade Union Act, S.N.S 1972, c. 19, s. 29; Ontario, Labour Relations Act, R.S.O. 1980, c. 228, s. 63; Saskatchewan, The Trade Union Act, R.S.S. 1978, c. T-17, s. 37; and Canada, Canada Labour Code, R.S.C., 1985, c. L-2, s. 45. The provisions exist to protect collective bargaining agreements from becoming meaningless due to, inter alia, the manipulation of the corporate form by employers. Such manipulation can be accomplished by a variety of means and the appellant submitted that "double breasting" was one of them. It was this situation the Board had to address.

"Double breasting" is apparently a common practice in the construction industry in Newfoundland. One company, which continues to carry on business subject to a union contract, creates a new parallel company which is non-union. In this way the owners of the companies can bid on both union and non-union jobs and utilize the skill and expertise of the key members of their staff on both. If the practice falls outside s. 89 the new company is not bound by the existing collective agreement. The Board found that "double breasting" fell within s. 89.

McLachlin J. characterizes the arrangement between the companies Lester and Planet as one of co-operation, "a sharing of expertise", and not one in which any disposition of work, assets or expertise had taken place under s. 89 of the Act. She finds that, even if the expertise of the principals Brent and Wade Lester was a corporate asset, it was equally the asset of both companies. There was no transfer of it from one to the other. My colleague arrives at this characterization despite the Board's factual finding that skills and assets were shuttled back and forth between the two companies as particular projects required. The Court of Appeal described the process as "mutual back scratching".

With respect, I ask: how do you transfer the skill and expertise of X from Company A to Company B other than by making X available to Company B to work on Company B projects? There is no other way. Mode of transfer must surely depend upon the nature of the subject matter. While Brent and Wade Lester were applying their skill and expertise on the non-union project of Planet, such skill and expertise was not available for the union project of Lester and the mobility of these two principals was at the very heart of the double breasting scheme.

My colleague takes a narrow approach to the interpretation of the phrase "otherwise disposes of". The Board gave the phrase a more liberal interpretation in light of what it perceived to be the purpose of the provision. I do not believe that just because the Board gave the phrase a broader interpretation than that given to it in some other jurisdictions means that its interpretation is patently unreasonable. It is clearly arguable that the Board's interpretation is consonant with the purpose and intent of the overall legislative scheme, i.e., to facilitate and preserve collective bargaining regimes between unions and employers. It is, I believe, significant in this connection that the labour relations statutes in some other jurisdictions referred to by my colleague contain common employer provisions which the Newfoundland statute does not. That being so, it is not at all surprising to me that it has not been found necessary in these other jurisdictions to construe a s. 89 type provision liberally as was done by the Board here. The provision must, however, be construed in the context of this statute and not of any other. In my view, the Board's interpretation of s. 89, in the absence of a common employer provision, cannot be said to be patently unreasonable.

In applying the test of patent unreasonableness it is important to remember that the test is a stringent one. As Lamer J. (as he then was) observed in Blanchard v. Control Data Canada Ltd., 1984 27 (SCC), [1984] 2 S.C.R. 476, at p. 493:

This is a very severe test and signals a strict approach to the question of judicial review. It is nevertheless the test which this Court has applied and continues to apply.

In other words, the test of patent unreasonableness establishes a very high threshold which means that an administrative tribunal's interpretation of the legislation in question will only be considered patently unreasonable if, as Dickson C.J. stated in C.U.P.E. at p. 237, it "cannot be rationally supported by the relevant legislation and demands intervention by the court upon review."

It is a necessary corollary of the C.U.P.E. test that the courts must "adopt a posture of deference to the decisions of the tribunal": see CAIMAW v. Paccar of Canada Ltd., 1989 49 (SCC), [1989] 2 S.C.R. 983, at p. 1003, per La Forest J. One of the implications of such deference is that judicial review is not available simply because there is disagreement over the tribunal's decision on the basis of conflicting interpretations of the relevant legislation. In this regard, I agree with, and find appropriate, the view expressed by Laskin C.J., in Teamsters Union, Local 938 v. Massicotte, 1982 18 (SCC), [1982] 1 S.C.R. 710, at p. 724, that

. . . mere doubt as to correctness of a labour board interpretation of its statutory power is no ground for finding jurisdictional error, especially when the labour board is exercising powers confided to it in wide terms to resolve competing contentions.

In applying these principles in the instant case, I am of the view that the stringent test in C.U.P.E. has not been met. While my colleague supports one interpretation of the section, it is by no means the only interpretation the provision can reasonably bear. Indeed, the broad interpretation given to it by the Board has the merit of advancing the clear purpose of the Act. It is, in other words, an interpretation "rationally supported by the relevant legislation" and deserving, in my view, of the deference mandated by C.U.P.E. I am mindful of La Forest J.'s observation in CAIMAW, supra, at p. 1003, that a

. . . tribunal has the right to make errors, even serious ones, provided it does not act in a manner "so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review".

The limited nature of judicial review is supported, in my view, by the presence in the Act of a privative clause, s. 18. The existence of such a clause is, as I observed in National Corn Growers, a clear indication from the legislature that the ordinary courts are not the appropriate forums for review of the decisions of specialized tribunals. It is not appropriate for courts to undertake a meticulous analysis of the tribunal's reasoning as my colleague has done here. To do so sets at naught both the privative clause in the legislation and the judicial restraint advocated in C.U.P.E.

In my view, the application of the principle in C.U.P.E. to the instant case requires this Court to defer to the decision of the Board. The Board's interpretation of s. 89 is not patently unreasonable in the context of the Act and ought to stand. While much of the evidence was equivocal regarding the specifics of the relationship between Lester and Planet, there was certainly evidence upon which the Board could reasonably conclude, as it did, that the skill and expertise of the principals Brent and Wade Lester were transferred back and forth between the two companies in order to enable them to bid on both union and non-union jobs and to carry these jobs to completion.

I would allow the appeal, set aside the judgment of the Newfoundland Court of Appeal and restore the decision of Russell J. I would award the respondents their costs both here and in the court below.

//McLachlin J.//

The judgment of Lamer C.J. and La Forest, Sopinka, Gonthier and McLachlin JJ. was delivered by

MCLACHLIN J. -- This case involves the application of successorship provisions of the Newfoundland Labour Relations Act, 1977, S.N. 1977, c. 64, as amended, to two construction companies possessing similar share ownership and principals and operating side by side. One company was bound by a collective agreement, the other not. The question is whether under the Act the collective agreement is deemed to apply to the second company under the Act.

The Facts

W.W. Lester (1978) Ltd., incorporated in 1978, is primarily engaged in the business of installing plumbing and heating systems, with limited involvement in other areas, such as mechanical work, construction work and real estate. The principals in Lester are Walter Lester, the majority shareholder who controls the voting preferred shares, and his two sons, Brent and Wade, who hold the common shares. Lester's employees are represented by the appellant union "United" which has a collective agreement with Lester.

In 1981, the Lester brothers decided that they wanted more control over their affairs, and wished to avoid the real estate and other construction work which Lester carried out, concentrating solely on mechanical work. Accordingly, the Lesters incorporated a second company, Planet Development Corporation Ltd., in which father and the two sons each hold one third of the shares.

The two companies, along with two other companies owned by the family, work out of the same office and share the same secretary, telephone number and office expenses. Apart from the secretary, the companies have separate employees. While a minor amount of equipment is shared between the two companies by renting the equipment to each other, Planet and Lester each own or lease their own equipment. The finances of the companies are separate but when Planet is required to provide a performance bond, a guarantee may be provided by Brent, Wade and Walter Lester and the associated companies. Wade Lester acts as an estimator for both companies. Brent Lester prepares bids for both companies. In most instances general contractors invite Brent Lester to prepare bids by either Lester or Planet, depending on whether the job in question is a union or non-union construction site.

Planet successfully bid on several projects including Burin Hospital, Fisheries College, School of Nursing and a Fishery Products Plant. These projects were not available to Lester. Conversely, Lester bid on projects that were not available to Planet. For example, Lester obtained a hospital contract (Clarenville) which was not available to Planet as the Clarenville hospital site was a union project.

Prior to the hearing of this matter, the community of Marystown was awaiting the construction of another hospital, the Burin Hospital. Brent Lester was asked to bid the Burin project with Planet and Planet obtained the mechanical subcontract. The Burin project was the catalyst that resulted in the labour hearing in question.

The union began by attempting to organize the employees working at the Burin site and brought an application for certification. It appears that the workers at the Burin site did not favour certification, and the union withdrew the application shortly before the hearing. In its place the union deposed an application alleging unfair labour practices. Its complaint alleged that Lester had violated ss. 24 and 25 of The Labour Relations Act, 1977 by informing union members that the only way they could work at the Burin site would be to drop out of the union. The union also sought a declaration of successorship pursuant to s. 89 of the Act for an order that Planet be bound by the collective agreement in existence between the union and the Newfoundland Construction Labour Relations Association, the accredited bargaining agent of Lester. At the same time, the companies laid a complaint alleging that union harassment of the employees working at the Burin site violated s. 28 of the Act.

All of the applications were heard at the same time. The Board granted the successorship declaration (one board member dissenting) and found it unnecessary to make findings on the other applications.

The companies applied to the Trial Division of the Newfoundland Supreme Court for an order of certiorari to quash the Board order. Before the Trial Division the companies argued that the Board had no jurisdiction to make such a declaration and, in the alternative, if it had jurisdiction that it had exercised its jurisdiction in a manner that was patently unreasonable. Russell J. denied the application. On further appeal the Court of Appeal in a unanimous decision held that the Board's decision was patently unreasonable. The Court remitted the matter of the unfair labour practices to the Board. Leave to appeal to this Court on the successorship issue was granted on June 8, 1989.

The Legislation

The Newfoundland Labour Relations Act, 1977, ss. 16.1(2), 17(k), 18(1) and 89:

16.1 . . .

(2) A trade union, council of trade unions, employer or employer's organization may apply to the Board for a determination of any matter referred to in paragraph (k) of section 17.

17. In relation to any proceeding before it, or to determine any matter referred to it by the Minister, or pursuant to an application made to it, the Board may

(k) decide for all of the purposes of this Act any question that may arise in a proceeding, or pursuant to an application made to it, or referred to it by the Minister, including, without limiting the generality of the foregoing, any question as to whether

(vii) any person or organization is a party to or bound by a collective agreement,

(viii) a collective agreement is in operation...

18. (1) No decision, order, direction, declaration or ruling of the Board shall be questioned or reviewed in any court, and no order shall be made or process entered or proceedings taken in any court, whether by way of injunction, declaratory judgment, certiorari, mandamus, prohibition, quo warranto, or otherwise, to question, review, prohibit or restrain the Board or any of its proceedings.

19. (1) Where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of his business or the operations thereof or any part of either of them, and

(a) the employer or the purchaser, lessee, transferee or person otherwise acquiring the business is a party to or is bound by a collective agreement with a bargaining agent on behalf of any employees affected by the sale, lease, transfer, disposition by other means or contract;

(b) one or more bargaining agents have been certified as bargaining agent for any such employees;

(c) one or more trade unions or a council of trade unions has applied to be certified as bargaining agent for any such employees; or

(d) one or more bargaining agents have given or are entitled to give notice under either section 72 or section 73 with respect to any such employees,

then, unless the Board otherwise directs, the collective agreement, certification, application, notice or entitlement to give notice continues in force and is binding upon the purchaser, lessee, transferee or person otherwise acquiring the business.

(2) Any employer, purchaser, lessee, transferee or any bargaining agent, trade union or council of trade unions or other person referred to in subsection (1) may apply to the Board for the resolution of any question or problem that as a result of such sale, lease, transfer or disposition has arisen or may arise with respect to any collective agreement, certification, application, notice or entitlement to give notice.

(3) Where an application is made under subsection (2), the Board shall, by order, make whatever award, give whatever direction, or take any other action that in its discretion the Board deems appropriate, to resolve any relevant question or problem and in particular, but without limiting the generality of the foregoing, may in that or a subsequent order

(a) modify or rescind to the extent that the Board deems necessary or appropriate any collective agreement;

(b) amend or revoke any certification or amend any application for certification;

(c) modify or restrict the operation of any notice or entitlement to give notice;

(d) determine whether employees affected constitute one or more appropriate bargaining units;

(e) if more than one collective agreement is to continue in force, designate the employees that are to be covered by each agreement;

(f) modify or restrict the operation or effect of any provision of any collective agreement and define the rights with respect thereto of any employees affected by the sale, lease, transfer or disposition by other means;

(g) declare which trade union, trade unions or council of trade unions shall be the bargaining agent or agents for the employees; and

(h) interpret any provision of any collective agreement.

(4) Notwithstanding anything to the contrary in this Act, a purchaser, lessee, transferee or person otherwise acquiring the business shall not be required to bargain with any bargaining agent with respect to employees to whom an application made under subsection (2) relates, until the Board has disposed of that application.

(5) Where an application is made under subsection (2), the Board may make or cause to be made any examination of records or other inquiries, and may hold any hearings and take any representation votes, that it deems necessary and prescribe the nature of evidence to be furnished by the Board.

The Judgments

Newfoundland Labour Relations Board

The majority reviewed the evidence and then referred to one of its earlier decisions in Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904 (1985), 55 Nfld. & P.E.I.R. 117, in which a successorship application was successful in the construction context. The majority then went on to determine whether or not there had been a disposition in this case.

Initially, the Board examined the relationship between the two companies and noted that in making a determination of whether or not there has been a sale, transfer or disposition, boards are not overly concerned with the "technical, legal form of the business disposition", particularly in the construction industry where the only assets required to carry on a business may be the skill and expertise of the principals. The Board summarized the evidence as follows:

It seems clear to us that there is a discernable continuity in the business or a part of it, and that Planet does not represent a new or different operation totally unconnected with the old. Lester came into being in 1978 and Planet came into being in 1981. The nature of the work carried on by both is the same. For example, Lester built the hospital at Clarenville and Planet built an identical hospital in Burin. The tools of the trade are the same, the skills of the workers are the same, the types of projects on which they bid are the same, the planning, engineering, technical and estimating skills are the same. The one significant difference is that one project is bid using union labour rates, while another is bid using non-union labour rates. The only conclusion we can come to is that the controlling forces (the Lesters) wish to be able to operate without the constraints and obligations of a collective agreement whenever it is economically convenient for them to do so. The danger is of course that in adopting this method of operation one may run afoul of the provisions of Section 89 of our Act. In the Pinsent case, board member McDonald observed in his addendum that "uncontradicted evidence in the Pinsent case clearly established that the only reason for the establishment of N. & L. Construction was to secure business that Pinsent was unable to secure through the advantage of non-union wage rates". He went on to empathize with the plight of private sector operators and this Board shares these views. However, almost all of the factors which persuaded the Board in the Pinsent case are present here. We have already discussed the "winding down" factor and have found that not to be determinative of the issue. The one factor which was stressed by counsel for the companies in this case was that no employees of Lester went to the Burin job. While in some cases this may be very persuasive, in the construction industry, it is of little or no weight. If this were to be a determining factor, all one would have to do is lay off employees when one project is finished, and then take on another project under a non-union bid, and hire new employees to do the new work.

The majority went on to find that successorship had occurred and ordered that Planet is bound by the collective agreement. Having reached this finding the Board found it unnecessary to deal with the unfair labour practice complaints.

J. V. McDonald in his minority decision strongly disagreed with the findings of the majority. In his view, before a successorship declaration can be made the union must establish that there has been a disposition of some identifiable and severable part of the predecessor's operation. Mr. McDonald stated that on the facts of this case he was unable to determine what distinct part of Lester's business had been transferred or otherwise disposed of to Planet. He noted that the majority in their decision did not identify what had been transferred or otherwise disposed of. It appeared to him that the majority was more concerned with establishing that Lester and Planet were one and the same, with the rationale being that if it could be found that the differences between the two were merely either superficial or imaginary, then one must be a successor to the other. Thus, in his view, the majority erroneously concluded that because of an apparently close relationship between the two companies in terms of ownership and control, one must by necessity be a successor of the other. Board member McDonald found that the evidence failed to establish that any coherent or severable part of Lester's business had been transferred to Planet and accordingly found that no disposition had occurred. He concluded:

I am left to wonder how the majority can so easily have disregarded the fact that Lester and Planet are two separate, active companies, and it is unclear to me, to say the least, how there can be any disposition such as the board describes when this is the case. I believe that the underlying rationale of the majority's decision is one that can only lead to awkward and unjust results, both in the present case and in others that may come before the Board in the future and, most importantly, is one which brings about a result which I believe was clearly not contemplated by the existing provisions of the Act.

Mr. McDonald also noted that the decision of the majority represented a dramatic alteration to the law and implied that in his view the majority decision was beyond the jurisdiction of the Board. He stated:

In my opinion, what the Board majority have ruled in the present case represents a significant departure from previous thinking and labour board jurisprudence. Indeed, with respect, I would go further and suggest that the majority have reached a conclusion which is inconsistent with both the relevant provisions of our Act and the evidence which was adduced before the Board during its hearings on this matter.

Newfoundland Supreme Court, Trial Division (Russell J.) (1987), 1987 5088 (NL SC), 67 Nfld. & P.E.I.R. 185

Two issues were put before Russell J.: (1) that the Board had no jurisdiction to determine whether or not a disposition had occurred and, (2) alternatively, if the Board had jurisdiction, that its decision was not rationally supported by the Act.

Russell J. held that the Board had jurisdiction under s. 17(k) of the Act.

On the merits, Russell J., after observing that the Board had considered the evidence and the representations of the parties and had based its conclusion that a transfer had occurred under the Act on a construction which the legislation might reasonably bear, denied Lester's application for certiorari.

Newfoundland Court of Appeal (Goodridge C.J.N., for the Court) (1988), 1988 4452 (NL CA), 70 Nfld. & P.E.I.R. 145

The Court of Appeal held that the while the language of ss. 89(1) and 17(k) left some doubt as to whether the Board technically had the jurisdiction claimed by it, s. 16.1(2) removed any such doubt.

Having concluded that the Board had the initial jurisdiction to consider the issue, the court went on to consider the scope of s. 89. In its view, at p. 149, it was confined to cases of a clear transfer:

The matter of double breasting has been a controversial one in the construction industry in recent years. Section 89 was not enacted with a view to dealing with it. It is quite clear from a reading of the section that the Legislature was thinking in terms of a transfer about whose existence there would be no controversy. It was contemplating a situation where the business or operations of one person would move in whole or in part to another person. It originally made no express provision for the determination of whether or not a transfer had taken place but, assuming it to have taken place, stated the consequences. The significant consequence in this case is that the collective agreement would be binding upon the transferee. [Emphasis added.]

The court stated that its task was to determine whether or not the Board made an error of law in its interpretation of the words "transfer or other disposition" or whether it made an error of fact in concluding that what transpired was a "transfer or other disposition". However, following this Court's decision in Blanchard v. Control Data Canada Ltd., 1984 27 (SCC), [1984] 2 S.C.R. 476, it was unnecessary to make a distinction because in either event the test is one of reasonableness. The court then reviewed the evidence presented before the Board and concluded that the evidence did not support the conclusion stated by the Board and therefore the decision was patently unreasonable. It stated the following conclusions, at p. 153:

[1.] Lester did not transfer to Planet the expertise and knowledge of Brent and Wade Lester. Brent and Wade Lester were two of the three owners of both companies. It was their decision and not the decision of Lester as to how their talents should be applied.

[2.] Lester and Planet and two other companies occupied the same building and all shared the cost of occupation.

[3.] There was no intermingling of employees of Planet and Lester. The only intermingling of which there was evidence consisted of the lady who answers the phone. The Board was told that she works for Lester. Inasmuch as Planet has the same telephone number she would also answer the phone for Planet. In addition she did the payroll for Planet for a period but this was subsequently taken over by a chartered accountant.

[4.] Planet has its own equipment and tools. However, either company might lease equipment to the other and in such a case a rent would be set up.

[5.] With respect to financial acumen and financial responsibility the only evidence of this was that where Planet was required to provide a performance bond Lester might provide a personal guarantee.

The Court of Appeal concluded, at p. 153, that the overall picture revealed that while there may have been some "mutual backscratching" between Lester and Planet, there was no transfer of business or operation; indeed, the contrary conclusion was supported by the evidence. The business that Planet did as a non-unionized company was not and would never have been available to Lester. It followed that the Board's conclusion that there had been a disposition of business within the meaning of s. 89 was not supportable by the evidence and thus was patently unreasonable.

The Court of Appeal allowed the appeal and held that Russell J. had erred in denying the application to quash the Board's determination that Planet was a successor to a part of the business of Lester within s. 89 of the Act.

The Issues

Two issues are raised before us:

I. Whether the Board had the jurisdiction, to enter into the inquiry as to whether or not successorship had occurred;

II. If the Board had the jurisdiction, whether the exercise of its jurisdiction was patently unreasonable.

Analysis

I. Jurisdiction of the Board

Section 89 provides that if there is a sale, lease, transfer or other disposition from one employer to another, the collective agreement of the transferring employer is imposed on the second employer. Because there was no acknowledgement that a disposition of any kind had occurred in this case, the Board was required to make a preliminary determination as to whether or not a disposition had taken place. The question was whether the Act gave the Board the power to determine whether an employer had disposed of his business or a part of his business under s. 89(1).

The problem arises because none of the provisions of the Act, as it stood at the relevant time, empowered the Board to enquire into whether a transfer had occurred. Section 89(1) does not expressly give the Board the jurisdiction to determine whether or not there has been such a transfer, providing only that the collective agreement will automatically attach to the purchaser if there has been a transfer. Section 89(2) similarly offers no assistance on the question of jurisdiction. While s. 17(k)(vii) gives the Board jurisdiction to answer questions as to whether any person or organization is a party to or bound by a collective agreement, it only applies where the determination is in relation to a proceeding before it. In National Bank of Canada v. Retail Clerks' International Union, 1984 2 (SCC), [1984] 1 S.C.R. 269, this Court held that a labour board had jurisdiction to make a preliminary inquiry as to transfer. The section there in question, however, was s. 144 of the Canada Labour Code, R.S.C. 1970, c. L-1, which provides that "Where any question arises under this section as to whether or not a business has been sold or as to the identity of the purchaser of a business, the Board shall determine the question". In the absence of a counterpart in the Newfoundland Act, there was arguably no matter before the Board for which s. 17 could have been relied on to impose a collective agreement.

This apparent oversight in the Act has been resolved by virtue of s. 16.1 of the Act which allows a union to apply to the Board for a determination of any matter referred to in s. 17. The Court of Appeal in the present case held that any doubt about the Board's jurisdiction is resolved by s. 16.1. However, this is inaccurate with respect to this case as s. 16.1 was not in force at the time that the Board heard this application.

Because the enactment of s. 16.1 renders this issue a moot question except for the determination of this case, and in view of my conclusion on the substantive issue before the Court, I am prepared to assume for the purpose of this judgment that the labour board had jurisdiction to consider whether or not there had been a sale, lease, transfer or other disposition.

II. Whether the Board's Exercise of its Jurisdiction was Patently Unreasonable

Assuming that the tribunal had the initial jurisdiction to determine whether or not a sale, lease, transfer or other disposition occurred, the next question is whether its determination that a disposition in fact occurred was patently unreasonable and thereby constitutes an excess of jurisdiction. This governing principle was explained by this Court by Dickson J. (as he then was) in Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, 1973 191 (SCC), [1975] 1 S.C.R. 382, at p. 389:

A tribunal may, on the one hand, have jurisdiction in the narrow sense of authority to enter upon an inquiry but, in the course of that inquiry, do something which takes the exercise of its powers outside the protection of the privative or preclusive clause. Examples of this type of error would include acting in bad faith, basing the decision on extraneous matters, failing to take relevant factors into account, breaching the provisions of natural justice or misinterpreting provisions of the Act so as to embark on an inquiry or answer a question not remitted to it.

In the final analysis, the question in cases of alleged misapplication of statutory provisions, as set out by this Court in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, 1979 23 (SCC), [1979] 2 S.C.R. 227, at p. 237, is the following:

...was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?

The test for review is a "severe test": Blanchard v. Control Data Canada Ltd., supra, at p. 493.

Section 18 of the Newfoundland Act contains a privative clause limiting the Court's jurisdiction to engage in judicial review to error in interpreting the provisions conferring jurisdiction on it, or excess of jurisdiction by reason of a patently unreasonable error in the performance of its function: CAIMAW v. Paccar of Canada Ltd., 1989 49 (SCC), [1989] 2 S.C.R. 983.

Courts should exercise caution and deference in reviewing the decisions of specialized administrative tribunals, such as the Labour Board in this case. This deference extends both to the determination of the facts and the interpretation of the law. Only where the evidence, viewed reasonably, is incapable of supporting a tribunal's findings of fact, or where the interpretation placed on the legislation is patently unreasonable, can the court interfere. As Dickson J. (as he then was) put it in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, supra, at pp. 235-36, referring to the privative clause in the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25:

[the clause] constitutes a clear statutory direction on the part of the Legislature that public sector labour matters be promptly and finally decided by the Board. Privative clauses of this type are typically found in labour relations legislation. The rationale for protection of a labour board's decisions within jurisdiction is straightforward and compelling. The labour board is a specialized tribunal which administers a comprehensive statute regulating labour relations. In the administration of that regime, a board is called upon not only to find facts and decide questions of law, but also to exercise its understanding of the body of jurisprudence that has developed around the collective bargaining system, as understood in Canada, and its labour relations sense acquired from accumulated experience in the area.

At the same time, the court cannot defer to decisions which are patently unreasonable. As Wilson J. recently noted in Paccar at p. 1021:

...if it were simply a question of whether the Board's interpretation of the Code was the correct one, or even whether it was a reasonable one, there would be no issue for the courts. In such circumstances the principle of curial deference would require that the Board's decision be respected. But the courts must not defer to decisions that are patently unreasonable. Such decisions cannot be passed off as the product of special expertise or, as the appellant submits, "policy choices" which are not subject to review by the courts. They can only be treated as decisions which the Board had no jurisdiction to make. [Emphasis added.]

The question, then, is whether there are errors which establish that the Labour Board in this case was acting beyond its jurisdiction. Bad faith on the part of the Labour Board is not alleged, nor breach of the procedural rules of natural justice. Rather the attack is on the basis of the Labour Board's decision. First, it is submitted that the Board misconstrued the provisions of the Act. Second, it is suggested that there was no evidence capable of supporting the Board's conclusion that a transfer took place. The two points are related. The first question must be how s. 89 should be construed. What arrangements and relationships does it cover? The answer to that question determines what sort of evidence is required to bring the section into play.

A. The Interpretation of s. 89

Section 89(1) of the Act establishes the conditions in which the collective agreement between a union and one employer may be imposed between the union and another employer. That occurs "Where an employer sells, leases, transfers or otherwise disposes of, or agrees to sell, lease, transfer or otherwise dispose of his business or the operations thereof or any part of either of them...."

The question is whether these words extend to parallel companies operating side by side in an independent although not unrelated manner, or whether, on the contrary, they are confined to true transfer situations.

(1) The Problem

In order to understand s. 89(1) it is necessary to examine the problem to which it and similar provisions across the country are addressed.

The basic aim of such provisions is to prevent employees from losing union protection when a business is sold or transferred or when changes are made to the corporate structure of a business. The problem may arise in two ways.

The classic situation, and the first to be addressed in most provinces, arises when a business or part of a business is transferred from one company to another. The transfer may be activated by legitimate motives or as a device to oust a union and may be made between unrelated companies or arise through corporate reorganization. The effect is the same. Absent legislation, the effect of the transfer is to terminate the relationship between the union and the employer, with the result that the employees would lose their bargaining rights. To meet this problem, successorship provisions, like s. 89 of the Newfoundland Labour Relations Act, 1977, have been passed.

The second situation in which the problem arises does not, at first glance, involve a transfer of the business or part of the business from one company to another. It arises where one company, which continues to carry on business subject to a union contract, sets up a second parallel company which operates without a union. This practice, known as "double breasting", is a device readily available in the construction industry, where workers tend to be hired for particular jobs. By having a new non-union company take on a new job, the employer can avoid the union contract. The workers for the first company, if they want work, may be compelled to work in a non-union shop for the second company. If work or employees are transferred to the non-union company, successorship provisions may render assistance to the affected employees. However, in the absence of some type of disposition, successorship provisions will not prevent double breasting.

Because related corporate structures will not in the absence of disposition trigger successorship provisions, five provinces and Parliament have enacted common or related employer provisions: Alberta, Labour Relations Code, S.A. 1988, c. L-1.2, s. 45; British Columbia, Industrial Relations Act, R.S.B.C. 1979, c. 212, s. 37, as amended, S.B.C. 1987, c. 24, s. 25; Manitoba, The Labour Relations Act, R.S.M. 1987, c. L10, s. 59; Nova Scotia, Trade Union Act, S.N.S. 1972, c. 19, s. 20; Ontario, Labour Relations Act, R.S.O. 1980, c. 228, s. 1(4); Canada, Canada Labour Code, R.S.C., 1985, c. L-2, s. 35. In the construction industry context, common employer provisions allow labour boards to impose a collective agreement in cases of double breasting where doing so serves a labour relations purpose.

Newfoundland has not enacted common employer provisions. The Advisory Committee to the Minister of Labour for the Province of Newfoundland, in a report on the construction industry, considered and rejected the adoption of common employer provisions. After hearing from unions and construction employers and taking into account both the need to allow corporations to remain competitive and the interests of unions, the Committee concluded that the existing provisions offered sufficient protections.

The situation in the case at bar is not one of successorship in the classic sense of a business or part of a business being transferred from one company to another. It falls rather into the second category of a collateral, connected company. The question is whether, given the absence of common employer provisions in Newfoundland, the successorship provisions of s. 89 of the Act can be read as extending to this case.

(2) Legal Remedies for the Problem of Double Breasting

(a) The Use and Limitations of Successorship Provisions

Successorship provisions similar to s. 89 of the Act exist in all provincial labour acts and in the Canada Labour Code. While there are slight variations in the wording, the purpose attributed to successorship provisions is consistent. One of the oft-cited quotes explaining the underlying rationale for successorship provisions is found in a decision of the British Columbia Labour Relations Board in Kelly Douglas & Co. and W.H. Malkin Ltd., [1974] 1 CLRBR 77, at pp. 81-82:

When an employer exercises this legal freedom to dispose of its business, this can have serious consequences for the situation of its employees. They may have struggled to become organized and achieve collective bargaining and then to arrive at a collective agreement. Once that agreement is finally settled, the employees naturally expect that its terms will be fulfilled in the conduct of the enterprise. The trouble is that these expectations could be set at naught by a simple change in corporate ownership. The employees may find themselves still working at the same plant, at the same machine, under the same working conditions, under the same supervision, doing exactly the same job as before, but for a different employer. The result of the sale of a business of which the employees may not even be aware is that the collective bargaining rights of the employees may have disappeared.

Realistically, one cannot expect these interests of the employees and their union to be at the forefront of the business negotiations which employers are free to engage in. Accordingly, the legislature adopted a very straight-forward protection. Certification and other orders under the Code follow the business into the hands of the transferee. The legislature went even further to impose the collective agreement on a person who didn't sign it. It is up to the prospective purchaser to investigate the terms of the bargain which its predecessor has made with the trade union and see that this is taken account of in the purchase price of the takeover before it steps into the shoes of the old employer.

Within that framework, it is important that the Board give a full and liberal interpretation to the concept of successorship. In particular, little reliance should be placed on the technical legal form which a business disposition happens to take as between the old employer and its successor. The significant factor as far as collective bargaining law is concerned in [sic] the relationship between the successor, the employees, and the undertaking.

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 provisions -- 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 {PP} 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.

This Court in National Bank of Canada v. Retail Clerks' International Union, supra, affirmed that the technical legal form of a disposition will not be determinative and upheld a finding by the Federal Court of Appeal that a labour board's interpretation of disposition to include amalgamation was not patently unreasonable.

Notwithstanding the broad discretion in labour boards to determine whether or not the mode of disposition constitutes successorship, the fact remains that in virtually all jurisdictions something must be relinquished by the predecessor business on the one hand and obtained by the successor on the other to bring a case within the section.

The appellant union urged on us the following definitions of "disposition":

... to `alienate or direct the ownership of property as disposition by will; to exercise finally, in any manner, ones power of control over; to pass into control of someone else; to alienate, relinquish, part with, or get rid of; to put out of the way; to finish with; to bargain away; to transfer into new hands or to the control of someone else (as by selling or bargaining away); relinquish the whole; (dispose of some property to a man all too anxious to buy)'.

By any of these definitions it is clear that disposition must mean that in some way the first company no longer has the business or part of the business, which has been conveyed to the second company.

Case law from jurisdictions across Canada is to the same effect. While there are slight variations from province to province in terms of scope (i.e., some Acts speak only of disposition of a business whereas other Acts provide for disposition of a part of a business) a common theme throughout the jurisdictions is that something must be relinquished from the first business and obtained by the second.

If the particular section in question allows for successorship upon disposition of part of a business (as the Newfoundland Act does) there is more latitude to find successorship, since successorship may occur, where, for example, a business transfers only a portion of its operation. However, even where the Act provides for disposition of part of a business, transfer of assets alone may be insufficient to establish successorship. Rather, a discernable part of the business must be disposed of. As Adams, in his text, Canadian Labour Law (1985), at p. 414, states in concluding a review of the law from various jurisdictions: "In virtually all cases where a sale of part of a business has been found, a separate and identifiable part of the predecessor's operations has been transferred". Adams continues at p. 415:

What is clear from all these cases is that what must be transferred is a portion of the business capable of being defined and identified as a functioning entity that is viable in itself or sufficiently distinguishable to be severable from the whole.

To determine whether or not the business or part of the business has been disposed of, most boards examine the nature of the predecessor business, and the nature of the successor business determines if the business of the predecessor is being performed by the successor. Most boards approach the issue by examining factors like the work covered by the terms of the collective agreement, the type of assets that have been transferred, whether goodwill has been transferred, whether employees are transferred, whether the business is operating in the same location, whether there is continuity of management, and whether there is continuity of the work performed: Lyric Theater Ltd. v. International Alliance of Theatrical Stage Employees, [1980] 2 Can LRBR 331 (B.C.); Canadian Union of Public Employees v. Metropolitan Parking Inc., 1979 815 (ON LRB), [1980] 1 Can LRBR 197 (Ont.). No single factor is determinative, since factors which are sufficient to support a successorship finding in one type of industry may be insufficient in another: International Longshoremen's Assn. v. Terminus Maritime Inc. (1983), 83 CLLC {PP} 16,029. In each case the Board must determine if, within the business context in which the transaction occurred, it can reasonably be said on the factors present that the business or part of the business has been transferred from the predecessor to the successor. Because a business is not merely a collection of assets, the vital consideration "is whether the transferee has acquired from the transferrer a functional economic vehicle": Metropolitan Parking Inc., supra, at p. 209.

Having reviewed the general principles governing the construction of successorship provisions, I turn to their interpretation in the context of the construction industry. Due to its peculiar nature, many of the factors examined in other contexts to determine if successorship has occurred may not be relevant. As Paul Weiler, Reconcilable Differences: New Directions in Canadian Labour Law (1980), explains at p. 183:

The character of the employment relationship in the construction industry is very different from what it is in the typical plant. There is no footing for the kind of tenured status which employees now enjoy under most collective agreements. As well, there is no basis for the kind of enduring association which a group of employees can develop in an industrial bargaining unit. Any one job for the construction worker is short and fleeting, and he must be prepared to be highly mobile, shifting from project to project across a wide geographic area.

It is the construction union which fills the vacuum, which provides the continuity and structure in a tradesman's working career.

In short, application of traditional factors to the construction industry may render it easy for a contractor to erode the protection which successorship provisions are meant to provide for bargaining rights. Construction companies, which often have very few tangible assets, could avoid union obligations by the simple technique of starting a new company to bid on a new project.

In response to this type of tactic, labour boards began to apply different tests when examining successorship in the construction context. The different treatment of successorship in the construction industry is explained in Gibraltar Development Corporation and Construction and General Labourers Union, BCLRB 12 29/82, at p. 607:

While the concept of the transfer of a business by means of the transfer of assets may be a valid concept in many contexts, it may be totally inapplicable in some situations in the construction industry. In the construction industry, the sole "assets" required to carry on a business may well be the skill and expertise of its principals as well as their resulting reputation and credibility. The movement of that expertise and reputation by "winding up" one business and "Starting up" another is not the same as the transfer of the tangible assets of a business.

In cases where few, if any tangible assets are required to carry on a business, the principals may be the only significant "feature" of a business. It is more meaningful then to speak of them as being or constituting the business itself rather than as being "assets" of the business. [Emphasis added.]

Thus, some boards dealing with this issue in the construction industry developed what has sometimes been referred to as a "key-man" concept. Successorship applications have sometimes succeeded where a principal in a small unionized construction company had left that company and formed a non-union company, provided that the individual involved was really the key-person or the crucial asset of the first business: see for example: Rivard Mechanical; Re Plumbers Union, Local 71, [1981] OLRB Rep.May 550; Frank Browne Acoustics Kamloops (1982) Ltd. v. United Brotherhood of Carpenters and Joiners (1984), 6 CLRBR (NS) 247 (B.C.). In the present case none of the principals in question have left the union company. Both companies continue to operate in a classic "double breasting" situation.

Successorship applications have also succeeded where it is established that because of the presence of the non-union company the union company is losing work, or the union company is wound down: see for example United Brotherhood of Carpenters & Joiners of America v. Cana Construction Co. (1984), 9 CLRBR (NS) 175 (Sask.); Doran Construction Ltd., Taggart Construction Ltd. and Taggart General Contractors Ltd.; Re Carpenters Union, Local 93, [1984] OLRB Rep.Aug. 1108 (Ont.); Gibraltar Development, supra, at p. 1108; Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904, supra.

Review of numerous decisions in the construction industry makes it clear that in all cases where successorship was established either a central principal left the first company (such that even if the first company remains operational a part of the business may have been disposed of) or the first company is wound down or at least has suffered a decline in business because of the presence of the non-union company. However, where both companies remain fully operational and where principals continue to work for both companies, boards have not found successorship as there is no identifiable disposition: see, for example, Viandes Seficlo Inc. v. Union des Employés de Commerce (1984), 84 CLLC {PP} 14,047 (Que.); International Brotherhood of Electrical Workers v. Minas Electric Co. (1976), 77 CLLC {PP} 16,075 (N.S.); Labourers' International Union of North America v. Elmont Construction Ltd., [1974] OLRB Rep.June 342. To put it another way, there is nothing within the successorship provisions to bar an individual from owning or working for more than one company or to bar a company from operating union and non-union branches.

This is not to suggest that in the absence of a common employer provision common ownership is always irrelevant. A close corporate connection may sometimes support the inference that a transaction was designed to circumvent bargaining rights and thus be contrary to the purpose attributed to successorship provisions. As the Ontario Board stated in Metropolitan Parking Inc., supra, at pp. 211-12:

In assessing the facts from which a transfer of a business may be inferred, the Board has always been especially sensitive to any pre-existing corporate, commercial or familial relationship between the predecessor and the alleged successor....If both businesses are also "in the same business", (i.e., supply the same product in approximately the same way and potentially to the same market or customers) a transfer of a business may have occurred but may be very difficult to detect. In such circumstances it may be important to carefully examine the pre-existing links or lines of common control to which the alleged predecessor and successor are both subject. Such examination is precisely what is undertaken by the Board on an application under section 1(4) [the Ontario common employer provision]; but it is also relevant on section 55 applicants, and it is for this reason that applications commonly plead section 1(4) in the alternative. It would be incorrect to make this consideration a decisive "test" for successorship; but where there is a pre-existing corporate connection between the predecessor and the successor the Board has been disposed to infer a "transfer" if there is the slightest evidence of such transaction. [Emphasis added.]

See also: United Brotherhood of Carpenters & Joiners of America v. Cana Construction Co., supra.

But while the existence of related companies may justify a less restrictive approach to the question of whether or not successorship has occurred, the fact remains that corporate interrelationship without some evidence of disposition will not be sufficient to trigger the successorship provisions.

The Newfoundland Labour Relations Board has until this case followed the same approach as other boards when addressing successorship in the construction industry. For example, in Re International Association of Machinists v. Professional Personnel Services Ltd. and C.P. Personnel Ltd. (Newfoundland Labour Relations Board, unreported, Sept. 1985) a unionized company had an airport security contract and later a non-unionized company was given the contract. Both companies were controlled and run by the same individual. The Board held that a disposition had not occurred and denied the successor rights application. The fact of common majority shareholdings and a possible relationship between the two companies was considered insufficient to invoke s. 89 because there must still be in fact a sale or other disposition.

In United Brotherhood of Carpenters and Joiners v. N. D. Dobin Ltd. and Bradco Ltd. (Newfoundland Labour Relations Board, unreported without written reasons, March 1985 -- cited in dissenting opinion of the Board), a unionized and a non-unionized company were owned and run by the same principals, shared office space, personnel and expenses. The companies also shared equipment through inter-company rentals. The Board denied the union's s. 89 application because it found there was no disposition. One of the reasons for this finding was the fact that both companies were still active and ongoing enterprises.

Conversely, in United Brotherhood of Carpenters and Joiners v. Robco Ltd. and Brookfield Investments Ltd. (Newfoundland Labour Relations Board, unreported, May 1985) and in Pinsent, supra, successorship declarations were granted where the original company ceased to exist and the second company increased its operations.

These cases reveal that, until this decision, the Newfoundland Board has followed traditionally accepted jurisprudence with respect to successorship provisions in the construction industry. If a principal has left the union company, or if the first company has lost work or is wound down, successorship may succeed. If none of these factors is present the mere practice of double breasting will not be sufficient to establish successorship as nothing has been transferred, in the classic sense of a loss to the union company accompanied by a corresponding gain to the non-union company.

I cannot leave consideration of the scope of s. 89(2) of the Act without reference to three cases relied on by the appellant for the contention that the section could extend to circumstances short of a clear conveyance from one company to another. The appellant cited Kelly Douglas & Co., supra; Frank Browne Acoustics, supra; and Pinsent Construction Ltd. v. International Union of Operating Engineers, Local 904, supra, in support of its contention that the relationship between Lester and Planet and the presence of the Lesters performing bids for both companies could properly fall within the meaning of "other disposition". While it is true that in these cases the labour boards in question determined that simple legal configurations such as incorporation cannot be used in derogation of hard-won bargaining rights, they are distinguishable from the present case. In all of these cases the evidence in favour of successorship went well beyond the mere existence of related companies.

In Kelly Douglas & Co., there had been a corporate reorganization, which resulted in work previously performed by some branches of the company being transferred to other branches, with the result that some outlets were closed. In effect, work was transferred. In Frank Browne Accoustics, one of the two principals had left the union company. Thus the asset (the principal's expertise, knowledge etc.) was transferred. In Pinsent, there was evidence that the union companies had lost work because of the creation of the non-union double breasted company. Again, work was transferred.

In summary, in none of these cases was the mere presence of two companies operating side by side sufficient to trigger successorship. There must be more to indicate a transfer or disposition. In Re N & L Construction Ltd. (1987), 1987 3974 (NL CA), 64 Nfld. & P.E.I.R. 271, the Newfoundland Court of Appeal was again faced with the question of whether there was a transfer of business within s. 89 of the Act. The evidence had established that there had been very little new work performed or bid on by the union company once the non-union company was set up. Gushue J.A. therefore upheld a trial division judgment affirming the original ruling of the Board. In doing so, he stressed the importance of that additional element. At page 275, he stated:

Having accepted that the board's decision should stand, I would add that I do so based on the strong facts of this case in support of such transfer or disposal. I do not agree with the board that s. 89 is a suitable vehicle, generally speaking, for dealing with "double-breasting" situations and I certainly do not accept the proposition that persons holding controlling shareholdings in companies which happen to be unionized, may never engage in other nonunionized endeavours, incorporated or otherwise. [Emphasis added.]

I conclude that a finding of successorship based on common shareholdings and a common business enterprise is clearly insufficient on the established jurisprudence to bring the case within s. 89 of the Act. Nor is it sufficient to show that the same people own or work for both companies. What must be established is that the first company must have conveyed some aspect of the business to the second company.

(b) The Advent of Common Employer Provisions

The obligation on the Union to establish the transfer required by successorship provisions may be difficult to discharge in the construction context. As the Ontario Board explained in Brant Erecting and Hoisting; Re Iron Workers' Union, [1980] OLRB Rep.July 945, at pp. 948-49:

A single principal may have several companies which are used, more or less interchangeably, so that bidding is done and work performed through whichever company is convenient. In such circumstances there may be an effective transfer of business between related businesses without any apparent disposition of assets, inventory, trade names, goodwill, employees, etc. Similarly, where capital requirements are minimal and business relationships transitory, it is relatively easy to wind up one business, and create another one which carries on essentially the same business as before. Indeed there will often be good commercial reasons for doing so unrelated to any express desire to undermine the union's bargaining rights.... Again, it is quite possible to do this without a clear and concrete disposition between the two firms so as to call section 55 [the successor provisions] into play.

For this reason, unions have long sought stronger protection than is provided under successorship provisions. Contractors have also sought changes, arguing that, especially in a poor economy, they can not be competitive if unable to bid on projects at non-union prices. (For a good summary of the various arguments raised in respect of double breasting see Concerned Contractors Action Group v. British Columbia and Yukon Territory Building and Construction Trades Council (1986), 13 CLRBR (NS) 121 (B.C.)).

Different provincial legislatures have responded to these respective demands of unions and contractors in different ways. For example, in British Columbia recent amendments to successorship provisions provide that the transfer of a principal alone is not sufficient to finding successorship. Thus in the context of the construction industry the movement of a key figure would no longer alone be sufficient to establish successorship. However, the British Columbia Act, like the federal and many of the provincial Acts, also contains what is known as a "common employer" provision, the most common response to concerns raised in the construction industry.

As noted earlier, common or related employer provisions presently exist in the federal, British Columbia, Alberta, Manitoba, Nova Scotia, Ontario and Saskatchewan Labour Acts. Such provisions allow boards to address double breasting (where appropriate to do so) by giving the board the ability to declare that two employers are common employers and to treat them as one employer for the purpose of the Act. This permits the board to impose the collective agreement of a union company on the non-union company and thus to control the practice of double breasting. However, unlike the successor provisions which, in most jurisdictions operate automatically (if disposition is found the collective agreement shall be imposed) common employer provisions are discretionary. A declaration will succeed only if there is a valid labour relations purpose to be achieved: Mackie Bros. Sand & Gravel Ltd. (1974), BCLRB No. L107/81; International Association of Bridge, Structural and Ornamental Iron Workers v. Empire Iron Works Ltd. (1986), 86 CLLC {PP} 16,027 (Alta.). Moreover, labour boards have noted that they will not grant such a declaration where it is clear that a union is attempting to use a common declaration in circumstances where they are unable to achieve certification: Tri Power Construction Ltd. v. United Brotherhood of Carpenters and Joiners of America (1984), 8 CLRBR (NS) 332 (B.C.); International Brotherhood of Electrical Workers v. Minas Electric Co., supra; International Association of Bridge, Structural and Ornamental Iron Workers v. Empire Iron Works Ltd., supra.

Newfoundland is no exception to the demands for stronger protection against double breasting than traditionally provided by successorship provisions. Newfoundland construction unions have argued for change, pointing out that s. 89, as it now exists in the Act, does not address the issue of double breasting. Companies have countered by voicing their concern to remain competitive. The Construction Industry Advisory Committee in Newfoundland recommended against change: Report of the Construction Industry Advisory Committee. The Committee observed as follows:

The union representatives that the committee heard from were adamant that the present Section 89 as it now exists in the Labour Relations Act is inadequate to protect the rights of the unions and their members. They claim that it is only in the most blatant cases that the Labour Relations Board is able to find the evidence that one company has indeed "transferred...sold or otherwise disposed of its business" to another. Compounding the situation is the fact that the onus of proof rests in these cases on the unions and our present Act has no common employer provision. Also, in this Province we have no provision similar to that found in the Ontario Labour Relations Act where a respondent to an application made by a union under their equivalent of our Section 89, has to adduce all facts within its knowledge that are material or may be unavailable to the applicant.

To date, common employer provisions have not been adopted in Newfoundland.

(c) Summary of Legal Remedies for Double Breasting

The foregoing review establishes that successorship provisions such as s. 89(1) permit a representation order to meet the problem of double breasting only where a transfer can be established. If no transfer can be established, the Union may succeed under common employer provisions, where these exist. In practice, in jurisdictions where both successor and common employer provisions exist, unions will often bring applications under both sections.

The absence of common employer provisions in Newfoundland leaves only one question: was there any evidence upon which the majority at the Labour Board could have found that a transfer, lease, sale or other disposition occurred in the sense of an identifiable conveyance of assets, work or other aspects of the business of the unionized company, Lester, to the non-unionized company, Planet?

B. Whether There was any Evidence to Substantiate the Finding of the Majority?

As stated at the outset, the Court in reviewing labour decisions is not concerned with whether or not the decision is "correct" but rather is concerned with whether or not the decision is "patently unreasonable". If there is any evidence capable of supporting a finding of successorship, the Court will defer to the Board's finding even though it may not have reached the same conclusion. However, absent such evidence, the decision must fall.

Although the testimony before the Board was sometimes contradictory, my review of the transcript reveals that there was no evidence to support the Board's conclusion that a transfer or "other disposition" had taken place.

1. Transfer of Employees

There was no evidence that any employees were transferred from Lester to Planet. There was contradicted evidence that a transfer had been considered. Dan Whalen and Ben McCann testified that Brent Lester told them that he expected to transfer certain employees -- Dave Goodyear, Wally Coady, and Joe Fitzpatrick -- from the Clarenville job (Lester's job site) job to the Burin job if they agreed to quit the union. This evidence was contradicted by other testimony:

(a) Brent Lester denied making this statement;

(b) In cross examination McCann admitted that no Lester Ltd. employees were hired by Planet;

(c) While Wally Coady did not testify as to whether or not he had previously worked for Lester he did testify that he had not joined the union until just before the Burin job, so it would have been difficult for him to have worked for Lester, a unionized contractor.

(d) According to Brent Lester, Joe Fitzpatrick was never hired on the Burin job.

(e) There is no other evidence as to the identity and activities of the employee Dave Goodyear.

The majority of the Board appears to have accepted that there was no evidence that employees were transferred, but discounted the significance of this on the ground that "in the construction industry, it is of little or no weight".

2. Intermingling of Equipment and Finances

Jimmy Cheeseman testified that Brent Lester had told him to take a welding machine from the Burin site to use at Cow Head. His testimony was contradicted by Brent Lester, who explained that this was not possible as an electric welding machine would not work at Cow Head because there was no electrical source there. As to other matters, Brent Lester testified that:

(a) items shipped by suppliers to the Burin site might have been accidently addressed to Lester Ltd. instead of Planet but that this error would have been due to the supplier and the items were purchased on Planet purchase orders;

(b) Brent Lester had on at least one occasion provided advances to Planet employees using Lester Ltd. cheques when the Planet payroll system had broken down;

(c) Planet's bonding line was supported by guarantees from the Lester Family, Regent Enterprises Ltd. and Lester Holdings Ltd.;

(d) Planet and Lester owned or rented their own equipment but, on occasion, the companies would rent equipment to each other.

While this evidence would be relevant if the application brought was a common or related employer application, it provides no evidence of a transfer or disposition of business. In particular, there is no evidence that any equipment, money or finances were relinquished by Lester and subsequently obtained by Planet.

3. Anti-union animus

The evidence on this point is of little assistance, since even if anti-union animus were established, that would not establish that a transfer occurred under s. 89 of the Act on the legal criteria set out earlier.

However, since the Board referred to this issue in reaching its decision, a brief review of the evidence on it may not be amiss. At best, the evidence as to anti-union animus must be regarded as weak.

Dan Whalen, business agent for the union, and Ben McCann, business manager for the union, testified that Brent Lester told them he was doing the Burin job with Planet in order to avoid the union. Bill Cheeseman, a member of the union, testified that when he visited the Burin site he was told by Keating, an employee at the site, that if he wanted to work on the Burin Hospital "you'll have to tear up your union card like we had to do". Cheeseman also testified that Brent Lester had offered him a union job at non-union wages.

This evidence is refuted by the following evidence:

(a) There was no evidence to substantiate the claims of Whalen and McCann that Brent bid the Burin project with Planet in order to avoid the union;

(b) Brent Lester testified that Cheeseman was not hired because he lacked the necessary ticket. The person who was hired to perform the work that Cheeseman claims he was initially offered by Brent Lester at lower than union rate was in fact paid the union rate;

(c) Brent Lester testified that he would have preferred to use Lester to do the Burin job as Lester employees had gained experience working on a similar hospital project at Clarenville such that it would have been easier to perform the work through Lester than through Planet;

(d) Keith Keating and Wally Coady were hired to work at the Burin site. Coady testified that he was not told he would have to tear up his card before working at the site. Both were card carrying union members, and Brent Lester was aware of their union status. Keith Keating denies being told that he would have to give up his union status in order to work at the site. Keith Keating also denies telling Cheeseman that he would have to tear up his card to work at the site. Rather, he testified that when Whalen (the business agent) and Cheeseman came to the site they threatened to "shut it down", and Keating then told Whalen that if Whalen wanted his card he would tear it up in front of him.

4. Principals/Expertise

This is the crucial element in this case. Evidence before the Board clearly established that Brent and Wade Lester performed work for both companies and that Brent Lester performed bidding on behalf of both companies. The Court of Appeal discounted this factor on the ground that Lester did not transfer the expertise to Planet, but rather, that it was the decision of Brent and Wade Lester operating in the course of their duties with the respective companies as to how their talents should be applied. The appellant submits that this interpretation fundamentally misconstrues the position of employees/managers/directors in relation to the companies for which they work.

Given the interrelationship between the two companies in question, I agree that it may not be appropriate to distinguish between the principals of the company and the company itself, as did the Court of Appeal. Nevertheless, it remains difficult to see on what basis a transfer or disposition of expertise can be said to have occurred. Both companies are entitled to use the expertise of the Lester brothers. The fact that Planet did so cannot be construed as a question of Lester's having relinquished the services of Brent and Wade. The evidence shows that the two companies, through their common employees, assisted each other -- "mutual back scratching", as the Court of Appeal graphically put it. For example, in relation to the Cow Head job, Lester received from Planet the information and prices which enabled Lester to obtain the contract. Conversely, when working at the Burin site Planet benefited from previous knowledge attained by Lester at the Clarenville site. The relationship is better described as a sharing of expertise than as a disposition from Lester to Planet.

Moreover, the expertise of Brent and Wade cannot be said to be expertise belonging to Lester. As the respondent argued, the word "expertise" is defined as an overall grasp of a subject process, etc. produced by ability, experience and skill. A person's expertise is something which has been built up or acquired over time. Lester was incorporated in 1978 and Planet in 1981. At the time of the hearing the expertise of Brent and Wade was expertise acquired over a period of years while working for both companies. Assuming that their expertise was a corporate asset, it is equally the asset of both Lester and Planet.

Finally, it is clear that the presence of Brent Lester in both companies did not result in a loss of work for Lester. The work which was available to Planet because of its non-union status was simply not available to the unionized company, Lester. The unrefuted evidence given at the hearing was that the presence of Planet has not resulted in any loss of work for Lester. Had Brent Lester been working for an unrelated company under the same circumstances, a successorship application would not have succeeded. The fact that Brent Lester has ownership in both companies cannot alter the fact that there is no evidence of disposition.

5. Summary of Evidence

I conclude that, while the evidence demonstrates a certain level of cooperation between the two companies, there is no evidence of any disposition by Lester to Planet, either of work, assets, or expertise. The evidence is incapable of supporting the Board's conclusion that there had been a disposition under s. 89 of the Act.

Both companies were operating out of the same office with essentially the same principals. One of the principals bid union jobs for one of the companies and non-union jobs for the other. However, both companies continued to operate independently and there was no evidence that work which would have gone to the union company was passed through to the non-union company. In fact there was evidence to the contrary. Had the union company ceased to operate (or had its operation been significantly curtailed), the Board might have been correct in finding successorship. However, since both companies continued to operate, there was no identifiable disposition and thus no successorship. The only asset that could have been "sold, leased, transferred or otherwise disposed of" within s. 89 was the expertise of the principals who were bidding on projects, since the businesses were otherwise run as separate operations. But this expertise was clearly not "sold" or "leased". Nor was it "transferred", since the first company continued to operate and to retain the services of the principals in question. The same logic must apply to the phrase "otherwise disposes of"; whatever the scope of the phrase, it must denote that in some way the first company no longer has an asset because it has disposed of it to the second.

C. Was the Board's Decision Patently Unreasonable?

The absence of evidence establishing a transfer or disposition under s. 89 of that Act renders the Board's decision patently unreasonable. The Board was able to arrive at its conclusion only by construing the Act in an unprecedented and unjustified manner.

On the facts of this case, where the two companies were operating side by side, the normal route would be to apply for a common employer declaration. In the absence of a common employer provision in the Newfoundland Labour Relations Act, 1977, the majority of the Board appears to have attempted to interpret the successorship provision as if it included such a provision. The Newfoundland Legislature has, for whatever reason, chosen not to enact such a provision (although clearly lobbied for). Achieving the opposite result by construing the Newfoundland successorship provisions as if they were common employer provisions is contrary to the weight of precedent and is patently unreasonable. Such a construction quite simply cannot be rationally supported by the relevant legislation.

Having concluded that there is no evidence of transfer or disposition sufficient to satisfy s. 89 of the Act and that the decision of the majority of the Board was by consequence patently unreasonable, I find it is unnecessary to consider the additional argument that no employees were affected by the alleged disposition.

Disposition

I conclude that the Newfoundland Court of Appeal correctly held that the decision of the majority of the Newfoundland Labour Relations Board was patently unreasonable. Accordingly, I would dismiss the appeal with costs.

//L'Heureux-Dubé//

The following are the reasons delivered by

L'HEUREUX-DUBÉ J. (dissenting) -- With the benefit of both Justice Wilson's and Justice McLachlin's reasons, and although I agreed with my colleague Justice Gonthier's approach on curial deference in National Corn Growers Assn. v. Canada (Import Tribunal), 1990 49 (SCC), [1990] 2 S.C.R. 1324, and still hold the same view, I join my colleague Wilson J. in the present appeal on the issue of the reasonableness of the Newfoundland Labour Relations Board's decision. As she does, and for the reasons she expresses, I find that the Board's decision was not patently unreasonable in the context of the Act.

I would therefore allow the appeal and dispose of the matter as suggested by my colleague Wilson J.

Appeal dismissed with costs, DICKSON C.J. and WILSON, L'HEUREUX‑DUBÉ and CORY JJ. dissenting.

Solicitors for the appellant: O'Dea, Strong, Earle, St. John's.

Solicitors for the respondents W.W. Lester (1978) Ltd. and Planet Development Corporation Ltd.: Heywood, Parsons, Mount Pearl, Newfoundland.

Solicitors for the respondent The Labour Relations Board for the Province of Newfoundland: Miller & Hearn, Labrador City, Newfoundland.

• Chief Justice at the time of hearing.

** Chief Justice at the time of judgment.