21
Ultimately, the Board asks itself whether enough significant parts of the business
have passed from the predecessor to the successor to warrant a successorship
declaration.
[95]
The fact-driven and contextual nature of the analysis under section 46 cannot be over-
stated. The particular industry at issue is part of that context. As noted in Construction Workers
Union (CLAC), Local 63 & 65 v. Hartland Pipeline Services et al., [2001] Alta. L.R.B.R. 296
(“Hartland”):
59
The cases repeatedly make the point that whether a "business," a "part of
a business" or something less than that has been transferred, is essentially a
fact-driven determination. There is no formula that can reliably be applied to an
individual case. Industries differ greatly as to what assets or intangibles are most
important to conveying a business as a going concern. Employers within
industries differ greatly as to the qualities or features that are most important to
meeting their business goals. Yet one can make some generalizations, and it is
generally the case that the construction industry has some unusual features that
weigh heavily in successorship determinations. Employers operate from bid to
bid, contract to contract, expanding their operation with short-term labour,
subcontractors, and rented equipment when necessary, and contracting it by
layoffs when activity is slow. Barriers to entry are relatively low; investment in
realty, inventory, sophisticated equipment and permanent labour need not be
large. Excepting the very large national and transnational construction
contractors, construction employers tend to be local or regional in their
operations. It follows that in any one area, owners, engineering firms and
contractors often know each other well. Industry relationships are uncommonly
personal. Goodwill is extraordinarily important to winning contracts, and goodwill
predominantly takes the form of the experience, knowledge, reputation and other
personal qualities of the senior managers of the construction contractor. These
factors may be so important to the success of an individual construction business
compared to other factors, that the senior manager or managers really embody
the "business"; where they go, the business goes. This is the "key man" concept,
which Adams in Canadian Labour Law, 2d ed. (Aurora, Ont.: Canada Law Book:
2000), refers to in the following terms (at ¶15.530):
Whether or not there is an exchange of physical assets in a transaction, the
board has repeatedly found an applicable successorship when there is an
acquisition of key managerial personnel. This is considered "the essence of
a business" in the bid-oriented sector of the construction industry.
60
Another point to note about successorships in the construction industry is
that the industry lends itself to informal transfers of the things that make up a
construction business. It is common for construction contractors to operate
through groups of companies in order to spread risk, limit liability, minimize tax,
or meet other valid business objectives. Within one construction group there can
be many companies, each possessing their own bank account and payroll
systems, but sharing office space, office equipment and personnel, renting
equipment from a common pool, and sharing the skill and efforts of the
ownership group and senior management. Given this, and because of the
unusual importance of intangible assets to a construction business, it is
extraordinarily easy to transfer the key elements of the business between the
Classification: Public
