United Transportation Union v. Central Western Railway Corp.

United Transportation Union v. Central Western Railway Corp.
Collection
Supreme Court Judgments
Date
1990-12-20
Report
[1990] 3 SCR 1112
Case number
20802
Judges
Dickson, Robert George Brian; Lamer, Antonio; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley
On appeal from
Federal Court of Appeal
Subjects
Constitutional law
Labour law
Notes
SCC Case Information: 20802
Decision Content
United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112
Central Western Railway Corporation Appellant
v.
United Transportation Union,
the Brotherhood of Maintenance of Way Employees,
Canadian Signal and Communications Union,
Brotherhood of Locomotive Engineers
and Canada Labour Relations Board Respondents
and
The Attorney General of Quebec and
the Attorney General for Alberta Interveners
indexed as: united transportation union v. central western railway corp.
File No.: 20802.
1990: April 30; 1990: December 20.
Present: Chief Justice Dickson* and Chief Justice Lamer** and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.
on appeal from the federal court of appeal
Constitutional law ‑‑ Division of powers ‑‑ Federal work or undertaking ‑‑ Labour relations ‑‑ CN rail subdivision incorporated as intraprovincial railway ‑‑ Railway continuing to transport grain and to deliver to CN and export network ‑‑ Whether employees subject to federal or provincial labour legislation ‑‑ Constitution Act, 1867, ss. 91 , 92 .
Labour law ‑‑ Jurisdiction ‑‑ CN rail subdivision incorporated as intraprovincial railway ‑‑ Railway continuing to transport grain and to deliver to CN and export network ‑‑ Whether employees subject to federal or provincial labour legislation.
Central Western operates a 165 km. railway line located entirely within Alberta. The line had been purchased from CN with its financial assistance: CN had been trying to secure approval for the abandonment of the line over the course of two decades. The line was joined to the CN rail network at one point but was separated by a four‑inch gap and a locked derailing device which was controlled by CN.
Central Western serves the grain industry. It arranges for the use of government‑owned grain cars and sees to the delivery of the cars to CN track for onward shipping. (CN does not run trains or cars on Central Western track.) The grain is then sent on to market via CN track to Vancouver. Federally regulated grain handling agencies and export channels are used.
The eight employees of Central Western are members of unions which had national collective agreements with CN. They filed an application with the Canada Labour Relations Board for an order that there had been a sale of the rail line which was governed by the Canada Labour Code . A successful application would bind the appellant to the unions' agreements with CN. The application was granted. An application to the Federal Court of Appeal under s. 28 of the Federal Court Act was dismissed. The constitutional questions before this Court queried whether the Canada Labour Code was constitutionally applicable to the short railway line owned and operated by Central Western.
It was unnecessary to address the matter of s. 92(10) (c) of the Constitution Act, 1867 . Prior to the hearing in this appeal, the federal government passed legislation, retroactive to July 1, 1986, which operated to withdraw any s. 92(10) (c) declarations that might exist with respect to Central Western.
Held (Wilson J. dissenting): The appeal should be allowed.
Per Dickson C.J. and Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.: There are two ways in which Central Western may be found to fall within federal jurisdiction and thus be subject to the Canada Labour Code . First, it may be seen as an interprovincial railway and therefore come under s. 92(10) (a) of the Constitution Act, 1867 , as a federal work or undertaking. Second, if the appellant can be properly viewed as integral to an existing federal work or undertaking it would be subject to federal jurisdiction under s. 92(10) (a). These two approaches, though not unrelated, are distinct from one another. For the former, the emphasis must be on determining whether the railway is itself an interprovincial work or undertaking. Under the latter, however, jurisdiction is dependent upon a finding that regulation of the subject matter in question is integral to a core federal work or undertaking.
Railways, by their nature, form a network across provincial and national boundaries. As a consequence, purely local railways may very well "touch", either directly or indirectly, upon a federally regulated work or undertaking. That fact alone, however, cannot reasonably be sufficient to turn the local railway into an interprovincial work or undertaking within the meaning of s. 92(10) (a).
A close commercial relationship exists between Central Western and CN. Central Western is only connected with CN and the various contractual arrangements between the two railways added to the physical connection. These factors, however, did not show that CN operated Central Western. The sale of Central Western resulted in a fundamental change in the management of the rail line, most notably, in the daily control of the business of the rail line. CN exercises no control over the running of the rail line, making it difficult to view Central Western as a federal work or undertaking.
Something more than physical connection and a mutually beneficial commercial relationship with a federal work or undertaking is required for a company to fall under federal jurisdiction. The requisite degree of integration was absent on these facts, and consequently, Central Western was not integral to any federal work or undertaking.
Dependence of a core federal work or undertaking upon a group of workers tends to support federal jurisdiction over those workers. The first task is to identify a core federal work or undertaking in relation to which Central Western might conceivably be seen as integral. Three were identified here: CN, the grain elevators found along the railway, and the "Western Grain Transportation Network".
If work occurs simultaneously between the two enterprises functional integration may exist. This temporal integration does not exist, however, between Central Western and CN as each operates independently within its own sphere. Further, Central Western's employees worked wholly within Alberta and in the normal course of affairs had no occasion to travel beyond that province in a working capacity. Finally, CN was in no way dependent on Central Western's services and would not be severely disadvantaged if the Central Western's employees failed to perform their usual tasks.
Central Western was not essential to the operation of the grain elevators located along the rail line. Elevators exist to receive, grade, handle and store grain but are not directly concerned with the transportation of grain. Grain could be transported from the elevators by alternative means, such as trucking, without altering the usefulness of the elevators along the line. There is an insufficient nexus between the grain elevators and Central Western to bring the railway within federal jurisdiction.
The term "Western Grain Transportation Network" was a "catch all" phrase for the array of federal regulatory powers relating to the movement of grain in Canada. Such a network, however, does not exist for the purposes of the jurisdictional designation of the Central Western. The fact that several entities involved in the transport of grain fall under federal jurisdiction cannot on its own serve to bring everything connected with that industry under federal jurisdiction. Parliament cannot expand its legislative jurisdiction in this manner.
Per Wilson J. (dissenting): Central Western, while not itself a federal work or undertaking, is integrally connected with CN and its labour relations are therefore subject to the Canada Labour Code .
The concept of operational integration more completely and coherently accounts for the existing jurisprudence concerning federal authority over labour relations than does dependency of federal enterprises on "subsidiary" provincial operations which is merely a narrower articulation of the test of operational integration. It strikes a realistic balance between allowing sufficient federal authority over labour relations to avoid patchwork regulation over interprovincial and national industries and protecting provincial jurisdiction in the labour field from undue encroachment. The test must be applied in relation to a single federal work or undertaking. The interrelationship between Central Western and the "Western Grain Transportation Network", which encompassed several federal works or undertakings, could not be considered.
The primary entity to which Central Western is operationally integrated is CN. The analysis of their interrelationship need not be performed in an abstract and acontextual fashion. The entire set of circumstances should be considered, including CN's nature as a going concern, Central Western's nature as a going concern and the connections existing between their operations.
CN, as a "going concern", was an interprovincial railway under an intricate and extensive federal regime. Central Western, a former subdivision of CN, was connected via the intraprovincial rail network and was almost exclusively concerned with the transportation of export grain. The agreements between Central Western and CN clearly demonstrated an ongoing connection between the two operations. These involved sharing the business as to the available grain to be transported (as determined by the Grain Transport Agency), the profits, and the cost and maintenance of some of the physical facilities. The maintenance work on the interchange between the two lines was to be done by employees to be the joint employees of both companies. Under such circumstances Central Western's employees should not fall under a different statutory regime governing their labour relations than CN's.
The relationship between Central Western and CN did not turn solely on a contract of carriage. Both were engaged in the transportation of export grain, were under public duty to perform this function, were carrying out this enterprise for the Grain Transportation Agency, were using the same government‑owned boxcars, and were paid the same amount by the same authority. Lack of co‑ordination of work was a neutral factor. Opportunities for the simultaneous performance of work were limited because of the nature of the operation of the line and therefore employee integration was not a relevant factor. The nature and extent of employee contact was not altered by or since the sale.
The whole fabric of grain transportation, which is an area of massive federal regulation, would be unravelled if this Court were to hold Central Western's employees to be within provincial jurisdiction. Well‑established bargaining patterns and the public interest must be considered and protected by insulating certain sectors of the economy from the disruptive potential of industrial strife. Dividing up labour relations jurisdiction would deprive Parliament of the ability to keep grain flowing in times of industrial unrest and wreak havoc with Parliament's intention to control the transportation of export grain.
Characterizing Central Western's labour relations as falling within federal authority gave effect to the policy articulated by both governments that organized workplaces should not lose the rights they have gained upon a transfer of the business for which they are employed. The Constitution should not be applied in a manner which would defeat this policy.
Cases Cited
By Dickson C.J.
Considered: British Columbia Electric Ry. Co. v. Canadian National Ry. Co., [1932] S.C.R. 161; Kootenay & Elk Railway Co. v. Canadian Pacific Railway Co., [1974] S.C.R. 955; National Energy Board (Re), [1988] 2 F.C. 196; In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174; distinguished: Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225; Luscar Collieries Ltd. v. McDonald, [1927] A.C. 925; Reference re Industrial Relations and Disputes Act, [1955] S.C.R. 529; Letter Carriers' Union of Canada v. Canadian Union of Postal Workers, [1975] 1 S.C.R. 178; Northern Telecom Ltd. v. Communications Workers of Canada (No. 1), [1980] 1 S.C.R. 115; Northern Telecom Canada Ltd. v. Communication Workers of Canada (No. 2), [1983] 1 S.C.R. 733; referred to: City of Montreal v. Montreal Street Railway, [1912] A.C. 333; Canadian Pacific Railway Co. v. Attorney‑General for British Columbia, [1950] A.C. 122; Construction Montcalm Inc. v. Minimum Wage Commission, [1979] 1 S.C.R. 754.
By Wilson J. (dissenting)
Toronto Electric Commissioners v. Snider, [1925] A.C. 396; Northern Telecom Canada Ltd. v. Communication Workers of Canada (No. 2), [1983] 1 S.C.R. 733; Reference re Industrial Relations and Disputes Act, [1955] S.C.R. 529; Letter Carriers' Union of Canada v. Canadian Union of Postal Workers, [1975] 1 S.C.R. 178; Northern Telecom Ltd. v. Communications Workers of Canada (No. 1), [1980] 1 S.C.R. 115; Attorney General of Canada v. St. Hubert Base Teachers' Association, [1983] 1 S.C.R. 498; Construction Montcalm Inc. v. Minimum Wage Commission, [1979] 1 S.C.R. 754; In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174; Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674; General Teamsters v. Consolidated Fastfrate Ltd. (1976), 76 C.L.L.C. 16,004; MIS (Canada) Holdings Ltd., [1987] O.L.R.B. Rep. 865; Loomis Messenger Service, [1985] O.L.R.B. Rep. 1131; CTG Telecommunications Systems, Inc. (1985), 10 C.L.R.B.R. (N.S.) 231; Inter‑City Truck Lines (Canada) Inc., [1979] 3 Can. L.R.B.R. 40; Kuehne & Nagel Int'l Ltd., [1979] 1 Can. L.R.B.R. 156.
Statutes and Regulations Cited
Act to amend the Industrial Disputes Investigation Act, 1907, S.C. 1925, c. 14.
Act to amend the Railway Act, S.C. 1990, c. 6.
Canada Grain Act, R.S.C., 1985, c. G‑10 .
Canada Labour Code, R.S.C. 1970, c. L‑1, ss. 2, 4, 108.
Canadian National Railways Act, R.S.C. 1970, c. C‑10, s. 18(1).
Canadian Wheat Board Act, R.S.C., 1985, c. C‑24, s. 45 .
Central Western Railway Corporation Act, S.A. 1984, c. 71.
Constitution Act, 1867, ss. 91(5) , 91(29) , 92(10) (a), (c), (13) .
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28.
Labour Relations Code, S.A. 1988, c. L‑12, s. 44.
Prohibition Order No. 17, P.C. 1980‑84.
Prohibition Order No. 19, P.C. 1980‑251.
Prohibition Order No. 22, P.C. 1984‑4047.
Railway Act, R.S.C. 1970, c. R‑2, s. 6(1)(c).
Western Grain Stabilization Act, R.S.C., 1985, c. W‑7.
Western Grain Transportation Act, R.S.C., 1985, c. W‑8
Authors Cited
Scott, F.R. "Federal Jurisdiction Over Labour Relations ‑ A New Look" (1960), 6 McGill L.J. 153.
APPEAL from a judgment of the Federal Court of Appeal (1988), 47 D.L.R. (4th) 161, dismissing an appeal from a judgment of the Canada Labour Relations Board. Appeal allowed, Wilson J. dissenting.
T. W. Wakeling and G. D. Chipeur, for the appellant.
Douglas Wray, for the respondents United Transportation Union, Brotherhood of Maintenance of Way Employees and Canadian Signal and Communications Union.
Robert E. Houston, Q.C., for the respondent Brotherhood of Locomotive Engineers.
V. L. Marleau, for the respondent Canada Labour Relations Board.
No one appearing for the intervener the Attorney General of Quebec.
W. Henkel, Q.C., for the intervener the Attorney General for Alberta.
//Dickson C.J.//
The judgment of Dickson C.J. and Lamer C.J. and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ. was delivered by
Dickson C.J. -‑ The issue in this appeal is whether the provincial or the federal government has jurisdiction, for the purposes of labour relations, over a 105 mile railway line situated wholly within the province of Alberta. The answer turns on whether the railway can be seen as a federal work or undertaking under s. 92(10) (a) of the Constitution Act, 1867 , or is integral to such a work or undertaking, so as to bring it within federal jurisdiction, and hence make applicable the provisions of the Canada Labour Code, R.S.C. 1970, c. L‑1 (now R.S.C., 1985, c. L‑2 ). A significant fact is that the railway was previously owned by a national railway company that was clearly subject to federal jurisdiction, but the line of railway here in question is now owned and operated by a provincial company. In order to answer the jurisdictional question, the physical and operational character of the railway must be examined.
Facts
The appellant, Central Western Railway Corporation, is a railway company incorporated by a statute of the Alberta legislature: Central Western Railway Corporation Act, S.A. 1984, c. 71. It was created to acquire and operate a small railway line in Alberta formerly owned by the Canadian National Railway (CN). Though the railway was called the Stettler Subdivision when it was owned by CN, I will refer to it as ("Central Western").
Central Western runs approximately 105 miles between Ferlow Junction and Dinosaur in central Alberta. It was built between 1909 and 1911 by the Canadian Northern Railway Company (Canadian Northern). In 1919 the federal government acquired ownership of Canadian Northern and all of its holdings, including the whole of Central Western, were transferred to the newly formed CN, a federal crown company. In 1963, CN applied to the Board of Transport Commissioners (a federal government agency) to abandon Central Western. CN requested, however, that a decision on the application not be made until the McPherson Commission (which was looking into transportation issues) made its findings. After those findings were delivered, the federal government declared that 12,413 miles of rail would be protected from abandonment because they comprised a "basic rail network". Certain lines were recommended to be abandoned, however, because they were no longer in use. Decisions about other railway lines, of which Central Western was one, were to await the findings of the Grain Handling and Transportation Commission, more commonly known as the Hall Commission. While awaiting these findings, the federal government protected Central Western through a series of Orders in Council known as Abandonment of Branch Lines Prohibition Orders.
At the Hall Commission's hearings, CN submitted that roughly half of Central Western should be abandoned. In its report, the Hall Commission agreed, although it favoured abandonment of a smaller portion of the rail line. Despite that recommendation and CN's original desire to abandon Central Western, the federal government continued to protect it, as it had done since 1967, through a series of Prohibition Orders. Prohibition Order No. 17 (P.C. 1980‑84), would have extended protection of the railway until January 1, 1985, but it was revoked on September 19, 1980 by Prohibition Order No. 19 (P.C. 1980‑251). This left CN's 1963 application eligible for consideration.
On October 5, 1982, after holding a hearing, the Canadian Transport Commission (CTC) granted an order to abandon over 80 per cent of Central Western effective August 31, 1983. An appeal of this decision was accepted by the Review Committee of the CTC, however, with the result that the date for abandonment was postponed for one year to August 31, 1984. Before this new abandonment date was reached, however, the federal government asked the CTC to reconsider the status of Central Western. On May 30, 1984, the CTC extended the date of abandonment to December 31, 1984. In July, 1984, the federal government asked the CTC to hold a further hearing. The result of this hearing was Prohibition Order No. 22 (P.C. 1984‑4047) which pronounced Central Western to be part of the basic rail network and protected from abandonment until the year 2000. Under the terms of the Railway Act, R.S.C. 1970, c. R‑2, s. 6(1)(c), the validity of this Order is dependent upon the appellant's being subject to federal jurisdiction, which is directly in issue in this appeal.
In 1986, CN gave notice to the United Transportation Union, the Brotherhood of Locomotive Engineers, the Canadian Signal and Communications Union and the Brotherhood of Maintenance of Way Employees (the respondent unions) that the line would be leased for a period of three years to the appellant. In the same year, however, the lease turned into a sale, under the terms of which over half of the purchase price of $2,700,000 was advanced to the appellant as an interest free loan to be repaid no later than July 31, 1997. The appellant obtained the lands, trackage, improvements and chattels, and the leases and operating agreements associated with the property. Virtually all of the rail line (except about three miles) was transferred to the appellant, effective November 21, 1986. As part of the purchase agreement, the appellant agreed to deliver to CN the first 120,000 tonnes of grain transported on the railway during each crop year.
Central Western is, and always has been, used for the transportation of grain. There are nine grain elevators, operated by four grain companies, along the line. These stand on land originally leased from CN and now leased from the appellant. Prior to the sale of the rail line, CN would spot empty grain cars at the elevators to be filled with grain. When the cars were full, CN would dispatch a locomotive to pick up the grain cars and take them to the Camrose Yard, just north of Stettler, for delivery to Vancouver.
Since the sale, the operation is different. Significantly, the appellant's trains do not travel on CN lines, and vice‑versa. Empty grain cars are delivered to the north point of the rail line, at Ferlow Junction, by CN locomotives. Central Western then takes the cars to the various grain elevators, and after being filled with grain they are returned to Ferlow Junction by Central Western. CN then takes the filled grain cars to Vancouver. The division in operation is further reflected by the nature of the physical connection between Central Western and CN Whereas the movement of rail cars was uninterrupted before 1986, a four-inch gap in the line of rail now separates Central Western from CN at both ends. There is a locked derail device, controlled by CN, which allows the lines to be connected. This device is used only when CN locomotives deliver or retrieve grain cars from Ferlow Junction.
It is worth mentioning that all grain cars are owned by the federal or provincial governments. In addition, the transport of grain, in terms of quantity and destination, is determined by the Grain Transportation Agency, in consultation with the Canadian Wheat Board, the latter then informing rail companies of the scheduled movement. Both the Grain Transportation Agency and the Canadian Wheat Board are federal agencies.
The appellant has eight employees. Each of the respondent unions has a national collective agreement with CN, and when first notified of the proposed lease (which became a sale), they filed an application with the Canada Labour Relations Board for an order that there had been a sale of the rail line which was governed by the Canada Labour Code . The effect of a successful application would be to bind the appellant to the unions' collective agreements with CN. The application was granted. The appellant appealed to the Federal Court of Appeal pursuant to s. 28 of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10 (now R.S.C., 1985, c. F‑7 ). That appeal was dismissed, however, and the appellant has now appealed to this Court.
Relevant Legislation
The relevant statutory provisions are as follows:
Constitution Act, 1867 :
92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next herein‑after enumerated; that is to say,--
. . .
10. Local Works and Undertakings other than such as are of the following Classes:--
(a) Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province;
(b) Lines of Steam Ships between the Province and any British or Foreign Country;
(c) Such Works as, although wholly situate within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the Provinces.
Canada Labour Code, s. 2 defines the relevant terms:
2. In this Act
"federal work, undertaking or business" means any work, undertaking or business that is within the legislative authority of the Parliament of Canada, including without restricting the generality of the foregoing:
. . .
(b) a railway, canal, telegraph or other work or undertaking connecting any province with any other or others of the provinces, or extending beyond the limits of a province;
. . .
(h) a work or undertaking that, although wholly situated within a province, is before or after its execution declared by the Parliament of Canada to be for the general advantage of Canada or for the advantage of two or more of the provinces; and
(i) a work, undertaking or business outside the exclusive legislative authority of provincial legislatures;
Section 108 (now s. 4) sets out the jurisdiction of the Canada Labour Relations Board:
108. This Part applies in respect of employees who are employed upon or in connection with the operation of any federal work, undertaking or business and in respect of the employers of all such employees in their relations with such employees and in respect of trade unions and employers' organizations composed of such employees or employers.
Issues
The following constitutional question was stated:
Is the Canada Labour Code, R.S.C. 1970, c. L‑1, constitutionally applicable to the short line railway owned and operated by the appellant Central Western Railway Corporation?
There are two ways in which Central Western may be found to fall within federal jurisdiction and thus be subject to the Canada Labour Code . First, it may be seen as an interprovincial railway and therefore come under s. 92(10) (a) of the Constitution Act, 1867 as a federal work or undertaking. Second, if the appellant can be properly viewed as integral to an existing federal work or undertaking it would be subject to federal jurisdiction under s. 92(10) (a). For clarity, I should point out that these two approaches, though not unrelated, are distinct from one another. For the former, the emphasis must be on determining whether the railway is itself an interprovincial work or undertaking. Under the latter, however, jurisdiction is dependent upon a finding that regulation of the subject matter in question is integral to a core federal work or undertaking.
Before examining in detail the application of s. 92(10) (a) to this appeal, I should mention the inapplicability of s. 92(10) (c). The Federal Court of Appeal considered the issue of whether Central Western came under federal jurisdiction by virtue of a declaration by Parliament that it was for the general advantage of Canada pursuant to s. 92(10) (c). The relevant provisions alleged to be declarations are sections of two federal statutes (see Canadian National Railways Act, R.S.C. 1970, c. C‑10, s. 18(1), and Railway Act, s. 6(1)(c)). Prior to the hearing in this appeal, however, the federal government passed legislation, retroactive to July 1, 1986, which operated to withdraw any s. 92(10) (c) declarations that might exist with respect to Central Western (see An Act to amend the Railway Act, S.C. 1990, c. 6, Royal Assent given March 29, 1990). It is unnecessary therefore to address the matter of s. 92(10) (c) in disposing of this appeal.
Judgments
Canada Labour Relations Board
The Canada Labour Relations Board agreed with the respondent unions that the rail line was subject to federal jurisdiction. It did not, however, view the railway as an interprovincial work or undertaking, but instead based its decision on a finding that, by virtue of physical and operational connections, the rail line was integral to the following federal works or undertakings: the CN, the grain elevators along the rail line and the "Western Grain Transportation Network". Having found the appellant to be within federal jurisdiction, the provisions of the Canada Labour Code pertaining to the sale of a business were applied and the Board concluded that the appellant was bound by the collective agreements CN had with the respondent unions. The Board acknowledged that the respondent unions' applications would have failed if it had not found Central Western to be a federal work or undertaking because the Canada Labour Code would not have been applicable. Since the Board found Central Western to fall within federal jurisdiction under s. 92(10) (a), it did not proceed to consider whether there existed a valid federal declaration under s. 92(10) (c).
Federal Court of Appeal (cited as Central Western Railway Corp. v. UTU, [1989] 2 F.C. 186).
Two of the three judges who sat on the appeal held that the appellant was subject to federal jurisdiction, though each for a different reason. Marceau J. found that Central Western fitted squarely within s. 92(10) (a) as an interprovincial railway. Lacombe J., on the other hand, did not find that Central Western was an interprovincial railway or an integral part of a federal undertaking; he preferred to base federal jurisdiction on the finding that there was a declaration of Parliament stating that Central Western was for the general advantage of Canada.
Hugessen J., in dissent, concluded that Central Western correctly fell within provincial jurisdiction. He agreed with Lacombe J. that Central Western could not be seen as falling under s. 92(10) (a) either as a federal work or undertaking or as an integral part thereof. As to the applicability of s. 92(10) (c), however, Hugessen J. made a distinction between a work and an undertaking. He held that a valid declaration existed so as to bring the rail works under federal competence, but felt that this declaration did not extend to labour relations. In support of this distinction, he noted that the word "undertaking" appears in s. 92(10) (a) but not in s. 92(10) (c). Hugessen J. thus concluded that while the federal government can govern the trackage and the right of way of the rail lines, its constitutional authority does not extend to labour relations.
Analysis
The core issue to determine is whether the appellant can be subject to the Canada Labour Code . For this to occur it must first come within federal jurisdiction. As noted above, there are two possible bases for such jurisdiction, and I will deal with each in turn: (1) Central Western is itself a federal work or undertaking pursuant to s. 92(10) (a) of the Constitution Act, 1867 , or (2) the appellant falls within s. 92(10) (a) as an integral part of a federal work or undertaking.
(1) Is Central Western a Federal Work or Undertaking?
At the Federal Court of Appeal, Marceau J. founded federal jurisdiction over Central Western on the basis that it fell directly within s. 92(10) (a) by virtue of being an interprovincial railway. The primary ground for this decision was his finding that prior to the sale the railway was an indivisible and integral part of CN. Having made these observations, Marceau J. stated, at p. 198:
It seems to me that such a character, which attaches to the work itself, cannot be seen as having disappeared for the sole reason that the line is now owned and operated by a different corporate entity, or that its connection with CN's line is now controlled by a special device. Being operated exactly as it was previously, the line remains a segment of a railway "connecting the province with other provinces".
This passage highlights the factors considered by Marceau J. in reaching his conclusion. In particular, he found neither the physical separation between Central Western and CN rail lines nor the change in ownership and operation of Central Western to be compelling factors in determining which level of government has consitutional jurisdiction over it. In examining the question of whether Central Western is itself a federal work or undertaking, I will examine these factors in turn.
(a) The Physical Connection
Marceau J. did not attach much significance to the fact that since the sale the rail lines have been separated by a four inch gap which is controlled by a special derail device. The respondents were of the same opinion, arguing that this tiny gap is not indicative of any important change in the railway. In fact, it is their position that the gap does not constitute a physical separation.
In as much as Marceau J. was relying on a physical connection to found federal jurisdiction, that, in itself, is insufficient. As I stated in Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225 (A.G.T. v. C.R.T.C.), at p. 262:
. . . mere interconnection of physical facilities in one province with those in a neighbouring province, territory or state may not be sufficient to attract the characterization of the undertaking involved as interprovincial in nature.
This view is not novel, having long had support in the case law. In City of Montreal v. Montreal Street Railway, [1912] A.C. 333 (Montreal Street Railway), for example, the Privy Council considered the validity of a federal statute which attempted to govern the through traffic on all railways, including intraprovincial ones. The statute was held to be ultra vires the federal government, and in the course of delivering judgment, Lord Atkinson commented on the question of whether a physical connection between rail lines was a sufficient basis for federal jurisdiction, at pp. 345‑46:
The right contended for in this case is in truth the absolute right of the Dominion Parliament wherever a federal line and a local provincial line connect to establish, irrespective of all consequences, this dual control over the latter line whenever there is through traffic between them, at least of such a kind as would lead to unjust discrimination between any classes of the customers of the former line. In their Lordships' view this right and power is not necessarily incidental to the exercise by the Parliament of Canada of its undoubted jurisdiction and control over federal lines, and is therefore, they think, an unauthorized invasion of the rights of the Legislature of the Province of Quebec.
The view expressed by Lord Atkinson in Montreal Street Railway is very persuasive. Railways, by their nature, form a network across provincial and national boundaries. As a consequence, purely local railways may very well "touch", either directly or indirectly, upon a federally regulated work or undertaking. That fact alone, however, cannot reasonably be sufficient to turn the local railway into an interprovincial work or undertaking within the meaning of s. 92(10) (a) of the Constitution Act, 1867 . Furthermore, if the physical connection between the rail lines were a sufficient basis for federal jurisdiction, it would be difficult to envision a rail line that could be provincial in nature: most rail lines located within a province do connect eventually with interprovincial lines.
The force of the reasoning of this latter point is well illustrated in British Columbia Electric Ry. Co. v. Canadian National Ry. Co., [1932] S.C.R. 161 (British Columbia Electric Railway). The British Columbia Electric Railway Company (B.C.E.R.C.) operated certain rail lines in British Columbia. One such line, the Central Park line, was connected to a Canadian Pacific Railway line and a line of the Canadian National Railway, both of which were under federal jurisdiction. The Board of Railway Commissioners for Canada concluded that because part of the B.C.E.R.C.'s rail line formed a connecting link between two other lines of railway under the Board's jurisdiction, it had jurisdiction over the intraprovincial rail line as well. This Court rejected the Board's conclusion and held that the Central Park line fell under provincial jurisdiction. Smith J., for the majority, held, at p. 170:
The mere fact that the Central Park line makes physical connection with two lines of railway under Dominion jurisdiction would not seem to be of itself sufficient to bring the Central Park line, or the portion of it connecting the two federal lines, within Dominion jurisdiction.
As in Montreal Street Railway, the reasoning in British Columbia Electric Ry. Co. make it clear that physical connection to an existing federal railway does not necessarily place a rail line under federal jurisdiction.
Compared to the rail line in British Columbia Electric Railway, Central Western illustrates a stronger case for coming within provincial jurisdiction. The line of track in British Columbia Electric Railway was only one mile long. In light of this relatively short length, it might by thought possible to see the rail line as being merely a link in the chain of a larger interprovincial network; yet, it was held to be under provincial jurisdiction. Central Western is 105 miles long. It is much more difficult to regard it as no more than a fully integrated part of CN's operations. Furthermore, there is no mention of any physical separation between the lines in British Columbia Electric Railway, unlike the situation in this appeal. On these bases, the argument that the physical connection between Central Western and CN brings the former within federal jurisdiction is weak.
(b) The Change in Ownership and Operation of the Railway
While the case law discussed above makes it clear that physical connection cannot be the determinative factor for jurisdictional questions, Marceau J. did not base his decision solely on this aspect of the relationship between CN and Central Western. His conclusion that Central Western fell within federal jurisdiction was also based on the view that the operation of the rail line had not changed subsequent to its sale to the appellant; in his opinion new ownership did not affect the jurisdictional question.
In so much as Marceau J. contends that corporate ownership is not determinative of the jurisdictional issue, he is correct. As I stated for this Court in A.G.T. v. C.R.T.C., at p. 265:
I do not find the fact that the members of Telecom Canada own their respective "works" to be significant. The separate ownership of works does not, in this case, take away from the degree of integration which exists between the member system and the level of cooperation and coordination which exists in the national telephone system; it does not make AGT's system less interprovincial and it does not make the Telecom Canada enterprise a mere loose association of interested parties. Ownership itself is not conclusive. [Emphasis added].
A change in corporate control can be significant, however, where it leads to alterations in the operation of the activity in question. The crucial determination is not simply whether there has been a change of corporate control, but whether the work in question can properly be described, with regard to its nature of operations, as being interprovincial.
In this case, the respondents argue that since Central Western had previously been owned by CN the sale to a provincial company cannot remove it from federal jurisdiction. Moreover, in arguing that there exists a significant operational connection between Central Western and CN, they point to the fact that Central Western is connected only with CN, and note that all of the appellant's freight goes to CN for onward transport. In the same vein, the respondents argue that th