Tokmakjian Inc. v. Achorn

Tokmakjian Inc. v. Achorn
Court (s) Database
Federal Court Decisions
Date
2017-11-22
Neutral citation
2017 FC 1057
File numbers
T-1110-15
Notes
A correction was made on November 30, 2017.
Digest
Decision Content
Date: 20171122
Docket: T-1110-15
Citation: 2017 FC 1057
Toronto, Ontario, November 22, 2017
PRESENT: The Honourable Mr. Justice Diner
BETWEEN:
TOKMAKJIAN INC.
Applicant
and
EMPLOYEES LISTED IN SCHEDULE “A”
ED ACHORN
Respondents
Table of Contents
I. Background. 4
II. Decision under Review.. 7
A. Factual context 7
B. Referee’s analysis. 9
III. Standard of Review.. 11
IV. Analysis. 12
A. The presumption of provincial jurisdiction over labour relations. 12
B. Rebutting the provincial presumption: “direct” and “derivative” federal jurisdiction. 18
C. Determining the number of undertakings. 21
D. The relationship between the “single undertaking” test and “derivative” federal jurisdiction. 30
(1) The “single undertaking” test 35
(2) The “derivative jurisdiction” test 37
E. Application of the law to the facts of this case. 39
(1) Did the Referee apply the tests correctly?. 39
(2) Are the Transit Employees federally or provincially regulated?. 42
V. Costs. 49
JUDGMENT AND REASONS
[1] This is an application for judicial review [Application] of the decision of a referee [Referee] appointed under section 251.12 of the Canada Labour Code, RSC, 1985, c L-2 [Code] finding that the Respondents were federally regulated for labour relations purposes.
[2] The Applicant, Tokmakjian Inc. [Tokmakjian], is based in Vaughn, Ontario and provides interprovincial charter and coach bus services. Until 2010, Tokmakjian also provided municipal transit services in York Region, Ontario. These two divisions operated as “Can-Ar Coach” [Coach] and “Can-Ar Transit Services” [Transit], respectively.
[3] The Respondents are former Transit employees [Transit Employees]. When the contract between Tokmakjian and York Region ended in July 2010, so did the Transit Employees’ employment. After termination, the Transit Employees filed a complaint under the Code for severance pay. An inspector ordered payment, and Tokmakjian appealed, arguing that the Transit Employees were not entitled to severance under the Code because they were governed by provincial rather than federal labour laws. The hearing of the appeal took place over four days between November 2013 and February 2014. On June 1, 2015, the Referee rendered her decision, concluding that the Transit Employees fell under federal jurisdiction for labour law purposes [Decision].
[4] I have considered the matter within this complex area of law, and concluded that the Referee erred: it is my view that the Transit Employees indeed fell under provincial jurisdiction.
I. Background [5] Tokmakjian began under the name “SN Diesel Service” in about 1971, servicing and repairing diesel engines [Diesel]. About ten years later, Tokmakjian bought a charter bus service, which it operated as Coach, starting out with only three buses. Around 1985, the City of Vaughan asked Tokmakjian to run its municipal bus service. Meanwhile, Coach had grown to 40 buses.
[6] Tokmakjian’s full-time Transit drivers were initially represented by the Can-Ar Transit Operators’ Association, which merged in 1995 with the Amalgamated Transit Union, Local 1587 [Local 1587], and then applied for a declaration that it had acquired its predecessor’s rights, privileges, and duties. The issue of jurisdiction was raised on the application before the Canada Labour Relations Board [CLRB]. At that time, Tokmakjian had one location (in Vaughan), one operations manager that oversaw both Coach and Transit employees, a central management team, and a single dispatch office. In addition to its 40 Coach buses, Tokmakjian also had 12 Transit buses.
[7] The CLRB’s decision ((7 November 1995), Toronto 580-280, 1482 (CLRB) at 4 [the 1995 CLRB Decision]) contained a constitutional analysis consisting of a single paragraph, stating that the CLRB had considered “such elements as the existence of a single reporting facility, common employee manuals, and the centralization of employee dispatch, of vehicle service, and of decision making with respect to labour relations”. Based on these considerations, and citing no authority, the CLRB found that Transit was “not severable” from Tokmakjian’s interprovincial transportation business. The CLRB then concluded that Tokmakjian was a federal undertaking for the purposes of the Code, relying on Charterways Transportation Ltd, 1993 CanLII 7922 (OLRB) [Charterways]. Thus, the CLRB found that Transit’s labour relations came within federal jurisdiction.
[8] In 2002, Tokmakjian moved its Coach operations to Mississauga (Transit and Diesel stayed in Vaughan), hiring a separate operations manager for Coach, and dividing its dispatch. Tokmakjian also introduced different software and payroll systems for Coach and Transit.
[9] In 2003, the Employment Equity Office of Human Resources Development Canada [HRDC] instructed Tokmakjian to comply with federal employment equity requirements. Because of Coach’s move to Mississauga, Tokmakjian requested a ruling on whether all its operations remained under federal jurisdiction (at that time, Tokmakjian had two main divisions, Diesel and Coach, the latter of which was divided into “Can-Ar Highway Coach” and “Vaughan Transit”).
[10] In the resulting HRDC decision, the inspector determined — based on information provided by Tokmakjian — that Diesel and “Vaughan Transit” both fell under provincial jurisdiction, whereas “Can-Ar Highway Coach” fell within federal jurisdiction due to its extra-provincial transportation services [the 2003 HRDC Decision]. It is noteworthy that the inspector who authored the 2003 HRDC Decision was the same inspector who prepared the report relied upon by the CLRB in issuing the 1995 CLRB Decision.
[11] After September 11, 2001, the amount of interprovincial and international travel by Coach decreased drastically: ultimately, Coach was downsized later in 2003 and moved back to Vaughan. A few years later, in 2006, Tokmakjian was awarded a major contract to operate municipal transportation for York Region Transit, which it did for the next four years.
[12] In early 2010, after Tokmakjian learned it was losing its contract with York Region, Local 1587 was granted decertification on an application to the Canada Industrial Relations Board [CIRB] (previously the CLRB). The issue of jurisdiction was not considered.
[13] Shortly afterwards, Amalgamated Transit Union, Local 113 [Local 113] applied to the Ontario Labour Relations Board [OLRB] for certification to represent the Transit Employees. Tokmakjian opposed the certification on the basis that all its operations were federally regulated. The matter was not resolved prior to the end of July 2010, when Tokmakjian’s contract with York Region ended and the contract was awarded to another company, Veolia Transportation Services (Canada) Inc. [Veolia]. Local 113 then obtained provincial certification to represent Veolia’s transit employees, who were largely individuals previously employed in Tokmakjian’s Transit division.
[14] Following the termination of their employment, the Transit Employees filed a complaint seeking severance pay under section 235 of the Code. After an order was issued for payment, Tokmakjian brought a wage recovery appeal under Part III of the Code, arguing that its Transit operations fell under provincial jurisdiction. The Decision resolving that appeal is now the subject of this Application.
[15] The Transit Employees affected by the appeal fall into three groups: (i) 145 drivers covered by a collective agreement, (ii) 19 mobility drivers covered by a different collective agreement and represented by a different union, and (iii) seven management employees. All these employees were hired by Veolia after the termination of their employment with Tokmakjian; no employee lost any work time as a result of the change of contract.
II. Decision under Review A. Factual context [16] The Referee found that, as of July 31, 2010, Coach and Transit employees worked out of the same location in Vaughan. This meant sharing the same workplace facilities (including breakroom, washrooms, and the parking lot), and using the same third-party payroll provider.
[17] The Referee also found that the two divisions had different managers, dispatchers, dispatch systems, and payroll accounts. Tokmakjian gave evidence that the terms and conditions of Coach and Transit employees’ employment were also different, as was the management of the two divisions. The Referee found that Coach’s 45 workers — which included non-unionized employees drivers and independent contractors — and Transit’s 245 unionized employees had different managers. It was also a condition of Tokmakjian’s contract with York Region that the company would adhere to Ontario’s health and safety and human rights legislation when managing Transit employees.
[18] The Referee found that drivers for both Coach and Transit were required to have the same class of license. Tokmakjian’s evidence was that Coach driving was regulated by provincial law and Transit driving was regulated by the Transit Employees’ collective agreement.
[19] Coach and Transit used different buses. Different rates of pay applied for Transit and Coach driving. Tokmakjian’s evidence was that Transit driving was considered more complex and, as such, required more detailed training than Coach, being heavily guided by Tokmakjian’s contract with York Region. While the same individuals provided training to both Coach and Transit employees, the training itself differed (including the use of different training manuals), although there was also some evidence before the Referee that Coach and Transit drivers received the same customer service training.
[20] While the factual record before the Referee was largely undisputed (the parties simply disagreed on its constitutional implications), one contested fact was the percentage of the Transit Employees’ payroll generated by Coach driving. The evidence was that somewhere between 0.85% and 1.5% of Transit drivers drove for Coach. There was evidence before the Referee that at least four Coach drivers drove Transit routes between 2009 and July 31, 2010. The Transit Employees gave evidence that Coach dispatchers would sometimes approach Transit drivers and request that they take on Coach shifts, and that other drivers would cover Transit routes if necessary. As such, the Referee accepted that the dispatchers did not operate in “watertight compartments”.
[21] The Referee also heard evidence about Tokmakjian’s operations during the G20 Conference in Toronto, which took place in June 2010. The Transit Employees led evidence that, at that time, there was a sudden and greatly increased need for Coach drivers, and many Transit drivers drove for Coach for much or all of that pay period.
B. Referee’s analysis [22] The Referee introduced the “Decision” section of her analysis as follows:
The parties have been raising the issue of constitutional jurisdiction between them for many years. It is unfortunate that the issue was left to be determined on an ad hoc basis, rather than being brought before the CIRB or the OLRB, either of which would have had more expertise in this complex area of the law. However, I must do my best to determine the proper constitutional jurisdiction of Transit, since if Transit is not within federal jurisdiction I have no authority to deal with the matter of severance pay, based on s. 167 of the Canada Labour Code.
[23] The Referee recognized that employment matters fall presumptively under provincial jurisdiction. However, she also relied heavily on the 1995 CLRB Decision, writing that “stability is an important value”, and “once a determination is made that an employer is within federal jurisdiction, […] its status should remain constant unless and until it can be shown that there has been a substantive change in the business since the last jurisdictional ruling”. The Referee did not, however, take the 2003 HRDC Decision into consideration, finding that it had been rendered for a specific purpose in a non-adversarial context, at a time when Coach and Transit were operating from separate locations.
[24] From this starting point, the Referee cited Tessier Ltée v Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23 [Tessier] for the proposition that she had to first answer whether Coach and Transit were a “single undertaking” or “two separate undertakings”. She then examined the evidence before her for commonalities and differences between the operations and “nature of the work” of the two divisions, and found:
Based on my analysis of the facts overall, it seems that many of them could support either result. However, in my view there is a slight preponderance of factors indicating that there is a single undertaking rather than two separate undertakings.
[25] With respect to the jurisprudence before her, the Referee distinguished many of the cases provided to her by Tokmakjian because they dealt with “derivative” jurisdiction and not whether two operations were “one undertaking”. She considered Trentway-Wagar Inc, 2007 CanLII 57371 (OLRB) [Trentway-Wagar] to be “most similar on its facts, and in the legal question being asked”, and determined that “the degree of centralization versus autonomy” was “about the same” in Trentway-Wagar as in the case before her. The Referee disregarded the dissent in Trentway-Wagar, finding that it erroneously dealt with derivative jurisdiction.
[26] The Referee ultimately concluded that Transit and Coach were a “single undertaking” providing interprovincial transportation services, and that the Transit Employees were thus federally regulated for labour relations purposes.
[27] The Referee also noted that, if she were wrong and Transit and Coach were two undertakings, she would not have concluded that the Transit Employees fell under federal jurisdiction under a “derivative” analysis. Her comments on this point, which amount to obiter dicta (i.e., incidental or extraneous remarks), were as follows:
It is certainly easy to imagine how the two lines of business could be quite easily separated. The degree of interchange or cross-over between the two lines of business is not large, in the ordinary course of events. If the facts as they existed were sufficient to establish two undertakings, then I would also have to conclude that there was insufficient dependence or integration to lead to derivative federal jurisdiction applying to Transit.
III. Standard of Review [28] Whether the Transit Employees are federally or provincially regulated is a constitutional question. The Federal Court of Appeal [FCA] recently confirmed in Sawyer v Transcanada Pipeline Limited, 2017 FCA 159 [Sawyer] that constitutional questions attract a correctness standard of review:
7 […] Constitutionality is one of the few issues that remain subject to correctness review. This has been the case since Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 58, [2008] 1 S.C.R. 190 [Dunsmuir] and remains so today: Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd., 2016 SCC 47, [2016] 2 S.C.R. 293 [Edmonton East].
8 The rationale underlying this principle is that the expertise of the Board is not in respect of legal analysis of the constitution: Dunsmuir at paras. 58-61; Westcoast Energy Inc. v. Canada (National Energy Board), [1998] 1 S.C.R. 322 at para. 40, 156 D.L.R. (4th) 456 [Westcoast Energy]. This point is underscored by considering that the premise that underlies deference, the existence of a range of possible outcomes, recognizes that reasonable people may take different, but equally acceptable views on the same point: Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2011 SCC 53, [2011] 3 S.C.R. 471. Governance of the Canadian federation would not be well served by the application of deference, and its tolerance for divergent but equally sustainable outcomes, with respect to legislative jurisdiction.
[29] The FCA also applied a correctness standard for the constitutional questions at issue in both Nishnawbe-Aski Police Service Board v Public Service Alliance of Canada, 2015 FCA 211 [Nishnawbe] (at para 6) and National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada, Local 114) v Pacific Coach Lines Ltd, 2012 FCA 329 [PCL (FCA)] (at para 18). The Supreme Court of Canada [SCC] refused to grant leave to appeal in both cases (2016 CarswellNat 962 (WL Can); 2013 CarswellNat 1865 (WL Can)).
[30] Accordingly, no deference is owed by this Court to the Referee’s constitutional determination.
IV. Analysis A. The presumption of provincial jurisdiction over labour relations [31] Legislative power in Canada is shared by the federal and provincial governments (see Peter W Hogg, Constitutional Law of Canada, 5th ed (Canada: Thomson Reuters, 2007) (loose-leaf 2016 supplement) ch 5.1 [Hogg]). The division of powers between the federal and provincial governments is set out in the Constitution Act, 1867. Generally speaking, the provincial legislatures are assigned broad powers over local matters, while the federal government has those powers which are better exercised at the national level (see Consolidated Fastfrate Inc v Western Canada Council of Teamsters, 2009 SCC 53 at paras 29-30 [Fastfrate]).
[32] The Transit Employees only have rights to severance pay under the Code if the federal government had constitutional jurisdiction to regulate Transit’s labour relations. I must therefore determine which level of government had jurisdiction over the Transit Employees.
[33] To begin with, the Constitution Act, 1867 does not tell us whether “labour relations” are a federal or provincial matter; it does tell us, however, that the provinces have jurisdiction, under section 92(13), to regulate local “property” and “civil rights” matters. The courts have interpreted these powers to include labour and employment matters (Tessier at para 11).
[34] Although the provinces have jurisdiction over labour matters because of section 92(13), the federal government nonetheless has exceptional jurisdiction over labour matters of “federal” works and undertakings — i.e., operations that fall under federal jurisdiction (NIL/TU,O Child and Family Services Society v BC Government and Service Employees’ Union, 2010 SCC 45 at para 12 [NIL/TU,O]). In other words, where the federal government has constitutional authority over an enterprise, the federal government also has the power to regulate the labour relations of that enterprise (see Tessier at para 15, referring to Reference re Industrial Relations and Disputes Investigation Act, [1955] SCR 529 (SCC) [Stevedores Reference]). This is because an appropriate level of control over labour relations is needed to effectively manage an enterprise.
[35] The upshot of the Constitution Act, 1867’s division of powers is that the provinces have “presumptive” jurisdiction over labour relations under section 92(13) and the federal government has jurisdiction over labour relations only when necessary (NIL/TU,O at para 11). Federal jurisdiction over labour matters is the exception, not the rule. For federal jurisdiction to apply to the labour relations of an undertaking, the provincial presumption must be rebutted (Nishnawbe at para 29).
[36] The Referee referenced the presumption of provincial jurisdiction over labour matters as follows:
Although there is a presumption that employment is a matter of provincial regulation, once a determination is made that an employer is within federal jurisdiction, it seems to me that its status should remain constant unless and until it can be shown that there has been a substantive change in the business since the last jurisdictional ruling. Stability is an important value, and an organization’s constitutional jurisdiction should not change back and forth easily or frequently, unless there is a compelling reason to do so.
[37] In this Application, Tokmakjian argues that the Referee erred by failing to start with the provincial presumption, instead beginning with a preference for “stability”.
[38] I agree with Tokmakjian that it was indeed an error for the Referee to mention the provincial presumption, but then fail to apply it. This was similar to the error made in Nishnawbe, in which Justice Stratas criticized the CIRB for referring to the provincial presumption in its decision but failing to engage with it (at paras 29-33). Because the provincial presumption derives from the Constitution Act, 1867, decision-makers must remember that federal jurisdiction over labour matters is exceptional, and narrowly interpret the situations where provincial jurisdiction is “ousted” (Fastfrate at para 27; NIL/TU,O at para 11). OLRB Chair Bernard Fishbein, for instance, observed recently in a comprehensive constitutional analysis that “courts will not quickly displace the presumption of provincial jurisdiction over labour relations” (Ramkey Communications Inc, 2017 CanLII 16933 (OLRB) at para 153 [Ramkey]).
[39] Also instructive is the dissent of Justice McLachlin (as she then was) in Westcoast Energy Inc v Canada (National Energy Board), [1998] 1 SCR 322 (SCC) [Westcoast], which has since garnered support (see Tessier at para 45). Justice McLachlin wrote that, where a federal power is exceptional, “it should be extended as far as required by the purpose that animates it, and no further” (Westcoast at para 116).
[40] Thus, where federal jurisdiction over a matter is the exception, not the rule, decision-makers must take that as the starting point — any alternative approach risks undermining the division of powers (see Westcoast at para 161, citing United Transportation Union v Central Western Railway Corp, [1990] 3 SCR 1112 (SCC) at 1146, 1990 CarswellNat 1029 (WL Can) at para 60 [Central Western]).
[41] The Transit Employees argue that the Referee assigned the 1995 CLRB Decision its correct significance and rely on Fastfrate for the proposition that consistency and predictability on constitutional questions is “essential” (Fastfrate at para 45).
[42] First, I am unpersuaded that the provincial presumption falls away merely because there has been a determination by a labour tribunal on the constitutional issue — especially where such a prior determination is cursory, and predates important developments in constitutional law. In this case, the 1995 CLRB Decision predated both Westcoast and Tessier, as well as appellate jurisprudence that has interpreted those cases (including Sawyer, Total Oilfield Rentals Limited Partnership v Canada (Attorney General), 2014 ABCA 250 [Total Oilfield], and Actton Transport Ltd v British Columbia (Employment Standards), 2010 BCCA 272 [Actton Transport], which are all examined further below).
[43] Second, the SCC comments on constitutional “predictability” in Fastfrate do not support the proposition advanced by the Transit Employees. In Fastfrate, the SCC referenced “predictability” in endorsing an existing body of case law specific to Fastfrate’s freight-forwarding business. This makes sense, because much of the jurisprudence in this area of law is industry-specific. But Fastfrate did not use “consistency” to displace the provincial jurisdictional presumption that flows from the division of powers set out in the Constitution Act, 1867. To the contrary, the SCC in Fastfrate gave full effect to the provincial presumption by interpreting the Constitution Act, 1867 in a manner that saw federal jurisdiction over labour relations as “the exception, rather than the rule” (Fastfrate at para 44). The Transit Employees’ reliance on Fastfrate for the principle of “consistency” in this context is therefore misplaced.
[44] The Transit Employees further argue that, notwithstanding the Referee’s comments on “consistency”, she nonetheless correctly conducted her own analysis and did not simply follow the 1995 CLRB Decision. In oral argument, counsel for the Transit Employees further suggested that the Referee looked at the facts as they existed in July 2010 and did not “look backward”.
[45] Again, I disagree. The Referee found that the constitutional ruling in the 1995 CLRB Decision should “remain constant” absent a “compelling reason” and a “substantive change” to Tokmakjian’s business. Indeed, the Referee found that a “key factor” in her constitutional analysis was that the “same types of business had been carried out since the original certification decision” and that the “fundamental nature of the undertaking” was still the same as it had been at the time of the 1995 CLRB Decision. She went on to conclude that “an existing constitutional jurisdiction decision” should not be affected by changes in the “proportions” of a business’ federal and provincial work, absent some other substantive change in the business’ activities. As such, I cannot accept the Transit Employees’ argument that the Referee did not “look backward”.
[46] Moreover, and although I am satisfied that the Referee erred in departing from the provincial presumption, I note that the Referee’s “consistency” rationale was itself inconsistent: she relied heavily on the 1995 CLRB Decision and placed no weight on the 2003 HRDC Decision. The parties to this litigation have switched their positions over the years with respect to which side of the constitutional divide they fell into, depending on what suited them at the time. Because of this, it was incumbent upon the Referee to examine Tokmakjian’s operations as of July 2010, and not selectively rely on an early, cursory, and dated constitutional determination.
[47] In sum, I find that the Referee erroneously focused on “compelling” reasons to depart from the 1995 CLRB Decision, and that she did not engage with whether the Transit Employees had successfully rebutted the presumption of provincial jurisdiction over Transit’s labour matters.
B. Rebutting the provincial presumption: “direct” and “derivative” federal jurisdiction [48] The courts have spent the better part of the past century grappling with how to determine constitutional jurisdiction over labour relations. Having reviewed the jurisprudence, the one thing that is clear to me in this area of law is that it is unclear. Indeed, in Ramkey — a 229-paragraph decision — Chair Fishbein observed that the law in this area is a “sea of confusing and often contradictory jurisprudence” (at para 5). While I do not propose to go to the lengths Chair Fishbein did in his effort to navigate these treacherous waters, I will try to outline my view of what the law requires in a constitutional analysis of labour relations — at least with respect to transportation undertakings.
[49] As explained above at paragraphs [34] to [35], the federal government has exceptional jurisdiction over the labour relations of “federal” undertakings. Whether an undertaking is “federal” — and the provincial presumption therefore rebutted — depends on the nature of the undertaking’s operations, assessed on the basis of the “normal and habitual activities of the business” and disregarding “exceptional or casual factors” (NIL/TU,O at para 14, excerpting from Northern Telecom v Communications Workers, [1980] 1 SCR 115 (SCC) at 132, 1979 CarswellNat 639F (WL Can) [Northern Telecom 1] at para 31 ). This is known as the “functional test” (NIL/TU,O at para 14).
[50] If the “functional test” is inconclusive, then the decision-maker must also consider whether provincial jurisdiction over the undertaking’s labour relations would “impair the core of the federal head of power at issue” (NIL/TU,O at para 18).
[51] In its recent Tessier decision, the SCC clarified how the “functional inquiry” in fact contains two pathways through which the federal government may assert jurisdiction over an undertaking’s labour relations (Tessier at paras 18-19).
[52] Under the first path, the federal government has jurisdiction over the labour relations of an undertaking that is itself “federal”. Under the second path, the federal government has jurisdiction if the undertaking is not itself “federal”, but is instead “integral” to another federal undertaking. Tessier labelled these two pathways as “direct” and “derivative” jurisdiction, respectively. The SCC explained that both pathways focus on the “essential operational nature” of the undertaking whose labour relations are at issue:
17 […]this Court therefore established that the federal government has jurisdiction to regulate employment in two circumstances: when the employment relates to a work, undertaking, or business within the legislative authority of Parliament; or when it is an integral part of a federally regulated undertaking, sometimes referred to as derivative jurisdiction. Dickson C.J. described these two forms of federal jurisdiction over labour relations as distinct but related in United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112, at pp. 1124-25.
18 In the case of direct federal labour jurisdiction, we assess whether the work, business or undertaking’s essential operational nature brings it within a federal head of power. In the case of derivative jurisdiction, we assess whether that essential operational nature renders the work integral to a federal undertaking. In either case, we determine which level of government has labour relations authority by assessing the work’s essential operational nature.
[Emphasis added]
[53] The portion of Central Western, referenced above in Tessier, reads as follows:
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
[Emphasis in original]
[54] In a typical application of the functional test, the decision-maker will examine whether the constitutional character of an undertaking is itself federal, and, if it is not, the decision-maker may look at the relationship between that undertaking, and another federal undertaking.
[55] On occasion, the functional test is complicated by the fact that a single enterprise can carry on more than one “undertaking” in the relevant constitutional sense. For instance, in Re Employees of the Canadian Pacific Railway in Empress Hotel (City), the Privy Council held that the appellant conducted two undertakings: a railway company and a hotel business, rather than a single railway undertaking ([1950] 1 DLR 721 (Judicial Committee of the Privy Council) at para 14, 1949 CarswellBC 115 (WL Can) at para 14). Where the number of undertakings is in dispute, the functional inquiry first requires that the decision-maker determine whether the operations form a “single” undertaking or not.
C. Determining the number of undertakings [56] The federal power that concerns the Court on this Application is found in section 92(10)(a) of the Constitution Act, 1867, which provides that a “local” work or undertaking falls under provincial jurisdiction, unless it connects two provinces, or extends beyond the limits of a province, in which case the federal government has jurisdiction (see Total Oilfield at paras 34-41). Section 92(10)(a) has been interpreted to mean that the provincial governments have authority over intraprovincial transportation undertakings, while the federal government has jurisdiction over interprovincial and international transportation undertakings (Total Oilfield at para 39).
[57] Tokmakjian is a transportation business because it uses buses to transport people (Total Oilfield at para 43; Fastfrate at para 65). However, its transportation activities only fall under federal jurisdiction if those activities are interprovincial. A transportation undertaking is “interprovincial” for the purposes of section 92(10)(a), if it “continuously and regularly” crosses provincial borders, even if those interprovincial operations are only a small fraction of its overall transportation activities (Tessier at paras 51-52; Total Oilfield at paras 71, 74). The “continuous and regular” test therefore means that a single transportation undertaking with predominantly intraprovincial activities can still be federally regulated.
[58] The background provided in the two paragraphs above helps to explain why the question of whether there are one or more undertakings makes a great deal of difference when it comes to the constitutional character of transportation businesses.
[59] In this Application, Tokmakjian argues that Coach and Transit were two undertakings as of July 2010. If that was the case, then only Coach would be subject to federal jurisdiction under section 92(10)(a) and, by extension, only Coach employees would be governed by the Code, because only Coach’s operations “regularly and continuously” crossed provincial borders.
[60] The Transit Employees assert, conversely, that Coach and Transit comprised one “single” transportation undertaking. Coach and Transit would then both be federally regulated because they constituted one undertaking whose operations “continuously and regularly” crossed provincial borders — even though cross-border trips were a small part of Coach’s operations, and represented a diminishing portion of Tokmakjian’s overall business after September 11, 2001.
[61] This type of “one undertaking or two” dispute was first considered in Ontario (Attorney General) v Winner, [1954] 4 DLR 657 (Judicial Committee of the Privy Council), 1954 CarswellNB 40 (WL Can) [Winner]. In that case, MacKenzie Coach Lines operated a bus service from Maine through New Brunswick to Nova Scotia, with some passengers getting on and off in New Brunswick. New Brunswick argued that it had the authority to regulate those trips that started and ended in the province.
[62] The Privy Council ruled that it might have accepted such an argument if there had been evidence that “Mr. Winner was engaged in two enterprises, one within the province and the other of a connecting nature” (Winner at para 50 (DLR), at para 50 (WL Can)). However, the Privy Council held that there was no evidence to support such a finding, writing that “[t]he same buses carried both types of passenger along the same routes; the journeys may have been different, in that one was partly outside the province and the other wholly within, but it was the same undertaking which was engaged in both activities” (Winner at para 50 (DLR), at para 50 (WL Can)).
[63] In Winner, the Privy Council rejected the argument that a distinction could be drawn between the “essential” interprovincial and the “incidental” intraprovincial portions of the business, ultimately finding that:
The question is not what portions of the undertaking can be stripped from it without interfering with the activity altogether; it is rather what is the undertaking which is in fact being carried on. Is there one undertaking, and as part of that one undertaking does the respondent carry passengers between two points both within the province, or are there two?
[Winner at paras 51-52 (DLR), at paras 51-52 (WL Can)]
Winner held that the transportation undertaking was “in fact one and indivisible” and whether or not it might have been carried out differently was irrelevant (Winner at para 55 (DLR), at para 55 (WL Can)).
[64] The analysis in Winner was then relied upon by the Ontario Court of Appeal in ATU, Local 279 v Ottawa-Carleton Regional Transit Commission, 4 DLR (4th) 452 (ONCA), 1983 CarswellOnt 599 (WL Can) [OC Transpo]. In that case, OC Transpo operated primarily in the Ottawa-Carleton area of Ontario, but a small percentage of its operations consisted of bus routes crossing into Hull, Quebec.
[65] OC Transpo argued that it was a municipal transportation system subject to provincial jurisdiction because the Hull routes were very minor and non-essential to its operations and could be discarded without affecting OC Transpo’s essential nature (OC Transpo at 458 (DLR)).
[66] The Court of Appeal, however, found that the analysis in Winner was “a complete answer to the submission that the bus routes to Hull could be severed from the operations of OC Transpo”, holding that the Hull routes were an “integral and historical part” of the transportation undertaking (OC Transpo at 460 (DLR)). Therefore, because it was a single undertaking with interprovincial transportation services, OC Transpo fell under federal jurisdiction, even though its interprovincial routes were only a small fraction of its overall operations (OC Transpo at 458 (DLR )).
[67] At the hearing of this Application, counsel for the Transit Employees argued that Winner and OC Transpo were dispositive of the constitutional question. These cases, it was argued, set out the correct principles for determining whether a transportation business comprises one or more undertakings, and that these principles have since been applied and developed by various labour boards and decision-makers, including in Charterways at paragraphs 20 and 29, Transit Windsor, 1993 CanLII 7885 (OLRB) at paragraphs 9-10 [Transit Windsor], 1113666 Ontario Limited cob Deluxeway Bus Lines, [1995] OLRD No 1603 (OLRB) at paragraph 14 [Deluxeway], Supply Chain Express Inc, 2001 CanLII 9134 (OLRB) at paragraph 44 [Supply Chain], Trentway-Wagar at paragraph 46, and Q-Tek Tankers Ltd, 2016 CarswellNat 4625 (WL Can) (Canada Adjudication) at paragraphs 18 and 38-43 [Q-Tek].
[68] The Transit Employees’ counsel also submitted that these cases set out the relevant factual indicia for determining whether a single transportation undertaking exists, and that the Referee correctly considered those indicia.
[69] I do not agree that the constitutional question in this Application starts and ends with Winner and OC Transpo and the various labour decisions that followed. This is because it was not until 1999 in Westcoast — well after both OC Transpo and Winner were decided — that the SCC dealt squarely with the test for a “single undertaking”. In Westcoast, the SCC considered whether federal or provincial jurisdiction applied to certain natural gas gathering pipelines and processing plants that were located entirely within British Columbia but fed natural gas to an interprovincial, mainline pipeline.
[70] Building on the test for constitutional jurisdiction set out in Central Western, the Westcoast majority determined that the gathering pipelines and processing plants would fall under federal jurisdiction only if they either (i) constituted a “single” federal undertaking with the mainline pipeline, or (ii) were “integral to” the mainline pipeline (Westcoast at paras 45-46). In other words, and using the language later adopted in Tessier, if a single undertaking was found, then the whole undertaking was “directly” federal because of the interprovincial character of the mainline pipeline. If the provincially-bounded facilities were a separate undertaking, they might still be found to be integral to the interprovincial pipeline, in which case they would have a “derivative” federal character.
[71] In determining whether the gathering pipelines, processing plants, and mainline pipeline were a “single” undertaking, the majority in Westcoast noted that a physical connection or common commercial owne