Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters

Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters
Collection
Supreme Court Judgments
Date
2009-11-26
Neutral citation
2009 SCC 53
Report
[2009] 3 SCR 407
Case number
32290
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
Alberta
Subjects
Constitutional law
Notes
SCC Case Information: 32290
Decision Content
SUPREME COURT OF CANADA
Citation: Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, [2009] 3 S.C.R. 407
Date: 20091126
Docket: 32290
Between:
Consolidated Fastfrate Inc.
Appellant
and
Western Canada Council of Teamsters, Consolidated Fastfrate
Transport Employees’ Association of Calgary and
Alberta Labour Relations Board
Respondents
‑ and ‑
Attorney General of Ontario and Attorney General of Quebec
Interveners
Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 81)
Dissenting Reasons:
(paras. 82 to 119)
Rothstein J. (LeBel, Deschamps, Abella, Charron and Cromwell JJ. concurring)
Binnie J. (McLachlin C.J. and Fish J. concurring)
______________________________
Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, [2009] 3 S.C.R. 407
Consolidated Fastfrate Inc. Appellant
v.
Western Canada Council of Teamsters,
Consolidated Fastfrate Transport Employees’
Association of Calgary and Alberta Labour
Relations Board Respondents
and
Attorney General of Ontario and
Attorney General of Quebec Interveners
Indexed as: Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters
Neutral citation: 2009 SCC 53.
File No.: 32290.
2009: February 19; 2009: November 26.
Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the court of appeal for alberta
Constitutional law — Division of powers — Labour relations — Transportation undertaking — Freight forwarding company providing consolidation and deconsolidation and pickup and delivery services to its customers across Canada — Company having integrated national corporate structure with branch offices throughout Canada and contracts with third-party interprovincial carriers — Whether labour relations of branch employees subject to provincial or federal jurisdiction — Whether company qualifies as interprovincial undertaking even though it does not itself perform interprovincial carriage of goods — Constitution Act, 1867, s. 92(10) (a).
Fastfrate is a freight forwarding company with branches across Canada, including the Calgary branch. Using its own terminal employees and mostly its own local drivers and trucks, one Fastfrate branch picks up and consolidates freight within the originating province, while another branch deconsolidates and delivers the freight in the receiving province. Fastfrate employees and equipment do not cross provincial boundaries. Fastfrate contracts with third-party trucking and railway companies for the interprovincial carriage of the goods and, except in one unusual case, its employees play no role in the operation of those companies’ transportation systems. Fastfrate has an integrated national corporate structure with a head office in Ontario and a team of three regional vice‑presidents who oversee a series of local branch offices throughout Canada, each with a branch manager who is responsible for the day‑to‑day management of the branch. Employees at the branch offices deal directly with consignors and consignees and manage their own accounts receivable, but decisions regarding rates, asset acquisition and other matters of general profitability are made at the regional or national level.
The union representing the Fastrate Calgary employees applied to the Alberta Labour Relations Board for a declaration on whether the labour relations of Fastfrate Calgary are subject to provincial or federal regulation. This application was in response to an earlier application by another union to be certified by the Canada Industrial Relations Board as the regional bargaining unit of Fastfrate employees for Alberta, Saskatchewan and Manitoba. The Board held that Fastfrate Calgary was subject to federal jurisdiction because it was part of a single, indivisible, interprovincial freight transportation undertaking. The reviewing judge quashed the Board’s decision and reaffirmed the existing provincial certification order, holding that absent any physical involvement in the interprovincial carriage of goods, there was “insufficient reason to displace the dominant presumption of provincial jurisdiction over labour relations”. The Court of Appeal, in a majority decision, restored the Board’s decision.
Held (McLachlin C.J. and Binnie and Fish JJ. dissenting): The appeal should be allowed.
Per LeBel, Deschamps, Abella, Charron, Rothstein and Cromwell JJ.: The employees of Fastfrate Calgary are subject to provincial jurisdiction. The question whether an undertaking, service or business is a federal one depends on the nature of its operation. An undertaking that performs consolidation and deconsolidation and local pickup and delivery services does not become an interprovincial undertaking simply because it has an integrated national corporate structure and contracts with third-party interprovincial carriers. Fastfrate’s operations are entirely intraprovincial. Neither Fastfrate employees, nor its equipment, are involved in any actual interprovincial transport. Section 92(10) (a) of the Constitution Act, 1867 and the jurisprudence interpreting it do not contemplate that a mere contractual relationship between a shipper and an interprovincial carrier would qualify Fastfrate as an undertaking connecting the provinces or extending beyond the limits of the province. Rather, it is the carriers that physically transport the freight interprovincially that constitute federal transportation works and undertakings. There is no indication that contracting alone can make intraprovincial undertakings subject to federal jurisdiction. The operational reality of Fastfrate is that it depends on third‑party interprovincial carriers to conduct its business. Fastfrate remains a shipper. Its presence at both the originating and terminating ends may mean that it can provide a comprehensive service to its customers, but this does not change the fact that it is still only a shipper using an interprovincial railway or trucking company. [3] [61] [69] [70] [72] [75]
The s. 92(13) provincial head of power over “Property and Civil Rights” in the provinces includes labour relations. By way of exception, Parliament may assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject. Section 92(10) (a) provides for such an exception to the provincial jurisdiction over “Local Works and Undertakings” by granting to the federal government authority over “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”. However, having regard to the historical context of s. 92(10) and its underlying purpose, the preference for diversity of regulatory authority over works and undertakings should be respected, absent a justifiable reason that exceptional federal jurisdiction should apply. [27‑28] [35] [39]
In this case, there was no compelling reason to depart from the general rule that works and undertakings are regulated by the provinces. Section 92(10) (a) focusses specifically on transportation and communication works and undertakings through its examples of “Lines of Steam or other Ships, Railways, Canals, Telegraphs”. The common thread among the enumerated transportation works and undertakings in s. 92(10) (a) is the interprovincial transport of goods or persons. The enumerated examples are all instruments of or means of facilitating actual transport. There is no reference to, or implication of, third parties connected to the means of actual transport through contract being subject to federal jurisdiction. The genus of transportation works and undertakings contemplated in s. 92(10) (a) as “connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province” consists of those that physically connect the provinces through transport, not those that notionally connect them through contract. The basket clause “other Works and Undertakings” is to be read ejusdem generis with the specific examples which precede it. A requirement for federal jurisdiction over transportation undertakings is that the undertaking itself physically operates or facilitates carriage across interprovincial boundaries. The line of cases holding that freight forwarders that are not themselves engaged in the interprovincial transport of freight and that simply contract with interprovincial carriers remain subject to provincial jurisdiction should be upheld. [3] [42‑44] [48]
Finally, under s. 92(10) (a), there is a difference between the communications and transportation contexts. Communications undertakings can operate and provide international and interprovincial communication services from a fixed point whereas transportation, by definition, involves mobility of goods, persons, and transportation equipment across territory. In the transportation context, it is not possible for an undertaking to operate an interprovincial transportation service where it does not itself perform the interprovincial carriage. A business can act as an intermediary between interprovincial carriers and consumers who want to access those carriers at a reduced price. This does not mean that such a business becomes the operator and provider of the interprovincial carriage. The objective of predictability in the freight‑forwarding context strongly suggests that the industry should be considered holistically and the prior jurisprudence of the courts concerning the industry should be respected. [60‑61] [65] [67]
Per McLachlin C.J. and Binnie and Fish JJ. (dissenting): Fastfrate is an interprovincial transportation undertaking and its labour relations ought to be subject to federal regulation. In an era where contracting out elements of a service business is commonplace, the modalities of how a truly interprovincial transportation operation “undertakes” to move its customers’ freight from one part of Canada and deliver it to another should not contrive to defeat federal jurisdiction. Checkerboard provincial regulation is antithetical to the coherent operation of a single functionally integrated indivisible national transportation service. [83‑84] [118]
In order to be characterized as an interprovincial transportation undertaking, there is no requirement that the entity must itself physically transport goods across a provincial boundary. Whether an undertaking, service or business is a federal one depends on the nature of its operation. Here, Fastfrate’s undertaking is much more than that of a mere shipper. It provides a customer‑to‑customer interprovincial service. It handles the shipment both in the province of origin and in the province of destination. An undertaking that offers an interprovincial service is no less an interprovincial undertaking because part of the performance of its undertaking is contracted out to unaffiliated service providers. [85] [99] [106] [113]
The interpretation of the division of legislative powers and of how they interrelate must evolve and must be tailored to the changing political and cultural realities of Canadian society. Although the passage of time does not alter the division of powers, the arrangement of legislative and executive powers entrenched in the Constitution Act, 1867 must be applied in light of the business realities of 2009 and not frozen in 1867. The current Canadian economy would be unrecognizable to the statesmen of 1867. A grown man is not expected to wear the same coat that fitted him as a child. Today’s coat is of the same design, but the sleeves are longer and the chest is broader and the warp and woof of the fabric is more elaborate and complex. [89‑90]
Adopting a purposive approach to constitutional interpretation, what is important is not how transportation was viewed in 1867 but rather to match in our own era the level of regulation (federal, provincial or territorial) appropriate to the nature and scope of the undertaking. The Constitution nowhere gives the provinces general jurisdiction in relation to “Works and Undertakings”. Section 92(10) only gives the provinces jurisdiction over local works and undertakings. To the extent such local works and undertakings connect the province “with any other or others of the Provinces or extending beyond the Limits of the Province”, they are now, as in 1867, regulated federally pursuant to s. 91(29). By contracting out part of its transportation operations Fastfrate does not escape federal jurisdiction. [84] [90] [96]
Furthermore, although the technology may differ from one industry to the other, the legal test to determine what constitutes an interprovincial undertaking under s. 92(10) (a) is the same whether it is applied to a communication or a transportation undertaking. No distinction should be drawn and none has been drawn to date in this Court’s cases. The test formulated in the s. 92(10) (a) cases is a functional test and it requires a court to focus on what transportation service Fastfrate undertakes to provide to its customers — local or interprovincial. The outcome does not depend on whether, in carrying out its interprovincial freight contracts, Fastfrate does or does not contract with another corporate entity to move the goods across an interprovincial or international boundary. The majority’s proposed test focusses on the means through which the undertaking is carried on rather than on the interprovincial service it provides to its customers. [85‑86] [104] [107]
In this case, it is evident that Fastfrate operates as a single enterprise and one could not separate the local from the interprovincial without gutting Fastfrate’s enterprise as it presently exists. Although Fastfrate attempted to characterize its provincial terminals as relatively independent and self‑contained, the fact is that a Fastfrate terminal at the point of a shipment’s origin has to be functionally integrated with the operation of the Fastfrate terminal at the point of delivery in order to perform its interprovincial pickup and delivery service. This is not the case of a company that is simply present in each province with a stand‑alone operation. On the contrary, each Fastfrate terminal is dependent on its sister terminals; the service offered depends on functional integration in the performance of Fastfrate’s contractual interprovincial undertaking to its customers. [116‑117]
Cases Cited
By Rothstein J.
Applied: Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112; distinguished: Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225; disapproved: D.H.L. International Express Ltd. (1994), 96 di 106; approved: 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; referred to: Reference re Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529; Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5; Lévis (City) v. Fraternité des policiers de Lévis Inc., 2007 SCC 14, [2007] 1 S.C.R. 591; Toronto Electric Commissioners v. Snider, [1925] A.C. 396; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; R. v. Blais, 2003 SCC 44, [2003] 2 S.C.R. 236; Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767; In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304; Attorney‑General for Ontario v. Winner, [1954] A.C. 541; Consumers’ Association of Canada v. Postmaster General, [1975] F.C. 11; Re Ottawa‑Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 (1983), 4 D.L.R. (4th) 452; Public Service Board v. Dionne, [1978] 2 S.C.R. 191; Windsor Airline Limousine Services Ltd. and U.S.W.A. (1999), 56 C.L.R.B.R. (2d) 70; Canadian Pacific Railway Co. v. Attorney‑General for British Columbia, [1950] A.C. 122; City of Montreal v. Montreal Street Railway, [1912] A.C. 333.
By Binnie J. (dissenting)
United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112; Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225; R. v. Toronto Magistrates, Ex Parte Tank Truck Transport Ltd., [1960] O.R. 497; R. v. Cooksville Magistrate’s Court, Ex parte Liquid Cargo Lines Ltd., [1965] 1 O.R. 84; Public Service Board v. Dionne, [1978] 2 S.C.R. 191; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767; In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304; Attorney‑General for Ontario v. Winner, [1954] A.C. 541; Téléphone Guèvremont Inc. v. Québec (Régie des télécommunications) (1992), 99 D.L.R. (4th) 241, aff’d [1994] 1 S.C.R. 878; Capital Cities Communications Inc. v. Canadian Radio‑Television Commission, [1978] 2 S.C.R. 141; Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674; In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174; D.H.L. International Express Ltd. (1994), 96 di 106.
Statutes and Regulations Cited
Canada Labour Code, R.S.C. 1985, c. L‑2 .
Constitution Act, 1867, ss. 91(29) , 92(10) (a), (13) , 95 .
Railway Act, 1868, S.C. 1868, c. 68.
Authors Cited
Browne, Gerald Peter. Documents on the Confederation of British North America. Toronto: McClelland and Stewart, 1969.
Coyne, H. E. B. The Railway Law of Canada. Toronto: Canada Law Book, 1947.
Fraser, I. H. “Some Comments on Subsection 92(10) of the Constitution Act, 1867 ” (1984), 29 McGill L.J. 557.
Hogg, Peter W. Constitutional Law of Canada, vol. 1, 5th ed. Scarborough, Ont.: Thomson/Carswell, 2007.
Kennedy, W. P. M. Documents of the Canadian Constitution 1759‑1915. Toronto: Oxford University Press, 1918.
Kennett, Steven A. “Jurisdictional Uncertainty and Pipelines: Is a Judicial Solution Possible?” (1997), 35 Alta. L. Rev. 553.
Labour Law Casebook Group. Labour and Employment Law: Cases, Materials, and Commentary, 7th ed. Toronto: Irwin Law, 2004.
McNairn, Colin H. “Transportation, Communication and the Constitution: The Scope of Federal Jurisdiction” (1969), 47 Can. Bar Rev. 355.
Whyte, John D. “Constitutional Aspects of Economic Development Policy”, in Division of Powers and Public Policy. Toronto: University of Toronto Press, 1985, 29.
APPEAL from a judgment of the Alberta Court of Appeal (Conrad, Watson and Slatter JJ.A.), 2007 ABCA 198, 79 Alta. L.R. (4th) 201, 412 A.R. 97, 404 W.A.C. 97, 285 D.L.R. (4th) 137, 147 C.L.R.B.R. (2d) 176, [2007] 11 W.W.R. 579, 67 Admin. L.R. (4th) 1, [2008] CLLC ¶220‑019, [2007] A.J. No. 857 (QL), 2007 CarswellAlta 1010, setting aside a decision of Hart J., 2005 ABQB 977, 59 Alta. L.R. (4th) 266, 390 A.R. 354, 263 D.L.R. (4th) 157, 120 C.L.R.B.R. (2d) 301, [2006] 9 W.W.R. 497, [2006] CLLC ¶220‑004, [2005] A.J. No. 1793 (QL), 2005 CarswellAlta 1923, allowing an application for judicial review of a decision of the Alberta Labour Relations Board (2005), 114 C.L.R.B.R. (2d) 1, [2005] Alta. L.R.B.R. 238, [2005] A.L.R.B.D. No. 92 (QL), 2005 CarswellAlta 940. Appeal allowed, McLachlin C.J. and Binnie and Fish JJ. dissenting.
Thomas W. R. Ross and Trisha Gain, for the appellant.
Clayton Cook, for the respondent the Western Canada Council of Teamsters.
Shawn W. McLeod, for the respondent the Alberta Labour Relations Board.
No one appeared for the respondent the Consolidated Fastfrate Transport Employees’ Association of Calgary.
Michael T. Doi and Mark Crow, for the intervener the Attorney General of Ontario.
Alain Gingras, for the intervener the Attorney General of Quebec.
The judgment of LeBel, Deschamps, Abella, Charron, Rothstein and Cromwell JJ. was delivered by
[1] Rothstein J. — The issue in this appeal is whether the labour relations of employees of the Calgary branch of Consolidated Fastfrate Transport Inc. (“Fastfrate”) are subject to provincial jurisdiction under s. 92(13) of the Constitution Act, 1867 or federal jurisdiction pursuant to the exception contained in s. 92(10) (a).
[2] This appeal concerns freight forwarding — an industry in which companies consolidate and deconsolidate freight and contract for its shipment with third‑party rail and truck carriers, including interprovincial ones. Fastfrate provides consolidation and deconsolidation and pickup and delivery services to its customers across Canada. It typically acts as the consignor and consignee for the third-party carrier such that customers receive a single bill of lading. The question in this case is whether Fastfrate’s provision of such services qualifies it as an interprovincial undertaking even though it does not itself perform any interprovincial carriage of goods.
[3] I am of the view that an undertaking that performs consolidation and deconsolidation and local pickup and delivery services does not become an interprovincial undertaking simply because it has an integrated national corporate structure and contracts with third-party interprovincial carriers. Fastfrate does not perform any interprovincial carriage itself. Absent this, I see no compelling reason to depart from the general rule that works and undertakings are regulated by the provinces. Accordingly, the labour relations of the employees of Calgary Fastfrate are subject to provincial jurisdiction. I would therefore allow the appeal.
I. Facts
[4] The market niche of freight forwarding companies is the consolidation and deconsolidation of freight. This is their economic raison d’être. The consolidation and deconsolidation of freight allows customers to benefit from an economy of scale when accessing third-party carriers. As the Alberta Labour Relations Board (“ALRB”) noted, “[b]y pooling the small shipments of many customers into full‑truckload shipments, Fastfrate can realize economies of scale that the individual customer cannot easily realize, and so can pass the savings to the customer” ((2005), 114 C.L.R.B.R. (2d) 1, at para. 8). Without this consolidation service, customers sending less‑than‑truckload and less-than-carload shipments would face substantially higher costs.
[5] Fastfrate is a freight forwarding company with branches across Canada, including the Calgary branch at issue in this case. Fastfrate employees pick up and consolidate freight within the originating province and employees of another Fastfrate branch deconsolidate and deliver the freight in the receiving province. Fastfrate contracts with third-party trucking and railway companies, primarily the Canadian Pacific Railway Company (“CPR”), for the interprovincial carriage of the goods.
[6] In most cases, Fastfrate and its employees play no role in the operation of CPR’s interprovincial railway system. As the ALRB noted, “[o]nly CP Rail employees and equipment load and unload rail cars” (para. 18). The one exception to this rule is in Thunder Bay, where Fastfrate “has a contract to act as the yard operator for CP Rail’s small intermodal terminal facility” (para. 18).
[7] The ALRB also found that Fastfrate’s employees and equipment do not cross provincial boundaries, subject to one now discontinued exception. Until November 2004, Fastfrate employees transported freight between their Ottawa and Montreal branches. Fastfrate ceased this practice in 2004, in part, because it raised a “contentious issue” for jurisdictional determinations (para. 17). The ALRB found these exceptions relevant only insofar as they proved the “rule” of Calgary Fastfrate’s operations:
That rule is, as we have stated: Fastfrate performs the pick-up and consolidation of freight at one end of the transaction and it performs the deconsolidation and delivery at the other end of the transaction, using its own terminal employees and mostly (but not exclusively) its own local drivers and trucks. But any component of its service that involves transport of the freight across provincial boundaries is contracted to a third-party interprovincial road or rail carrier. [Emphasis added; para. 19.]
[8] In terms of corporate structure, Fastfrate’s head office is located in Mississauga, Ontario. Fastfrate has a team of three regional vice‑presidents who, with regional managers, oversee a series of local branch offices throughout Canada, each with a branch manager. Decisions regarding rates, asset acquisition and other matters of general profitability are made at the regional or national level (ALRB, at para. 31). Employees at the branch offices deal directly with consignors, consignees and manage their own accounts receivable (ALRB, at para. 30). Branch managers are responsible for the day-to-day management of each branch, including hiring, dismissing and scheduling employees. However, regional managers will only sign collective agreements with the approval of a regional vice‑president (ALRB, at para. 33).
II. Judicial History
[9] In June 2004, the Consolidated Fastfrate Transport Employees’ Association of Calgary (“Calgary Association”) applied to the ALRB for a declaration on whether the labour relations of Calgary Fastfrate are subject to provincial or federal regulation. This application was in response to an earlier application by the Western Canada Council of Teamsters (“Teamsters”) to be certified by the Canada Industrial Relations Board as the regional bargaining unit of Fastfrate employees for Alberta, Saskatchewan and Manitoba (ALRB, at para. 4). The Teamsters’ consolidation application, if successful, would have had “the effect of displacing or ‘raiding’ the [Calgary] association for its Calgary bargaining unit” (ALRB, at para. 4).
A. Decision of the Alberta Labour Relations Board (2005), 114 C.L.R.B.R. (2d) 1
[10] In its July 2005 decision, the ALRB held that Calgary Fastfrate’s operations were within federal jurisdiction and, therefore, subject to the Canada Labour Code, R.S.C. 1985, c. L‑2 .
[11] The ALRB considered and rejected the Teamsters’ argument that Calgary Fastfrate’s labour relations are subject to federal regulation on the basis of “‘derivative’ federal jurisdiction”. The ALRB found that Fastfrate’s operations were not “essential or integral” to the CPR or any other interprovincial undertaking: see Reference re Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529 (the “Stevedores Reference”). The ALRB concluded that the jurisdictional analysis must centre on the nature of Fastfrate as an undertaking in its own right.
[12] The ALRB relied heavily on evidence of organizational integration between Fastfrate’s head office and its branches in its jurisdictional analysis. The ALRB applied the “dominant purpose” approach adopted by the Canada Labour Relations Board (“CLRB”) in D.H.L. International Express Ltd. (1994), 96 di 106 (“DHL”), and the “three‑fold unity” test proposed by S. A. Kennett in his article, “Jurisdictional Uncertainty and Pipelines: Is a Judicial Solution Possible?” (1997), 35 Alta. L. Rev. 553. When the ALRB examined “the operations of the Calgary Fastfrate location and the rest of the Fastfrate organization for unity of ownership, unity of purpose and unity of control”, it concluded that “the Calgary Fastfrate location is part of a single, indivisible interprovincial undertaking” (para. 55).
[13] The ALRB distinguished the facts of the present case from In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174, and Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674. In Cannet and Cottrell, the Federal Court of Appeal and the Ontario Divisional Court respectively held that freight forwarders were subject to provincial jurisdiction. The ALRB distinguished the present case on the basis that “in neither Cannet nor Cottrell was there evidence that the freight forwarder regularly engaged in deconsolidation and delivery of freight on its own account at the destination end of the shipment” (para. 51). In the ALRB’s view, this fact, along with Fastfrate’s integrated corporate structure, was sufficient to constitute Fastfrate as an interprovincial undertaking for constitutional purposes.
B. Decision of the Court of Queen's Bench of Alberta (Hart J.), 2005 ABQB 977, 59 Alta. L.R. (4th) 266
[14] Fastfrate sought judicial review of the ALRB decision. The reviewing judge quashed the ALRB decision and held that Calgary Fastfrate’s labour relations were subject to provincial regulation. He reaffirmed the existing provincial certification order.
[15] The reviewing judge agreed with the ALRB that derivative federal jurisdiction was not at issue in this case. He found Fastfrate’s operations easily distinguishable from the stevedoring company in the Stevedores Reference.
[16] As for the proper characterization of Fastfrate as an undertaking, the central question for the reviewing judge was whether “Fastfrate [is] best described as a series of effectively independent intra‑provincial undertakings, albeit grouped within an overarching corporate control architecture, or . . . as a single undertaking with a dominant interprovincial purpose?” (para. 23 (emphasis in original)). He concluded that the existence of an overarching corporate structure was insufficient to qualify Fastfrate and its provincial branches as a single federal undertaking. Absent any physical involvement in the interprovincial carriage of goods, there was “insufficient reason to displace the dominant presumption of provincial jurisdiction over labour relations” (para. 44).
C. Decision of the Alberta Court of Appeal, 2007 ABCA 198, 79 Alta. L.R. (4th) 201
(i) Watson and Slatter JJ.A. for the Majority
[17] Watson J.A. for the majority of the Court of Appeal held that the reviewing judge erred in law when he overturned the ALRB’s decision and affirmed the provincial certification order. Watson J.A. concluded that Fastfrate “operates an interprovincial freight collection and delivery service” (para. 75) and is therefore subject to federal regulation.
[18] Watson J.A. took issue with the reviewing judge’s emphasis on physical involvement in interprovincial carriage. On their reading, the jurisprudence does not require a “threshold of tangible and physical connection” between provinces for an undertaking to qualify as interprovincial under s. 92(10) (a) (para. 46). Rather, the focus should be on the functional nature of the undertaking. “[T]he test”, Watson J.A. wrote, “must consider the reality of the situation globally” (para. 53).
[19] Watson J.A. was persuaded by the CLRB’s reasoning in DHL. In that case, the CLRB held that the freight forwarder D.H.L. International Express Ltd. (“DHL Ltd.”) was subject to federal jurisdiction. DHL Ltd. was an “express pick‑up and delivery courier service” with offices throughout Canada (p. 107). It contracted with commercial and charter airlines to provide express delivery to interprovincial and international destinations. The CLRB found that even though DHL Ltd. contracted out actual interprovincial and international transportation, its “dominant purpose” was nevertheless interprovincial. The CLRB held that DHL Ltd. was a single, indivisible federal undertaking engaged in the international and interprovincial delivery of goods and documents. Watson J.A. concluded that “[t]he DHL case is sound” (para. 71).
[20] Applying the reasoning in DHL to the present case, the majority of the Court of Appeal concluded that Fastfrate operates as “an interprovincial freight collection and delivery service” (para. 75). Fastfrate’s labour relations were therefore found to be subject to federal regulation under the s. 92(10) (a) exception.
(ii) Conrad J.A. (in Dissent)
[21] Conrad J.A. held, in dissent, that Fastfrate’s labour relations are subject to provincial regulation. Conrad J.A. focussed on the specific services that Fastfrate performs, rather than the services which it contracts out. She noted that Fastfrate collects, organizes, consolidates, and deconsolidates freight at a variety of branches and negotiates rates for third-party transportation (para. 82). The only transportation services Fastfrate actually performs itself are intraprovincial pickups and deliveries. All interprovincial transportation is carried out by third parties. For Conrad J.A., it “follow[ed] that Fastfrate is not an interprovincial or international transportation undertaking” (para. 82). The fact that its provincial operations are functionally integrated into a single corporate structure does not change the reality that the only transportation services Fastfrate performs itself are intraprovincial.
[22] Conrad J.A. concluded that the ALRB erred by focussing on the degree of corporate integration between Fastfrate’s provincial branches and its head office. For Conrad J.A., the ALRB’s constitutional inquiry was skewed from the outset because it focussed on the unity of the national enterprise, rather than determining whether there was an interprovincial undertaking in the first place (para. 106). In order to determine whether Fastfrate is an interprovincial transportation undertaking, the ALRB should have considered whether Fastfrate was actually “transporting” freight across provincial or international boundaries. This analysis was never undertaken by the ALRB.
[23] Unlike the majority, Conrad J.A. did not accept the CLRB’s reasoning in DHL. She disagreed that a freight forwarder that does not itself perform interprovincial carriage of freight can nevertheless be considered an interprovincial transportation undertaking (para. 118). In her view, the fact that a company, such as DHL Ltd. or Fastfrate, may have a national head office and an integrated network of provincial terminals does not transform it into an interprovincial undertaking subject to federal jurisdiction. Likewise, the existence of corporate contracts between a freight forwarder and interprovincial carriers does not change the nature of the freight forwarder undertaking itself.
[24] Conrad J.A. therefore concluded that Fastfrate was not an interprovincial undertaking pursuant to s. 92(10) (a). She would have dismissed the appeal.
III. Relevant Constitutional Provisions
[25] This case concerns the classification of an “undertaking” pursuant to the Constitution Act, 1867 . The relevant sections are:
91. . . . the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, —
. . .
29. Such Classes of Subjects as are expressly excepted in the Enumeration of the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces.
. . .
92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter 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:
. . .
13. Property and Civil Rights in the Province.
IV. Analysis
A. Standard of Review
[26] The parties agree that the applicable standard of review in cases of constitutional interpretation is correctness: see Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5, at p. 17. However, as the respondent Teamsters also note, the ALRB’s constitutional analysis rested on its factual findings. Where it is possible to treat the constitutional analysis separately from the factual findings that underlie it, curial deference is owed to the initial findings of fact: see Lévis (City) v. Fraternité des policiers de Lévis Inc., 2007 SCC 14, [2007] 1 S.C.R. 591, at para. 19. In the present case, I agree with the majority of the Court of Appeal that the ALRB’s factual findings regarding the operations and organizational structure of Fastfrate merit deference.
B. Constitutional Landscape of Labour Relations
[27] The basic rule in the division of powers over labour relations is that the provinces have jurisdiction over industries that fall within provincial legislative authority and the federal government has jurisdiction over those that fall within federal legislative authority: see Labour and Employment Law: Cases, Materials, and Commentary (7th ed. 2004), at p. 85. However, as the jurisprudence makes clear, federal jurisdiction has been interpreted narrowly in this context. In Toronto Electric Commissioners v. Snider, [1925] A.C. 396, the Judicial Committee of the Privy Council held that the s. 92(13) provincial head of power over “Property and Civil Rights” in the provinces includes labour relations. It is only where a work or undertaking qualifies as federal that provincial jurisdiction is ousted.
[28] In Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115, Dickson J. (as he then was) summarized the principles that govern federal‑provincial jurisdiction over labour relations, at p. 132:
(1) Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule.
(2) By way of exception, however, Parliament may assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject.
. . .
(5) The question whether an undertaking, service or business is a federal one depends on the nature of its operation. [Emphasis added.]
Under s. 92 of the Constitution Act, 1867 , therefore, provincial jurisdiction is the norm. Federal jurisdiction extends only to those classes of subjects expressly excepted from the provincial heads of power and those enterprises deemed integral to such federal works and undertakings. As I will discuss, s. 92(10) (a), itself a limited carve-out, provides for such a federal exception. The question in this case is whether the nature of the operations of Fastfrate are subject to provincial or federal jurisdiction.
C. Division of Powers (Sections 91 to 95 )
[29] The division of powers in ss. 91 to 95 of the Constitution Act, 1867 form the bedrock of our federal system. They seek to preserve local diversity within the federal nation by conferring “[b]road powers” on provincial legislatures, while at the same time “reserving to Parliament powers better exercised in relation to the country as a whole”: Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3 (per Binnie and LeBel JJ., at para. 22).
[30] Federalism exists as a fine balance between local governance and centralized decision making. As Binnie and LeBel JJ. observed, at para. 22, in Canadian Western Bank:
The fundamental objectives of federalism were, and still are, to reconcile unity with diversity, promote democratic participation by reserving meaningful powers to the local or regional level and to foster co‑operation among governments and legislatures for the common good.
D. Guiding Principles: Interpreting Section 92(10)(a)
[31] It is within this federal framework that the present case arises. This is especially true with res