Canadian Air Line Employees Association v. Emery Air Freight Corporation, 1984 CanLII 1111

Canadian Air Line Employees Association v. Emery Air Freight Corporation

[1984] OLRB Rep. October 1412

0643-84-R Canadian Air Line Employees Association, Applicant, v. Emery Air Freight Corporation, carrying on business under the name of Emery World-wide, Respondent, v. Group of Employees, Objectors

BEFORE: Corinne F. Murray, Vice-Chairman, and Board Members J. Wilson and H. Kobryn.

APPEARANCES: J. James Nyman, J. T. Saunders, P. Pelletier and J. Armstrong for the applicant; C. F. Humphrey, Louisa Davie and Gary Kennedy for the respondent; no one for the objectors.

DECISION OF THE BOARD; October 3, 1984

1. This is an application for certification in connection with a group of office, sales and clerical employees of the respondent.

2. On the basis of the evidence heard, the Board finds the applicant to be a trade union within the meaning of section 1(1 )(p) of the Labour Relations Act.

3. In this application the respondent has raised the preliminary question of the jurisdictional competence of this Board to entertain the instant application. The respondent asserts that the application ought to be brought under the provisions of the Canada Labour Code because:

(a) the respondent is an undertaking extending beyond the limits of Ontario, and in the alternative,

(b) the respondent is an integral part of an undertaking or undertakings which extend beyond the limits of Ontario.

4. The respondent is the Canadian part of a worldwide transportation system. The transshipment of goods by the respondent, is divisible into two different components, i.e., national (within Canada) and international (both into Canada from outside Canada and from within Canada to outside Canada). Within Ontario the respondent has two bases for operating (known as "stations") — Ottawa and Malton. The Malton operations are the subject of this application for certification. In the rest of Canada the respondent has 6 stations — Halifax, Montreal, Winnipeg, Calgary, Edmonton and Vancouver. Goods coming to and going out of Canada to the United States and other worldwide location pass physically through facilities in Dayton, Ohio, known as the "Superhub", whereas the goods originating from within Canada and being delivered to parts in Canada do not. A computer, located in Wilton, Connecticut, receives, stores and communicates information pertinent to the international transshipment of goods by the respondent on behalf of its customers.

5. In connection with the Malton station the respondent leases a portion of the cargo area, known as Cargo Building "B", at the Lester B. Pearson International Airport. The major part of this leased area is a bonded warehouse where goods being received and forwarded are stored. The other part of the leased premises is an office area, which houses a computer terminal linking the Malton operations to the Wilton computer. Through that terminal the respondent's Malton employees can input data regarding items received by the Malton facilities which are to be transshipped and can "track" the progress of the goods through the Emery Worldwide system. The terminal also allows Malton employees to advise the receiving stations of the approximate arrival time of the goods sent from Malton and the delivery instructions of the customer. In connection with items whose destination is the Malton station, the terminal outputs information as to value, originating point, delivery instructions, etc., which allows the Malton employees to "track" those items for its customers.

6. Based on the total number of shipments Malton handles, only 10% of them are deliveries in Canada between Malton and other Canadian stations. The bulk (75%) of Malton's shipments are to and from the United States with 15% going to and from off-shore locations. For the purposes of the respondent's argument the important federal aspect is the movement of items to and from the U.S. and therefore the information as to those going to or coming from "off-shore locations" is not precise. For the purpose of clarity we will first describe the respondent's intra-Canada operations and then describe the intra-North America operations.

7. For items originating in the area served by the Malton station (the western limits of Mississauga to the eastern limits of Scarborough) for a destination point inside of Canada, the following process occurs. A customer contacts the respondent's Customer Service Department and requests a "pickup". A pickup slip is made up by an employee in this department from information supplied by the customer, i.e., customer's name, address, number of pieces in pickup, weight, destination, whether hazardous or requiring special treatment. The completed pickup slip goes to a dispatcher located at the Malton premises and the dispatcher directs, via a two-way radio, the appropriate driver to pick the item up. The trucks used for the pickup are owned and operated by a separate corporate entity, Corridor Transport, which has no legal connection with the respondent except by contract. The trucks are painted with the respondent's logo and these trucks are used exclusively in connection with the respondent's business. The drivers wear Emery uniforms. When the driver makes the pickup, the customer signs a receipt (usually an airbill) which either has already been made up by the customer or which the driver has made up. After the pickup has been completed and the driver takes the item to the Malton facility, it is off-loaded. The respondent uses commercial carriers, for example, either Air Canada or companies in the business of overland transportation, or a combination thereof to convey the goods from Malton to their Canadian destination. The purchase of space on Air Canada flights is on an "as necessary" basis. We received no evidence that any other commercial carrier was used besides Air Canada.

8. Delivery of items received at Malton from other Canadian stations or from the U.S. to destinations within the area served by the Malton station are made by the Corridor Transport drivers in trucks printed with the respondent's logo. If delivery is for a location beyond this area, the respondent's employees make arrangements to retain another commercial carrier.

9. For items going to and from the U.S. the same pickup and delivery procedures at Malton apply as sketched out above. However, after the items are off-loaded to the warehouse and the inputting of information is done into the computer, the additional paperwork necessary for the movement of goods to the U.S. must be completed and checked, i.e., after a manifest of freight already on the planned flight to the U.S. is received, a Canada Customs Advice Notice (Exhibit "2") is produced on Malton's terminal and "hard copy" printer, both of which rely on the programming of the Wilton computer. After clearing Canada Customs, the goods are then loaded onto the appropriate aircraft. At the time of our hearing the respondent had entered into a contract with Air Niagara, a separate corporate entity, under which Air Niagara provided a prop-plane painted with Emery's logo and a pilot for two flights per night between Toronto and Buffalo, 5 nights a week. There is no dispute that the plane is for the respondent's exclusive use and flies at a time dictated by the respondent. After the second flight each night, the plane and pilot remains in Buffalo overnight to await the cargo inbound for Canadian destinations. This cargo arrives in the early morning on a DC-8 owned by the respondent's U.S. corporate relative flying from the Superhub in Dayton to Buffalo. Items which have arrived on the Air Niagara flights are off-loaded to the Buffalo Air terminal, are cleared through U.S. Customs and then loaded on the DC-8 for the return to the Dayton Superhub. The cargo from the DC-8 is loaded either on the Air Niagara prop-plane or on a truck owned and driven by a driver employed by BuffAir, a separate corporate entity from the respondent, which supplies the truck for the exclusive use of the respondent (although in this instance, the Emery logo is not on the truck). The lighter items (envelopes) are carried by air and the middle and heavy-weight items are carried by BuffAir. When the Air Niagara flight from Buffalo or the BuffAir truck arrives at Malton, their cargo is checked by the respondent's employees and Customs documents are compared with invoices attached to the items. After this, the goods are ready for clearance by a Customs broker for the importer. After Canada Customs clears the broker's paperwork, the Customs Advice Notice is stamped and the goods requiring delivery are delivered either by Corridor Transport vehicles or by another commercial surface carrier as described above.

10. Gary Kennedy, the respondent's Director of Canada, testified as to the foregoing. He also testified as to the nature of the contractual arrangements between the respondent and Air Niagara and BuffAir. He testified in examination-in-chief to the effect that the respondent had virtually a ~'day-to-day" contract with Air Niagara. Under cross-examination he acknowledged that there were no ties between the respondent and Air Niagara except by way of the service contract relating to the prop-plane and pilot as outlined above. He agreed that Air Niagara holds the necessary licences to operate the aircraft dedicated to Emery's use. The respondent is not Air Niagara's only customer. The respondent has no control over the hiring, firing or any other terms or conditions of employment of persons necessary to the Air Niagara flights. Mr. Kennedy also agreed that the only link between BuffAir and the respondent was by way of contract, although not describing it as a "day-to-day" one like Air Niagara's. BuffAir holds the licence necessary to make the runs for the respondent, although, as far as Customs clearance is concerned, the trucks are able to cross the U.S./Canada border without clearance at that point because of a special permission granted to the respondent by Canada Customs for the clearance to occur at Malton instead of at the border crossing. The driver of the truck is employed by BuffAir and all the terms and conditions of employment are under BuffAir's control. If a problem arises with either Air Niagara or BuffAir employees working on the respondent's contracts, the respondent complains to Air Niagara or BuffAir and they remedy the situation. While Mr. Kennedy could not be certain that BuffAir had other customers besides the respondent, he thought it probable. Mr. Kennedy agreed with the general statement that insofar as the transshipment of goods between Malton and the time a DC-8 operated out of the Dayton Superhub becomes involved, the entire operation of transshipping goods is done under contract by other entities, with no corporate relationship to the respondent. We note also that Mr. Kennedy agreed that all the other Canadian stations are operated on this same basis, i.e., carriage of goods between the Canadian station to the appropriate U.S. entry point is done under contract by other entities, with no corporate connection to the respondent.

SUMMARY OF ARGUMENTS

11. Counsel for the respondent primarily argues that the respondent is "an undertaking extending beyond the limits of the province" within the meaning of section 92(l0)(a) of the Constitution Act, 1867 (formerly named the British North America Act, 1867, 30-31 Vict., c.3 (U.K.)) because the Canadian/U.S. flow of goods, is an "international distribution network" made up of a number of components assembled by the respondent in such a fashion as to qualify as "an undertaking extending beyond the limits of the province". Counsel for the respondent emphasized the overall control of the system by the respondent and relied on this aspect of the facts to argue that the respondent's operations are distinguishable from the "freight forwarding" fact situations which were the basis of numerous decisions of this Board and the Courts (for example, Airgo Agency Limited, [1982] OLRB Rep. Sept. 1233; Ottor Freightways Limited, [1975] OLRB Rep. Jan. 1; Re The Queen and Cottrell Forwarding Co. Ltd. (1981), 1981 CanLII 1896 (ON HCJ), 33 O.R. (2d) 486 (Div. Ct.); Re Cannet Freight Cartage Ltd. and Teamsters Local 419(1976), 1975 CanLII 2218 (FCA), 60 D.L.R. (3d) 473, [1976] 1 F.C. 174, 11 N.R. 606 (F.C.A.)). Counsel pointed out that the evidence of Mr. Kennedy showed that Air Niagara and BuffAir were dependent on the respondent and "if it didn't put freight on either, then they would not operate". BuffAir can only make the run from Buffalo to Toronto on behalf of the respondent and is allowed to postpone clearing Customs until reaching Pearson International Airport only because of exemption given to the respondent by Canada Customs. If the respondent had no freight, then Air Niagara would cease flying the prop-plane back and forth to Buffalo. Finally, the respondent's counsel asked us to take note of the fact that the Toronto to Buffalo flight connects the freight with a system in the U.S. This linkage gives the respondent "meaning as a federal undertaking", i.e., extending beyond the province. The "Emery system" cannot be divided up into parts because the parts do not have a separate existence. The respondent conceded that the part of its system for transshipment of goods within Canada, which relies on commercial carriers not under the respondent's control, is indistinguishable from the factual situation described in the Airgo decision, supra, and therefore could not be considered a federal undertaking on its own. It is the international aspect, specifically to and from the United States, which makes the respondent a federal undertaking.

12. In the alternative, the respondent's counsel argues that the respondent is an integral part of an undertaking extending beyond the province. The facts show that the respondent is "sufficiently interconnected with" Air Niagara and BuffAir to make the respondent's labour relations subject to federal regulation. Counsel asserted that the evidence showed that the "business" of Air Niagara and BuffAir would not exist without "integration" with the respondent. He distinguished the railway and air carrier cases on the basis that those cases were rooted in the notion that without the particular freight forwarder's business, the commercial carriers would still be moving freight for someone else. On the facts before us counsel believed it was clear that Air Niagara would not be moving freight back and forth across the border if the respondent was not its customer.

13. Counsel for the applicant saw nothing in the facts which made the respondent operation distinguishable, in the constitutional sense, from the freight forwarding companies examined in the cases cited in paragraph 11 above. While acknowledging that the respondent has greater "economic" or "marketplace" control over Air Niagara and BuffAir than the freight forwarders described in any preceding decision, this economic difference does not make it a federal undertaking extending beyond the province nor does it make the respondent an integral part of these two federal undertakings. Counsel for the applicant argued that the recognized and correct test is a "functional" one. The approach required to be adopted in analyzing the respondent's arguments is most clearly annunciated by the Supreme Court of Canada in Montcalm Construction Inc. v. Minimum Wage Commission, et al (1979), 1978 CanLII 18 (SCC), 93 D.L.R. (3d) 641, [1979] 1 S.C.R. 754 wherein the Court stated that, as a rule, there is exclusive provincial competence over the matters of labour relations and the terms and conditions of employment of persons in Canada and that these matters only come within federal competence if it is shown, functionally, to be an integral part of a subject over which there is primary federal competency. Counsel for the applicant argues that what the respondent's first position amounts to is an assertion that the respondent's system is an undertaking over which Parliament has primary competence. The error in it is the assumption that a high degree of control over the international movement of goods as a result of contractual arrangements creates an area of federal competence. While the respondent relied on the Cottrell decision supra, to support this assumption, a closer reading of it shows that when the Divisional Court referred to "direct control" over a carriage or communications system being necessary to have federal competence, it meant control in the corporate sense, not the control one obtains by contract. The applicant asserts that the respondent's system is essentially the same as that of Cottrell, which the Court found not to be a federal undertaking.

14. The applicant assails the respondent's secondary argument on the basis that it does not satisfy the tests laid down in the Stevedores, case, sub. nom. Reference Re Validity of Industrial Relations and Disputes Investigation Act (Can.) and Applicability in Respect to Certain Employees of Eastern Canada Stevedoring Co. (1955) 1955 CanLII 1 (SCC), S.C.R. 529, (1955) 3 D.L.R. 721 (S.C.C.), which established that in order for the labour relations area of a company's operations to be federally regulated it must be established that the company's operations consist exclusively of services integral or necessary to a federal undertaking. The applicant cites Canada Labour Relations Board, et al v. Paul L'Anglais Inc., et al (1983)1983 CanLII 121 (SCC), 146 D.L.R. (3d) 202 (S.C.C.) which applied this test to companies selling air-time and producing commercial and audio-visual material for a broadcasting undertaking. The Court found these services not to be integral, in a functional sense, to the federal undertaking such that the labour relations matters of the service company would be removed from provincial competency. To the same effect the applicant's counsel cited The Canadian Air Line Employees' Association and Wardair Canada (1975) Ltd., et al case (1980), 1979 CanLII 4076 (FCA), 97 D.L.R. (3d) 38 (Fed. C.A.) wherein a company (Intervac) to which Wardair, an acknowledged federal undertaking, "wholesaled" its passenger space and which in turn retailed this to the public, was found not to be integral to Wardair notwithstanding evidence to the effect that 90% of Wardair's ticket sales occurred through Intervac and, without Intervac, Wardair would stop operating. These cases show that the proof of economic power and control is not enough.

15. In response the respondent agreed that the test was a functional one and that the "core activity" of the respondent must be found to be the transportation of goods beyond a provincial boundary. While acknowledging and agreeing with the applicant that no one is directly employed by the respondent to actually move goods across boundaries, nevertheless the respondent is unlike the other freight forwarding cases because it has assembled a "system" which the Board cannot sever into parts for the purpose of its assessment of its jurisdiction. The distinction between Emery's system and the freight forwarding company s arrangements considered in previous decisions is not simply who was contracted with (e.g., Air Niagara as opposed to Air Canada) but the extent of the control the respondent is able to have regarding the timing and frequency of the international delivery flights and trips. The respondent submits the major difference is that the respondent has established a total system which does not operate without the respondent.

16. Section 92(l0)(a) of the Constitution Act, 1867 provides:

17. 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.

Section 91(29) of the same Act provides that the subject matters excluded under section 92(10) are within the jurisdiction of the Parliament of Canada. It has been established for almost 60 years that as a general and primary rule, Parliament has no authority over labour relations as such or over the terms of a contract of employment: Montcalm Construction Inc., supra, at p. 652, and Northern Telecom Ltd. v. Communications Workers of Canada et al (1979), 1979 CanLII 3 (SCC), 98 D.L.R. (3d) 1, [1980] 1 S.C.R. 115, 28 N.R. 107 (S.C.C.), wherein Toronto Electric Commissioners v. Snider et al, (1925) 1925 CanLII 331 (UK JCPC), 2 D.L.R. 5, [1925] A.C. 396, [1925] 1 W.W.R 785 was cited with approval. Only if the labour relations matters are demonstrated to be an integral part of a federal work or undertaking do they fall under the exclusive jurisdiction of Parliament. The simple question is whether the regulation of the labour relations of the respondent vis-a-vis its staff located at Malton is an integral part of a federal work or undertaking.

17. There is only one way in which the respondent itself can qualify as a federal work or undertaking, i.e., showing itself to be an undertaking "extending beyond the limits of a province" pursuant to section 92(10)(a). While it is true that it has been established that an "undertaking" need not be a physical thing or work (In Re Regulation And Control of Radio Communication of Canada, 1932 CanLII 354 (UK JCPC), [1932] 2 D.L.R. 81, [1932] A.C. 304, [1932] 1 W.W.R. 563 (P.C.)), we do not think that the "system" or "arrangement" that the respondent has constructed amounts to anything more than an assemblage or collage of undertakings which themselves in all likelihood would either fall under federal jurisdiction or, in the case of BuffAir, may not come within Canada's national jurisdiction at all. An examination of the undertakings which have qualified under section 92(l0)(a) as ones which either are "connecting the provinces" or extending "beyond the provinces" (both phrases we understand to be articulating the common notion of extending beyond one province into either another country or another province) clearly indicates that this category has described either communication systems (e.g., Toronto v. Bell Canada Telephone Co. [1905] A.C. 52 (P.C.)) or cartage systems (e.g., A.-G. Ont. et al. v. Winner et al 1954 CanLII 289 (UK JCPC), [1954] 4 D.L.R. 657, [1954] A.C. 541, 13 W.W.R. (N.S.) 657) which have extended beyond the provincial boundaries on equipment or using equipment owned and operated by one corporate entity. Reading the Cottrell decision, supra, as a whole, we find that it stands for the proposition that all the enterprises or organizations or undertakings that have been held to be interprovincial undertakings within the meaning of section 92(l0)(a) of the Constitution Act, 1867, supra, have involved themselves in the tangible and physical aspects of the actual carriage of goods or have operated the communication service using their own equipment or facilities. The Court in Cottrell decided (at page 491) that Cottrell could not be considered an undertaking within the meaning of section 92(10)(a) because it was not involved in "the tangible or physical aspects of the actual carriage of goods (because) its business is entirely contractual in that it arranges and co-ordinates the interprovincial transportation of its customers goods". Cottrell itself owned none of the railway cars used to move the goods (assembled from customers) across provincial boundaries. The vehicles used to pick up and deliver, both of which generally occurred without crossing provincial limits, preliminary to and following the transshipment of goods by rail were also not owned or leased by Cottrell, although some were owned by a subsidiary. The Court distinguished this fact situation from the line of cases upholding federal primacy in carriage services and communications systems on this basis (see A.-G. Ont. v. Winner, supra; R. v. Borisko Bros. Quebec Ltd. (1969), 1969 CanLII 903 (QC PROVCT), 29 D.L.R. (3d) 754, 9 C.C.C. (2d) 227 (Que. Sess. of Peace); R. v. Toronto Magistrates, Ex p. Tank Truck Transport Ltd., 1960 CanLII 120 (ON HCJ), [1960] O.R. 497, 25 D.L.R. (2d) 161 sub nom. Re Tank Truck Transport Ltd. (H.C.); affirmed 1963 CanLII 46 (SCC), [1963] 1 O.R. 272, 36 D.L.R. (2d) 636 (C.A.); Capital Cities Communications Inc. v. C.R.T.C. 1977 CanLII 12 (SCC), [1978] 2 S.C.R. 141,81 D.L.R. (3d) 609 (S.C.C.) City of Toronto v. Bell Telephone Co. of Canada, [1905] A.C. 52 (P.C); R. v. Cooksville Magistrate's Court, Exp. Liquid Cargo Lines Ltd., 1964 CanLII 162 (ON HCJ), [1965] 1 O.R. 84,46 D.L.R. (2d) 700, 65 C.L.L.C. 147 (H.C.); Re Pacific Produce Delivery & Warehouses Ltd. and Retail, Wholesale & Department Store Union, Local No. 580 (1974), 1974 CanLII 1106 (BC CA), 44 D.L.R. (3d) 130, [1974] 3 W.W.R. 389 sub nom. Pacific Produce Delivery & Warehouses Ltd. v. Labour Relations Board (B.C.C.A.); R. v. Letco Bulk Carriers Ltd. (1978), 1978 CanLII 1669 (ON HCJ), 18 OR. (2d) 562,83 D.L.R. (3d) 252,39 C.C.C. (2d) 210 (Ont. Co. Ct.); Re Kleysen's Cartage Co. Ltd. and Motor Carrier Board of Manitoba (1965), 1965 CanLII 512 (MB CA), 48 D.L.R. (2d) 716,51 W.W.R. 218 (Man. C.A.). The Court at page 492 agreed with and amplified upon a Federal Court of Appeal's assessment, in the course of determining that Cottrell's subsidiary was not to be an undertaking within the meaning of section 92(l0)(a) (Cannet Freight Cartage Ltd., supra) , that the only undertaking in the carriage system Cottrell had arranged was the railway company. At page 492 the Court had this to say:

The railway company is the only body carrying on the interprovincial undertaking and it has the physical works as well. Clearly, if an individual customer of Cottrell wished to ship goods to the west, it could contract with the railway company to ship such goods. The mere fact that by contract Cottrell agrees with that individual customer to enter into the contract with the railway company and become the shipper itself, does not make Cottrell anything other than a shipper. The shipment is merely part of an over-all contract and a person who has no tangible or physical property under its control to operate an undertaking cannot, by contract, make himself a person carrying on an undertaking within the meaning of s. 92(10) (a) of the British North America Act, 1867. Cottrell is not carrying on an undertaking or operation but is merely providing a service by contract. To hold otherwise would mean that any travel broker or other person engaged in general commerce could, by contract, provide interprovincial undertakings, even though he had no facilities whatsoever, and thereby claim that he was not subject to provincial jurisdiction. This would be an unreasonable interpretation of the section in question.

(emphasis added)

18. Although in the Cottrell/Cannet decisions the federal undertaking is identified specifically as the Canadian National Railway, which was the railway used by Cottrell, the reasoning is not limited to cargo or freight forwarders who use the railways or scheduled airlines. We find the reasoning to be applicable to the respondent, a cargo or freight forwarder which has contracts with Air Niagara, the owner/operator of small air cargo plane or planes used, and with BuffAir, the owner/operator of flatbed trucks used. We agree with counsel for the applicant that the only difference between the two situations is size. In the latter the cargo or freight forwarder has greater means and power to dictate schedules to a small air carrier which can be more responsive to the needs of the purchaser of its service. This difference should not mislead or take away from the essential fact that the arrangement is purely "contractual" and the relationship is that of a freight forwarder to a commercial carrier, i.e., a carrier who for money payment agrees to move goods. For the same reasons the relationship between the respondent and BuffAir is not essentially different from the contractual arrangements common between freight forwarders and trucking operations. The non-essential difference is size and usage. For all these reasons we have concluded that the respondent's operations into and from the United States do not make it a federal undertaking within the meaning of sections 92(1 0)(a) and 9(29) of the Constitution Act, 1867, supra;

19. Insofar as the alternate argument is concerned, we cannot agree that the respondent is integral to an undertaking which extends beyond the province. Although the respondent attempted in this aspect of its argument to refer us back to the international system (Canada to U.S.) as the undertaking to which it was integral, we find this tautological. In order to succeed in this argument, a clear federal undertaking must be first identified and then the operations of the respondent related to it (see the Stevedores case, supra; Airgo Agency Limited, supra; Montcalm Construction Inc., supra; Paul L'Anglais Inc., supra). Having rejected the argument that the respondent's system or arrangement itself is a federal undertaking, it must be established, to succeed under the alternate argument, that the respondent is so integrated with Air Niagara and BuffAir that the respondent is "essential" to them. It is important to point out immediately that most cases cited above where this argument has been considered, dealt with relationships where a company was supplying services to or upon a clearly federal undertaking. However, on the facts before us and before the Board in Airgo, an acknowledged federal undertaking was supplying a service to the operation, trying to establish it was integral to the federal undertaking. In Airgo, supra, relying on previous decisions of the Board rejecting the notion that a freight forwarding company could be integral (in the constitutional sense) to railways, the Board specifically rejected the notion that a freight forwarder could be integral to commercial airlines in the following way:

20. These issues have been previously addressed both by this Board and in the courts in railway cases. In Ottor Freightways [1975] OLRB Rep. Jan. 1 the Board was called upon to determine whether a freight forwarding company operating by rail was in the federal or provincial jurisdiction with respect to labour relations. The company had terminals in Toronto and Ottawa and was involved in carrying freight to points in Quebec out of its Ottawa terminal. Goods were pooled in Toronto and loaded on freight cars bound for Ottawa, where they were unloaded and delivered in the respondent's trucks within a twenty mile radius of Ottawa, including Hull and Gatineau. The Board found that it did not have jurisdiction because the respondent's trucking operation crossed provincial lines. While it found that the company was an undertaking connecting provinces, the Board specifically rejected the alternative argument that the respondent's link to the Canadian Pacific Railway brought it within the federal jurisdiction as an undertaking integral to railways. The Board distinguished the Stevedoring case on the basis that stevedores perform a function essential to shipping and therefore are an integral part of it. It also declined to follow an earlier Board decision, H' WK Forwarding Ltd. [1970] OLRB Rep. Mar. 1450, which had found a freight forwarding company to be an undertaking integrally connected with railways. The Board reasoned as follows (pp. 4-7):

Thus, relying upon Attorney-General for Ontario et al v. Winner et al, Winner et al v. S.M. T. (Eastern Ltd.) et al 1954 CanLII 289 (UK JCPC), [1954] 4 D.L.R. 657 (J.C.P.C.); Regina v. Manitoba Labour Board exparte Invictus Ltd. (1968)1967 CanLII 606 (MB QB), 65 D.L.R. (2d) 517; Re Tank Truck Transport Ltd. (1961), 1960 CanLII 120 (ON HCJ), 25 D.L.R. (2d) 161; and Regina v. Cooksville Magistrate's Court, ex parte Liquid Cargo Lines Ltd. (1965), 1964 CanLII 162 (ON HCJ), 46 D.L.R. (2d) 700, we rule that the respondent's business is an undertaking that connects the Province of Ontario with the Province of Quebec and its labour relations is therefore regulated by the Canada Labour Code ...

Therefore the Board must dismiss this application on the preceding basis and this basis alone. We would note that this has been the foundation to all the preceding Board decisions involving freight forwarding companies save for General Truck Drivers' Union, Local 938 and H'WK Forwarding Ltd. [1970] OLRB M.R. p. 1450; (see General Truck Drivers' Union, Local 938 and Hendric and Co. Ltd. [1965] OLRB M.R. p. 646; Canadian Transportation Workers Union #197 and Wilson's Truck Lines Ltd. and General Truck Drivers' Union, Local 938 [1970] OLRB M.R. p. 204; Teamsters Local Union 879 and Crown Moving and Storage, operated by Donald W. Murray Movers Ltd. [1973] OLRB M.R. p. 119; and David Beaton v. General Truck Drivers' Union, Local 938 and Consolidated Fastfrate Ltd. [1974] OLRB M.R. p.269), and with all due respect, we cannot accept the reasoning outlined in the H' WK Forwarding Ltd., decision supra, and cannot do so for the following reasons.

The panel in H'WK Forwarding Ltd. did not focus on the intrinsic inter-provinciality of the company's activities in that case (and the nature of the business in that case did extend outside of Ontario on a regular basis) but rather rested its reasoning upon the Eastern Canada Stevedoring Co. case, supra, holding that the employees of the freight forwarder were integrally related to railways and railways are a federal undertaking in their own right. And, in fact, this is the second "leg" to the respondent's argument in the application before us today in that, Mr. Filion, counsel to the respondent, relied upon the H' WK Forwarding Ltd. case, supra, as well as a more recent case of the Board — Teamsters Union, Local 938 and Centeast Auto Terminal Ltd. and Canadian Brotherhood of Railway, Transport and General Workers [1974] OLRB M.R. 67, (a case which we believe correctly applied Eastern Canada Stevedoring Co., supra, but a case involving facts that are substantially different than those before us. But, we believe that when the constitutional law test in this area is applied to a freight forwarder's operation that exists solely within a Province, it cannot be said that such an activity forms an integral part of and is necessarily incidental to the operation of a railway as defined under the exceptions to "local works and undertakings" in section 92(l0)(a) of the British North America Act. Rather we believe that, while none are on all fours with the facts at hand, cases like Murray Hill Limousine Service Limited v. Sinclair Batson et al 66 C.L.L.C. 14,143; Re Colonial Coach Lines Ltd. et al and Ontario Highway Transport Board et al (1967), 1967 CanLII 178 (ON HCJ), 62 D.L.R. (2d) 270; Underwater Gas Developers Ltd. v. Ontario Labour Relations Board et al (1960), 1960 CanLII 145 (ON CA), 24 D.L.R. (2d) 673; Bachmeier Diamond and Percussion Drilling Co. Ltd. v. Beaverlodge District of Mine, Mill and Smelter Workers' Local Union

Number 913 (1962), 1962 CanLII 309 (SK CA), 35 D.L.R. (2d) 241 (Sask. C.A.); and Teamsters International Union Local 990 and North Shore Supply Co. Ltd., File No. 5791 -74-R, more appropriately describe the relationship of freight forwarders vis-a-vis the railways — the relationship is one of convenience to freight forwarders and of an incidental or tertiary benefit to railways.

In Eastern Canada Stevedoring Co., supra, the company's operations consisted exclusively of services rendered in connection with the loading and unloading of ships, pursuant to contracts with seven shipping companies and the work was carried on under the authority and supervision of the ships' officers. Therefore, the work that was being done was something that the companies engaged in the federal undertaking (navigation and shipping) had to have done for them and to this end they contracted another company and that company thereby became integrally related to them. Similarly in Centeast Auto Terminal Ltd., supra, the Canadian National Railway had contracted with foreign automobile manufacturers to transport their automobiles to customers in Canada. And obviously, to fulfil this obligation Canadian National Railway had to unload and store the vehicles until they were picked up. But Canadian National Railway contracted out this integral function of their railway responsibility to a specialized concern and the Board found, by reason of this contact — a contract that was a necessary aspect of the railway's business — that the specialized concern had become an integral part of and necessarily incidental to Canadian National Railway.

However, in the case before us Canadian Pacific Railway has not sought out the respondent and engaged it to perform an integral aspect of the railway's responsibilities. Rather, the respondent is primarily engaged in servicing its own customers (i.e., delivering their goods, etc.) and it has chosen to do this, in part, by rail as opposed to "over the road". Therefore while Canadian Pacific Railway obviously enjoys such patronage it is in no way an integral part of its operations. It is convenient but is in no way necessary or integral to the operation of a railway. In other words while it is convenient to the railways to have only one customer the primary purpose or benefit of freight forwarding is to serve the many customers who deal with the freight forwarders, and therefore the benefit flowing to the railways is only of a tertiary nature. (This perspective is very nicely developed in relation to airline limousine services in Re Colonial Coach Lines Ltd. et al and Ontario Highway Transport Board et al, supra, p. 277). Accordingly an enterprise cannot parasitically and unilaterally make itself an integral part of a federal undertaking unless it is performing a service that is of a primary value to that undertaking and requested by the federal undertaking on that basis. In the facts before us the respondent has merely agreed to transport its customers' goods to some other geographical point and has elected to do this by rail. It could have elected to do it by truck or by air but chose the rail. This election is to its own benefit and convenience and is not an integral part of Canadian Pacific Railway's activities. (Canadian Pacific Railway is only a passive medium in the relationship with the respondent.)

Or another way to have this same perspective is to examine the primary purpose and function of the respondent's business. This perspective forces one to look to the respondent's customers — not to Canadian Pacific Railway. The respondent delivers matters to and from railroad terminals for the customers — not the railroad. In other words it [sic] primary value, or nature of the respondent's business, is that of a parochial delivery agent and only incidentally does the railroad become involved. It is this perspective which distinguishes these facts from Letters Carriers' Union of Canada v. Canadian Union of Postal Workers and M & B Enterprises Ltd. 1973 CanLII 183 (SCC), [1974] 1 W.W.R. 452 (S.C.C.), where a trucking firm had been engaged by the Canadian Post Office to handle and collect mail. There the company was working for the Canada Post Office performing one of its functions and the company was therefore an integral part of that activity; (see also City of Kelowna v. Labour Relations Board of British Columbia and C. U.P.E., Local No. 338, 74 C.L.L.C. 14,207 (B.C.S.C.). Whereas had the arrangement been one of numerous customers asking the trucking firm to deliver mail to the Post Office the relationship with the Post Office would have been quite collateral or secondary.

While both the Airgo and Ottor decisions emphasize exclusivity, the more important emphasis for our purpose is the fact that the freight forwarders were not performing a "service" for the railways or the air carriers, as were the stevedores or the trucking firm in the Stevedores case, supra, and the Letter Carriers' Union case, supra, respectively, but rather the railways or air carriers were performing a service for the freight forwarders. Seen in this light, it is clear that, notwithstanding the reduced size and greater responsiveness of Air Niagara and BuffAir, Air Niagara and BuffAir are performing services on behalf of the respondent. On that basis the second alternative argument must fail.

20. We therefore find that this application is within our jurisdictional competence. This matter is referred to the Registrar so that dates for further hearings may be set. We are not seized in this matter.