Ontario Labour Relations Board
Between:
Service Employees Union, Local 210, Affiliated With Service Employees International Union, AFL-CIO-CLC, Applicant/Complainant,
v.
Keytours Inc., Respondent,
v.
Group of Employees, Objectors
Before: Robert J. Herman, Vice-Chairman, and Board Members W. G. Donnelly and W. F. Rutherford.
Appearances: John Pistor, Gerald Durocher for the applicant/complainant; Frank Fazio, Glen Mullins and Steve Djelebian for the respondent; Anna Vannelli and Maureen Greenwood for the group of employees.
Decision of the Board
1The name of the respondent is amended to read: "Keytours Inc.".
2This is an application for certification and a complaint filed pursuant to section 89 of the Labour Relations Act.
3The respondent has challenged the jurisdiction of the Board to entertain these proceedings, and asserts that its business is within federal jurisdiction and these proceedings ought to be brought before the Canada Labour Relations Board. Before embarking upon any inquiry into the merits, the Board entertained evidence and submissions with respect to this preliminary constitutional issue.
4The parties agreed that these two proceedings ought to be consolidated if the Board did find that it had the proper jurisdiction. For the reasons given below, we find that this Board has the necessary jurisdiction to entertain them and, accordingly, we hereby direct that these two proceedings be consolidated.
5The respondent sets up and markets air and rail tour packages, primarily selling these packages on a wholesale basis to other travel agents, with its retail sales being steadily phased out. The only office operated by the respondent is located in Windsor, Ontario. When the respondent decides to put together a new destination package, a senior officer or officers of the respondent travel to that destination, ordinarily outside the province. While there, that employee assesses whether the destination will be an attractive one for potential buyers and inspects the various accommodation options, local tours and sight-seeing events, transportation arrangements and so on. After assessing the facilities and services available and the cost required to utilize them, the employee returns to the Windsor office where a decision is made whether to set up the particular destination package. If the proposed destination on balance seems attractive, the respondent, through its employees, and in the Windsor office, puts together the various contractual arrangements in order to provide a complete package available for sale to travel agents and ultimately to the consumer who takes the trip. These package tours depart at various times during the week, with all air tours leaving from the Detroit airport to destinations outside the Province of Ontario, and the rail tours either leaving from locations within the United States and entering the Province of Ontario, or alternatively, both leaving from and arriving entirely within the Province of Ontario.
6In essence, the respondent purchases bulk space from both a common air carrier and from Via Rail or Amtrak and in turn the respondent utilizes this bulk space to compose its package tours. The respondent is regulated by the various levels of government, both Canadian and International, and holds numerous licences issued by provincial, federal, American or International agencies or commissions. Together, these licences enable the respondent to run its business and to offer package tours which go beyond the confines of the province. The respondent is licenced under the Travel Industry Act, R.S.O. 1980, c.509, as a retail and wholesale travel agent, it holds a licence as a general sales agent for Via Rail, and is subject to the regulatory control, where applicable, exercised by the International Air Transport Association (I.A.T.A.) authorizing the respondent to sell its charters internationally, and by the United States Federal Department of Transportation, which authorizes the respondent to contractually arrange for its charter air flights.
7The Articles of Incorporation, as amended, of the respondent indicate the following as its objects:
To conduct the business of a general travel agency, on a wholesale and on a retail level and, without limiting the generality of the foregoing, to buy, sell, exchange and otherwise deal in and with train, steamship, airplane and other tickets, and to arrange for hotel accommodations and travel tours of all kinds.
In the Board's view these objects accurately reflect and describe the business conducted by the respondent, on the basis that the arranging of hotel accommodations and travel tours includes the setting up and composing of the package tour itself. Put differently, the package tours offered by the respondent, with their specific dates, times of departure and hotel accommodations, only exist as a specific package tour because the respondent has assembled the tour. Unlike most other travel agents, who sell tours which have been assembled by other corporations or individuals, Keytours Inc. sells tours which it has assembled itself.
8During the past year, approximately one hundred thousand people purchased one of the respondent's rail tours. Most of these passengers were resident in the United States and bought their tickets from within the United States. The tour packages involving air flights carried approximately ninety-five thousand passengers during the same period, of whom approximately ninety per cent were resident in the United States. As noted earlier, most of these passengers bought their tickets from other travel agents, and it is those agents which are the regular customers of the respondent.
9The tours currently offered by the respondent involving air flights have destinations in Las Vegas, the Bahamas, and several Florida locations. All of the flights leave from the Detroit airport, as noted above, and all of them utilize planes owned by American Trans Air and leased through a charter contract with the respondent. American Trans Air is a common carrier based in the United States. For each one of the flights during a given week, the respondent must arrange a charter contract with American Trans Air, and also arrange that funds in a specified amount be deposited in an escrow bank account in an American city, as required by the United States Department of Transportation. In effect, that Department of Transportation requires that the respondent post a bond for each of the flights leaving from the Detroit airport. There is no requirement that the respondent charter planes from American Trans Air, and for any given charter flight the respondent could choose to lease or charter a plane from another air carrier. For practical reasons, because the respondent is such a valued customer of American Trans Air and therefore receives very attractive fee schedules from them, the respondent charters only from this one air carrier.
10In signing a contract for a particular charter, the respondent is in effect purchasing in bulk all the seats for a given flight leaving at a specific time and arriving at its destination at a specific time. The respondent in turn uses this seat capacity to assemble its package deals. If the various travel agents selling the respondent's tours should not fill up a plane, the plane nevertheless travels to its destination though seats remain unsold and unfilled. The individual charter contracts make clear that the flight times are finalized by American Trans Air only thirty days prior to the scheduled flight date.
11The air tickets are American Trans Air tickets, issued by the respondent, and obtained by passengers from whichever agent they might have bought the tour. For tours going to destinations other than Las Vegas, several hours before the plane is scheduled to depart from the Detroit
airport, one or two employees from the Windsor office travel to the Detroit airport carrying with them the passenger manifest, a list of names of the passengers travelling on the particular flight about to leave. When they arrive at the Detroit airport, the respondent's employees hand over the passenger manifest to employees of an unrelated corporation, Butler Aviation, hired by the air carrier American Trans Air to provide all ground services. Butler Aviation checks all passengers in, and does all the ground handling of their package. The employees of the respondent, in addition to bringing the passenger manifest from Windsor, are present to ensure that there are no problems and to respond should passengers have any inquiries. On occasion these employees will perform a short cursory inspection of the passenger area of the airplane to ensure that it is clean, and where Butler Aviation might be encountering problems in the quick processing of passengers, the respondent's employees may assist physically in the loading of the baggage. The evidence indicated that these tasks were performed on the odd occasion and in an effort to assist American Trans Air or Butler in the performance of their contractual duties.
12The non-Las Vegas flights then depart for their various destinations, and no employee of the respondent is on those flights. When the flights arrive at their Florida or Bahamas destinations, their baggage is unloaded and the passengers are marshalled through customs, baggage reclaiming, and transported to their various hotels by employees of other corporations. No employees of the respondent are either retained or present in the Bahamas or Florida to assist the disembarking passengers.
13Flights going to Las Vegas operate somewhat differently. The passenger manifest is not carried over to the Detroit airport by an employee of the respondent, but rather is picked up in Windsor by an employee of Bob Neugebaeur Travel Services, a company hired by the respondent, on a commission basis. At least one employee of Bob Neugebauer Travel Services also takes the Las Vegas flight with all the passengers, during which that employee attempts to sell tickets for various tours or attractions in Las Vegas. One seat is provided on each flight for this employee of the Travel Service, and any additional employees of the 'rravel Service who might take the flight must pay for their seats. Once the flight arrives in Las Vegas, deplaning and baggage handling is handled by employees of an unrelated corporation which has been hired by Keytours Las Vegas Inc., a corporation separate and distinct from the respondent. All the services performed in connection with all Las Vegas flights, from the picking up of the passenger manifest in Windsor to the deplaning in Las Vegas and the transportation to the relevant hotels, and to the return to Detroit, are all performed by corporations retained by the respondent, either directly or indirectly, and in no respect by any employees of the respondent. Additionally, all profits made in the Las Vegas tours, the majority of air tours run by the respondent, accrue to the Las Vegas corporation.
14As is inevitable in the travel industry, there have been delays on occasion with respect to some of the flights offered by the respondent. Where the delays have been caused by mechanical problems with the airplane, American Trans Air is solely responsible for any compensation due to passengers. On the one occasion where evidence was led with respect to a delay caused by weather problems, the compensation paid to passengers was split, with American Trans Air paying approximately sixteen thousand dollars and the respondent paying approximately three to four thousand dollars of the compensation eventually paid.
15While the air package tours are assembled by the respondent, the individual aspects of that tour are for the most part carried out by corporations under contract with the respondent to perform specified services. As the president of the respondent indicated in testimony, "a number of components carry out individual jobs as designated. We keep it all together.".
16With respect to rail tours, of the approximately one hundred thousand passengers who
took one of these tours during the past year, roughly eighty-five thousand of those passengers boarded Via Rail trains in Ontario for destinations similarly contained within the Province. Roughly ten thousand passengers boarded trains in the United States for destinations either in the United States or in Ontario. The respondent formerly had rail tours going to the cities of Montreal and Quebec City, but as of December 1,1985 those tours had largely been phased out with scant prospect of re-establishing them. Although an employee of the respondent attends regularly at the Windsor train station to assist passengers in boarding the trains, there was no evidence that any employee had attended at the Detroit train station during the previous two years.
17Train seats are bought by the respondent in bulk from either Amtrak in the United States, or Via Rail in Ontario and in turn those seats form part of the packages offered by the respondent for sale to the passenger. Unlike unutilized air seats, the cost of which must be borne by the respondent, the respondent is liable to Amtrak and Via Rail only for those seats which it is actually able to sell. Also unlike the charter air flights, the rail seats are sold for regularly scheduled trains. The advantage to the passenger is attractive pricing obtained by the respondent because of the number of tickets it sells, and the ability to buy an entire package, rather than only a rail ticket. Similar packages would be available from other travel agents, or from the rail carriers themselves. As with the air packages, rail packages might include hotel accommodation and local tours or entertainment, and tickets for the rail tours are sold by travel agents who have connections with the respondent.
18All employees of the respondent are based in its Windsor office. Most of those employees never leave the Windsor office and are involved in different aspects of the business, taking reservations from travel agents or individual passengers, working on the necessary documentation, inventory control of seating and tour capacity, group sales, accounting, and a small computer department. Some aspects of the business do involve extra- provincial travel. One individual regularly travels between Windsor and Detroit, acting as a "runner", picking up and delivering mail to the Detroit post office box, or carrying various materials from one side of the border to the other. Another individual is on the road from Tuesday to Friday most weeks, usually in the United States, servicing travel agents who sell the respondent's packages or soliciting others to do so. As noted earlier, one or two of the respondent's employees will travel to the Detroit airport, for a non-Las Vegas flight, to deliver the passenger manifest to the ground handler, Butler Aviation, and to assist in other aspects where needed. One or both of the owners or chief officers of the respondent will travel to the various international destinations, both when inspecting new destinations in order to assemble new package tours, and in order to inspect and supervise the flights and packages to existing destinations. Except for these various activities, all services are performed in the Windsor office, including the assembling of all tours, the signing of all contracts, the receipt of all payments, and all accounting, reservations, and mail.
19Based on these facts, the respondent argues that it is beyond the jurisdiction of this Board because it either:
(a) is integral to a federal work or undertaking, specifically air or rail travel; or
(b) is itself engaged in an "extra-provincial" undertaking.
20The first ground relied upon by the respondent is clearly set out 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, 119791 1 S.C.R. 754. The Court there stated that the provinces generally have jurisdictional competence over matters of labour relations ,but that matters ordinarily within provincial jurisdiction may come within Federal labour relations jurisdiction if it can be shown that the business functionally forms an integral part of a subject over which there is primary federal authority.
Section 92(10)(a) of the Constitution Act provides, in part, as follows:
In each Province the Legislature may exclusively make laws in relation to
- 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 Federal Government and the Parliament of Canada. Although labour relations are ordinarily a matter of provincial jurisdiction, the jurisprudence makes clear that a business or undertaking which is found to be an "integral" part of a federal work or undertaking falls within the exclusive jurisdiction of Parliament.
21The focus of our inquiry concerning whether the respondent's operation is "integral" to
a federal work or undertaking was nicely summarized in Canadian Telecommunications Group,
[1985] OLRB Rep. Feb. 182 at pp. 187-8:
- The most appropriate starting point for an examination of this issue is the following passage from the judgement of Mr. Justice Dickson (as he then was) in Northern Telecom Ltd., v. Communications Workers of Canada et al., (1979), 1979 CanLII 3 (SCC), 98 D.L.R. (3d) 1 at pages 13 to 15, 28 N.R. 107 at 123 to 127 ("Northern Telecom No. 1").:
The best and most succinct statement of the legal principles in this area of labour relations is found in Laskin's Canadian Constitutional Law, 4th ed. (1975), p. 363:
In the field of employer-employee and labour-management relations, the division of authority between Parliament and provincial legislatures is based on an initial conclusion that in so far as such relations have an independent constitutional value they are within provincial competence; and, secondly, in so far as they are merely a facet of particular industries or enterprises their regulation is within the legislative authority of that body which has power to regulate the particular industry of enterprise
In an elaboration of the foregoing, Mr. Justice Beetz in Montcalm Construction Inc. v. Minimum Wage Com'n et al. (1978), 1978 CanLII 18 (SCC), 93 D.L.R. (3d) 641, [19791 1 S.C.R. 754, 25 N.R. 1, set out certain principles which I venture to summarize:
(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.
(3) Primary federal competence over a given subject can prevent the application of provincial law relating to labour relations and the conditions of employment but only if it is demonstrated that federal authority over these matters is an integral element of such federal competence.
(4) Thus, the regulation of wages to be paid by an undertaking, service or business, and the regulation of its labour relations, being related to an integral part of the operation of the undertaking, service or business, are removed from provincial jurisdiction and immune from the effect of provincial law if the undertaking, service or business is a federal one.
(5) The question whether an undertaking, service or business is a federal one depends on the nature of its operation.
(6) In order to determine the nature of the operation, one must look at the normal or habitual activities of the business as those of "a going concern", without regard for exceptional or casual factors; otherwise, the Constitution could not be applied with any degree of continuity and regularity.
A recent decision of the British Columbia Labour Relations Board, Re Arrow Transfer Co. Ltd., [1974) 1 Can. L.R.B.R. 20, provides a useful statement of the method adopted by the Courts in determining constitutional jurisdiction in labour matters. First, one must begin with the operation which is at the core of the federal undertaking. Then the Courts look at the particular subsidiary operation engaged in by the employees in question. The Court must then arrive at a judgment as to the relationship of that operation to the core federal undertaking, the necessary relationship being variously characterized as "vital", "essential" or "integral". As the chairman of the Board phrased it, at pp. 34-5:
In each case the judgment is a functional, practical one about the factual character of the ongoing undertaking and does not turn on technical, legal niceties of the corporate structure or the employment relationship.
22It simply cannot be said that the respondent's business is in any way "integral" to the operation of an air or a rail service. The respondent in utilizing the services of American Trans Air, or alternatively Via Rail or Amtrak, is utilizing the services to serve its own ultimate customers, the paying passengers, and not to service the air carrier or rail companies. All trains utilized by the respondent for their package deals would leave at the same times, serving the same destinations and on the same schedules, with or without the respondent's business and participation. Insofar as the train companies are concerned, the respondent is in no different position then any travel agent, selling seats on their trains for use by passengers. Because of the volume of sales by the respondent, both the Via Rail and Amtrak apply a special pricing policy to the respondent's purchases, but that cannot reasonably be said to amount to an "integral" relationship with their services.
23Similarly, American Trans Air owns and operates the planes, serving not only the respondent but other customers. The respondent merely charters its planes for various charter flights. If the respondent were correct in its submission that such inter-relationship with American Trans Air must mean that the respondent's operations are so closely connected as to attract federal labour relations jurisdiction, then a provincially regulated company which charters a plane for a flight, whether intra-provincial or extra-provincial in destination, would be exempt from provincial regulation. Similarly, bulk purchasing seats on a Via Rail journey would effectively exempt an employer from provincial regulation.
24The Board considered a similar question in Ottor Freightways Limited, [1975] OLRB Rep. Jan. 1 wherein it stated, at paragraph 12:
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.)
25While the respondent needs various licences, both federal and international, in order to conduct its business, the business does not become federal in nature merely because it is regulated by an extra-provincial regulatory authority. While such licences are one factor to be considered, the focus of our inquiry must remain upon the nature of the business itself, and what the business actually does, rather than focusing on the regulatory authorities involved. As the Board stated in Canadian Telecommunications Group, supra:
- The business of a customs broker is one which would not exist but for customs and excise legislation, matters within federal jurisdiction. It is necessary to obtain a license from the federal taxation authorities in order to act as a customs broker. The day-to-day aspects of the undertaking of a customs broker are greatly influenced by extensive federal regulations. In the course of this business, a customs broker regularly collects and remits taxes to Revenue Canada. In Kuehne & Na gel International Ltd., (1979) 1 Can. L.R.B.R. 156, the respondent customs broker disputed the jurisdiction of the B.C. Labour Relations Board on the basis that the factors just recited brought its operations within federal jurisdiction for all purposes, including labour relations. The B.C. Board rejected that argument. In its reasons it cited Re James Enterprises Ltd., and Manitoba Labour Board, 1971 CanLII 1005 (MB QB), [1971] 21 D.L.R. (3d) 1 (Man. Q.B.), which held that the comprehensive federal supervision of the pan-mutual system associated with an employer's race track business did not exclude the application of provincial labour legislation to that employer and its employees. The B.C. Board had this to say at page 167 of its decision:
To appreciate the proper effect of this close supervision by Parliament of the customs brokerage business, it is of assistance to return again to the decision in Re James Enterprises. After reciting the detailed and extensive nature of the federal supervision of the operation of the pan-mutual betting system, Wilson 1. goes on to say:
1 cannot agree, because of the federal power of supervision to that extent, the minister's control over the affected employees must extend to wages, hours of work, holidays and the many other matters ordinarily associated with the notion "conditions of employment".
(at page 9)
Following an examination of several authorities, the judgment concludes with this observation:
But of the instant case, the terms and conditions of employment of these employees is a matter quite apart from compliance with the federal regulations in question, nor are they to be regarded as a "facet" of the supervision deemed necessary to police the observance of those regulations. And so, provincial legislation touching upon such matters as wages, hours of work and the like have an "independent constitutional value" which persists unaffected by the existence of other (federal) rules not in conflict, and having another purpose to serve.
(at page 12)
The reference in this passage to the "independent constitutional value" of the employment relations in question in that case is, of course, a reference to the of quoted passage from Laskin's Canadian Constitutional Law which was set out in Part III of this decision:
Insofar as such relations have an independent constitutional value they are within provincial competence....
With very few specific exceptions which flow out of certain heads in Section 91 of the B.N.A. Act, the employment relations in all service industries have an independent constitutional value and are thus provincially regulated. The small number of exceptions are typified by Parliament's legislative authority over banking. In that particular service industry, employment relations do not have an independent constitutional value; rather, they are but a facet of the banking industry over which Parliament has the exclusive legislative authority by virtue of head 15 of Section 91. But it is a mistake to assume that because a service offered by an employer relates to or is somehow connected with a branch of the Federal Government, the employment relations of that employer lose their independent constitutional value. If that were so, then an employer whose employees offer counsel or advice in relation to Federal income tax laws and, to carry the analysis to its absurd extreme, a lawyer offering advice and legal services to clients in relation to all manner of federal agencies and programs, would be subject in their employment relations to the Canadian Labour Code. The point is that the services offered by such employers, like the services offered by a custom-house broker, are extended and provided to the public. The services are not conceived nor made available for the purpose of becoming or being an indispensable cog in the great wheel of the Federal Government; the Federal Government is quite capable of carrying on its functions in the absence of the employers and their employees who may earn a livelihood by assisting members of the public in their relations with the Government.
26The freight forwarding business which was the subject of the Board's inquiry in Ottor Freightways Limited, supra, similarly required extra-provincial licenses, granted both by Ontario and Quebec authorities. Again, the requirement that the respondent obtain and operate pursuant to these licenses or regulatory authority cannot detract from a jurisdiction that this Board would otherwise have. If that were true, every travel agent, regulated in part by I.A.T.A., would be under federal jurisdiction. So too would be every corporation which remits taxes to Revenue Canada.
27Both parties referred to and relied upon Re Canadian Air Line Employees' Association and Wardair Canada (1975) Ltd. et al., 1979 CanLII 4076 (FCA), 1979, 97 D.L.R. (3d) 38, a decision of the Federal Court of Appeal. Wardair was involved in the air carrier business, transporting passengers by air under regulations which compelled Wardair to have other companies sell its seating capacity. A separate corporate entity, Intervac, related to Wardair, was a tour operator which acquired from Wardair the rights to market its seating capacity, as well as the seating capacity of various other air carriers. Intervac in turn sold the seating capacity on Wardair through travel agencies and through its own employees, the subject of the application for certification involved in the Federal Court of Appeal proceedings. It was clear that the air carrier business or undertaking was carried on solely by Wardair or another charter operator, and not by Intervac itself. As the Court stated in that case, at page 43 et seq.:
as I understand the law, where something is done as an integral part of the operation of a federal work, undertaking or business and that something is reasonably incidental to such operation, it may be regulated by Parliament as part of the regulation of that work, undertaking or business even though it is not essential to the operation of such a work, undertaking or business; but where such a thing is made the subject of a separate local business or businesses, it cannot be regulated by Parliament merely because, if it were done as an integral part of operating a federal work, undertaking or business, it could, as such, be regulated by Parliament.
I turn to considering the question raised by this s. 28 application.
If the operator of an air carrier business has its own staff to "sell" directly to potential passengers, such selling operation would ordinarily be an integral part of the air carrier business. However, where, as here, the air carrier, as it is required to do by regulation, sells its space "whole sale" to somebody who "retails" it, the selling activities of the air carrier cease when it has sold what it has to sell and the sale by the wholesaler is a local activity in the province where it occurs.
While it is not too clear to me on the evidence as to how it is accomplished, what Intervac does is make arrangements with Wardair, and to a lesser extent with other air carriers, whereby it acquires the right to confer on its customers the right to be passengers on the air carrier's aeroplanes. In my view, its position, as between the air carrier and the passengers, is not different, from a constitutional point of view, from the position of any ordinary travel agency....
28There are differences between the business of the respondent and that of Intervac as described in the Intervac decision, but those differences are not significant in our view. The respondent itself hires the common air carrier and enters charter contracts with that carrier. The respondent is licensed by various extra-provincial authorities, or alternatively, is subject to their regulatory authority. Passengers who took a tour sold by Intervac were presumably under the impression they were taking a Wardair tour. In the instant case, the evidence suggests that passengers taking packages offered by the respondent, regardless of what corporation or entity was servicing a particular part of the tour, were under the impression that these were the respondent's tours. The passengers were constantly reminded of this fact, for sound business and marketing reasons, and signs with the respondent's name and logo upon them were at the airport and Windsor train station to advise passengers where to check in. The fact that these packages in their entirety are marketed as the respondent's tours, and passengers embarking upon them perceive them to be respondent's tours, does not change the nature of the business involved. For the reasons noted, it simply cannot reasonably be maintained that the respondent's business itself is integral to a federal work or undertaking, and we accordingly decline to find that its operation is so integral as to deprive this Board of jurisdiction over the regulation of its labour relations.
29We turn now to the second ground raised by the respondent, that the respondent's business itself is an "extra-provincial work or undertaking" and therefore exempt from provincial jurisdiction. The respondent bases this ground upon several factors. The package tours would not exist unless employees of the respondent travelled to international locations to scout out those locations. Employees of the respondent regularly attend at the Detroit airport to bring a passenger manifest to Butler Aviation for Butler to use in assisting with the boarding of passengers. Those employees of the respondent assist Butler where necessary, on occasion inspect the planes, and also on occasion pick up questionnaires filled out by returning employees, dealing with comments or complaints about the trip just completed. One of the respondent's employees regularly travels between Detroit and Windsor carrying mail and other documents or parcels between those two locations. The respondent maintains a post office box in the United States, literally dozens of escrow bank accounts as required for its charter flights, and has on retainer a U.S. attorney. One of the salesmen employees travels regularly throughout parts of upper United States, calling on various travel agents in efforts to entice them to sell the respondent's tours or to service those agents who are already so doing. The respondent heavily promotes its tours to an American market, including attendance at various American trade fairs and other promotional events. The respondent submits that its flights and tours are the respondent's flights and tours and passengers view the tours as being offered and run by the resp6ndent. The companies hired by the respondent are based outside the Province of Ontario, either in Detroit or other American or international locations, and perform the service components at those locations (for example, they assist the passengers in boarding, disembarking, and the handling and carriage of their baggage). The individuals involved in the performance of passenger services are, without exception, employees of other corporations and not of the respondent. The respondent also submits that the fact it is under the regulatory control, and holds licenses from, various extra-provincial agencies or commissions also must mean that the respondent's business is itself extra-provincial in nature.
30Before considering some of the numerous cases relied on by the parties, we should comment on the way the respondent characterized its second ground for asserting that its labour relations fall within federal jurisdiction. The respondent asserted that its business is itself an "extraprovincial" work or undertaking. In our view this characterization reflects a misconception of subsection 92(10)(a) of the Constitution Act (supra, 20). This subsection places within federal jurisdiction those types of "lines of steam ... and other works and undertakings" which "connect" Ontario with other provinces or which "extend" beyond the limits of Ontario. The test is not whether the business is engaged in "extra-provincial" activity, but whether the business is one which "extends" or "connects" beyond the province. A business carrying on its affairs in locations including those outside the province would be conducting an extra-provincial business (or work or undertaking), but might not be carrying on the business of "extending" or "connecting", and thus it would remain subject to provincial labour relations regulation.
31With this in mind, we turn to the jurisprudence. Several of the cases referred to by the parties were dealt with by the Board in Canadian Telecommunications Group, supra. As the Board stated therein:
- The decision of the Federal Court of Appeal in Wardair refers to that court's earlier decision in Re Cannet Freight Cartage Ltd., and Teamsters Local 419 (1975), 1975 CanLII 2218 (FCA), 60 D.L.R. (3d) 473, [1976] 1 F.C. 174, where that court considered the position of another enterprise interposed between a federal undertaking and its customers. In Cannet the enterprise in question was that of a freight forwarder, which solicited freight from customers and arranged with the Canadian National Railway ("C.N.") for transportation of the freight in carload lots. Cannet employees worked in premises leased from C.N., where they loaded the freight collected by their employer into freight cars provided by C.N. Cannet made all the arrangements with the customers and C.N., and arranged for unloading and delivery of the freight when it reached its destination on the railway line. The Federal Court of Appeal did not agree with the submission that Cannet's employees were, in these circumstances, employed "on or in connection with the operation of an interprovincial railway", so as to bring them within the ambit of the Canada Labour Code:
In my view, whether or not employees whose work is physically upon or in connection with a railway may be said to be employed "upon or in connection with" the railway within s. 108 read with s. 2 of the Canada Labour Code must be determined, keeping in mind the constitutional limitations on Parliament's powers in the labour field, having regard to the circumstances in which the work takes place. Clearly a person employed by the railway company to carry out a part of the transportation services provided to its customers falls within those words even though he does not physically come in touch with the right of way or rolling stock. Just as clearly, a person working for a local businessman in a Province does not fall within those words even though his work, in connection with that man's purely local operation, requires that he perform a large part or all of his services physically on the railway's right of way or rolling stock.
For example, if the railway has pick-up service in a city as a part of its overall transportation service, I should have thought that the employees concerned would be regarded as employed in connection with the railway. If, on the other hand, the railway merely supplies railway cars to its customers to be loaded by them and unloaded by consignees, I should have thought that the employees of the consignor, while loading the car for their employer, would continue, from a constitutional point of view, to be working upon or in connection with their employer's business and would not pro tem become railway workers,
When the problem in this case is so approached, in my view, it is clear that the employees in question were not employed upon or in connection with the Canadian National Railway. They were employees of the applicant loading freight on a railway car under arrangements whereby the car was to be loaded by the shipper and not by railway employees.
The Court also rejected the argument that the freight forwarding business was itself an undertaking extending beyond the limits of a province or connecting one province with another:
In my view, the only interprovincial undertaking involved here is the Canadian National interprovincial railway. Clearly, a shipper on that railway from one Province to another does not, by virtue of being such a shipper, become the operator of an interprovincial undertaking. If that is so, as it seems to me, the mere fact that a person makes a business of collecting freight in a Province for the purpose of shipping it in volume outside the Province by public carrier, does not make such a person the operator of an interprovincial undertaking.
- Cannet was a subsidiary of the freight forwarding company whose activities were in question in Re The Queen and Cottrell Forwarding Co. Ltd., (1981) 1981 CanLII 1896 (ON HCJ), 33 OR. (2d) 486 (Ont. Div. Ct.). There the court considered whether a similar freight forwarding operation was a federal work or undertaking not subject, for that reason, to provincial licencing requirements. The court reviewed the applicable jurisprudence, and particularly the decision of the Federal Court of Appeal in Cannet Freight Cartage Ltd. and Teamsters Local 419, supra. At page 491 of the report of its decision, the Court said:
While the decision of the Federal Court of Appeal is not binding upon this Court it is certainly persuasive. In any event, I agree with the decision with certain amplifications. 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 unreasonable interpretation of the section in question.
[emphasis added]
32We agree with and adopt the propositions as set out in the two above considered cases. We are required to determine, for constitutional purposes, the real and functional nature of the business conducted by the respondent. The respondent must be engaged in that business or undertaking itself, and it cannot through contractual means, in effect "contract itself out of' an otherwise proper provincial jurisdiction. See also Emery Worldwide, [1984] OLRB Rep. Oct. 1412 and Airgo Agency Limited, [1982] OLRB Rep. Sept. 1233, for further cases in support of this view. With few exceptions, all the services provided outside the Province of Ontario are provided on a contractual basis by persons other than employees of the respondent. Those contractual services, while necessary in order for the respondent to assemble a composite package for sale to the public, cannot cause the respondent to be found to be engaged in a federal undertaking, at least within the functional meaning for constitutional purposes. These services are for the most part neither "connecting" nor "extending" in nature, but in any event, other entities have been contracted to perform them. The business of the respondent is to assemble and sell packaged tours to travel agents and members of the public. It is not itself in the business of conducting those tours, nor of transporting the passengers from one location to another. "Connecting" or "extending" beyond the province, within the meaning of section 92(10)(a) of the Constitution Act, is neither one of the purposes of the business nor activity performed by the business. Various services it supplies by contract in order to arrange for the transportation of such passengers and their handling at their destination points do not mean that the respondent itself is involved in that federal undertaking of "connecting" or "extending". Rather, through arrangements made entirely from within its Windsor location, the respondent has contracted with other entities for specified services to be provided to its customers.
33The parties also made reference to the Windsor Airline Limousine Services Limited, [1980] OLRB Rep. Feb. 272. The respondent in that case essentially conducted the business of operating a taxi company, servicing primarily the City of Windsor but involving on a regular but infrequent basis, trips to and from the City of Windsor. The Board therein held that notwithstanding the small percentage of business involving extra-provincial trips across the border, the respondent's business was not itself a work or undertaking extending beyond the province. The Board felt that the extra-provincial trips were of such a small percentage and so incidental to the main part of the respondent's business, carrying passengers and making trips within the Province of Ontario, that it could not be said that the respondent's business, taken as a whole, was "connecting" in nature. As the Board stated at page 289:
The Board must, to use the words of the Supreme Court of Canada, look to the nature of the respondent's operations. It must look at the normal, or habitual, activities of Veteran Taxi viewed as a "going concern" and avoid any distorted conclusion that would flow from giving undue weight and regard to the exceptional factor of the runs to Detroit that amount to two percent of its business, that is provincial in character.
34The Board in that case based its decision, in part, on the basis that the extra-provincial trips made by its drivers constituted a relatively small percentage of the total business of the respondent company. We do not agree that the percentage of the respondent's activity involving "extra-provincial" activity is either a critical or determinative factor.
35The Ontario Court of Appeal dealt specifically with this issue in Ottawa-Carleton Regional Transit Commission v. Amalgamated Transit Union, Local 279 et al., (1983) 84 CLLC 12,025. In that case the Court was asked to consider the nature of the transit system operated by O.C. Transpo in the Ottawa-Carleton region. Although the great majority of routes provided by O.C. Transpo were entirely within the Province of Ontario, it did have regular routes crossing into Hull, Quebec. The Court stated, at page 12,029 et seq.:
The crucial issue to be determined is whether this undertaking connects Ontario with any other province or extends beyond the provincial limits of Ontario in such a way as to fall within the section. Although it may comprise a small percentage of its total operation, it is clear that OC Transpo, on a regularly scheduled basis, connects Ontario with Quebec and, similarly, extends beyond the provincial boundaries in its daily operations. It must therefore be determined if that, in itself, is sufficient to bring the operation within the section.
There is a long history of decisions pertaining to the trucking and transportation industry. These authorities have rejected a quantitative approach which would determine the result based upon a comparison of the extra-provincial business to the business carried on within the province. Instead, the decisions have turned upon a finding that the extra-provincial operation was a continuous and regular one. If the extra-provincial operation was found to be continuous and regular, then the undertaking was determined to be one which connected provinces. There is no reason, in my view, to depart from that line of decisions which has for many years governed the transportation industry. The test used in those authorities is a reasonable one and it can be readily applied.
The appellant relied upon a decision of the Divisional Court, Re Windsor Airline Limousine Services Ltd. and Ontario Taxi Association 1688 (1980), 1980 CanLII 1897 (ON HCJ), 30 O.R. (2d) 732. In that case the court was considering the operation of a taxi service. The greatest part of the business (98%) was derived from fares picked up and delivered within the Windsor area. Some one to two per cent of the company's business involved border crossing runs, either by way of taking passengers and mail from Windsor to Detroit, or other points in Michigan, or bringing passengers back from Michigan across the border to Windsor.
The Divisional Court, after a review of the facts, decided that it was required to consider the main or predominant business of the taxi company and to base its decision upon that finding. At pp. 736-7 the following appears:
I find no essential difference between the concept expressed in Winner in terms of the "pith and substance" of a commercial undertaking from that expressed in Montcalm where the nature of the operation is, as I read that case, to be elicited from the ordinary activity of the undertaking. As I read Montcalm it requires that on the facts before us we consider the main or predominant business of the undertaking: what in Montcalm is described as its "ordinary" as opposed to its "exceptional" activity. That, in my opinion, satisfies as well the search for the pith and substance of the enterprise.
Thus, it was appropriate in that case to use such terms as "habitual and normal" activities to denote "ordinary" activities whereas it would not be so in this case. The transborder crossings of applicant were, I think, unquestionably "habitual and normal" but, in terms of the great bulk of its business, they were certainly "exceptional".
The concept of "ordinary" rather than "exceptional" business applied to the facts before us lead, in my opinion, to only one conclusion. The ordinary business of applicant [sic] is intraprovincial. Its extra-provincial business is exceptional. The figures adopted by the Board were not challenged. The company's intraprovincial trips outnumbered its transborder trips by a ratio of some 60 or 70 to 1.
I believe, the wrong test was applied in that case. A percentage of business test should not govern the determination.
In my view, the quantitative approach should not be adopted. Rather, the determination of the essential issue as to whether the undertaking connects provinces should be based upon the continuity and regularity of the connecting operation or extra provincial business.
36While the percentage of the extra-provincial activity conducted by employees of the respondent is admittedly small, it is also performed on a regular and continuous basis. However, the test is not whether any employees of a particular respondent on a regular and continuous basis perform some of their job duties outside the Province. If that were so, then businesses who have salesmen who regularly, albeit occasionally, travel outside the Province to sell their goods, would be engaged in federal undertakings or businesses. Similarly, businesses might send buyers outside the Province in order to find products to be bought and shipped to Ontario and sold within the stores run by the business within the Province. It would make no sense from a constitutional perspective to hold that such businesses would thereby become subject to federal labour relations regulation. Indeed, it may not matter whether any employee ever leaves the province. What is critical to this inquiry is whether the business, regardless of whether employees are involved in extra-provincial activity on a regular and continuous basis, is of a connecting nature and the purpose of the business is at least in part to connect the province with points outside the province. In the cases referred to above, where businesses were found to be federal works or undertakings, the extra-provincial activity involved performance of the function central to the business and the business was one of "connecting". For example, in Re Windsor Airline Limousine, supra, the respondent was involved in the business of carrying passengers, and as such operated its own vehicles in order to transport those passengers beyond provincial borders. Similarly, in the freight forwarding cases, the essential nature of those businesses was to forward freight. The purpose of those companies was to carry passengers or freight from one location to another, including extra-provincial locations. The companies in those cases were not merely carrying on business at more than one location, but were conducting the business of "connecting" or "extending" beyond the province.
37In Ottor Freightways Limited, supra, where the Board found that a trucking company was involved in a federal undertaking, it stated as follows:
- Thus, relying upon Attorney-General for Ontario et al v Winner et al, Winner et al v SM. 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 ex parte Invistus 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 pane 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. In coming to this conclusion we have not focused on what the various trucking licences empower the respondent to do but rather what it actually does; (see Re Tank Truck Transport Ltd., supra, p. 667; Invistus Ltd., supra, p. 526); and the test of what it does relates to the continuity and regularity of its interprovincial activity and not to the percentage of total volume that activity represents; (see particularly Re Tank Truck Transport Ltd., supra, p. 166; Liquid Cargo Lines Ltd., supra, p. 703). In other words the primary function of the respondent's business need not have an interprovincial flavour. Rather, to connect Provinces, it neet [sic] only engage in interprovincial activity on a "continuous and regular basis" - a phrase that has been applied to one trucking company that hauled only 1.6% of its loads to or from points outside of Ontario (Liquid Cargo) and to another company where the percentage of such total trips amounted to only 6% (Tank Truck)....
In that case, distinguishing it from the instant proceeding, the respondent whose business was found to be federal in nature itself owned the truck, and more importantly, the primary function of its business was freight forwarding, or carrying goods by truck. The purpose of the business was to "connect" or "extend", and it would not have mattered whether a particular employee travelled outside the province. If all employees worked at one truck terminal located within the province, and never left the province, the business itself would remain one of "connecting" or "extending" and would be subject to federal jurisdiction.
38Here the respondent cannot say that the primary function or central nature of its business is one of connecting, by (for example) carrying passenger manifests to and from the Detroit airport, or by seeing passengers off at that airport. The respondent acts as courier or performs these services, for its own purposes and benefits. It is not in the business of ferrying documents across the border, nor of carrying mail to and from Detroit for its customers. It is not in the business of performing those connecting services. It would not be realistic, or appropriate in the constitutional sense, to characterize the respondent's business as that of "conducting" international tours. Rather, what the respondent does is to "assemble" package tours and "market and sell" them to its customers, whether such customers are other travel agents or individual passengers. The fact that activities are performed by employees of the respondent outside the province does not assist the Board in assessing whether the respondent is in the business of "connecting". It indicates only that the business is carried on at more than one location.
39Again, if it were otherwise, then any activity performed by an employee on any regular or continuous basis, which involved that employee leaving the Province of Ontario in order to perform the activity, would render that particular business the subject of federal labour relations jurisdiction. Indeed, it is arguable that on the same basis a company would be under federal jurisdiction were it to mail letters or documents to locations outside the Province or were it to use the telephone for long distance calls outside the province. It would thereby be involved in some extra-provincial activity, although the employee would not have to leave the Province in order to perform such activity. Our inquiry must focus on the nature of the respondent's business, in the constitutional sense, and not solely on whether employees travel beyond the Province in order to assist in some manner in the carrying on of that business, nor on whether the business itself is carried on at more than one location. Department stores like Eatoris or Simpson's do not become federal in nature simply because they may send buyers around the world in order to look at goods for purchase and resale in their stores. The central nature of their businesses is selling goods, and whether they carry on this business entirely within the province or at several extra-provincial locations does not make the business constitutionally federal. To be so found the business must have as its purpose "connecting" or "extending.
40In our view the activities of the respondent which do involve employee's travel beyond the bounds of Ontario fall within the same analytical categories. Such activities are indeed regular and continuous, and form part of the respondent's business. Nevertheless, the purpose of the business is not to "connect" or "extend" nor is it in the business of "connecting" or "extending". It is in the business of assembling and selling package tours to customers.
41Accordingly, we do not find that the business of the respondent is a federal undertaking or work so as to deprive this Board of jurisdiction.
42This matter is referred to the Registrar for relisting for hearing to deal with the merits of these consolidated proceedings.