0459-00-R Industrial Wood & Allied Workers of Canada, Local 700, Applicant v. Supply Chain Express Inc., Canadian Merchandising Employees Union, Responding Parties.
2990-99-R Industrial Wood & Allied Workers of Canada, and its Local 700, Applicant v. Wilson’s Truck Lines Limited, Wilson Logistics Inc., and Supply Chain Express Inc., Responding Parties v. Canadian Merchandising Employees Union, Intervenor.
3843-99-U Industrial Wood & Allied Workers of Canada, Local 700, Applicant v. Wilson Logistics Inc., Supply Chain Express Inc., Canadian Merchandising Employees Union, Tom Rees and Scott Carter, Responding Parties.
BEFORE: David A. McKee, Vice-Chair.
APPEARANCES: James Fyshe and Bill Brady for the applicant; Fred von Veh for Wilson’s Truck Lines Limited and Wilson Logistics Inc.; Andra Pollak, and Scott Carter for Supply Chain Express Inc.; Alick Ryder and Tom Rees for the Canadian Merchandising Employees Union.
DECISION OF THE BOARD; November 29, 2001
1These three applications all deal with the relationship of these parties to one another under the Labour Relations Act, 1995. S. O. 1995 ch.1 (the "Act"). The applicant , the International Wood & Allied Workers of Canada Local 700 (the “IWA”) asserts that there has been a sale of business from Wilson Truck Lines Limited (“WTL”) to either or both of Wilson Logistics Inc. (“WLI”) and Supply Chain Express Inc. (“SCE”). The Canadian Merchandising Employees Union (“CMEU”) alleges it has a collective agreement with SCE. The IWA has applied to terminate any bargaining rights which may arise under that collective agreement, and in any event asserts that the CMEU has received employer support within the meaning of section 15 and that the collective agreement is not a collective agreement pursuant to section 53. The IWA has also alleged other unfair labour practices against the responding parties.
2The issue to be decided at this point is whether the business of Supply Chain Express Inc. is properly regulated by the laws of Canada or by the laws of the Province of Ontario, specifically the Canada Labour Code R.S.C. 1985 ch. L-2 or the Labour Relations Act, 1995. These applications were filed on January 10, 2000, March 22, 2000, and May 10, 2000. On July 4, 2001, SCE gave notice of a constitutional question. Specifically, it had stated that since April 2001 its business has changed and was now governed by federal rather than provincial law.
3The effect of such a finding is described in part, in a previous decision of this Board in these proceedings dated August 24, 2001. SCE contends that this Board has no jurisdiction over SCE because it is now a federal undertaking. However, it asserts that this matter should continue in some form before the Canada Industrial Relations Board (“CIRB”) pursuant to section 44 of the Canada Labour Code. The CMEU takes the same position. Neither party has brought an application before the CIRB. WTL and WLI agree that, if SCE is regulated by federal legislation, this Board has no jurisdiction to make any order with respect to SCE or its relationship with the CMEU, and that this matter should proceed before the CIRB. However, WTL and WLI advise that their position before the CIRB will be that their operations are purely local and therefore governed by provincial law, and that the CIRB has no jurisdiction over them. The IWA takes the position SCE is governed by provincial legislation.
4SCE is a company that supplies trucking services. Aside from a small head office staff, it employs truck drivers who carry goods by truck. Most of the work carried on relating to the trucking work is performed in the Province of Ontario. Two of its drivers carry freight between Ontario and Quebec. The Board heard the evidence with respect to the nature of SCE’s business on August 17, September 17 and 18, October 30, 31 and November 9.
5During the course of these hearings, two procedural rulings were made, aside from a decision about the Board’s jurisdiction to decide the issue at all (that decision was issued orally on August 16, 2001). The first ruling was with respect to further evidence that I thought it was necessary to hear. The evidence, which I heard, came exclusively from two witnesses called by SCE. The evidence dealt primarily with the work done by two drivers who regularly haul freight between Ontario and Quebec. After evidence and argument on that point, I had very little evidence about SCE generally, although from the pleadings and some of the evidence, it was obvious that SCE did a large amount of work distributing goods for Sobeys, a retail food chain in Ontario. At the end of argument on October 31, I advised counsel in part as follows:
Yesterday, Mr. Fyshe made an argument about what he called the “severability of activities”. Essentially, he argued that the two drivers driving between Ontario and Quebec were engaged in a separate business from the “rest” of SCE’s business, which he described as the supply of product to Sobeys. He referred to a few cases. Very little argument was addressed on this point by any of the responding parties initially, and only briefly by SCE in response.
Quite frankly, given that this is a constitutional matter, I began my research before argument concluded. There is in fact a body of caselaw, although almost all of it before labour boards rather than courts, about this issue. The issue is defined by Prof. Hogg in his text, Constitutional Law of Canada (Carswell, Loose leaf edition) as follows:
The decisions in Bell Telephone, Winner, Ottawa-Carleton, Tank Truck and Liquid Cargo were each premised on the finding that the company (or individual) was engaged in one indivisible undertaking. But a company may engage in more than one undertaking, in which case the company’s operations may become subject to dual legislative authority. The fact that various business operations are carried on by a single proprietor does not foreclose inquiry as to whether or not those operations consist of more than one undertaking for constitutional purposes. It is the degree to which the operations are integrated in a functional or business sense that will determine whether they constitute one undertaking or not.
This is in fact an issue which this Board has rarely dealt with. One case in point is that of Charterways Transportation Limited, [1993] OLRB Rep. Nov. 1125.
I have heard some evidence on this issue, but not much; what I have heard suffers from a lack of precision. For instance, there was a dispute in argument about Mr. LeClair’s evidence and specifically whether he described Sobeys as SCE’s “main customer” or its “only other customer”. Of course, the word “main” is equally consistent with being the only other customer, that is, other than the customers serviced by the two drivers driving between Ontario and Quebec. I can and will decide this case on the evidence submitted. However, this is a constitutional question, and as courts have said time and again, the answer is dependent on the facts. Courts expect labour boards to examine the facts in detail, first in order to deal with the constitutional question and second, so that the reviewing court will understand what the nature of the business is. Indeed, in Northern Telecom Ltd. v. Communications Workers of Canada, 1979 CanLII 3 (SCC), [1979] 98 D.L.R. (3d) 1 (SCC) (“Northern Telecom No.1”), the Supreme Court of Canada expressed some considerable dissatisfaction with the material before it when a constitutional question was being raised. I will deal with the evidence that I have, but not before giving the parties a chance to address the issue specifically. This hearing will resume on November 9 to hear any further evidence any party wishes to adduce.
6In response, SCE called further evidence on November 9. The evidence was adduced by recalling Mr. LeClair to the stand, a practice to which no one objected.
7The second issue arose during Mr. LeClair’s examination. Earlier in the proceedings, in an effort to provide some limit to the evidence being adduced, I ruled that the evidence led by SCE about the alleged inter-provincial nature of its business, would be limited to events occurring before August 17, 2001, the first hearing day after the notice of a constitutional question had been filed. This date was somewhat arbitrary. However, it was SCE’s assertion that it became federally regulated beginning in April 2001 and that the situation remained unchanged. Since the days of hearings were somewhat spread out to accommodate counsel’s calendars, if there was no temporal limit on evidence, there was a risk that each day of hearing would be consumed with evidence about what had happened since the last day of hearing. No party objected to this ruling, although SCE did indicate it was prepared to lead evidence about events which had occurred after August 17, 2001.
8On November 9, 2001, when SCE led further evidence about its operations, it sought to adduce evidence about two trips made by certain of its employees on October 15 and November 5, 2001. Counsel for the applicant (“IWA”) objected on the grounds that these were events which had occurred after August 17, but more fundamentally were different from what had been previously represented to him. I ruled that I would admit the evidence, primarily because it was the kind of evidence that I stated I needed to hear in greater detail. If counsel for the IWA was prejudiced by evidence which surprised him, an adjournment might be necessary. However, no request for such an adjournment was made.
Facts
9The Board heard from two witnesses called by SCE, John LeClair, Director of Safety and Compliance for SCE, and Dave Ryan, a truck driver.
10The head office structure of SCE is quite compact. SCE has a head office in Whitby. Scott Carter is the Chief Executive Officer. William Merkur is the Comptroller. As noted, John LeClair is Director of Safety and Compliance. Gina Mineri does all payroll and benefit plan administration for SCE. Colleen Landry is the receptionist. Laurie Laplante and four dispatchers are responsible for dispatching trucks connected with the work performed by drivers hauling goods for Sobeys, a retail food chain.
11All of the other employees of SCE are truck drivers who, in generic terms, drive trucks used to haul freight from one destination to another. There are two types of work performed by SCE. For purposes of description rather than definition, I will refer to these as the “Sobeys work” and the “general freight work”. No evidence was led about any other type of work in which SCE might be engaged.
General Freight Work
12This is work that SCE commenced to do in April 2001. Two drivers, each of whom operates a truck, or “power unit” which hauls a trailer, do this work. One trailer is a van and the other is a flatbed trailer, so that any type of freight can be moved.
13Both drivers are based in the Province of Quebec. Both reside in that province. The two trucks, when they are not in operation or en route, are stored at a yard owned by a company named Diversco. Diversco has no particular relationship with SCE and simply rents space and an office facility to SCE. The office facility is simply a desk, telephone and fax machine.
14The freight that these two drivers haul is general freight. That is, SCE is prepared to haul any form of freight (other than, presumably, dangerous goods or other material for which special licences are needed) for any customer or set of customers. Initially, all of the work was obtained through a system known as the Link Logistics System. Some of the work is still obtained in this fashion. The Link Logistics System was described by Mr. LeClair as a “load broker”. It is, simply, an internet site where customers who need freight delivered from one point to another indicate their needs and trucking companies are able to bid on that work. Mr. LeClair examines this website on a daily basis and bids for certain loads. From those loads, he puts together a route for the two drivers.
15As indicated, initially all of the work came from bidding on the Link Logistics System. Since April, certain customers have become regular customers in the sense that when they have a load to deliver, they call Mr. LeClair directly. Mr. LeClair’s decisions about which loads to bid on are determined by the locations of the pickup and destination points and whether it is possible to put together more or less continuous operations from Montreal into Ontario and back to Montreal. He works on a cost basis of $1.20 per mile in his calculations as to whether a particular trip is profitable or not.
16The number of drivers is small but is not fixed. It is a reflection of the available business, and Mr. LeClair testified that Mr. Carter, the CEO of SCE, has instructed him to “grow” this particular service. He gave little evidence about how he plans to do so, although the growth from one driver to two was a result of developing a growing client base of “repeat” customers as well as using the Link Logistics System.
17The routes followed by these two drivers follow a typical pattern over a week. Generally, the week starts Sunday night or Monday morning in Montreal. At either of those two times, the driver will take on a load for a customer in the Montreal area and then drive, on Monday, to the first destination in Ontario. The routes, of course, vary each week, but essentially all of them commence with one or more pickups in the Montreal area followed by a delivery to one or more drop-off points in Ontario. The driver then picks up one or more loads in Ontario and drives them back to the Province of Quebec. There was some dispute among counsel about trips within Ontario. My review of the evidence leads me to the conclusion that no, or virtually no, trips originate and terminate in Ontario. That is, the drivers do not pick up from a customer in Ontario and drop off to another destination in Ontario on their way back to Montreal.
18A typical cycle, commencing in the Province of Quebec, going to Ontario and returning to the Province of Quebec, takes two to three days. The drivers sleep in the “sleeper compartment” in the truck while they are on the road. Once, when a truck was in a garage overnight for servicing, SCE rented a hotel room for the truck driver.
19The vehicles are licensed by the Province of Ontario for travel within the Province and for extra-provincial deliveries. They are also licensed by the Province of Quebec.
20The two vehicles and trailers are leased. There is, of course, a separate rental fee for each one and the lessor does the maintenance. SCE pays a maintenance fee of a certain number of cents per kilometre. The leases for these two vehicles are governed by the master lease between SCE and the vehicle lessors. The two vehicles and trailers are insured under the same insurance policy that covers all of the trucks that do the Sobeys work. Only Mr. Ryan, who could not answer the question, was asked whether there was any similarity between the van he drove and any van used in the Sobeys work. Presumably, the flatbed trailer is not similar to anything used for the Sobeys work, but I have no evidence on this point.
21There are currently two truck drivers who do the general freight work. The first driver hired was Clifford Bush. The current drivers are Dave Ryan and an individual identified as “Jean-Paul”. Before working for SCE they were all drivers for other trucking companies which hauled general freight, and were recruited from those companies by SCE directly or through one of the other drivers. Drivers are paid an hourly wage rate and guaranteed payment for a minimum of 40 hours per week. Subject to that guarantee, they are paid only for the hours which they are actually driving. The records of work done filed for Dave Ryan indicate that he in fact drives for less than forty hours in most weeks.
22It was asserted in argument that the document identified as a collective agreement between the Canadian Merchandising Employees Union (“CMEU”) and SCE covered these two drivers. The evidence was limited to the fact that dues are deducted from the paycheque of the two drivers and that Dave Ryan testified that he was “told” that he was covered by the collective agreement. The collective agreement itself was filed as an exhibit. It is difficult to understand how that collective agreement could be made to apply to these truck drivers. The recognition clause in the collective agreement, Article 2.01, provides that the union is the “sole collective bargaining agency for all [SCE’s] employees employed in the Province of Ontario, save and except …”. The wages indicated in Schedule “A” of the collective agreement for employees engaged in driving functions are not hourly, but rather expressed as cents per kilometre travelled. There are also hourly rates for certain functions (such as “hook up and drop”, “dock positioning”, “unloading”, and “stripping”). Backhaul pickup and delivery is paid on an hourly basis. There is no minimum guaranteed wage found anywhere in the collective agreement. Counsel for SCE argued that there might in fact be arrangements between SCE and the CMEU not found in the collective agreement which approximate those applicable to the general freight work drivers. If so, SCE did not tell the Board about those arrangements, and was presumably in the best position to do so.
23Article 11 of the collective agreement deals with seniority. Article 11.01 and 11.05 refer to seniority lists. No seniority list was produced as an exhibit in these proceedings.
24I can only conclude that, while dues are obviously deducted from the paycheques of the general freight work drivers, it cannot be said that the collective agreement “contains provisions respecting terms or conditions of employment or the rights, privileges or duties of the employer” with respect to these two employees.
25Absences from work of these two drivers had not been a subject of any consistent treatment by SCE, presumably because of the newness of the business. On one occasion, one of the trucks was involved in a collision caused by a non-SCE truck driver. Mr. LeClair believed that SCE’s truck would be out of operation for only a few days; in the end, it was out of service for one week. SCE did not replace that truck, but simply declined some of the work it might otherwise have done during that period of time. There has to date been no occasion on which the drivers were ill or absent on vacation. Mr. LeClair said he expected that he would simply replace them with one of the other drivers of SCE. However, he did testify that for the one week that one of the trucks was out of service, the other drivers employed by SCE doing the Sobeys work were too busy to fill in for that one vehicle.
Sobeys Work
26Sobeys was described as the “main” customer of SCE. In fact, other than the customers who are serviced by the two general freight work drivers, it is SCE’s only other customer. Engaged on this work are 60 full-time drivers, 4 part-time drivers and 9 owner/operators. Notwithstanding that this last group are owner/operators, they are fully dedicated to the Sobeys work. The operation is a seven-day-a-week operation, so that at any one time, there are 35-40 full-time drivers, 2 part-time drivers, and 7 owner/operators on the road. Deliveries to Sobeys stores involve about 65 trips per day. All of the work done by these drivers is the delivery of grocery and grocery-related goods to Sobeys stores in Ontario, and since May 2001 the “backhaul” work for Sobeys described more fully below. One hundred percent of the time of these drivers is dedicated to this work.
27The routes which these drivers use are determined, presumably, by Sobeys and SCE. SCE employs four dispatchers who do most of the work of creating and monitoring progress along the schedules. However, this must involve close consultation with Sobeys. All vehicles have a global-positioning system device called “Air I Q”. No evidence was tendered as to whether the two general freight work trucks do as well. The information from this global positioning system goes to both Sobeys and SCE.
28SCE’s head office and Sobeys’ warehouse are both in Whitby. If there are other distribution centres operated by Sobeys elsewhere in Ontario, they were not referred to in evidence. The stores serviced by SCE from the Whitby warehouse are all in Ontario. The delivery of goods to Sobeys stores creates a varying number of trips per week. The number of trips increases greatly during the summer, especially just before long week-ends. At times, SCE will subcontract some of the work to Chester Cartage to handle the overload.
Backhaul Work
29In this case, the term “backhaul” is used to describe a process whereby SCE’s trucks, after emptying their loads at Sobeys’ stores, drive to a vendor or supplier to Sobeys (generally a food processor) and pick up product from that party. The product is then delivered to Sobeys’ Whitby warehouse, where it is stored and assembled into store-loads at a later date. Before May 2001, the trucks returned to Sobeys or SCE’s yards empty.
30The exact business relationship between SCE and Sobeys is to some extent beyond the scope of Mr. LeClair’s duties and responsibilities. He was not involved in the negotiations of putting the backhaul business together. In January or February 2001 SCE and Sobeys attempted to create a backhaul program. Obviously, such a program involves considerable scheduling and planning on a both a long-term and very short-term basis. The attempt was not successful and was discontinued in February 2001.
31In May, a backhaul program was started again. Again, Mr. LeClair was not directly involved in the arranging of the business, but his impression was that Sobeys had been able to organize the backhaul work in a more manageable order, and SCE was able to take on the backhaul program in a much fuller manner.
32Mr. LeClair stated that SCE does all of Sobeys’ backhaul work in Ontario and Quebec. However, except for the few trips listed below, the list of backhaul trips filed as an exhibit related to trips exclusively within the Province of Ontario. This summary exhibit detailed something over 1200 trips in the period May 7, 2001 to October 26, 2001.
33The backhaul program has had some inter-provincial work, but of a very limited and irregular nature. Invoices were filed reflecting three trips in January and February, before the first backhaul program was discontinued. I heard no evidence as to how the backhaul program operated at that time, or how one could characterize those three trips in connection with whatever else was being done at that time.
34Since the current backhaul program began in earnest in May, there has been one inter-provincial trip. On November 5 (four days before the last day of hearing and after I had raised the issue of the integration of the two types of work), one owner-operator who had been dispatched to a Sobeys store in Hawkesbury was sent to Montreal to pick up a load of Kraft cheese products and to deliver them to the Whitby warehouse of Sobeys. I find it very likely that this was not the only delivery of Kraft products for Sobeys during the six-month period during which the backhaul program operated. In addition, on one occasion on October 15, one of the trucks engaged in general freight work became disabled in Quebec and a power unit truck normally dedicated to Sobeys work was dispatched to complete the delivery of goods in the loaded trailer originally attached to the disabled truck, for the general freight work driver.
35SCE also filed a letter dated August 22, 2001 without objection. Mr. LeClair was not the recipient of the letter and could not explain the circumstances under which it came into being. The letter is from Sobeys to SCE and expresses an intention about the backhaul program, including suppliers such as Kraft and Perkins Paper located in Montreal. The letter does not appear to be a contractual document, or part of a tendering or pre-contractual exploration process. At best, it is a statement of intention on the part of Sobeys which is simply hearsay. Even if I were to accept it as a statement of Sobeys intentions, it appears to have led to exactly one load being hauled from Montreal to Whitby.
36All trucks owned and operated by the owner/operators are licensed to operate in Quebec. Mr. LeClair stated that this licensing was effected as part of the attempt by SCE to “capture” all of Sobeys’ backhaul work. None of the other trucks dedicated to Sobeys work are so licensed. The two trucks operated by the general freight work drivers have never done Sobeys’ backhaul or delivery work.
Constitutional Authority over Labour Relations: General Principles
37The general framework for determining the constitutional authority over labour relations of a business or undertaking is set out in the decision of Mr. Justice Beetz in Montcalm Construction Inc. v. Minimum Wage Commission (1978) 93 D.LR. (3d) page 641 at page 652:
The issue must be resolved in the light of established principles, the first of which is that Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule: Toronto Electric Com’rs v. Snider et al., 1925 CanLII 331 (UK JCPC), [1925] 2 D.L.R. 5, [1925] A.C. 396, [1925] 1 W.W.R. 785. 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: Reference re Industrial Relations and Disputes Investigation Act, etc., 1955 CanLII 1 (SCC), [1955] 3 D.L.R. 721, [1955] S.C.R. 529 (the “Stevedoring case”). It follows that 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; 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: Reference re Minimum Wage Act of Saskatchewan, 1948 CanLII 36 (SCC), [1948] 3 D.L.R. 801, 91 C.C.C. 366, [1948] S.C.R. 248 (the “Revenue Post Office case”); Commission du Salaire Minimum v. Bell Telephone Co. of Canada (1966), 1966 CanLII 1 (SCC), 59 D.L.R. (2d) 145, [1966] S.C.R. 767 (the “Bell Telephone Minimum Wage case”); Letter Carriers’ Union of Canada v. Canadian Union of Postal Workers et al. (1973), 1973 CanLII 183 (SCC), 40 D.L.R. (3d) 105, [1975] 1 S.C.R. 178, [1974] 1 W.W.R. 452 (the “Letter Carriers’ case”). The question whether an undertaking, service or business is a federal one depends on the nature of its operation: Pigeon, J., in Canada Labour Relations Board et al. v. City of Yellowknife (1977), 1977 CanLII 230 (SCC), 76 D.L.R. (3d) 85 at pp. 89-90, [1977] 2 S.C.R. 729 at p. 736, 14 N.R. 72. But, 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” (Martland, J., in the Bell Telephone Minimum Wage case at pp. 148-9 D.L.R., p. 772 S.C.R.), without regard for exceptional or casual factors; otherwise, the Constitution could not be applied with any degree of continuity and regularity; Agence Maritime Inc. v. Canada Labour Relations Board et al. (1969), 1969 CanLII 109 (CSC), 12 D.L.R. (3d) 722, [1969] S.C.R. 851 (the “Agence Maritime case”); the Letter Carriers’ case.
These general principles remain the law today.
Transportation Industries
38The focus of the parties was the latter part of Beetz, J.’s analysis, that is, an examination of the nature of the operation on a ‘going concern’ basis to determine whether it is federal in character. The starting point in transportation activities is section 92 (10)(a) of the Constitution Act, 1867:
In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subject next hereinafter enumerated; that is to say,-
- 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.
39The words “work” and “undertaking” have been the subject of fairly consistent judicial elucidation, most recently summarized by the Supreme Court of Canada in Westcoast Energy Inc. v. Canada (National Energy Board) (1998) 1998 CanLII 813 (SCC), 156 DLR (4th) 456 at p. 481:
47Section 92(10)(a) refers to both “works” and undertakings”. “Works” were defined in City of Montreal v. Montreal Street Railway, 1912 CanLII 352 (UK JCPC), [1912] A.C. 333 at p. 342, 1 D.L.R. 681 (P.C.) as “physical things, not services”. Since the proposed gathering pipeline and processing plant facilities will be located entirely within the Province of British Columbia, it seems clear that they would constitute local works. As a result, the submissions of the parties concentrated on whether Westcoast operated a single federal undertaking. “Undertaking” was defined in Re Regulation & Control of Radio Communication, 1932 CanLII 354 (UK JCPC), [1932] 2 D.L.R. 81 (P.C.) at p. 86, as “not a physical thing, but … an arrangement under which … physical things are used”. Professor Hogg concludes in Constitutional Law of Canada, supra, at p. 22-4, that the term “undertaking” appears to be equivalent to “organization” or “enterprise”. In Alberta Government Telephones v. Canada (Canadian Radio-television and Telecommunications Commission), 1989 CanLII 78 (SCC), [1989] 2 S.C.R. 225, 61 D.L.R. (4th) 193 (A.G.T.), Dickson C.J. stated at p. 259 that “[t]he primary concern is not the physical structures or their geographical location, but rather the service which is provided by the undertaking through the use of its physical equipment”.
In this decision I shall use the word “undertaking” in this sense, that is as a synonym for “organization”, “enterprise” or the “service provided”.
40Counsel for SCE argued that the general tests set out in Montcalm Construction do not apply when dealing with the labour relations of transportation or communications enterprises. Specifically, she argued that the “test” with respect to transportation activities was a much simpler and more reduced one. Essentially, the only factual issue is whether the transportation business includes inter-provincial transportation on a regular and continuous basis. Once that question is answered in the affirmative, the labour relations of the business are governed by federal legislation and the analysis need go no farther.
41It is something of an overstatement to say that the “test” in dealing with transportation enterprises is essentially different from those in other types of industries. It is more accurate to say that the nature of the transportation industry is such that the “nature of the operation” or its “normal and habitual activities” are defined by the routes along which the business transports goods and/or people. The nature of the business is, of necessity, defined by the nature of the transportation in which it engages. If the undertaking includes both local and interprovincial transportation, then it is the interprovincial transportation that defines the nature of the undertaking, regardless of how large a part it of the undertaking it constitutes.
42In fact, in dealing with transportation enterprises, the Supreme Court of Canada often refers to a two-stage analysis, dealing first with the “work” itself and then the “undertaking”, see Central Western Railway Corporation v. United Transportation Union (1990) 1990 CanLII 30 (SCC), 76 D.L.R. (4th) 1. In the case of a trucking enterprise, the issue of physical connection is clearly less relevant than in the case of a railway, and the case law has generally focussed on the nature of the undertaking.
43The first and leading case in this area is Attorney-General for Ontario v. Winner, et al, 1954 CanLII 289 (UK JCPC), [1954] 4 D.L.R. 657 (Privy Council) (“Winner”). That case dealt with the operations of a bus company which operated among three maritime provinces and the State of Maine. The issue giving rise to the decision was an attempt by the Province of New Brunswick to regulate the carriage of passengers between points entirely within the Province of New Brunswick. The Privy Council dealt with the relationship between federal and provincial authority in transportation in general terms as follows at p. 678:
Their Lordships are not concerned to dispute either the provincial control of the roads or that it has the right of regulation, but there nevertheless remains the question of the limit of control in any individual instance and the extent of the powers of regulation.
It would not be desirable nor do their Lordships think it would be possible to lay down the precise limits within which the use of provincial highways may be regulated. Such matters as speed, the side of the road upon which to drive, the weight and lights of vehicles are obvious examples but in the present case their Lordships are not faced with considerations of this kind nor are they concerned with the further question which was mooted before them, viz., whether a Province had it in its power to plough up its roads and so make interprovincial connections impossible. So isolationist a policy is indeed unthinkable. The roads exist and in fact form a connection with other Provinces and also, in this case, with another country. Since in their Lordships’ opinion Mr. Winner is carrying on an undertaking connecting New Brunswick both with Nova Scotia and the State of Maine there exists an undertaking connecting Province with Province and extending beyond the limits of the Province.
Prima facie at any rate such an undertaking is entrusted to the control of the Dominion and taken out of that of the Province. No doubt if it were not for s. 90 (10) (a) of the B.N.A. Act the Province, having jurisdiction over local works and undertakings and over property and civil rights within the Province could have prohibited the use of or exercised complete autocratic control over its highways, but the subsection in question withdraws this absolute right where the undertaking is a connecting one. To this limitation some meaning must be given and their Lordships cannot accept the view that the jurisdiction of the Dominion is impaired by the Province’s general right of control over its own roads. So to construe this subsection would in their Lordships’ opinion destroy the efficacy of the exception.
The limitation of the jurisdiction of Dominion and Province have been many times canvassed and litigated both in the Canadian Courts and in the Privy Council. Undoubtedly the Province has wide powers of regulation. Many instances were adduced in the course of argument and their Lordships may refer to certain of those most relied upon.
Both the latter cases however are careful to point out that legislation will be invalid if a Dominion company is sterilized in all its functions and activities or its status and essential capacities are impaired in a substantial degree.
What provisions have the effect of sterilizing all the functions and activities of a company or impair its status and capacities in an essential degree will of course depend on the circumstances of each case but in the present instance their Lordships cannot have any doubt but that the Act or the licence or both combined do have such an effect on Mr. Winner’s undertaking in its task of connecting New Brunswick with both the United States of America and with the Province of Nova Scotia.
Nor indeed, whatever may be said of the Act, is the licence a provision applying to all persons: It is a particular provision aimed at preventing Mr. Winner from competing with local transport companies in New Brunswick.
But, it is contended, there are two rights – that of the Dominion and that of the Province – one giving power to the one body and the other to the other; and enabling Dominion or Province to pass legislation dealing with its own topic: the Province with its roads and the Dominion with connecting undertakings. So long as the Dominion has not, as it has not, passed legislation dealing with the matter, the powers overlap and the Province is entitled to enact its own provisions which unless and until the Dominion deals with the matter are valid and enforceable. This argument does not appear to have been presented to the Courts in Canada and their Lordships do not agree with it.
The Province has indeed authority over its own roads but that authority is a limited one and does not entitle it to interfere with connecting undertakings. It must be remembered that it is the undertaking not the roads which come within the jurisdiction of the Dominion, but legislation which denies the use of provincial roads to such an undertaking or sterilizes the undertaking itself is an interference with the prerogative of the Dominion.
If the undertaking is a single undertaking, then it is regulated by federal legislation. To find otherwise would have the effect of sterilizing or impairing the inter-provincial functions. The Privy Council then went on to analyze the particular nature of the bus line and stated as follows at pp. 679-680:
There remains however the further question whether although the licence cannot be limited in the manner imposed by the Board Mr. Winner can nevertheless as the Supreme Court adjudged be prohibited from taking up and setting down purely provincial passengers, i.e., those whose journey both begins and ends within the Province.
So far as their Lordships are able to judge none of the parties and none of the interveners suggested such a compromise in any of the Courts in Canada.
Their Lordships might however accede to the argument if there were evidence that Mr. Winner was engaged in two enterprises one within the Province and the other of a connecting nature.
Their Lordships however cannot see any evidence of such a dual enterprise. The same buses carried both types of passenger along the same routes; the journeys may have been different, in that one was partly outside the Province and the other wholly within, but it was the same undertaking which was engaged in both activities.
The Supreme Court however approached the question from a different angle. To them a distinction should be drawn between what was an essential and what [was] an incidental portion of the enterprise. In their view the portion which could be shed without putting an end to it did not constitute an essential part of the undertaking and therefore could be dealt with by the Province, leaving only the essential part for the Dominion’s jurisdiction.
Their Lordships are of [the] opinion that this method of approach results from a misapprehension of the true construction of s. 92 (10) (a) of the B.N.A. Act. The question is not what portions of the undertaking can be stripped from it without interfering with the activity altogether; it is rather what is the undertaking which is in fact being carried on. Is there one undertaking, and as part of that one undertaking does the respondent carry passengers between two points both within the Province, or are there two?
The view of the Supreme Court is succinctly put by Rand J. when he says: [[1951]], 4 D.L.R. at pp. 562-3, S.C.R. at p. 924, 68 C.R.T.C. at pp. 7-8-9]: “Assuming then that the International and interprovincial components of Winner’s service are such an undertaking as head (10) envisages, the question is whether, by his own act, for the purposes of the statute, he can annex to it the local services. Under the theory advanced by Mr. Tennant, given an automobile, an individual can, by piecemeal accumulation, bring within head 10 (a) a day-to-day fluctuating totality of operations of the class of those here in question. The result of being able to do so could undoubtedly introduce a destructive interference with the balanced and co-ordinated administration by the Province of what is primarily a local matter; and the public interest would suffer accordingly. There is no necessary entirety to such an aggregate and I cannot think it a sound construction of the section to permit the attraction, by such mode, to Dominion jurisdiction of severable matter that otherwise would belong to the Province.”
No doubt the taking up and setting down of passengers journeying wholly within the Province could be severed from the rest of Mr. Winner’s undertaking but so to treat the question is not to ask is there an undertaking and does it form a connection with other countries or other Provinces but can you emasculate the actual undertaking and yet leave it the same undertaking or so divide it that part of it can be regarded as interprovincial and the other part as provincial.
The undertaking in question is in fact one and indivisible. It is true that it might have been carried on differently and might have been limited to activities within or without the Province, but it is not, and their Lordships do not agree that the fact that it might be carried on otherwise than it is makes it or any part of it any the less an interconnecting undertaking. (emphasis added)
44The purpose of this lengthy quotation is to demonstrate the type of analysis the Privy Council was engaged in. First, the Court looked at the nature of the operation. This was determined by what Winner did. As a bus company, its nature was defined by the routes over which it ran and where it sought to pick up or drop off passengers. Next, it determined that there was an undertaking connecting provinces with one another and the United States. It came to that conclusion because the routes over which the buses travelled ran among provinces and the State of Maine. Finally, the proper analysis, according to the Court, was not whether inter-provincial elements could be stripped from the undertaking leaving only an intra-provincial one, the question is simply: “is there one undertaking or two?”. On the facts of the case, the Privy Council found there was one.
45A number of cases followed Winner in which the issue was essentially a re-argument of the nature of the undertaking in each case. In these cases, one party attempted a quantitative analysis of the inter-provincial transportation versus the intra-provincial transportation, in an unsuccessful attempt to characterize the nature of the undertaking as essentially provincial with only an insignificant portion of inter-provincial work. In R. v. Toronto Magistrates, Ex Parte Tank Truck Transport Ltd. 1960 CanLII 120 (ON HCJ), [1960] O.R. 497 (HCJ) (“Tank Truck”), McLellan, J., concluded at p. 508:
I agree with counsel for the respondent that not every undertaking capable of connecting Provinces or capable of extending beyond the limits of a Province does so in fact. The words connecting and extending in s. 92(10) (a) must be given some significance. For example a trucking company or a taxicab company taking goods or passengers occasionally and at irregular intervals from one Province to another could hardly be said to be an undertaking falling within s. 92(10) (a). As appears from the Winner case and the Underwater Gas Developers case undertaking involves activity and I think that to connect or extend, that activity must be continuous and regular, but if the facts show that a particular undertaking is continuous and regular, as the undertaking is in this case, then it does in fact connect or extend and falls within the exception in 10(a) regardless of whether it is of greater or less in extent than that which is carried on within the Province. The theory put forward by counsel for the respondent that the main and primary function of an undertaking, determined by volume, is a test to be applied to decide whether undertakings fall within s. 92(10) (a) must inevitably be a question of percentages. There is no sound principle upon which the line can be drawn. Should it be 60%, 70% or 80%? I am reinforced in my conclusion that this is not the test by the judgement of Duff, J., (as he then was) in R. v. E. Terminal Elev. Co., 1925 CanLII 82 (SCC), [1925] S.C.R. 434, rejecting an argument that parliament had jurisdiction to enact the Canada Grain Act of 1912 on the ground that 75% of the grain produced in Canada was exported abroad.
46The same conclusion was reached in R. v. Cooksville Magistrate’s Court, Ex Parte Liquid Cargo Lines Ltd. 1964 CanLII 162 (ON HCJ), [1965] 1 O.R. 84 (HCJ) (“Liquid Cargo Lines”) at pages 88-89. Most recently in Re Ottawa-Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 (1983) 4 D.L.R. (4th) (452) (OCA) (“O-C Transpo”), the Ontario Court of Appeal dealt with a bus company whose inter-provincial bus routes carried 0.5 percent of its travelled mileage and only 2 to 4 percent of its revenue. The Court rejected the quantitative approach to determining constitutional authority, saying:
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 extraprovincial business to the business carried on within the province. Instead, the decisions have turned upon a finding that the extraprovincial operation was a continuous and regular one. If the extraprovincial 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.
There are difficulties inherent in a quantitative approach. For example, the question must always arise, where should the line be drawn in any particular case? Should the crucial ratio be 80-20, 90-10, 95-5 or 60-40? If a quantitative approach is to be taken, then should a very large corporation with a small but regular extraprovincial business representing 4% of its operations be in a different category from a small concern with the same amount of extraprovincial business but, because of its smaller total operation, the extraprovincial work amounting to 50% of its total? Should the labour relations of the smaller concern be regulated by a different body than those of the larger business? 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 extraprovincial business.
It specifically disapproved of the quantitative analysis in Windsor Airline Limousine Services Ltd. and Ontario Taxi Association 1688 (1980) 1980 CanLII 1897 (ON HCJ), 30 O.R. (2d) 732. The Federal Court of Appeal reached the same conclusion in Augustine’s School Bus Inc. v. Asher (2001) CLLC, 220-052.
47Federal regulation may be the exception rather than the norm. However, federal law will be applied where it is necessary to do so to preserve the competence or capacity of the federal undertaking. If some portion of the undertaking is engaged in inter-provincial transportation and that cannot be separated from the local transportation portion of the undertaking, then the entire matter is regulated by federal legislation.
48Thus, once the business or undertaking has been identified, courts have indeed focussed on a single factual question to define the nature of a transportation business: whether the inter-provincial transportation undertaken by the business regular and continuous. If so, then the business is regulated by federal authority. However, the first question is the identification of the business or undertaking.
49That issue is addressed in many of the decided cases, although it is little discussed as the cases were all decided in one way. As the extract from Hogg, Constitutional Law in Canada, cited above, states, all of these cases were decided on the basis that the company involved was engaged in one indivisible undertaking. It is not a presumption but a factual finding in each case. In Winner, the Privy Council specifically addressed the issue of whether the bus operations of Winner constituted one undertaking or two. It found that it was a single indivisible undertaking as a question of fact. In Tank Truck, this fact was conceded by counsel (page 501). Liquid Cargo Lines followed Tank Truck, but focussed exclusively on the definition of “regular and continuous”. In O-C Transpo, the issue did not attract any explicit consideration, because perhaps the facts make it so evident that there was a single indivisible undertaking. The bus drivers were regular operators who also drove regular routes in Ottawa; the buses were interchangeable, various chartering and funding arrangements were simply part of the business of O-C Transpo. Analyzing similar facts in Transit Windsor, [1993] OLRB Rep. July 698, this Board found that Transit Windsor (and a related company, Windsor Chartabus) was engaged in a “single indivisible undertaking” (paragraph 9). The issue was not discussed in St. Augustine’s Buslines.
50Applying this analysis to SCE raises the question of what one is examining. The general freight work is clearly regulated by federal legislation. The inter-provincial transportation is not merely regular and continuous: that is all that that part of SCE does.
51If one looks only at the Sobeys work, the business is clearly provincial. None of the trips outside the Province of Ontario could be described as regular or continuous. I am unable to put the three trips made in January and February 2001 in any sort of context. In any event, they were part of a business enterprise that did not succeed and was terminated in February 2001. Although the Sobeys backhaul program commenced again in May, it was on a different and more organized footing than the earlier effort. To look at the work in January and February would be meaningless. The two trips made since May 2001were occasioned by an emergency breakdown, and a single unexplained trip to Montreal which was clearly out of the ordinary manner of supplying Kraft cheese products to Sobeys stores.
52The question then is whether one looks at both types of work as the business or undertaking of SCE or whether one sees them as separate undertakings carried on by the same corporation. That is, can it be said that the general freight work is integrated with, or forms an inseparable part of, the Sobeys work? If it is, the business is federally regulated. If it is not, the general freight work is federally regulated and beyond the competence of this Board, but the Sobeys work is provincial and falls under the Labour Relations Act, 1995.
53Although it is an issue that arises rarely, it is clear that one company or one corporation may engage in more than one undertaking. The question of integration is a factual one based on how the various types of work performed by the company are arranged. It is not a matter of the type of work done. The one decision cited by Prof. Hogg, supra, is C.P.R. v. Attorney-General of British Columbia 1949 CanLII 278 (UK JCPC), [1950] 1 D.L.R. 721 (PC) (“Empress Hotel”). In that case, the Privy Council (and indeed every level of court in Canada) concluded that the Empress Hotel did not form part of the undertaking of the railway business of the CPR. That is, it was a different undertaking. That was not because a hotel and a railway are fundamentally different kinds of businesses, which indeed they are, rather it was because, on a factual level, the two undertakings were not integrated. Privy Council stated at page 731-732:
This section limits the places where the appellant may build or operate hotels but it does not limit the classes of hotel business which may be carried on therein. Their Lordships do not read the authority to carry on business “for the comfort and convenience of the travelling public” as requiring the appellant to cater exclusively or specifically for those who are travelling on its system. The appellant is free to enter into competition with other hotel-keepers for general hotel business. It appears from the facts stated in the Order of Reference that the appellant has so interrupted its powers and that in the Empress Hotel it does carry on general hotel business. It may be that, if the appellant chose to conduct a hotel solely or even principally for the benefit of travellers on its system, that hotel would be a part of its railway undertaking. Their Lordships do not doubt that the provision of meals and rest for travellers on the appellant’s system may be a part of its railway undertaking whether that provision is made in trains or at stations, and such provision might be made in a hotel. But the Empress Hotel differs markedly from such a hotel. Indeed there is little if anything in the facts stated to distinguish it from an independently-owned hotel in a similar position. No doubt the fact that there is a large and well-managed hotel at Victoria tends to increase the traffic on the appellant’s system: it may be that the appellant’s railway business and hotel business help each other, but does not prevent them from being separate businesses or undertakings. (emphasis added)
As the italicized portion of the quotation indicates, their lordships were quite able to contemplate a hotel which was integrated with the railway.
54Of course, it is not a proper method of analysis to look at what could be separated from the federal undertaking, or how a business might otherwise have been organized. The question is whether, in looking at how SCE has organized itself, regardless of whatever issues motivated that form of organization, the two types of work are integrated. Integration is a question of fact.
55In this case, the IWA did not argue that the presence of the general freight work was a “subterfuge” or a colourable attempt to change the nature of the undertaking. The Privy Council in Winner raised this one possible exception to the general rule (see page 680). However, that is not an issue here, and the question is simply one of how SCE’s operations are structured.
Integration
56Because the question of the nature or character of an undertaking is essentially one of fact, there are few universally applicable rules. As the Supreme Court of Canada said in Alberta Government Telephones v. Canadian Radio-Television and Telecommunications Commission, 1989 CanLII 78 (SCC), [1989] 2 S.C.R. 225 at p. 258:
It is impossible, in my view, to formulate in the abstract a single comprehensive test which will be useful in all of the cases involving s. 92(10)(a). The common theme in the cases is simply that the court must be guided by the particular facts in each situation, an approach mandated by this Court’s decision in Northern Telecom, 1980, supra. Useful analogies may be found in the decided cases, but in each case the determination of this constitutional issue will depend on the facts which must be carefully reviewed as was done by the trial judge in the present appeal.
There are, however, some common themes which emerge from the caselaw of the Supreme Court of Canada and Privy Council.
57First, SCE argued that trucking is itself an indivisible activity. Counsel argued that once one discovers a company is engaged in trucking, the analysis should be exclusively on whether some portion of the work, no matter how small, is inter-provincial on a regular and continuous basis. She argued that it was impossible to contemplate more than one enterprise within a trucking company. Counsel could cite no authority for this proposition, and asserted that it was not addressed in the case law because everyone “knows”, or would “assume” such an obvious state of affairs to be self-evident. As noted, beginning with Winner, courts have contemplated precisely the prospect of two distinct undertakings operated by the same transportation company.
58Precisely the opposite argument was addressed to (and rejected by) the Supreme Court of Canada in Westcoast Energy Inc. v. Canada (National Energy Board), supra. In that case certain of the parties argued that the issue of the functional integration of various operations could only arise in circumstances where the businesses were engaged in transportation or communications (see pp. 486-488). This was rejected by the Supreme Court of Canada as too narrow an approach to the question before it, and unsupported by the case law ( p. 488 at para. 64).
59Second, counsel asserted that the fact that SCE is a single corporation should be virtually determinative of the issue of integration. She acknowledged that she could not assert that one corporation can never carry on two undertakings, but it was a factor which should weigh heavily in this Board’s determination. Again, there is no authority for this proposition. The fact of one or more corporations is simply a fact to be given its appropriate weight in context.
60The presence or absence of a particular corporate structure is of little consequence. In Northern Telecom, No. 1, supra, the Supreme Court of Canada said at p. 15:
In the field of transportation and communication, it is evident that the niceties of corporate organization are not determinative. As McNairn observes in his article, supra, at pp. 380-1.
A transportation or communication undertaking is a possible corporate activity but it may or may not be segregated from the total corporate enterprise or it may be even larger in scope than a single corporate enterprise. To determine questions of this nature, corporate objects have a certain relevance. But of primary concern is the integration of various corporate activities in practice (including the corporate organizations themselves if more than one is involved) and their inherent interdependence.
McNairn’s comment is borne out by the cases. On the one hand a single enterprise may entail more than one undertaking, e.g., Canadian Pacific Railway’s Empress Hotel was found to be an undertaking separate and independent from the railway undertaking in CPR Co. v. A-G. B.C….On the other hand, two separate corporate enterprises may be found to be included within one single and indivisible undertaking, as in stevedores employed by a stevedoring company loading and unloading ships in the “Stevedoring case”…..or a trucking company which did 90% of its business for the Post Office in Letter Carriers Union of Canada v. Canadian Union of Postal Workers et al….
61In Alberta Government Telephones, supra, the court said at pp. 263-264:
Underlying many of the arguments is an unjustified assumption that by choosing a particular corporate form the various players can control the determination of the constitutional issue. This Court has made it clear in this area of constitutional law that the reality of the situation is determinative, not the commercial costume worn by the entities involved. In Northern Telecom, 1980, supra, the following observation of the Chair of the British Columbia Labour Relations Board in Arrow Transfer Co., [1974] 1 Can. L.R.B.R. 29, at pp. 34-35, was approved at p. 133:
In each case the judgement 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.
After noting the variety of academic writing on the general issue of constitutional jurisdiction over telecommunications, the Court in Northern Telecom, 1980, made the following apposite statement, at p. 134:
In the field of transportation and communication, it is evident that the niceties of corporate organization are not determinative. As McNairn observes in his article, supra, at pp. 380-1:
A transportation or communication undertaking is a possible corporate activity but it may or may not be segregated from the total corporate enterprise or it may even be larger in scope than a single corporate enterprise. To determine questions of this nature corporate objects have a certain relevance. But of primary concern is the integration of the various corporate activities in practice (including the corporate organizations themselves if more than one is involved) and their inherent interdependence. [Emphasis added.]
While the above comments were made in a case where the issue was whether a particular subsidiary formed an essential part of an interprovincial telecommunications enterprise (Bell Canada), the underlying theory is fully applicable here. Constitutional jurisdiction should not vary according to the corporate form involved.
(See also Northern Telecom Canada Ltd. v. Communications Workers of Canada, (1983) 1983 CanLII 25 (SCC), 147 D.L.R. (3d) 1 (SCC) (“Northern Telecom No. 2”) per Dickson, J., at page 5 and Estey, J. at p. 34.) As will be seen below, the CLRB did treat the fact of corporate organization as a relevant fact in one decision, but primarily as an indication of the intent and motivation of the owner of a number of corporations rather than an independently relevant fact.
62Third, the fact that the activities of two operations may be complementary or mutually beneficial is not sufficient to point to integration. To repeat the comments of the Privy Council in the Empress Hotel case, supra, at p 732:
… Their Lordships do not doubt that the provision of meals and rest for travellers on the appellant’s system may be a part of its railway undertaking whether that provision is made in trains or at stations, and such provision might be made in a hotel. But the Empress Hotel differs markedly from such a hotel. Indeed there is little if anything in the facts stated to distinguish it from an independently-owned hotel in a similar position. No doubt the fact that there is a large and well-managed hotel at Victoria tends to increase the traffic on the appellant’s system: it may be that the appellant’s railway business and hotel business help each other, but that does not prevent them from being separate businesses or undertakings.
63Finally, an analysis of a “work” for the purposes of section 92(10)(a) of the Constitution Act focuses on the “physical thing” in question. However, when one is not dealing with an interprovincial railway or telephone system, the physical structures of the business are of limited importance. Where there is an undertaking which is clearly federal in nature, and it is alleged that another local undertaking is integrated with it, the physical structures or their geographic location will not be the focus of the inquiry, but rather the service provided by these undertakings. The fact that the physical structures connect with a federal work or undertaking at some point does not, in itself, make them integral to that federal undertaking, nor does a lack of such connection make them inevitably provincial in character. Again, in the Alberta Government Telephone case, the Court said at p. 259 and p. 262:
I am in agreement with Reed J. that AGT’s argument places too much emphasis on the physical facilities employed by it to provoke the inter-provincial and international services it offers. The primary concern is not the physical structures or their geographical location, but rather the service which is provided by the undertaking through the use of its physical equipment. The fact that a company does not own or operate physical facilities outside a particular province does not mean that the company’s undertaking is necessarily local in nature (see: R. v. Toronto Magistrates, Ex Parte Tank Truck Transport Ltd., 1960 CanLII 120 (ON HCJ), [1960] O.R. 497, and R. v. Cooksville Magistrate’s Court, Ex Parte Liquid Cargo Lines Ltd., 1964 CanLII 162 (ON HCJ), [1965] 1 O.R. 84 (H.C.), at p. 89, per Haines, J.)
This brief review of the jurisprudence shows therefore that mere interconnection of physical facilities in one province with those in a neighbouring province, territory or state may not be sufficient to attract the characterization of the undertaking involved as interprovincial in nature.
(See also the various “Railway” cases where the issue of the physical connection to the interprovincial rail line was not necessarily determinative: City of Montreal v. Montreal Street Railway, 1912 CanLII 352 (UK JCPC), [1912] A.C. 333, British Columbia Electric Railway Co. v. Canadian National Railway Co., 1931 CanLII 72 (SCC), [1932] S.C.R. 161, Kootney & Elk Railway Co. v. Canadian Pacific Railway Co., 1972 CanLII 182 (SCC), [1974] S.C.R. 955, and Central Western Railway Corporation v. United Transportation Union, (1990) 1990 CanLII 30 (SCC), 76 D.L.R. (4th) 1 (S.C.C.))
Analyzing one or more undertakings
64There have been a number of cases dealing with whether or not one undertaking (usually carried on by a separate corporation) is so integrated with a federal undertaking that it too is governed by federal legislative power. The approach in these cases were summarized by the British Columbia Labour Relations Board in Arrow Transfer Co. Ltd., [1974] 1 CLRBR 29 as follows:
In these and other cases of this genre, the Courts have adopted this approach. They begin with the operation which is at the core of the federal undertaking (e.g. railway, shipping, or the postal service). They then look at the particular subsidiary operation engaged in by the employees whose collective bargaining is in question and reach a judgment about the relationship of that operation to the basic federal undertaking. The judges have used a variety of terms to characterize the part the particular operation may play in the over-all enterprise. It must have a “vital”, “essential”, “integral”, “important”, or “intimate” role in the undertaking if it is to fall within the jurisdiction of Parliament. As was said earlier, that has been the conclusion about the relationship of stevedoring to shipping and of mail pick-up to the postal service; the opposite conclusion was reached regarding the relationship of a hotel to the railroad. 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.
(See also Letter Carriers Union of Canada v. Canadian Union of Postal Workers and M & B Enterprises Ltd. (1973) 1973 CanLII 183 (SCC), 40 D.L.R. (3d) 105 (S.C.C.) at pages 110-111, and Burnshine Mobile Maintenance Limited and Canadian Labour Relations Board (1985) 1985 CanLII 5507 (FCA), 22 D.L.R. (4th) 748 (FCA) at page 752.) Both of these decisions drew heavily on the same analysis in the Reference re Industrial Relations and Disputes Investigation Act, 1955 CanLII 1 (SCC), [1955] 3 D.L.R. 721 (S.C.C.) at page 759 (the “Stevedoring case”) and Northern Telecom No. 2.
65The Federal Court of Appeal summarized the definition of an “integral” relationship found in the two Northern Telecom decisions in Re Canada Labour Code, (1986) 1986 CanLII 3986 (FCA), 34 D.L.R. (4th) 228 at page 243 in this manner:
I conclude from the two Northern Telecom cases that the crucial factor in determining constitutional jurisdiction in such cases is the “macro-relationship” between the subsidiary operation and the core federal undertaking. The facts of this relationship should be examined from a functional, practical point of view, and for federal jurisdiction to be established (1) there must be a high degree of operational integration and (2) it must be of an ongoing nature. Construction Montcalm, therefore, must also be interpreted in this light.
66In each of these cases, of course, there was no issue that there were two different undertakings, generally carried on by two corporations which may or may not have had common owners. Counsel for SCE sought to distinguish them on that ground, asserting that at least in the case of a trucking enterprise, it was impossible to identify two undertakings within the same corporation. This argument does not flow logically from the caselaw. If corporate form is not a determinative, or even at times a relevant factor, and if the same corporation can carry on disparate undertakings such as a hotel and a railway, there is no reason why a single corporation may not carry on two or more trucking undertakings.
67Whether it does or not; and whether, if so, the undertakings are integrated, is a question of fact. As always, it is necessary to keep in mind the dictates of the Supreme Court of Canada. First, one must look at the normal or habitual activities of the undertaking on a “going concern” basis without regard to exceptional or casual factors. Second, in doing so, one must focus on that going concern as it is organized by those who operate it without regard to whether it is possible to arrange it in some other fashion, or notionally to “strip away” the federally-regulated portions of it.
68The cases dealing with this kind of analysis are all, except for the Empress Hotel case, decisions of provincial labour boards or the Canada Labour Relations Board. However, as the Supreme Court of Canada said, because of the fact-driven basis of the analysis, decided cases are no more than useful analogies. To the extent that they disclose any legal analysis, all of these cases rely on the principles enunciated by the Supreme Court of Canada and Privy Council quoted above.
69Counsel for SCE relied heavily on a brief decision of this Board in Charterways Co. Ltd., [1973] OLRB Rep. May 285. In that case, an application for certification, the Board rejected a suggestion by the representative of the trade union that it certify only the part-time employees of the company if the full-time employees were engaged in inter-provincial bus operations. There is no analysis of the facts in the decision, and one wonders how much evidence the Board in fact heard. However, it did conclude that: “The proper procedure is to look at the integrated transportation undertaking of the respondent in determining the question of jurisdiction (see Stevedoring case, 1955 CanLII 1 (SCC), [1955] 3 D.L.R. 721)” (paragraph 5). That is, the Board found, on the basis of whatever evidence it had, that the full-time and part-time drivers were part of an integrated transportation undertaking.
70In a decision twenty years later, the Board dealt with another application involving what was by then Charterways Transportation Limited, [1993] OLRB Rep. Nov. 1125. The question in that case is whether several local branches of Charterways (which viewed in isolation carried on purely local undertakings) were integrated with the rest of Charterways’ operations in Ontario, which were clearly federally regulated. The issue was articulated this way:
- The parties agree that the cross-border activity engaged in by Charterways across the Province is of a regular and continuous nature. In effect, the unions acknowledged that Charterways would fall under federal labour relations jurisdiction if the Board concludes that the undertaking in question is all of the bus services of Charterways in Ontario, across all branches. In turn, Charterways agrees, if the Board reaches the opposite conclusion and concludes that each branch constitutes a separate undertaking for constitutional purposes, that the two branches would at the present time each fall within provincial jurisdiction.
The Board considered that the branches were integrated with the provincial operations:
- All the branches, including the two in question, are engaged in the same basic undertaking, which is to provide a variety of bus services to local customers. In essence, each branch is simply the local geographical terminal at which this same bundle of services is provided or is available upon request. Each branch is the local depot at which the same bus services are offered to the local customer base.
Accordingly, the Board found that it had no jurisdiction to deal with the labour relations matters of any aspect of Charterways.
71In Servichem Inc., (1991) 16 CLRBR (2d) 48, the Canada Labour Relations Board was faced with an employer which argued that it operated two divisions: a longshoring division and a “bagging, storage and shipping division”. The employer alleged that the latter division was provincial in nature. The Board in fact analyzed the operation of the employer into several different services or operations: longshoreing (including unloading and cleaning of ships and the delivery of product to the other divisions), the operation of bulk storage port facilities (primarily storing livestock feed and grain) and a plant (which stored and bagged bulk chemical products and loaded them onto certain trucks or railway cars) and a “cam-rail” division (which unloaded goods delivered by rail). Viewed in isolation, the latter two divisions were purely local and not federally regulated. However, the CLRB concluded at p. 58:
After reviewing all documents on file, the Board concludes that the employer’s business is one and indivisible. The centralized direction and control of the business, in terms of both its finances and the management, day-to-day operation and volume of business of the various divisions, means that each of these operations cannot be considered an autonomous undertaking that is capable of operating separately from the whole.
The absence of specialized duties enables the employees to perform interchangeably the duties of the positions in each division. This particular factor contributes to the oneness of the business. Moreover, the existence of similar duties in the various divisions, in particular those relating to shipping, which are performed by the same employees, confirms that the various normal and habitual activities carried out by the employer are closely related. This integration of duties is also characteristic of the management personnel.
It is well established that a business can engage in separate activities constitutionally (Northern Telecom No. 2, supra, and Empress Hotel, supra). However, where the facts show that a business is one and indivisible and carries out activities between two provinces, jurisdiction lies in the federal sphere. This was established by the Privy Council in Winner, supra. However, it pointed out, in that case, that the business could have been operated differently and could therefore have come under a different constitutional jurisdiction:
“The undertaking in question is in fact one and indivisible. It is true that it might have been carried on differently and might have been limited to activities within or without the Province, but it is not, and their Lordships do not agree that the fact that it might be carried on otherwise than it is makes it or any part of it any the less an interconnecting undertaking.(p.680)
This reasoning applies in the instant case. The Board finds that the labour relations between Servichem and its employees come under federal jurisdiction. It also finds that it has the power to deal with the application for certification before it.
72In J. C. Fibers Inc., (1994) 94 di 1, the CLRB dealt with a company which carried on both the recovery of paper for recycling by customers, and general freight transportation by truck. The same trucks were used for both paper-hauling and general freight. Some forty-five percent of the paper for recycling was purchased in a form ready for delivery to the customer. This was trucked from the vendor to a loading dock operated by J.C. Fibers at Chambly. The remaining fifty-five percent of the paper was picked up from vendors and delivered to the Chambly plant for unloading, sorting and bundling. Once bundled, it too was placed on the loading dock.
73Bundled paper was then delivered to customers in Canada and the United States by trucks. Those same trucks also hauled local freight. This general freight transportation accounted for between twenty-seven percent and forty-six percent of the miles driven by employees of J.C. Fibers. The Board found that “general transportation enables the company to diversify its commercial activities and capitalize on its equipment, while promoting maximum use of truck drivers” (p.3). The CLRB found that all of the trucking was federally regulated, since both vendors of paper for recycling purposes and the customers of both paper for recycling purposes and general freight were located in several provinces and the United States. However, the sorting and bundling work fell under provincial jurisdiction, as this was purely local in nature. At p. 5 the Board said:
As for the buying and selling activities, the Board decides that they are purely local in nature and come under provincial jurisdiction. These activities do not constitute an integral and essential part of the core federal undertaking, i.e., the transportation business, and are severable from it.
In the present case, the factors of functional integration and dependency, which would support a finding that the buying and selling business is an integral part of the core federal undertaking and therefore comes under federal jurisdiction, do not apply. The operational structure the company adopted in order to operate this part of the business is an important consideration. The employees who sort and bundle the paper and the truck drivers are not interchangeable, as a significant amount of the paper that is bought and resold is not handled by any employees other than the truck drivers.
74Three other decisions of the CLRB dealing with the integration of separate businesses are worth noting, although each of these involves separate corporate structures. In Lougheed Express Ltd., (1981) 1 CLRBR 75, a purely local trucking company was purchased by a larger inter-provincial company. The Board found an integration within the combined organization, relying on the following facts:
- an integrated pay system;
- integrated invoicing and billing;
- dispatching for all three companies by the same personnel at each terminal;
- the expenses of one corporation (use of the terminal in Halifax, the cost of running a truck to Sydney, and maintenance of equipment), were undertaken without payment or reconciliation among the three corporations;
- there was evidence of cross-utilization of trucks, equipment, and some employees.
75In Brinks Canada Limited and Brinks Security Limited, (1991) 86 di 220, the CLRB looked at the data tape business (essentially the collection and storage of computer entry data from automatic banking machines) operated by Brinks Security Ltd. It found that this was a different business entirely from the inter-provincial transportation and automatic banking machine servicing work carried on by Brinks Canada Limited. The question, however, was whether or not the “physical and operational connection between the two exists to such a degree that the data tape activities form a vital and integral part of the core federal undertaking” (page 229). It found they were not. In doing so, it relied on the following facts:
- separate physical work locations of the employees (although they were immediately adjacent to one another);
- little integration of work schedules and equipment;
- separate revenue and accounting and corporate uniforms;
- different emphasis on transportation by truck (incidental to the data tape business and central to the rest of Brinks’ operations);
- fundamentally different services delivered to two geographically distinct markets.
The Board did not find the common business services such as marketing, accounting, personnel and general management significant, nor the fact that two Brinks’ employees worked part-time for the data tape business (pages 229-230).
76Finally, the case of Val Nord Buslines Limited (1990) 14 CLRBR (2d) 132 is a fact situation of a different sort. This decision analyzes the “deconstruction” of a federally regulated trucking undertaking. Before the events giving rise to this decision occurred, various companies making up the “Larose Group” of companies were all governed by the Canada Labour Code. In 1989:
…the Group began what is described later in this decision as a rationalization of its organization. At the time, Paquette was engaged simultaneously in activities under federation jurisdiction, i.e., inter-provincial charter transportation, and activities specifically under provincial jurisdiction, such as local transportation of the handicapped and urban transportation. The rationalization contemplated by the Group was designed to reorganize its various activities within the province and entrust their administration to companies of the Group engaged solely in these activities. In short, to separate the federal and provincial sectors and leave Paquette with only the charter operations. The decision was therefore made to transfer intermunicipal transportation and modified transportation from Paquette to Val Nord.
Why decide to rationalize at this particular time? This was a personal initiative on the part of Mr. Larose, who was not called to testify at the hearing. No one provided an explanation, other than to say that Mr. Larose had been talking about if for a long time. A dispatcher testified that this rationalization was a way of keeping the revenues of the various “departments” separate, thus making it easier to see that the operation he headed, modified transportation, was in fact the revenue-generating activity that ensured Paquette’s survival. Some witnesses testified that the charter business is in decline and may even be running a deficit. (p.135)
77The relevant corporations in this decision were St. Eustace (the “head office operation”) (“Paquette”, “Val Nord” and “Blainville”). In 1989 Paquette decided to and did transfer a number of its activities to its sister corporations, Val Nord and Blainville. Thus, Paquette was left with inter-city transportation and inter-provincial charterwork, clearly federal in nature. Val Nord and Blainville performed only local bus transportation: school bus routes and modified transportation (i.e. services for the handicapped). The Board found that they were provincially regulated based on the following factors:
- each represented itself as a separate legal entity distinct from others in the group;
- there were separate dispatchers and separate workforces;
- separate collective agreements governed different employee groups;
- there was no interchange of equipment (although Paquette occasionally borrowed a bus from Val Nord for the purposes of a charter which involved handicapped passengers which the Board found to be exceptional rather than regular);
- there was no operational link among the companies;
- there was no coordination of activities;
- only their owner and certain managers were common to all of the corporations.
St. Eustace was also found to be provincial. It did not engage in any transportation activities at all, but rather in inter-corporate services among the various companies. Since Paquette only amounted to a small portion of its work and responsibilities, it was found to be not so integrated or dependent on Paquette as to be federally regulated.
78The CLRB found the fact of separate corporations was relevant, but not because the fact of separate incorporations was itself significant. Rather, it served to underline the employer’s determination to reconfigure its business and to keep the businesses operating under separate undertakings. The Board said at page 148:
To repeat the rule once more, one must examine the facts of the situation. If, leaving aside the corporate structures, one finds a single indivisible operation whose activities are integrated, it cannot be divided artificially so as to allow a part of it not to come under federal jurisdiction. However, it does not appear to us that the case law is asking us to turn a blind eye to clear and precise divisions between certain related operations and lump them all together under federal jurisdiction without first ensuring that each really is a federal undertaking: Northern Telecom Canada Ltd. v. C.W.O.C., 1983 CanLII 25 (SCC), [1983] 1 S.C.R. 733, 83 CLLC ¶14,048, 147 D.L.R. (3d) 1, 48 N.R. 161 (“Northern Telecom No. 2”).
Supply Chain Express Inc.
79In reviewing the operations of SCE, I conclude that it in fact carries on two separate undertakings: the general freight work and the Sobeys work. These two undertakings are not integrated, nor can either service or type of work be described as “vital”, “essential”, “integral”, “important”, or carrying on an “intimate” role in the undertaking of the other. In coming to this conclusion, I have relied on the facts set out below.
80In dealing with the evidence, there are times when the evidence on a crucial point was unclear or absent. In such cases, I have drawn certain inferences. I disagree with the approach taken by the CLRB, that the onus of proof rests on the party asserting federal jurisdiction (see Val Nord, page 143). This Board must make its determination on the evidence before it, whatever that may be. However, where one party has peculiar knowledge of a fact, and that fact was relevant to an issue raised in the proceedings, it is a proper evidentiary inference to conclude that if led, the evidence would not favour the position of the party which chose not to lead it.
Employees:
81Different groups of persons make up the workforce of the two undertakings. Employees do not transfer between them. Drivers for the general freight work were recruited not from the Sobeys group (which was already in existence), but from existing drivers working for other general freight carriers. There is no ongoing interchange between the two employee groups.
Terms and Conditions of Employment:
82These were different among the two groups. The employees performing the Sobeys work are covered by a collective agreement which sets out terms and conditions of employment. No evidence was led to suggest that the parties to that agreement were not living up to their contractual obligations or had agreed to vary them. The general freight work employees were not covered by the collective agreement, although they paid dues to the CMEU. Their terms and conditions of employment are different. They are paid on an hourly basis, with a minimum guarantee of 40 hours per week. Employees engaged in Sobeys work do not have any guarantee. Their pay is primarily by distance travelled, although there are provisions for hourly rates in some circumstances and piecework rates for other tasks.
Equipment:
83There was no evidence about the kind of trucks driven in the Sobeys work. Since they were involved in the carriage of goods for the retail grocery trade, I find it unlikely that a flatbed truck is used in the Sobeys fleet of trucks. I am willing to assume that the van-type trailer used by the other general freight truck is similar or identical to trailers used by the Sobeys drivers. However, there is no sleeper compartment in the Sobeys trucks, which are necessary for the use of the general freight work employees as they currently operate. There is no interchange of equipment between the two undertakings.
Licences:
84Licensing for the vehicles is different. The general freight work vehicles are licensed for inter-provincial travel between Ontario and Quebec. Only the nine owner/operators doing Sobeys work have vehicles which are so licensed, and they have travelled inter-provincially only twice (once to rescue a broken-down load) since May 2001. None of the Sobeys employees other than the owner/operators drive vehicles licensed to travel in Quebec.
Customers:
85The Sobeys work is performed for one customer: Sobeys. There is obviously a close connection with the needs of that customer, to the extent that the global positioning system information about the location of SCE’s trucks is shared with Sobeys. The general freight work is performed for a large number of customers, none of which makes up a significant percentage of the total volume, and which do not include Sobeys. Sobeys and SCE have entered into a contract giving them a relationship which is general in nature and extends over a continuous period of time. General freight work contracts are limited to a single trip at a time. They are expressed in an invoice. The undertakings are of a different commercial nature. Neither undertaking performs work for the others’ customers.
Dispatching:
86This is handled differently by the two undertakings. Four dispatchers working under the general supervision of Mr. LeClair dispatch Sobeys’ drivers. Given the evidence about the global positioning system information and the backhaul work for Sobeys, one can only conclude that dispatching is done in close coordination with Sobeys. Mr. LeClair’s involvement is limited to dealing with unusual problems about which the dispatchers do not have authorization to make the final decision. Mr. LeClair does all of the dispatching of the general freight work drivers, in connection with soliciting customers and arranging routes. When Sobeys work produces an excess of work over capacity at peak periods, a subcontractor is brought in to fill the gap. When one of the general freight work trucks was disabled for one week, no attempt was made to fill that gap.
Costing, Profit, and Accounting Practices:
87These were not described in evidence at all. Counsel for the IWA cross-examined Mr. LeClair who had no knowledge of them. On the basis of the inference noted above, I infer that this evidence would not assist SCE in its assertion that the two operations are integrated.
Common Elements:
88Balanced against this, there is some evidence of common elements between the two undertakings. The central management of the business is comprised of the same individuals. Payroll is common, as is the provision of employee benefits. The two general freight work vehicles and trailers are leased under a master lease which covers most, if not all, of the trucks driven in the Sobeys work. While these are elements that do point to a certain level of commonality between the two divisions, they do not make them in any significant manner integrated, essential to one another, or even particularly important to one another.
Conclusion:
89In conclusion then, I find that SCE is engaged in two separate undertakings: the Sobeys work and the general freight work. The general freight work is clearly regulated by federal legislation and this Board has no jurisdiction over the labour relations of that undertaking. The Sobeys work is entirely carried on within the Province of Ontario and is governed by the laws of the Province of Ontario. These two undertakings are not so integrated with one another that they constitute a single undertaking.
90Indeed, these two operations carry on independently of one another, except for some of the efforts of 4 individuals in the head office: Mr. LeClair, the benefits and payroll administrator, the comptroller and the CEO. The involvement of these individuals does not point to an integration of the two operations. Rather, this is the result of one corporation or business carrying on two separate operations. The emphasis of the examination of businesses by courts and labour boards has been on the functional integration of the operations. Here there is none; each of the operations functions independently of the other.
91Therefore, these hearings will proceed as before. However, the general freight work will not be the subject of any order or direction of this Board, and hence, should not be the subject of any further evidence in these proceedings.
Other Considerations:
92In light of this finding, I do not need to deal extensively with the argument about what the consequences for these proceedings would be if I had found that SCE was entirely regulated by the Canada Labour Code. However, it is worth making some comment. Counsel for the CMEU argued that SCE had “flipped” from being provincial to federal in early 2001, flipped back to provincial in February, and then flipped once again into a federal status in May 2001. For that reason, he argued the entire matter should be left in the hands of the CLRB, rather than considering what might or might not be the application of the Ontario Labour Relations Act during periods when SCE was or might be governed by provincial law. In the circumstances of this case as it stands, I disagree. While the two businesses or undertakings of SCE are governed by separate legislative authority, there is nothing to say that any business or undertaking will remain static forever. SCE may change in ways as yet unanticipated. It may well at some point be entirely regulated by federal legislation.
93The fact is that all of these responding parties were governed by the Labour Relations Act, 1995 when the applications were filed. The applications in no way relate to the general freight work which commenced after the applications were filed and which will not be further considered in these applications. Applicants are generally entitled to have their rights determined as of the date on which the applications were filed. Certainly as of this date, SCE carries on an undertaking, the Sobeys work, which is entirely local in nature and subject to the Act. Even if SCE were to integrate its two operations into a single undertaking at some future point, and section 44 of the Canada Labour Code were to apply, the parties are at the very least entitled to know their position under the provincial legislation which governed them the day before such change might occur, so that they know what it is that “continues” under the Canada Labour Code, if and when anything does.
94Hearings in these matters will resume on December 6, 2001. The parties had originally agreed to interrupt the calling of evidence in the case of Wilson Truck Lines Limited and Wilson Logistics Inc. to permit the IWA to call a witness it had summonsed to produce documents that might be relevant to these proceedings. This schedule was interrupted by the need to deal with the constitutional issue. While the Board will permit the parties to call evidence out of order in this fashion, none of the days currently set for hearing will be adjourned to permit the calling of the IWA’s witness. That witness may be called at any point the witness is summonsed and the hearing permits. Otherwise the case will resume with the calling of evidence by WTL and WLI.
“David A. McKee ”
for the Board