COURT OF APPEAL FOR ONTARIO

CITATION: Canada Post Corporation v. Hamilton (City), 2016 ONCA 767

DATE: 20161019

DOCKET: C60687

Doherty, Epstein and Miller JJ.A.

BETWEEN

Canada Post Corporation

Applicant (Respondent)

and

City of Hamilton

Respondent (Appellant)

Peter Griffin and Rory Gillis, for the appellant

John B. Laskin and Yael Bienenstock, for the respondent

Stéphane Ėmard-Chabot, for the intervener, the Federation of Canadian Municipalities

Heard: February 2, 2016

On appeal from the judgment of Justice Alan C.R. Whitten of the Superior Court of Justice, dated June 11, 2015, with reasons reported at 2015 ONSC 3615, 126 O.R. (3d) 501.

Miller J.A.:

A. Overview

[1] Does the respondent, Canada Post Corporation, have the authority to make unilateral decisions about the placement of community mailboxes? This is ultimately a question of constitutional law and is at the heart of this appeal.

[2] At the time of Confederation, a national postal service was essential to the development of a national economy. Like much other national infrastructure, jurisdiction over postal services was allocated to the federal Parliament by the Constitution Act, 1867. Parliament most recently exercised that law-making power by enacting the Canada Post Corporation Act, R.S.C. 1985, c. C-10 (“CPCA”), a statute that vests responsibility for establishing and operating the postal service in Canada Post, a federal crown agent.

[3] Traditional postal services play a much reduced role in contemporary business and personal communications. Electronic communications have sharply reduced the demand for traditional postal services, contributing to a significant reduction in Canada Post’s revenues. To adapt to this structural decline in revenue, Canada Post announced it would restructure its delivery services away from door-to-door delivery and towards community mailbox (“CMB”) delivery. Unsurprisingly, this move has attracted opposition. The appellant, City of Hamilton, among other municipalities, has strenuously opposed Canada Post’s plan to phase out door-to-door mail delivery in established neighbourhoods. Although the City has urged Canada Post to adopt other cost-saving options, like reduced home delivery, it recognizes that the decision to switch to CMBs is a decision for Canada Post and not for the City. The City maintains, however, that it has a supervisory role – effectively, a veto – over Canada Post’s site selection for CMBs within the boundaries of the City.

[4] In response to a decision by Canada Post to roll-out the first phase of its conversion to CMBs in downtown Hamilton, the City passed a by-law establishing a regulatory regime that gives it control over the installation of equipment, including CMBs, on municipal roads: By-Law No. 15-091 (the “By-Law”). Canada Post challenged that By-Law in the Superior Court of Justice on constitutional and other grounds, and was entirely successful on its application.

[5] In my view, the City’s appeal from that decision must fail. Although the subject matter of the By-Law comes within the City’s jurisdiction, it nevertheless conflicts with federal legislation and is therefore inoperative under the doctrine of paramountcy to the extent it applies to Canada Post.

B. Background

(1) Canada Post’s Authority

[6] Canada Post receives its authority and responsibility for the postal service from the CPCA. The CPCA grants Canada Post the authority, with the approval of the Governor in Council, to make regulations “governing the design, placement and use of any receptacle … intended for the posting …or delivery” of mail: s.19(1)(k).

[7] Relying on this authority, Canada Post promulgated the Mail Receptacles Regulations, SOR/83-743 (the “Regulation”). Section 3 of the Regulation provides that Canada Post “may install … in any public place, including a public roadway, any receptacle … to be used for the collection, delivery or storage of mail.” Section 4 further provides that no person may relocate or remove a mail receptacle without Canada Post’s prior authorization.

[8] These provisions authorizing Canada Post to place mail receptacles on municipal roads continue in Canada Post a power that was previously enjoyed by the Postmaster General. Under The Post Office Act, 1867, c. 10, s. 10(14), the Postmaster General was authorized to place mail receptacles “in the streets … or other public place where he may consider such Letter Box to be necessary” (emphasis added). A later version of that statute was more explicit in the grant of discretion: “the Postmaster General shall administer … the Canada Post Office, and … provide and arrange for the erection of letter boxes or other receptacles at such locations as he deems appropriate” (emphasis added): The Post Office Act, S.C. 1950-51, c. 57, s.5(f). The power to install mail receptacles on municipal roads is a power that has been exercised by Canada Post and its predecessors from Confederation.

[9] Significantly, in carrying out its statutory object of operating the postal service in Canada, Canada Post is required to “have regard to … the need to conduct its operations on a self-sustaining financial basis while providing a standard of service that will meet the needs of the people of Canada”: CPCA, s. 5(2)(b). Meeting the postal service needs of Canadians on a self-sustaining basis has become increasingly difficult. Toward that end, Canada Post announced on December 11, 2013 a “Five-Point Action Plan” intended to better realize this dual obligation. An integral part of that plan is the replacement of all home delivery with CMBs by 2019.

(2) The City’s Opposition to Canada Post’s Plan

[10] There has been significant opposition to Canada Post’s plan, not least in the City of Hamilton. On February 26, 2014, the City Council approved a resolution advising Canada Post and the federal government that it “oppose[d] the discontinuation of door-to-door mail delivery service”, and setting out conditions that Canada Post should meet if it nevertheless replaced door-to-door service with CMBs. These conditions included that, in selecting sites for CMBs, Canada Post take into account City concerns such as the impact on traffic flows, parking and winter road maintenance, and that it consult with prescribed public and private groups about the site selection process.

[11] Canada Post stayed its course. In June 2014, it announced that it would convert 36,000 residential addresses in the City to CMBs. As part of this plan, in September 2014, Canada Post provided the City with approximately 1,000 intended CMB locations, which would be the first phase of some 4,000 city-wide installations.

[12] In response, City Council adopted a motion on September 24, 2014 that not only acknowledged Canada Post’s exclusive jurisdiction over postal services in Canada, but also asserted the City’s authority to regulate with respect to public highways, the protection of property, the prevention of nuisance, and the health, safety and well-being of its residents. It objected that Canada Post did not have in place appropriate criteria for the location of CMBs that would safeguard the health and safety of residents, and voiced concerns about the convenience, accessibility, and security of CMBs.

[13] The City Council therefore directed its staff to provide it with a report “with respect to options available to the City to prevent installation of community super mailboxes in the City’s road allowances pending agreement with Canada Post on appropriate locational criteria and such other measures as may be necessary to prevent safety hazards, property damage or nuisance, before the installation of community mailboxes by Canada Post proceeds” (emphasis added). In the interim, City staff advised Canada Post, by letter dated October 3, 2014, that staff would not assist Canada Post with the implementation of CMBs by providing any comment at that time on its proposed locations for CMBs.

[14] The report, which was submitted to City Council on February 4, 2015, recommended that the Mayor write to the Prime Minister and Minister of Transport “to express its opposition to the elimination of home mail delivery”. It also recommended that the Mayor request the immediate suspension of the roll-out of CMBs so that: (1) Canada Post could engage in “full and meaningful” consultation with the City, and (2) the federal government could amend the Regulation “to recognize the City’s authority to regulate the installation and maintenance of community mailboxes in public roadways”.

[15] The scope of the “full and meaningful” consultation advocated by the report was not directed only (or even primarily) to the siting of CMBs; the consultation was to explore other “options short of the elimination of home mail delivery” such as reduced frequency of delivery.

[16] Tellingly, the report noted that the Regulation “currently provide[s] authority for Canada Post to install community mailboxes on municipally-owned property, without limitation.” It objected that the Regulation failed to recognize a municipality’s “primary responsibility for public roads”. Finally, the report recommended that City staff be directed “to include” CMBs in a forthcoming road installations by-law, which was planned by the Public Works Committee.

(3) By-Law 15-091

[17] The City adopted the recommendation, and on April 15, 2015, the City enacted By-Law No. 15-091, regulating the installation of equipment on City roads.

[18] Section 3.1(1) of the By-Law prohibits any person from undertaking any “work” (defined to include any installation of equipment on a road) without first obtaining a permit in accordance with the By-Law and the City’s “Roads – Equipment Installation Manual” (the “Manual”). There was a problem, however, in that the existing Manual did not address above-ground equipment and so there were no criteria in place to govern the permitting of CMBs.

[19] To address this lacunae, the By-Law includes a moratorium provision prohibiting the City’s Director of Engineering Services from considering any permit application from Canada Post for installing CMBs or issuing any permits to Canada Post until 120 days after Canada Post paid an upfront fee of $200 for each of the first 500 CMB permits. According to s. 4.1, the stated purpose of the moratorium period is as follows:

…to temporarily stop work with respect to the installation of equipment accessed by the public (community mailboxes and any similar equipment) while the Director develops appropriate standards to be added to the Roads – Equipment Installation Manual and takes all other necessary steps for the processing of these permits.

Temporarily stopping this work will ensure that the installation of large numbers of community mailboxes by Canada Post Corporation in established neighbourhoods is regulated in accordance with appropriate standards.

[20] Part 5 of the By-Law establishes the permit application process, and the powers of the Director. The Director’s powers are discretionary, and include the power to refuse a permit for non-compliance with the By-Law or Manual: s. 5.3(1). The Director is authorized, by s. 6.3(1), to impose conditions that the Director “considers appropriate for the protection of a road, any property abutting a road or of any person.”

[21] The Manual was updated prior to the hearing of the application. Nevertheless, as Canada Post has not paid the $100,000 permit fee set by the City, the moratorium remains in effect.

(4) Canada Post’s Application

[22] Canada Post successfully challenged the By-Law on six grounds, and the application judge declared it to be inapplicable and inoperative with respect to the installation of CMBs by or on behalf of Canada Post.

[23] First, the application judge held the By-Law was inoperative in respect of CMBs on the basis of vagueness.

[24] Second, he held that the By-Law was of no effect insofar as CMBs were concerned as it contravened s. 14(1) of the Municipal Act, 2001, S.O. 2001, c. 25. Section 14(1) renders a by-law in conflict with a federal Act or regulation of no effect. The application judge concluded there was a conflict because the By-Law frustrated the purpose of the Regulation, which he characterized as “the time sensitive need for [Canada Post] to carry out its mandate with respect to delivery of mail on a self-sustaining financial basis.”

[25] Third, the application judge characterized the subject matter of the By-Law as in pith and substance the control of the location of CMBs, which he concluded is “ultra vires the authority of the City, even though it is within an aspect, i.e. roads, that the City has jurisdiction.” The application judge’s conclusion on vires was influenced by his view that the By-Law was adopted as a means to stop the transition to CMBs: “[t]he by-law was purposely created by councillors with the avowed intention of stopping the transition of home delivery to CMBs, an intention expressed in a by-law which essentially takes over [Canada Post’s] decision making in choosing a business model.”

[26] Fourth, he held the By-Law intruded into the core federal jurisdiction over the postal service, and was inapplicable to Canada Post by operation of the doctrine of interjurisdictional immunity.

[27] Fifth, he held that Canada Post was not bound by the By-Law on the basis of Crown immunity.

[28] Sixth, although the application judge concluded that the By-Law was ultra vires, had he concluded otherwise, he would nevertheless have held it to be inoperative vis-à-vis Canada Post due to the doctrine of paramountcy.

C. issues

[29] On appeal, the City argues that the application judge erred in drawing the following five conclusions:

(1) The By-Law is unconstitutionally vague.

(2) Canada Post is immune from the application of the By-Law because of Crown immunity.

(3) The By-Law is ultra vires the City on the basis that its pith and substance is a matter that comes under exclusive federal jurisdiction.

(4) The By-Law is inapplicable to Canada Post due to the doctrine of interjurisdictional immunity.

(5) If the By-Law were not ultra vires, it would nevertheless be inoperative due to the application of the Municipal Act and the doctrine of federal paramountcy.

D. Analysis

[30] The focus of these reasons is on the questions of vires and paramountcy, which are decisive of the appeal. The other issues raised by the City – vagueness, Crown immunity, and interjurisdictional immunity – will be disposed of summarily.

Division of powers: Vires and Paramountcy

[31] The following section first articulates the general principles of the division of powers analysis, specifically the doctrines of ultra vires and paramountcy, and then applies them to the facts of this appeal.

(1) The general principles

(a) Pith and Substance

[32] The first step in a division of powers analysis is to characterize the law being challenged. This characterization is a matter of determining the “pith and substance” of the challenged law: Union Colliery Co. of British Columbia v. Bryden, [1899] A.C. 580 (P.C.), at p. 587. In more contemporary language, this step has been described as determining the “true character” (RJR-MacDonald Inc. v. Canada (Attorney General), 1995 CanLII 64 (SCC), [1995] 3 S.C.R. 199, at para. 29) or “true nature of the law” (Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, at para. 26) or of “identifying the ‘matter’ to which [the law] essentially relates” (Canadian Western Bank, at para. 26).

[33] Although the terminology is well-settled, there is no single test for determining a law’s matter and, as the Supreme Court cautioned in R v. Morgentaler, 1993 CanLII 74 (SCC), [1993] 3 S.C.R. 463, at p. 481, “[t]he approach must be flexible and a technical, formalistic approach is to be avoided.”

[34] The initial question of “what is a law’s pith and substance” invites two prior questions: “[w]hat in fact does the law do and why?”: Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536, at para. 17 (“COPA”), citing D. W. Mundell, “Tests for Validity of Legislation under the British North America Act: A Reply to Professor Laskin” (1955), 33 Can. Bar Rev. 915, at p. 928;see also Grégoire Webber, “Asking Why in the Study of Human Affairs”, (2015) 60:1 Am. J. Juris. 51 at p. 54. These two paths of inquiry are often expressed as a search for: (1) “the purpose of the enacting body”, and (2) “the legal effect of the law”: Canadian Western Bank, at para. 27; Reference re Firearms Act (Can.), 2000 SCC 31, [2001] 1 S.C.R. 783, at para. 16. These two inquiries are related: while purpose is often “the key to constitutional validity”, “[l]egal effect is often a good indicator of the purpose of the legislation”: Morgentaler, at pp. 482-83.

(i) Effect of the law

[35] The effect of the law can include both (1) legal effect, and (2) the practical consequences that result from legislation: Morgentaler, at pp. 482-83; Quebec (Attorney General) v. Lacombe, 2010 SCC 38, [2010] 2 S.C.R. 453, at para. 20.

[36] Acts of legislation are, paradigmatically, reasoned plans enacted either to change or confirm existing legal rights and obligations of persons. Thus, the legal effect of legislation is determined “from the terms of the legislation itself”, by asking how the legislation affects the legal rights and obligations of those subject to it (Morgentaler at p. 480. See also, Richard Ekins, The Nature of Legislative Intent (Oxford: Oxford University Press, 2012), at pp. 121-27).

[37] The effects of legislation are an important indicator of its purpose. The Supreme Court has cautioned, however, that the enquiry into effects not be truncated by considering only the means chosen by the legislature and ignoring the more ultimate ends. For example, in Ward v. Canada (Attorney General), 2002 SCC 17, [2002] 1 S.C.R. 569, a federal regulation prohibited the sale of two types of young seals. The Supreme Court rejected the argument that the subject matter of the legislation was the regulation of the sale of seal products, which would be a matter within provincial jurisdiction (i.e., as a matter related to “property and civil rights in the province”). The immediate effect of the regulation was to prohibit the sale of seals. But this effect was only an intermediate end: a means, by way of removing the financial incentive to hunt seals and curtailing the commercial hunt, to achieve the more ultimate end of protecting a fisheries resource. An adequate account attends to both the intended effects and means chosen to bring them about.

(ii) Purpose of the enacting body

[38] The effects of legislation are one guide to its purpose, but there are others, bearing in mind that the relevant purpose for analysis is, as Binnie J. stated at para. 27 of Canadian Western Bank, the purpose of the “enacting body” in enacting the legislation, and not the purpose of any individual member.

[39] In determining the purpose of the enacting body, a reviewing court may consider both intrinsic evidence (evidence contained within the text, such as statements in a preamble or a purpose clause) and extrinsic evidence (evidence outside of the text, such as minutes of parliamentary debates): Canadian Western Bank, at para. 27.

[40] This analysis is not concerned with the motives of the government in proposing the legislation, or the motives of the enacting body or of any of its individual members: Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, [2015] 1 S.C.R. 693, at paras. 35-38 (“Gun Registry II”). Motive, in this context, should be understood as the desire to achieve some end other than the immediate change in legal rights and obligations achieved by the legislation.

[41] For example, in Gun Registry II, the Supreme Court considered Quebec’s argument that federal legislation resulting in the destruction of a firearms database was motivated by a desire to prevent or hinder Quebec from developing its own long-gun registry. The court decided that although that may well have been the government’s motive, it did not play a role in the characterization of the matter of the legislation. At para. 38, the court commented:

Quebec’s submissions, in our respectful view, confuse the subject matter of s. 29 of the ELRA with Canada’s motives and the means employed by Parliament. In determining the true character of s. 29, we are not concerned with whether destroying the data is good policy, whether Canada’s motives were sound, or whether the destruction of that data conflicts with the policy objectives of Quebec. We recognize that the federal government’s ultimate goal may well have been to prevent Quebec from creating its own long-gun registry. We also accept that the destruction of the data is the means chosen by Canada because of its irremediable nature. That being said, these considerations are not indicative of a “colourable” purpose from a division of powers’ perspective. An intention on the part of one level of government to prevent another from realizing a policy objective it disagrees with does not, on its own, lead to the conclusion that there is an encroachment on the other level of government’s sphere of exclusive jurisdiction.

The subject matter of legislation is thus distinct from the motives of government and of individuals within a government.

(b) Heads of power

[42] Once the matter of the challenged legislation is ascertained, the next step is to determine whether the matter comes within one of the heads of power allocated to the enacting legislative body by s. 91 or s. 92 of the Constitution Act, 1867. If not, the legislation is ultra vires and void.

[43] Legislation will not be ultra vires, however, simply because its subject matter, for another purpose, could have fallen under the jurisdiction of the other level of government under a different head of power. The double aspect doctrine provides that “subjects which in one aspect and for one purpose fall within sect. 92, may in another aspect and for another purpose fall within sect. 91”: Hodge v. The Queen (1883), 9 A.C. 117, at p. 130 (P.C.). Accordingly, the doctrine contemplates that some subjects will fall equally under two distinct heads of power, one federal and one provincial: Rogers Communications Inc. v. Châteauguay (City), 2016 SCC 23, 397 D.L.R. (4th) 611, at para. 50.

(c) Paramountcy

[44] This double aspect raises the possibility of conflict between valid federal and provincial laws that both deal with the same subject matter. The doctrine of paramountcy stipulates that such conflict is to be resolved in favour of federal legislation: Canadian Western Bank, at para. 32. Where there is a conflict, federal legislation is paramount and the conflicting provincial legislation is inoperative to the extent of the conflict.

[45] The Supreme Court has recently clarified its jurisprudence on what is required for a conflict: Alberta (Attorney General) v. Moloney, 2015 SCC 51, [2015] 3 S.C.R. 327, at paras. 17-29. It summarized when a conflict will occur, at para. 29:

[I]f the operation of the provincial law has the effect of making it impossible to comply with the federal law, or if it is technically possible to comply with both laws, but the operation of the provincial law still has the effect of frustrating Parliament’s purpose, there is a conflict.

[46] With those legal principles in mind, I now turn to an examination of the City’s By-Law.

(2) Application of Principles

(a) Pith and Substance of the By-Law

[47] What is the pith and substance, or subject matter, of the By-Law?

[48] On the City’s submission, the purpose of the By-Law is the regulation of the installation of equipment (including CMBs) on municipal roads. The rationale is supplied by the pre-amble to the By-Law, which notes the City’s authority under the Municipal Act to pass by-laws for municipal purposes, with specific reference to its responsibility for “ensuring that persons are protected from injury, property is protected from damage, and disruption is minimized for those using the road as well as for abutting properties.”

[49] The application judge rejected this submission and accepted Canada Post’s argument that the “true purpose” of the By-Law is revealed in the circumstances of its enactment, including the vocal opposition of Council to the imposition of CMBs, and statements of individual Council members expressing a desire to “derail” the implementation of CMBs and control the process of conversion. He concluded that this intention to stop the transition was expressed in the By-Law itself.

[50] The application judge found that the By-Law “was purposely created by councillors with the avowed intention of stopping the transition of home delivery to CMBs.” From this characterization of purpose, he concluded that the By-Law’s subject matter is the regulation of postal services.

[51] I accept the City’s submission that the application judge erred in characterizing the pith and substance of the By-Law. In particular, I am of the view that he erred in confusing the concepts of purpose and motive. Although the Council members were opposed to the imposition of new CMBs, and one or more members may have hoped the By-Law would “derail” the implementation of Canada Post’s CMB plan, the motives of individual Council members (or even the Council as a whole) do not of itself establish the pith and substance of the By-Law. To reiterate, “[a]n intention on the part of one level of government to prevent another from realizing a policy objective it disagrees with does not, on its own, lead to the conclusion that there is an encroachment on the other level of government’s sphere of exclusive jurisdiction”: Gun Registry II, at para. 38.

[52] The application judge erred by focusing on whether Council was generally opposed to CMBs or whether individual members of Council harboured a hope that the By-Law might derail Canada Post’s plan. A better guide to the By-Law’s purpose, and ultimately its subject matter, is its legal effect, or the change it works in legal rights and obligations.

[53] As I will discuss, the By-Law changes legal relationships in two ways: (1) it creates a permitting process that requires all persons to obtain a permit before installing equipment on city roads and gives jurisdiction to the Director to grant or refuse an installation permit based on criteria set by the City; and (2) it imposes a moratorium on issuing permits to Canada Post for CMBs for 120 days after Canada Post pays permit fees for the first 50 CMBs, totalling $100,000.

(i) The permit provisions

[54] As noted above, Part 3 of the By-Law prohibits “work” - which includes the installation of equipment on City roads - without a permit. Part 5 vests the Director with authority to issue or refuse permits, and requires the Director, in making a decision, to “have regard for the Roads – Equipment Installation Manual’, which was updated to address all above-ground equipment installations subsequent to the passing of the By-Law.

[55] The criteria in the updated Manual governing above-ground equipment, which are meant to constrain the exercise of the Director’s discretion, include matters such as the accessibility of equipment for persons with disabilities, vehicular and pedestrian safety, setbacks, respect for privacy of occupants of nearby homes, and protection of trees. Several of these criteria are vague and open-ended and can only be applied through the exercises of discretion.

[56] Significantly, these criteria do not address the efficiency or modality of mail delivery. The Director is not vested with any authority to grant or refuse a permit based on any judgment about the adequacy of mail service that would result. The subject matter of this part of the By-Law is the regulation of municipal rights of way for the protection of the physical safety of persons and property.

[57] The By-Law is readily distinguishable from the notice of reserve that was held to be ultra vires in Rogers Communication. In that case, the municipality argued that its purpose in issuing a notice of reserve, which prevented Rogers from installing a cell phone tower on a property for which it had received federal approval, was to protect the health and well-being of residents living close to that property. The Supreme Court rejected this characterization, instead classifying the notice as a matter of choosing the location of a radiocommunication antenna system. It concluded that the notice was ultra vires the province as it was an exercise of an exclusive federal power over radiocommunications. To have decided otherwise, the Court explained, “could encourage municipalities to systematically exercise the federal power to choose where to locate radiocommunication infrastructure while alleging local interests in support of their doing so” (para. 47.) To have decided otherwise would have expanded the scope of municipal jurisdiction well beyond the division settled by the Constitution Act, 1867.

[58] Here, the pith and substance of the By-Law is to protect against risks of harm to property and harm to persons using municipal roadways. Unlike in Rogers, the By-Law is of general application, establishing standards that govern the implementation of all equipment on City roads. And unlike the notice in Rogers, it does not prohibit CMBs or restrict their placement in a way that would be tantamount to prohibition.

(ii) The moratorium provision

[59] Unlike the general permit provisions, the moratorium provision is expressly and exclusively directed at Canada Post. However, it is important to note the close connection between the moratorium provision and the permitting process. The moratorium provision is not an indirect prohibition, but is in the service of the permitting process.

[60] The purpose of the 120-day period was to allow time for the City to develop the standards that would govern the issuance of permits. Those standards have now been developed.

[61] The purpose of the permitting fees was, according to the City, to enable the City to hire extra staff to manage the permitting process, which includes: (1) implementing a system to track and manage the permit application process; (2) assessing the need for an agreement between Canada Post and the City to “address infrastructure impacts, upgrade costs, and operations impacts”; and (3) hiring additional staff to process the permit applications.

[62] Although Part 4 of the By-Law was occasioned by the pending wide-scale installation of CMBs, the By-Law was already under revision in train when it was adapted to address the CMB roll-out. As previously noted, it is otherwise of general application, applying to all equipment installations on municipal road allowances. The fact that it specifically addresses CMBs in one provision – the moratorium – does not negate its character as a law of general application. As the City argued, the express mention of CMBs in the By-Law was necessary to its success as a comprehensive ordinance regulating the installation of equipment on City roads, and the mere fact that Canada Post was expressly addressed in the By-Law is not itself problematic: see Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), 2002 SCC 31, [2002] 2 S.C.R. 146, at paras. 66 and 76 (the mere mention of the word “Aboriginal” in a statute does not render it ultra vires the province). The scale of the roll-out of CMBs posed an immediate logistical problem for the City. The moratorium provision was needed to enable the City to work up the necessary infrastructure to regulate the location of CMBs.

[63] The requirement that Canada Post pay $100,000 in permit fees up front should be understood in this light. Canada Post’s standard procedure on CMB roll-outs is to consult with the host municipality. It recognizes that this consultation imposes costs on the municipality, and its practice is to pay $50 per installation. The City has judged this payment to be inadequate to cover the costs of the permit process, and requires a fee of $200 per CMB. While the By-Law extracts a fee that is four times the rate that Canada Post pays voluntarily, that does not change the subject matter analysis.

[64] Although Canada Post has refused to pay the fee, there is no evidence on the record that the imposition of the fee would create an obstacle to Canada Post such that the matter of the By-Law should be characterized as being in relation to mail delivery rather than the regulation of the use of municipal rights of way. In other words, this case is unlike the situation in Attorney-General for Alberta v. Attorney-General for Canada, 1938 CanLII 251 (UK JCPC), [1939] A.C. 117 (P.C.), where a provincial tax on banks was so excessive that the only available inference was that its purpose was not to raise revenue through taxation (a valid provincial object), but to put banks out of business. Its dominant purpose was therefore held to be the regulation of banks rather than the raising of revenue through taxation.

[65] I therefore conclude that the application judge’s characterization of the subject matter of the by-law is an error of law. The subject matter is, much as the City contends, the protection of persons and property from harm occasioned by equipment installed on municipal road allowances.

[66] The next step in the analysis is to determine whether this subject matter comes within a head of power allocated to the provinces by the Constitution Act, 1867.

(b) Heads of power

[67] Municipalities hold such powers as are delegated to them by provincial legislatures. The City of Hamilton locates its ultimate authority for the impugned By-Law in ss. 92(10) and (13) of the Constitution Act, 1867, respectively the powers over local works and undertakings, and property and civil rights in the province.

[68] It is a short walk from the characterization of the By-Law as being in relation to the protection of persons and property from harm occasioned by equipment installed on municipal road allowances, to the conclusion that the By-Law comes within provincial jurisdiction under ss. 92(10) and (13).

[69] The subject matter of the By-Law does, however, as the application judge correctly noted, also impact the federal head of power over the postal service, set out in s. 91(5) of the Constitution Act, 1867. That led the application judge to conclude, incorrectly in my view, that the By-Law usurps the jurisdiction of Canada Post, which under the CPCA has the power, with the approval of the Governor in Council, to make regulations governing the placement of mail receptacles. In particular, the application judge erred in the application of the double aspect doctrine. The doctrine provides that the authority of one level of government to legislate with respect to a subject matter does not mean the other level of government does not have the authority to legislate with respect to another aspect of the same subject matter for another purpose: Canadian Western Bank, at para. 30.

(c) Conclusion on vires

[70] The By-Law falls within the City’s jurisdiction. That conclusion invites the next step of the division of powers analysis, which is to determine whether there is a conflict between the By-Law and any federal legislative provisions.

[71] For the reasons that follow, I conclude that there is a conflict, in the relevant sense, and that the federal provisions are paramount and the By-Law is therefore inoperative to the extent that it applies to Canada Post.

(d) Paramountcy

[72] As set out above, there are two types of conflict that can ground a paramountcy analysis: operational conflict, and frustration of the purpose of federal law. Only the latter is at issue: it is common ground that the application judge correctly concluded there was no operational conflict.

[73] The City says the application judge erred by focussing on a conflict with a “federal purpose” at large, or the purpose behind Canada Post’s business plan, rather than the purpose of any legislative instrument. It argues that the doctrine of paramountcy requires conflict with a legislative instrument, and cannot be invoked where there is only conflict with a business plan of a Crown corporation.

[74] I do not agree with this reading of the application judge’s reasons. He described the federal purpose as follows:

[84] The federal purpose advanced is the time sensitive need for [Canada Post] to carry out its mandate with respect to delivery of mail on a self-sustaining financial basis. As mentioned declining mail usage in the face of electronic communications at the same time as an increase in the number of residences has made door-to-door delivery of transactional mail the most expensive form of delivery. Accordingly, [Canada Post] actively seeks to transition to CMBs to reduce eventually its labour force, which is one of its most costly components of mail delivery.

[85] Also as set out, the [Regulation] allows for the installation of mail receptacles in public places, including a public roadway. A CMB is clearly a receptacle within the ambit of the regulation. City employee affidavits and correspondence with [Canada Post] clearly acknowledged the mandate of [Canada Post].

These paragraphs, read together, show that the object of the application judge’s federal purpose analysis was not the business plan of Canada Post, but rather the Regulation, taken together with the CPCA. The relevant conflict is between the By-Law, which the application judge interpreted as giving final authority over the location of mail receptacles to the City, and the federal purpose of the Regulation and the CPCA, which grant sole decision-making power over the location of mail receptacles to Canada Post.

[75] The City further objects, relying on the Supreme Court’s decision in COPA, that the application judge erred because the Regulation is merely permissive (in that it allows but does not require Canada Post to install any receptacles on municipal roads) and a permissive regulation cannot, without more, ground the requirement for a conflict for paramountcy analysis. The City relies on COPA, where the court stated, in part, at paras. 66 and 68:

The standard for invalidating provincial legislation on the basis of frustration of federal purpose is high; permissive federal legislation, without more, will not establish that a federal purpose is frustrated when provincial legislation restricts the scope of the federal permission: see 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241.

As discussed above, invocation of federal paramountcy on the basis of frustration of purpose, as opposed to operational conflict, requires clear proof of purpose; mere permissive federal legislation does not suffice.

[76] I disagree with the City’s reading of COPA. The propositions that COPA advances are these: (1) there is a heavy burden on the party claiming paramountcy to establish that there is a conflict; (2) to find a conflict on the second branch, there must be “clear proof of purpose”, and (3) the mere existence of a permissive federal legislative provision is not of itself sufficient proof of federal purpose. In COPA, there was some uncertainty as to the federal purpose in promulgating regulations that generally permitted persons to construct aerodromes without prior approval. The court rejected the argument that the existence of the regulations permitting the construction of aerodromes were, in themselves, sufficient proof of a particular purpose that had been alleged ­- encouraging “widespread construction of aviation facilities”: COPA, at para. 68.

[77] I see no similar uncertainty as to the purpose of the Regulation, particularly in light of the long history of the Postmaster General’s discretion over the placement of mail receptacles.

[78] In my view this appeal is more similar, factually, to British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86. In that case, the Canada Marine Act, S.C. 1998, c. 10, vested in the Vancouver Port Authority the authority to make decisions about the development of the Vancouver Port, including the approval of a development by Lafarge Canada that would contravene city by-laws. The court held that there was a conflict between the federal purpose under the Canada Marine Act of vesting authority in the Vancouver Port Authority, and the permitting by-laws of Vancouver.

[79] Similarly, in this appeal, the federal purpose of the CPCA and the Regulation in conferring on Canada Post the power to place mail receptacles on municipal roads is in furtherance of the objects of Canada Post, which include having regard to the “need to conduct its operations on a self-sustaining financial basis while providing a standard of service that will meet the needs of the people of Canada”: CPCA, s. 5(2)(b). The By-Law, by giving the City a veto over the siting of mail receptacles, conflicts with the federal purpose behind the Regulation.

[80] The City objects that unlike the siting of the cellphone tower in Rogers, which is discussed above, the exact placement of a CMB is a “fine grained” matter that cannot, in its nature, have any substantial bearing on the operations of Canada Post. Allowing the City the authority to relocate a CMB down the street will not impact the operations of Canada Post, the City argues, and it may enhance public access.

[81] Again, I cannot agree with this submission. The record demonstrates that the process of converting mail delivery to CMBs is complex, not only due to the necessary coordination with third parties such as residential customers, municipalities, and contractors, but also because of the internal procedures that Canada Post’s collective agreements mandate when Canada Post restructures a mail delivery route. Were the City to refuse approval for even a few sites, it would require Canada Post to redraw its mail delivery routes and restart the cycle of consultation with customers, volume mail delivery counts, route restructuring and staffing, and hiring contractors. And there is of course no guarantee that sites selected in the subsequent round would meet with City approval. Furthermore, what is at issue is not the location of a single mail receptacle, or even a few hundred mail receptacles. The CMBs are part of a national network. These logistical problems would be magnified by the number of municipalities enacting such a by-law – each with their own decision-maker and criteria – that will collectively have veto power over the placement of CMBs nation-wide.

[82] The City additionally argues that there is no conflict because the Regulation and the By-Law can be read together, and that respect for the constitutional principles of co-operative federalism and subsidiarity require giving effect to a harmonious interpretation of the By-Law and Regulation, if at all possible.

[83] A harmonious reading of the By-Law and the Regulation, however, is not, in my view, possible. It is not a matter, as the City suggests, of the Regulation not providing any standards for implementation of the CMBs and the By-Law supplying this defect. It is true that the Regulation does not set out criteria to govern the location of CMBs. Canada Post of course has policies and standards that it has adopted for site selection, including policies governing consultation with communities and municipal governments. The By-Law (together with the Manual) does not complete, or render more specific, the work begun in the Regulation. Instead it asserts a supervisory jurisdiction over the decision-making of Canada Post. It is not co-operative but competitive, displacing one discretionary authority with another.

[84] The constitutional principle of subsidiarity cannot, as was held by a plurality in Reference re Assisted Human Reproduction Act, 2010 SCC 61, [2010] 3 S.C.R. 457, at para 72, per McLachlin C.J., be invoked to alter the division of powers. As with all constitutional principles, however, it can play a role in statutory interpretation and in the development and application of legal doctrine, including the doctrine of paramountcy. The City argues that respect for subsidiarity, understood as the proposition that governmental decisions should be taken at the level of government closest to the affected parties, should lead to a harmonious interpretation of the CPCA, Regulation, and the By-Law.

[85] Further, the intervener argues that municipalities have a “historical right of way management role” that should be respected in the division of powers analysis, not only because municipalities are better placed to coordinate the demands placed on road allowances by competing users, but also because this is a function that has been historically exercised by municipalities. This argument draws some support from another aspect of subsidiarity that has been affirmed by legal academics: that the reason that higher levels of government and authority should not displace the pre-existing initiatives of lower levels of government and civic society, is because there is something inherently valuable in local institutions and communities being able to maintain their own projects and commitments: see e.g., N.W. Barber & Richard Ekins, “Situating Subsidiarity” (2016) 61:1 Am. J. Juris 5.

[86] Nevertheless, no matter how it is articulated, the principle of subsidiarity has no application on these facts. The power of the Postmaster General (and its successor, Canada Post) to locate mail receptacles in its national network, free of interference, has existed from Confederation and has been continuously exercised. Canada Post is not displacing any pre-existing local initiatives. And as I noted with respect to the argument from co-operative federalism, a harmonious reading of the CPCA and Regulation together with the By-Law is not possible.

[87] I therefore conclude that there is a conflict between the By-Law on the one hand, and the CPCA and the Regulation on the other, and the application judge made no error in so finding. The By-Law is thus inoperative to the extent of the conflict, including both the permitting and moratorium provisions as they apply to Canada Post.

[88] As the application judge found, the conclusion that there is a conflict for division of powers purposes similarly resolves the question of whether the By-Law is inconsistent with s. 14(1) of the Municipal Act, which renders a by-law that is in conflict with a federal act or regulation of no effect.

[89] While the paramountcy conclusion disposes of the appeal, I will briefly touch on the other issues raised by the City.

Other Issues

(1) Vagueness

[90] When Canada Post commenced its application and included vagueness among the By-Law’s infirmities, the City had not yet drafted its update to the Manual. As noted above, it did so shortly before the application was argued. Although the application judge determined the By-Law was impermissibly vague, even with the criteria contained in the updated Manual, Canada Post concedes on appeal that the By-Law is not vague.

[91] In my view, the concession is proper. The application judge erred in characterizing the By-Law as standardless and vague in view of the standards set out in the Manual. The situation facing the City was appropriately addressed through a delegation of authority so that discretion, exercised in individual cases and guided by the criteria set out in the Manual, could be applied to particular circumstances: Batty v. Toronto (City), 2011 ONSC 6862, 108 O.R. (3d) 571, at para. 120.

(2) Crown Immunity

[92] Given my conclusion on the doctrine of paramountcy, I consider it unnecessary to answer this question.

(3) Interjurisdictional immunity

[93] The doctrine of interjurisdictional immunity protects the “core” of a legislative head of power from impairment by the actions of a government at the other level: COPA, at para. 26. Its application involves two steps: (1) determining whether a statute or measure adopted by a government at one level trenches on the core of a power of the other government, and (2) determining whether the effect of the statute or measure on the protected power is sufficiently serious to trigger the application of the doctrine: COPA, at para 27.

[94] Its application has wide-ranging consequences and as the Supreme Court recently reiterated, it should be applied “with restraint” and “in general be reserved for situations already covered by precedent”: Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725, at para. 63, citing Canadian Western Bank, at paras. 67 and 77.

[95] I agree with the City’s submission that Canada Post has not identified any precedent recommending the application of this doctrine. It is not sufficient that the doctrine has in the past been applied to the head of power of postal services. There needs to be a closer nexus with the actual subject matter of the By-Law.

[96] As this case presents a novel situation with respect to interjurisdictional immunity, the application judge needed to identify some exceptional rationale for extending the doctrine and did not do so. Accordingly, I am of the view that the application of the doctrine in this instance is an error of law.

E. Fresh evidence

[97] The City sought leave to introduce fresh evidence consisting of reports of a decision of the Government of Canada, following the election of 2015, to temporarily discontinue the roll-out of conversion to CMBs. The evidence does not assist in the resolution of the legal issues in this appeal.

F. Disposition

[98] For these reasons, I would deny leave to admit the fresh evidence and would dismiss the appeal.

[99] If the parties are unable to agree on costs, they may make brief written submissions, not exceeding three pages (excluding an attached bill of costs). Canada Post shall file its submissions within 15 days from the date of these reasons, and the City shall fill its response within 10 days of receipt of Canada Post’s submissions.

Released: “DD” OCT 19 2016

“B.W. Miller J.A.”

“I agree. Doherty J.A.”

“I agree. Gloria Epstein J.A.”