Court File and Parties

Date: September 12, 2023 Information No.: 4460 999 22 25370 Ontario Court of Justice

His Majesty The King v. Vinventory Canada Inc.

Before: His Worship Justice of the Peace L. Phillipps On: September 12, 2023, at KITCHENER, Ontario

Appearances: E. Owens/D. Guttman, Crown Prosecutor H. Malik, Counsel for Vinventory Canada Inc.

Decision on Application

PHILLIPPS, J.P. (Orally):

Vinventory Canada Inc. (hereinafter Vinventory) refers the following question of law to this Court for hearing and consideration. The motion asserts that presumptive jurisdiction has been displaced and that Vinventory is subject to federal derivative jurisdiction and, therefore, Ontario’s Occupational Health and Safety Act, R.S.O. 1990, c.0.1 is constitutionally inapplicable and that Part II of the Canada Labour Code applies. The applicant also seeks that the charges against the corporation be quashed on constitutional grounds.

The federal Attorney General has not intervened.

There exists a high threshold when displacing the province's presumptive labour jurisdiction over Vinventory and it is limited to the most unusual and compelling circumstances. As the Supreme Court of Canada set out in Tessier Ltée v. Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23, [2012] 2 S.C.R. 3.) there is "no simple litmus test".

Background

The defendant is Federally incorporated. They are charged in connection with an incident in August of 2021 where it is alleged that one of their employees fell and suffered injuries, including a head injury, while unloading automobiles from a train. The defendant is charged with two counts under Ontario’s Occupational Health and Safety Act for failure to protect the worker with a guardrail and failing to cover an opening in the floor of a loading ramp.

The majority of the factual evidence in this matter comes from the two affidavits of Vinventory’s President, Mr. Nicholas Erickson.

A company called Connect the Lines Inc. (Hereinafter CTL) has leased a Canadian Pacific Railway (CP) owned rail yard (the Wolverton facility) located in Ayr, Ontario since 2017.

Glovis Canada Inc. (Glovis) is a subsidiary of Hyundai Glovis. Around 2017, Hyundai and Kia automobile handling was contracted to CTL to manage including rail unloading and yard management at the Wolverton facility.

CTL contracted with Vinventory to be the sole provider of their services at the Wolverton facility.

At the time of the allegations, Vinventory was a sub-contractor, under contract. Vinventory provides the automobile industry with rail yard management, railcar loading and unloading as well as inspection services.

There is no evidence that any other brands of motor vehicles were the subject of Vinventory’s operations at Wolverton. In fact, there is a marked absence of evidence concerning what else takes place at that rail yard.

Vinventory did not operate at any other location in Canada.

Vinventory was under contract from October 20, 2020 until October 20, 2022 or, as the contract set out, otherwise terminated by their written agreement. In October of 2022, the contract ended, the employees work ended in Canada and CTL took over the work at the Ayr facility. According to the Vehicle Loading/Offloading and Security Services Agreement, CTL could terminate the agreement by providing Vinventory with 60 days prior written notice indicating the date on which the agreement would terminate.

Through the contract, Vinventory was responsible for conducting automobile inspections, reporting damage and status to Glovis, offloading the automobiles from railcars, inventory management and lot security.

As might be expected when considering the multiple facets of an interprovincial railway, CP maintained an active and ongoing presence on the CP yard with staff on-site, locomotive engineers, conductors, a Yard Master and maintenance crews. The maintenance crews conducted inspections, maintained and repaired the tracks, related equipment, trains and property throughout the CP Yard. These tasks did not involve Vinventory but there was, necessarily, regular communication between the entities.

The Constitution

Labour relations is presumptively a provincial matter. It engages the province's authority over property and civil rights under section 92 of the Constitution Act, 1867.

Section 91 sets out the exclusive Legislative Authority of the Parliament of Canada while section 92 defines exclusive powers of Provincial Legislatures.

Jurisdiction over labour relations and working conditions is not delegated to either the provincial or federal governments under section 91 or section 92 of the Constitution Act, 1867.

Following the decision in Toronto Electric Commissioners v. Snider, [1925] A.C. 396 (P.C.), courts have accepted that legislation respecting labour relations is presumptively a provincial matter. The provinces’ authority over property and civil rights under section 92(13) of the Constitution Act, 1867 are engaged.

Parliament can regulate employment when the employment relates to a work, undertaking or business within the legislative authority of Parliament or when it is an integral part of a federally regulated undertaking. (Tessier paragraph 17)

There is no dispute that the defendant corporation does not meet the direct jurisdiction test as it does not fall squarely within a section 91 area of jurisdiction as it doesn’t own or operate an interprovincial railway. The company is not owned by any federally regulated undertaking. Therefore, it is not within the legislative authority of Parliament. The question before me, however, concerns the nature of and dependency upon Vinventory’s employee’s work and if it is an integral part of CP's federally regulated undertaking to the extent that the presumption of provincial jurisdiction should be displaced.

The displacement of provincial jurisdiction should be the exception.

In Consolidated Fastrfate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, Justice Rothstein, wrote at paragraph 39,

“In my view, having regard to the historical context of section 92(10) and its underlying purpose, the preference for diversity of regulatory authority over works and undertakings should be respected, absent a justifiable reason that exceptional federal jurisdiction should apply”.

The Relationship

I must assess the extent to which the effective performance of the federal undertaking was dependent on the services provided by the related operation and how important those services were to the related work itself.

It is submitted that Vinventory was essential and integral to the running of the federally regulated railway and that without their services, the operations of CP would grind to a halt at Wolverton. There is nothing before me which would lead me to believe that the controls that CP or CTL had over Vinventory were greater than any other owner/client or general contractor might have over a sub-contractor. If unavailable to fulfill their role, there is no evidence that another contractor could not step in to fill the void. In fact, the submissions reveal that CTL is currently performing the duties previously contracted out to Vinventory and commenced these operations following the expiry of the contract.

It is important to note that the role of Vinventory in Canada and its operations occurred entirely within the confines of the Wolverton rail yard. It was not itself an interprovincial undertaking.

When the Supreme Court considered dependency in Westcoast Energy Inc. v. Canada (National Energy Board), [1998], 1 S.C.R. 322; [1998] S.C.J. No. 27 it set out at paragraphs 140 and 141:

140, "I turn next to the argument based on dependency. Like common management, dependency may be a factor in determining whether the local work or undertaking has lost its distinct identity and essentially functions as a fully integrated adjunct of the interprovincial enterprise. However, as with the factors previously considered, dependency is not the ultimate test".

141, "To be relevant at all, the dependency must be permanent: Northern Telecom No.1, supra, at paragraph 132. It is also clear that dependency of the local work or undertaking on the interprovincial enterprise is immaterial: see Central Western, supra; National Energy Board (Re), supra; and In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174 (C.A.), at p. 177-78. Dependency is relevant only where the interprovincial work or undertaking is dependent on the local enterprise in the sense that the latter is essential to the interprovincial enterprise’s delivery of services".

In this case, any dependency was not permanent. It was for a relatively brief two year contract and it did, in fact, end at the conclusion of that term. It was also product specific given that the work involved specific makes of automobiles.

While the offloading and inventory management functions were essential to Glovis, it was the responsibility of CTL to assure the continued movement of the product. It was then sub-contracted to Vinventory to complete that particular task as it related to the Wolverton rail yard. This differs from the Ontario Labour Relations Board’s decision in Labourer's International Union of North America, Local 183 v. Rail-Term Inc., (hereinafter Rail-Term) where there was a direct relationship with CP.

This unit of employees was local and functionally independent of the rest of the related operation. They formed a discrete unit related to the Glovis car inventory.

The cessation of Vinventory’s contract is not dispositive; however, it is persuasive evidence as to the ongoing imperative of their work. If the work done by the employees of Vinventory was integral, how could it end with the expiry of the contract and simply be assumed by CTL? If the work was imperative on October 20, 2022, why did the operation that they had been tasked with continue after that date in the absence of the Vinventory workers? There is also, no compelling evidence that CP could not have assumed the duties performed by Vinventory. The affidavit of Mr. Erickson confirms that CP performs similar functions at other locations.

Vinventory acknowledges that Rail-Term decision is not binding on this Court, but it is submitted as persuasive and that the rationale applied in that decision ought to be followed.

However, that decision pre-dates the decision of the Ontario Court of Appeal in Ramkey Communications Inc. v. Labourers' International Union of North America 2019 ONCA 859, hereinafter Ramkey. The OLRB did not have the benefit of the Ramkey decision at the time and the Board might have decided differently today. In allowing the appeal, the Ontario Court of Appeal found that the Divisional Court had erred in considering Rogers dependency on having a functioning network line and the type of work performed by the respondent's construction technicians. Instead, the Court said, the proper focus was the extent to which Rogers depended on the services of the respondent's construction technicians.

In Tessier, at paragraph 38 the Supreme Court set out that the focus was,

"on the relationship between the activity, the particular employees under scrutiny, and the federal operation that is said to benefit from the work of those employees".

Like Vinventory, Ramkey's contract could be terminated with notice. Ramkey was not the only provider of this kind of service to Rogers, and Ramkey's dominant client at the time was Rogers. The evidence before the Court is that Vinventory's only client at the relevant time was CTL. Although there was no evidence adduced to this point, it seems likely that there are other CP rail yards in Canada where similar services are needed and provided by other contractors.

In Tessier, the corporate relationship between the federal undertaking and the party seeking the finding of derivative jurisdiction was considered by Justice Abella. Quoting at paragraph 61,

"To be relevant at all, a federal undertaking’s dependency on a related operation must be ongoing. Yet we have no information about the corporate relationship between Tessier and the shipping companies, whether Tessier’s stevedoring activities were the result of long-term or short-term contracts, or whether those contracts could be terminated on short notice. There is nothing, in short, to demonstrate the extent to which the shipping companies were dependent on Tessier’s employees. As a result, as in the Court of Appeal, no conclusions could even have been drawn about whether those of Tessier’s employees who occasionally performed stevedoring activities were integral to federal shipping undertakings. This too argues against imposing exceptional federal jurisdiction."

I take from this, that short-term contracts or those which may be terminated on short notice tend not to support a displacement of provincial jurisdiction.

Further, the Court found that the controls that Rogers had over Ramkey were not greater that any owner/client or general contractor. The OLRB had considered, in that case, that if Ramkey was unavailable to do the work, Rogers would simply use another contractor (Ramkey supra Paragraph 20). That mirrors the relationship between the Federal undertaking and Vinventory in this instance. It seems that this was not a permanent relationship and when the relatively short contract expired, other employees of CTL assumed the functions previously performed by Vinventory. There is no evidence of any crisis or disruption when the contract with Vinventory expired and the work was otherwise assumed.

Referring to Tessier at paragraph 45,

"McLachlin J., writing in dissent, framed the case differently and in a way that is of particular assistance in this case. After noting that the gathering and processing plants themselves were not inter-provincial transportation undertakings (the direct jurisdiction test), she held that they could only be subject to federal regulation if they were integral to the inter-provincial pipelines. In applying the derivative approach, she emphasized that exceptional federal jurisdiction would only be justified when the related operation was functionally connected to the federal undertaking in such an integral way that it lost its distinct provincial character and moved into the federal sphere.

The local work or undertaking must, by virtue of its relationship to the interprovincial work or undertaking, essentially function as part of the interprovincial entity and lose its distinct character. In the context of an interprovincial transportation or communication entity, to be functionally integrated, the local work or undertaking, viewed from the perspective of its normal day-to-day activities, must be of an interprovincial nature — that is, be what might be referred to as an “interconnecting undertaking” ... If the dominant character of the local work or undertaking, viewed functionally, is something distinct from interprovincial transportation or communication, it remains under provincial jurisdiction. (Tessier, McLachlin’s dissent, paragraph 124)

Unlike Northern Telecom in Northern Telecom Ltd. v. Communication Workers of Canada, [1983] 1 S.C.R. 733, [1983] S.C.J. No.55, there was no interprovincial component to Vinventory's work where Northern Telecom's work extended to several other provinces. Vinventory's employees were located wholly within a single province, in fact, a single rail yard, and this was found to be a distinguishing factor in United Transportation Union v. Central Western Railway Corp., [1990] 3 SCR 1112. I note that the Erickson affidavit sets out that the rail yard and inspection services are “among other business activities” provided by Vinventory. There is no evidence as to what the other business activities are.

In United Transportation, then Chief Justice Dickson wrote,

"Finally, and perhaps most importantly, it cannot be said that CN is in any way dependent on the services of the appellant. Since 1963, CN has consistently wanted to abandon the Central Western rail line, indicating that the line is not vital or essential to its operations. Consequently, in contrast to the Northern Telecom cases, the core federal undertaking (CN) would not be severely disadvantaged if the appellant's employees failed to perform their usual tasks. In sharp contrast to the Stevedores' Reference or Letter Carriers' case, the effective performance of CN's obligation as a national railway is not contingent upon the services of the appellant. These factors point strongly, almost decisively, against a finding of federal jurisdiction over the employees in question."

It has not been established by the evidence before this court that the Wolverton Yard itself was essential to CP’s effective performance as a national railway. It seems that prior to 2017 when the Wolverton Yard was established, CP functioned in its absence and a reasonable assumption can be drawn that CP operations would continue if the rail yard was unavailable.

Ongoing Relationship

In Tessier, the Supreme Court adopts part of the dissenting reasons of Justice McLachlin (as she was then) in Westcoast Energy Inc. v. Canada (National Energy Board) supra

"To be relevant at all, the dependency must be permanent ... It is also clear that dependency of the local work or undertaking on the interprovincial enterprise is immaterial ... Dependency is relevant only where the interprovincial work or undertaking is dependent on the local enterprise in the sense that the latter is essential to the interprovincial enterprise's delivery of services."

As the performance of inter-provincial rail transportation by CP could not be said to be contingent upon the services of Ramkey supra, in this case, while an interruption of services might have disrupted the efficient operation of the rail yard, it is not reasonable to conclude that CP would not have continued to provide services across Canada as a result. And there is nothing before the Court which would lead to a conclusion that other facets of that particular rail yard, whatever they might have been, would not have continued in the absence of Vinventory's workers.

I note that this Court did not receive evidence from CP or CTL with regard to any facet of the motion.

There was no compelling evidence that would support that the inter-provincial operations of CP would have been significantly impacted had Vinventory been unavailable to perform their work. The impact would have been at this rail yard. And while I can speculate that there may have been a ripple effect from such an interruption, the evidence does not permit me to imagine or conflate what that might have amounted to.

This was, for Vinventory, a time limited engagement. And while Vinventory might have wanted and even anticipated an extension beyond the two year time limit imagined by the contract, that’s not what happened. There was no commitment by CTL to a long term relationship.

Vinventory argues that the nature of the relationship with CP differs from the subsidiary operation in Labourers’ International Union of North America v. Rail Cantech Inc. because the contract in that case was to perform and complete maintenance services during a fixed period. They submit that this type of fixed temporal arrangement is similar to that of a construction project in that it has an expected end date. It is suggested that the work undertaken by Vinventory could not be “completed” by a set date as CP would continue to need rail yard services. But the same argument could be made that the need for maintenance services for a railway undertaking are also of an ongoing nature and that in order to maintain a railway, maintenance must be conducted continually.

I note that I am asked by Vinventory to distinguish cases involving construction activities from the circumstances in the case at bar. It is clear in Ramkey supra that there is no “construction presumption”. At paragraph 68, Justice Hoy writes,

“There is a provincial presumption over labour relations generally. The same principles apply to construction employees as to other employees in determining whether they are subject to derivative federal jurisdiction.”

Conclusion

I find that Vinventory served as a local contractor and that the dominant character of their work was distinct from interprovincial transportation. The functional integration test has not been satisfied. Their role was not vital, essential or integral to the operation of the federal undertaking. CP’s obligation as a national railway was not contingent upon Vinventory. There lacks an ongoing character that would have constitutional significance.

In this case, Parliament can effectively regulate CP’s operations of the interprovincial railway without displacing the presumption of provincial regulation.

Vinventory is not derivatively subject to federal jurisdiction.

The motion is dismissed without costs.

Released: September 12, 2023 PHILLIPPS, J.P.