Division of Powers

It is rare for Constitutional law division of powers cases to get to the Supreme Court f Canada in modern times.  Today's decision in Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53  is an exception.

 

A summary of the decision follows:

 

Fastfrate is a freight forwarding company with branches across Canada, including the Calgary branch.  Using its own terminal employees and mostly its own local drivers and trucks, one Fastfrate branch picks up and consolidates freight within the originating province, while another branch deconsolidates and delivers the freight in the receiving province.  Fastfrate employees and equipment do not cross provincial boundaries.  Fastfrate contracts with third party trucking and railway companies for the interprovincial carriage of the goods and, except in one unusual case, its employees play no role in the operation of those companies transportation systems.  Fastfrate has an integrated national corporate structure with a head office in Ontario and a team of three regional vice‑presidents who oversee a series of local branch offices throughout Canada, each with a branch manager who is responsible for the day‑to‑day management of the branch.  Employees at the branch offices deal directly with consignors and consignees and manage their own accounts receivable, but decisions regarding rates, asset acquisition and other matters of general profitability are made at the regional or national level.

 

The union representing the Fastrate Calgary employees applied to the Alberta Labour Relations Board for a declaration on whether the labour relations of Fastfrate Calgary are subject to provincial or federal regulation.  This application was in response to an earlier application by another union to be certified by the Canadian Industrial Relations Board as the regional bargaining unit of Fastfrate employees for Alberta, Saskatchewan and Manitoba.  The Board held that Fastfrate Calgary was subject to federal jurisdiction because it was part of a single, indivisible, interprovincial freight transportation undertaking.  The reviewing judge quashed the Board's decision and reaffirmed the existing provincial certification order, holding that absent any physical involvement in the interprovincial carriage of goods, there was "insufficient reason to displace the dominant presumption of provincial jurisdiction over labour relations".  The Court of Appeal, in a majority decision, restored the Board's decision.

 

Per LeBel, Deschamps, Abella, Charron, Rothstein and Cromwell JJ.:  The employees of Fastfrate Calgary are subject to provincial jurisdiction.  The question whether an undertaking, service or business is a federal one depends on the nature of its operations.  An undertaking that performs consolidation and deconsolidation and local pickup and delivery services does not become an interprovincial undertaking simply because it has an integrated national corporate structure and contracts with third party interprovincial carriers.  Fastfrate's operations are entirely intraprovincial.  Neither Fastfrate employees, nor its equipment, are involved in any actual interprovincial transport.  Section 92(10)(a) of the Constitution Act, 1867 and the jurisprudence interpreting it do not contemplate that a mere contractual relationship between a shipper and an interprovincial carrier would qualify Fastfrate as an undertaking connecting the provinces or extending beyond the limits of the province.  Rather, it is the carriers that physically transport the freight interprovincially that constitute federal transportation works and undertakings.  There is no indication that contracting alone can make intraprovincial undertakings subject to federal jurisdiction.  The operational reality of Fastfrate is that it depends on third‑party interprovincial carriers to conduct its business.  Fastfrate remains a shipper.  Its presence at both the originating and terminating ends may mean that it can provide a comprehensive service to its customers, but this does not change the fact that it is still only a shipper using an interprovincial railway or trucking company. 

 

The s. 92(13) provincial head of power over "Property and Civil rights" in the provinces includes labour relations.  By way of exception, 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.  Section 92(10)(a) provides for such an exception to the provincial jurisdiction over "Local Works and Undertakings" by granting to the federal government authority over "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".  However, having regard to the historical context of s. 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.

 

In this case, there was no compelling reason to depart from the general rule that works and undertakings are regulated by the provinces.  Section 92(10)(a) focusses specifically on transportation and communication works and undertakings through its examples of "Lines of Steam or other Ships, Railways, Canals, Telegraphs".  The common thread among the enumerated transportation works and undertakings in s. 92(10)(a) is the interprovincial transport of goods or persons.  The enumerated examples are all instruments of or means of facilitating actual transport.  There is no reference to, or implication of, third parties connected to the means of actual transport through contract being subject to federal jurisdiction.  The genus of transportation works and undertakings contemplated in s. 92(10)(a) as "connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province" are those that physically connect the provinces through transport, not those that notionally connect them through contract.  The basket clause "other works and undertakings" is to be read ejusdem generis with the specific examples which precede it.  A requirement for federal jurisdiction over transportation undertakings is that the undertaking itself physically operates or facilitates carriage across interprovincial boundaries.  The line of cases holding that freight forwarders that are not themselves engaged in the interprovincial transport of freight and that simply contract with interprovincial carriers remain subject to provincial jurisdiction should be upheld. 

 

Finally, under s. 92(10)(a), there is a difference between the communications and transportation contexts.  Communications undertakings can operate and provide international and interprovincial communication services from a fixed point whereas transportation, by definition, involves mobility of goods, persons, and transportation equipment across territory.  In the transportation context, it is not possible for an undertaking to operate an interprovincial transportation service where it does not itself perform the interprovincial carriage.  A business can act as an intermediary between interprovincial carriers and consumers who want to access those carriers at a reduced price.  This does not mean that such a business becomes the operator and provider of the interprovincial carriage.  The objective of predictability in the freight‑forwarding context strongly suggests that the industry should be considered holistically and the prior jurisprudence of the courts concerning the industry respected.