Lloyd's Register North America Inc. v. Dalziel, 2004 FC 822

                                                                                                                      Date: 20040609

                                                                                                                 Docket: T-1892-02

                                                                                                            Citation: 2004 FC 822

Ottawa, Ontario, this 9^th day of June, 2004

PRESENT: THE HONOURABLE MADAM JUSTICE SNIDER

BETWEEN:

                               LLOYD'S REGISTER NORTH AMERICA INC.

                                                                                                                                Applicant

                                                                   - and -

                                                          JOHN DALZIEL

                                                                                                                            Respondent

                                      REASONS FOR ORDER AND ORDER

SNIDER J.

[1]                Lloyd's Register North America Inc. (_Lloyd's_ or the _Applicant_) is a wholly owned subsidiary of, and successor in interest in Canada to, Lloyds Register of Shipping, an ancient, international marine classification society whose operations in Canada it has assumed and continued. Mr. John Dalziel, the Respondent, claims that he was constructively dismissed from his employment with Lloyd's as a marine surveyor. In response to the referral of his complaint to adjudication under section 240 of the Canada Labour Code, R.S., c.L-1, the Applicant contended that it was not subject to federal labour law and that, therefore, the Adjudicator was without jurisdiction to adjudicate the complaint.

[2]                After a 5 day hearing, Mr. Eric K. Slone (the _Adjudicator_) rendered his decision on October 16, 2002. Based on his review of the evidence and the relevant jurisprudence, he concluded that the Applicant provided services that were close to the _heart_ of shipping and must, in his view, _be within the exceptional class of activities that fall within federal jurisdiction as a matter integral to the federally regulated matter of shipping_. Accordingly, he dismissed the preliminary objection to his jurisdiction.

[3]                The Applicant seeks judicial review of that decision.

Issues

[4]         There is one overarching issue in this judicial review:

1.         Did the Adjudicator err in determining that _classification by Lloyd's Register and all that the relationship entails_ is integral to the federally regulated matter of shipping and, thus, subject to federal employment law?

[5]         As I reviewed the written and oral submissions of the Applicant, I determined that the errors alleged by the Applicant could be framed as the following three sub-issues. Those three issues are as follows:

1.         Did the Adjudicator err by incorrectly applying the jurisprudence in Reference re Industrial Relations and Disputes Investigation Act (Canada), [1955], 3 D.L.R. 721 (S.C.C.) (the _Stevedoring Reference_), Northern Telecom Ltd. v. Communications Workers of Canada, [1983]

1 S.C.R. 733 (_Northern Telecom_) and Letter Carriers' [1975] 1 S.C.R. 178">Union of Canada v. Canadian Union of Postal Workers, [1975] 1 S.C.R. 178 (the _Letter Carriers case_) given that the activities of the Applicant are not part of the physical operation of ships or are not under the supervision and control of a shipowner?

2.         Did the Adjudicator err by finding that the activities of the Applicant go beyond a _mutually beneficial commercial relationship_ given that the role played by the Applicant is analogous to the provider of any other contractual service to a ship, such as laundry or insurance services?

3.         Did the Adjudicator err by taking into account the relationship of the Applicant to the Crown in the right of Canada that arises pursuant to: (a) the delegation to the Applicant of its regulatory function to conduct statutory inspections under the authority of the Canada Shipping Act, R.S., c. 5-9; and (b) agreements between the Crown and the Applicant?

Adjudicator's Decision

[6]         In his decision, after a careful analysis of the relevant jurisprudence and a summary of the evidence before him concerning the nature of the work performed by the Applicant, the Adjudicator wrote:

My task is to look into the gray area and place this employer on one side or the other of the jurisdictional line. As the level of dissent in the reported cases referred to above demonstrates, this is not an exact science. However, the cases stake out some ground that makes the task a little easier. There are a number of questions, arising from the decisions referred to above, that I may ask myself. They are not, of course, mutually exclusive, but are to an extent asking the same question in a different way:

·                Is the operation of Lloyd's Register essential to operation of federal industry, in the sense that stevedoring is to shipping or the delivery of mail is to the postal service?

·                Is the activity of classing ships and performing delegated statutory inspection services an integral part of the business of shipping?

·               Are these activities practically or functionally integrated with shipping?

·                        Is the relationship _vital_, _essential_ or _integral_?

In my opinion, each of these questions should be answered in the affirmative.

Classification societies may not own or manage ships, but have nevertheless made themselves essential to the operation of a modern shipping industry. The very neutrality that is required of classification societies would be incompatible with direct involvement in ship ownership or management. While there may be no legal requirement for ships to be classed, classification has become a practical requirement for ships of a certain size engaged in commercial shipping. Classification societies are involved in the setting of technical standards and inspection of vessels from the blueprint stage through to the end of their commercial life-from cradle to grave, so to speak. Classification societies have become integral to shipping in the sense that if one were magically to remove them without a trace, the industry would grind to a halt and something like classification societies would have to be invented to take their place. The integration of their activities has been deepened by the adoption of class standards at the national and international level, and the delegation of federal, statutory duties to employees of classification societies.

I have looked in vain in the reported cases cited to me for any example of an employer claiming to be under provincial jurisdiction whose personnel were, in addition to their private commercial activity, also deputized by the federal government to police a federal statute. In none of the cases where provincial jurisdiction was found has there been anything even approaching this close a relationship between the federal government, qua regulator, and the employees in question. This relationship is unique, and would be a powerful indicator by itself of federal jurisdiction.

It is easy to see how employees laying concrete on a runway, delivering cargo locally, or constructing wharves simply have a _physical connection and a mutually beneficial commercial relationship with a federal work or undertaking_-to quote Dickson C.J.C. in Central Railway-which is insufficient to brand them as integral to the federal undertaking. Here, Lloyd's Register and its employees have much more than a physical connection and beneficial relationship to shipping. As IACS says in its newsletter quoted above, _class rules are the technical heart of ship safety legislation_ and the classification societies are _the primary means by which the shipping industry regulates itself._ The societies are the authors and at times arbiters of standards-some of which are incorporated by reference into Canadian federal law-by which shipping must be carried out both in Canada and internationally. In my respectful view, this function is very clearly _essential_ to the federally regulated matter of shipping and functionally integrated therewith.

I have considered the argument made by Mr. Youden that there are others, such as insurers who underwrite ships, who would also be practically required to operate a ship but who would not, simply by virtue of that practical necessity, become federal undertakings. While an individual insurer might choose to specialize in marine policies, this strikes me as simply an example of a _physical connection and a mutually beneficial commercial relationship_ with shipping. It stands a bit to the side. Fundamentally, it is insurance in a shipping context. It would lack the character of a functionally integrated aspect of shipping. Classification by Lloyd's Register and all that the relationship entails, is not merely surveying in a shipping context; it is very much closer to the heart of shipping and must, in my respectful view, be within the exceptional class of activities that fall within federal jurisdiction as a matter integral to the federally regulated matter of shipping.

Constitutional and Statutory Framework

[7]        The Adjudicator was concerned primarily with Part III of the Canada Labour Code, under which the complaint was brought. Relevant to his determination, subsection 167(1)(a) states:

[8]        The terms _federal work, undertaking or business_ are defined in section 2 of the Canada Labour Code:

[9]        Of course, those provisions of the Constitution Act,1867 that allocate governmental power between the federal Parliament and the provincial Legislatures are also pertinent to the decision and to my analysis. Of particular importance are two provisions of the Constitution Act, 1867. Pursuant to subsection 91(10), the federal Parliament has the authority to regulate _shipping and navigation_. In general, the regulation of labour relations is within provincial competence as related to _property and civil rights_ in a province (subsection 92(13)).

[10]       It was not disputed that regulation of labour relations, in general, falls within provincial competence under property and civil rights in the province. Federal regulation of labour relations is the exception rather than the rule. Similarly, there was no disagreement with the proposition that the federal Parliament has jurisdiction to regulate labour relations in certain circumstances. Indeed, there was no argument that the test to determine if a particular work, undertaking or business falls within the exception to provincial competence is whether the work performed by the employees is an integral part of the undertaking within federal jurisdiction. The difference of view begins with the nature of the work performed by the Applicant and whether that work is sufficiently integrated with the core undertaking (shipping, in this case) to sweep its employees into federal jurisdiction.

[11]       This is the framework within which this dispute arises.

What is the appropriate standard of review?

[12]       Both parties agree that the standard of review for a question of constitutional legislative competence under the division of powers is one of correctness. I agree.

[13]       This application for judicial review questions the Adjudicator's jurisdiction. Notwithstanding the high degree of deference owed to the Adjudicator because of his expertise in labour matters and the existence of a privative clause (Canada Labour Code, section 243), the standard of review is that of correctness where the question concerns the Adjudicator's jurisdiction (Lamontagne v. Climan Transportation Services (2747-7173 Québec Inc.), [2000] F.C.J. No. 2063 (T.D.)(QL)).

[14]       The Respondent attempts to distinguish between the findings of fact made by the Adjudicator-described as primary facts-and the meaning he ascribed to these facts in his analysis of constitutional jurisdiction. The Respondent submits that the facts found by the Adjudicator should be disturbed as little by this Court as possible, meaning they should only be held to be erroneous if there is no rational basis to them or they are unreasonable.

[15]       Upon reviewing the submissions of the parties, it seems that the concerns raised by the Respondent are not warranted on the facts of this case. Neither party, in its submissions, contests the facts as set forth by the Adjudicator in his decision. For this reason, I accept that the facts, as stated by the Adjudicator in his decision, are rationally supported by the evidence that was before him.

[16]       At its heart, the disagreement between the parties does not stem from the primary facts, as was noted by the Adjudicator, but rather the _spin_ given or significance ascribed to them. As stated above, the three sub-issues identified required the Adjudicator to assess the application of the jurisprudence to these primary facts. In undertaking that analysis, the Adjudicator had no more expertise than this Court. I will proceed on the basis that the appropriate standard of review is correctness.

What is the work, undertaking or business carried on by the Applicant?

[17]       The Applicant does not disagree with the Adjudicator's description of the business carried on by the Applicant. Because of the significance of the factual background to the analysis of the issues, I will briefly outline the context in which this dispute arises.

1.         Lloyd's Register, founded in 1760, was the first classification society of its kind. It arose due to a need for an independent classification society to examine and classify the condition of merchant ships. Today, the parent corporation together with its subsidiaries is perhaps the largest classification society in the world and in Canada has by far the vast majority of classed ships.

2.         The Applicant, created as a result of reorganization in 2000, has offices across Canada, including Halifax, St. John's, Québec City, Montréal, Toronto and Vancouver.

3.         The system of self-regulation by classification within the shipping industry has and continues to benefit industry financiers, insurers and charterers in terms of providing access to trustworthy information concerning the condition of ships. The classification system has also contributed enormously to shipping and ship safety for over two and a half centuries. Classification societies are impartial and independent bodies.

4.         Classification is an ongoing activity. Shipowners, upon initial classification, are issued certificates attesting to the ship's condition. These certificates are relied upon by banks, underwriters, charterers and others in their assessment of the risks inherent in financing, insuring, chartering or sending cargo on that ship. In order to remain _in class_, a ship is subject to regular inspections carried out by surveyors such as the Respondent.

5.         Although there is no legal requirement to class a ship, there are powerful commercial pressures to have a ship classed from the design stage all the way to the end of her use. It is fair to say that, without classification, a ship cannot be insured, cannot obtain financing and will likely not have cargos to carry, as cargo underwriters may be reluctant to participate in the contract of carriage for an uninsured merchant ship. Today, _[i]f a vessel is to operate successfully in the market, it is necessary to demonstrate [by classification] that it is being maintained properly and is fit for the intended purpose from the perspective of insurers, cargo shippers, administrative authorities and other parties. ... This is the historical essence of the ship classification system._ (Masataka Hidaka, Chairman, International Association of Classification Societies (_IACS_)).

6.         In addition to its classification function, the Applicant also has been delegated certain responsibilities under the Canada Shipping Act. Under federal legislation, it is mandatory for many ships and mobile offshore drilling units to meet the requirements of the International Safety Management (_ISM_) Code, an international standard related to the safe management and operation of ships. Certificates are issued to compliant ships. Pursuant to subsection 317.1 of the Canada Shipping Act, the Minister of Transport may authorize a classification society (or others) to conduct inspections. Under two delegation agreements between Lloyd's Register and the Minister of Transport (July 20, 1999 and December 22, 2000), the Canadian Government has authorized the Applicant to _carry out a wide range of statutory surveys on Canadian ships on its behalf_.

7.         The Applicant, in addition to its marine activities, states that it has operations covering management systems, land-based industries, railways, and oil and gas. As the Adjudicator found:

·            Over 65% of its activities today continue to be in the marine sector;

·                       About 15% of its activities consist of statutory surveys for the federal Department of Transport, pursuant to its delegated authority;

·                       The remaining part of its activity is in the management and energy sectors, some of which may have the additional character as marine because it involves offshore operations.

[18]      In summary, collectively, the employees of the Applicant spend at least 80% of their time carrying out two different, but complementary, functions. First and foremost are the functions of a classification society. Secondly, the employees carry out mandatory inspections on behalf of the Canadian Government pursuant to the provisions of the Canada Shipping Act.

What principles are to be applied to the question of jurisdiction?

[19]       The Adjudicator thoroughly reviewed the relevant jurisprudence and extracted four legal tests or principles from those authorities. He described those principles as follows:

1.              Jurisdiction as an _integral part_ of federal competence

Parliament has no authority over labour relations as such nor over the terms of a contract of employment, except where it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject. Montcalm Construction v. Minimum Wage Commission (above).

2.             Is the enterprise _essential to operation of federal industry_

An enterprise may nevertheless fall under federal jurisdiction if it is essential to the operation of a federal industry, eg. stevedoring to shipping, installation of phones to the telephone system, or the delivery of mail to the postal service: Reference re Industrial Relations and Disputes Investigation Act (above), Northern Telecom Canada Ltd. v. Communication Workers of Canada, (above); Letter Carriers' [1975] 1 S.C.R. 178">Union of Canada v. Canadian Union of Postal Workers et al (above).

3.              Look for a _practical or functional integration_

The test involves looking for a practical or functional integration between the core federal work or undertaking and the employees in question. This involves something more than physical connection and a mutually beneficial commercial relationship with a federal work or undertaking. UTU v. Central Western Railway Corp. (above); Northern Telecom Canada Ltd. v. Communication Workers of Canada (above).

4.             The relationship must be seen as _vital_, _essential_ or _integral_.

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. The necessary relationship has been variously characterized as _vital_, _essential_ or _integral_: Re Arrow Transfer Co. Ltd.., (above).

[20]       Augmenting or further refining the four listed above, I would add a few further principles that I take from the case law. It has been held that neither the occurrence of the work on federally owned land (Montcalm Construction v. Québec (Minimum Wage Commission) (1978), 93 D.L.R. (3d) 641 (S.C.C.)) nor the proportion of the work performed by a company in connection with a federal undertaking is determinative in assessing jurisdiction (Letter Carriers', supra; Northern Telecom,supra; Montcalm, supra). Further, the Canada Labour Code _should not be construed to apply to employees who are employed at remote stages, but only to those whose work is intimately connected with the work, undertaking or business._ (Stevedoring Reference, supra). A continuous or ongoing relationship with a federal undertaking is evidence of an intimate connection to it (Montcalm, supra; Waschuk Pipeline Construction Ltd. v. General Teamsters, Local No. 362, (1988), 62 Alta. L.R. (2d) 318 (Q.B.)).

[21]       It appears that the Applicant does not dispute that the Adjudicator summarized the principles correctly. Thus, I am left with determining whether the Adjudicator erred in how he applied these principles to the facts before him.

Sub-issue #1: Are the Stevedoring Reference, Northern Telecom and the Letter Carriers case applicable to the case at bar?

[22]       The Applicant submits that the Adjudicator erred in how he applied the principles expressed by the Supreme Court of Canada in the Stevedoring Reference, the Letter Carriers case and Northern Telecom to the situation before him.

[23]       In the Stevedoring Reference, the Court held that employees of a stevedoring company in Toronto who loaded and unloaded ships, were _integral to_ or _part and parcel of works in relation to which the Parliament of Canada has exclusive jurisdiction to legislate_. In the Letter Carriers case, the Court held that the employees of a company providing mail delivery services under a contract with Canada Post were covered by the Canada Labour Code. In Northern Telecom, the Court dealt with the issue of jurisdiction over employees of a company that installed telecommunications equipment for Bell Canada, a federal undertaking. The facts in that case demonstrated a _very close tightly scheduled integration of the services provided by the installers and the acceptance of those services by the employees of Bell into the telecommunications network without interruption of the performance of the network_ (Northern Telecom, supra at p. 762). The employees were found to be subject to the Canada Labour Code.

[24]       The Applicant describes these three cases as immediately distinguishable from the case at bar and, therefore, unhelpful. In its submission, it was the physical nature of the activities carried out by the employees that was decisive in finding sufficient integration with a federal undertaking. In the Stevedoring Reference, the stevedores lifted cargo on and off the vessels. In the Letter Carriers case, the employees physically delivered mail. In Northern Telecom, the equipment was physically installed by the employees in question. In contrast, the Applicant describes its function as missing this critical and obvious nexus; its services have nothing to do with the contract of carriage of the ships concerned. The work performed by Lloyd's is analogous to providing an audit or insurance function which is not physical in any way. Is this, as posited by the Applicant, a sufficient distinguishing feature of these cases? I am not convinced that it is.

[25]       It is trite to say that businesses sell products, services or both. The former is property whose title passes to the customer when sold and the latter is not. The Applicant performs a service, namely, certifying the safety and seaworthiness of vessels throughout their lifespan. But so too did the stevedores, letter carriers and telephone installers in the aforementioned cases. These services, although perhaps involving heavier objects, are no more physical than those of the Applicant, whose marine surveyors physically inspect vessels and physically issue certificates. Surely the physicality of the service and its physical proximity to the federal undertaking are not dispositive of the integration issue. If they were, then the services of the employees in Mountcalm, supra who physically built the landing strip upon which planes land would have been held to be integrated with a federal undertaking; they were not. Put simply, the physical nature or labour intensity of a service, though not entirely irrelevant to the issue of integration, is not a decisive indicator of it. In my view, the legal lens through which the issue of integration is examined is not as narrow or unsophisticated as the Applicant would have this Court believe.

[26]       The Applicant also argues that the Adjudicator ignored the fact that the work of the Applicant is not carried out under the control and supervision of the shipowners. This, the Applicant submits, was an essential feature of the trilogy of cases. In support of this contention, the Applicant points out that, after describing the work of the contract employees, Justice Ritchie in the Letter Carriers case, supra at p. 4, stated that _the work so described which is performed by these employees is essential to the function of the postal service and is carried out under the supervision and control of the Post Office authorities_ [emphasis added]. The Applicant attempts to distinguish the Letter Carriers case on the basis of these last few words, arguing that Lloyd's is not under the supervision and control of the ships to which the services are provided. I do not view this aspect of the Letter Carriers case as setting out a requirement for supervision by the federal company as a test or principle; rather, the supervision was merely another factor that helped establish, in the court's mind, the integrated nature of the services provided. Absence of control and supervision does not automatically mean that provincial jurisdiction follows. This case does, however, reinforce and even expand on the conclusions of the Stevedoring Reference. Specifically, where the work of the contracted employees is an integral part of the effective operation of the Post Office-even where the employees are not exclusively so employed-they are engaged in connection with the operation of a federal work within the meaning of the Canada Labour Code.

[27]       I look to the trilogy of cases as helpful in establishing certain principles. Most importantly, federal jurisdiction will only be found in the exceptional circumstances of an integral or essential link between the services provided by the contractor and the federal work or undertaking. While each of these cases dealt with aspects of physical operation, it was not an error for the Adjudicator to turn to this set of jurisprudence for some overarching principles. The Applicant would have the Adjudicator and me read these cases as standing for the negative-that, unless the activities in question are part of the physical operation of the federal work, there can be no federal jurisdiction. That would be an incorrect application of this important jurisprudence.

[28]       Further, the Applicant has adopted extremely narrow definitions of _operations_ and of _navigation and shipping_. In my view, the concept of _shipping_ is not confined to the contract of carriage as the Applicant appears to argue. The definition of the terms _federal work, undertaking or business_ in the Canada Labour Code includes a business _carried on for or in connection with navigation and shipping_. It would be unduly restrictive to limit the definition to instances of physical operation or fulfilment of the contracts of carriage. Such reading down would render meaningless a substantial portion of the definition.

[29]       In the Applicant's submission, the Adjudicator ought to have found a lack of federal jurisdiction, as in the cases of Montcalm,supra, Waschuk Pipeline Construction, supra and WIC Western International Communications Ltd. v. Communications, Energy and Paperworkers [1975] 1 S.C.R. 178">Union of Canada, (2002), 216 F.T.R. 301. In my view, all of these cases are readily distinguishable from the facts of the case at bar.

[30]       In Montcalm, supra the work in question was the construction of runways for an airport situated on federal Crown land. The work was held to be an activity that was too remote to aeronautics and the construction workers did not have a continuous and ongoing relationship to a federal undertaking. In the present case, however, employees of the Applicant have been _deputized_ (to borrow the words of the Adjudicator) by the Canadian government, qua regulator, to police the Canada Shipping Act. Further, the expertise of classification societies such as the Applicant is used as the _primary means by which the shipping industry regulates itself_ (IACS). The rules that these societies make _are at the heart of ship safety legislation_ (IACS). To my mind, this role is far less remote to shipping than the work of construction workers is to aeronautics.

[31]       In Waschuk, supra, the activity was replacing inter-provincial pipeline. The Alberta Court of Queen's Bench held that this activity was not an ongoing activity that contributed to operation of the pipeline on a daily basis. Again, the Applicant is not in the business of performing a remote and periodic construction function in the context of a federal undertaking. Rather, its services are relied upon by and benefit numerous stakeholders in the shipping industry every day, for purposes of ensuring safety and managing financial risk.

[32]       In WIC Western, supra the mere fact of holding shares in a business that falls within federal jurisdiction was held not to bring the labour relations at issue within federal jurisdiction. It is a major stretch to conclude that the passive act of holding shares is similar to the classification and inspection functions performed by the Applicant's employees.

[33]       In conclusion on this point, the Adjudicator did not err in his application of the relevant jurisprudence to the work of the Applicant. On my review of the relevant jurisprudence in light of the facts before the Adjudicator, I reach the same conclusion as he did; the activities of the Applicant are integral to the federally regulated matter of shipping.

Sub-issue #2: Do the activities of the Applicant go beyond a _mutually beneficial commercial relationship_?

[34]       Chief Justice Dickson, in United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112, at 1147 (_Central Western_), stated that _something more than physical connection and a mutually beneficial commercial relationship with a federal work or undertaking is required for a company to fall under federal jurisdiction_. The Applicant argues that the relationship between it and the shipping industry is merely a mutually beneficial commercial relationship such as was the case in Central Western and nothing more. The relationship between the Applicant and works, undertakings and businesses properly falling within federal jurisdiction over shipping and navigation is no different than the following:

·            a shipyard providing repairs and new building services to the shipping and navigation industry;

·            a provider of provisions to vessels, including bunkers, victuals and related services;

·            an insurance broker who obtains insurance coverage on the owner's vessels;

·                       a company that builds wharfs for vessels;

·                       a company that provides dredging services;

·            an auditing company that provides an independent audit of a shipping company's books of account;

·                       lending services;

·                       builders and maintainers of trains;

·            truckers hauling freight for the Canadian National Railway within a province;

·                       a province installer, under contract, of telecommunications equipment; and

·                       a contractor providing postal delivery services.

[35]       Thus, the Applicant argues that the Adjudicator erred by concluding that _Lloyd's Register and its employees have much more than a physical connection and beneficial relationship to shipping_.

[36]       I assume from the Applicant's presentation of this list of _services_ that I am to infer that all of them would fall under provincial jurisdiction. However, I am not satisfied that, for the most part, they are similar to the service at issue in this proceeding or, in some cases, would even be within provincial competence. In any event, I agree with the proposition that simply providing a service to a federal undertaking does not sweep the service provider into the federal sphere of competence. But, what we have here is much more than a simple service. The role of the Applicant was described in detail by the Adjudicator in his decision, reproduced above. As stated by the Adjudicator:

·            the Applicant, and other classification societies, have made themselves essential to the operation of a modern shipping industry;

·            while there is no legal requirement for a ship to be classed, classification has become a practical requirement for ships of a certain size; and

·            classification societies are involved in the setting of technical standards and inspection of vessels from the blueprint stage through to the end of their commercial life.

[37]       Even the IACS, the association representing the Applicant, describes class rules as _the technical heart of ship safety legislation_ and the classification societies as _the primary means by which the shipping industry regulates itself_.

[38]       Finally, I cannot ignore the unique role that shipping has occupied in the jurisprudence involving constitutional division of powers. In the Supreme Court of Canada decision in Whitbread v. Wally, [1990] 3 S.C.R. 1273 at 1294 and 1300, Justice La Forest expressed the view of a unanimous Court on the nature of navigation and shipping within our constitutional framework. Although that case dealt with an action for damages involving a pleasure boat rather than labour relations, the views expressed indicate the underlying thrust of the jurisprudence affecting shipping, and are relevant to the debate before me.

Quite apart from judicial authority, the very nature of the activities of navigation and shipping, at least as they are practised in this country, makes a uniform maritime law which encompasses navigable inland waterways a practical necessity...

For it would be quite incredible, especially when one considers that much of maritime law is the product of international conventions, if the legal rights and obligations of those engaged in navigation and shipping arbitrarily changed as their vessels crossed the point at which the water ceased . . . or commenced to ebb and flow.

There is in Parliament's jurisdiction over railways (and other federal works and undertakings) nothing even remotely comparable to the body of maritime law that is a central feature of its jurisdiction over navigation and shipping.

[39]       This leads me to consider the effect of deciding that Lloyd's surveyors are not governed by federal labour codes. The default position is that they are governed by provincial codes. This logically entails a finding that the classification of ships falls under a provincial head of power.

[40]       Classification transcends provincial boundaries. Indeed, it is international in scope. If the Applicant is correct that the business it carries out is properly a provincial responsibility, what would be the consequences? Presumably, each province could establish different legislation affecting classification of ships. Would it be reasonable for classification carried out in Halifax to differ from one undertaken in Vancouver?

[41]       It seems to me that uniform standards and regulation of this important aspect of international shipping are highly desirable as well as consistent with the body of Canadian law in this area. The international nature of classification suggests that it is integral, essential and vital to shipping, wherever it occurs. It is illogical to find, therefore, that classification in Canada may proceed on a purely local level or that it is somehow not integral to shipping in Canada, especially when one considers that Canada has acceded to many of the relevant international conventions that deal with shipping standards.

[42]       In this regard, I note the Supreme Court of Canada's decision holding that a telephone company created by a statute of the province of Alberta was within federal legislative authority (Alberta Government Telephones v. Canadian Radio-television and Telecommunications Commission, [1989] 2 S.C.R. 225, (_AGT_)). Of particular relevance to the case before me are the comments of Chief Justice Dickson concerning the role of Alberta Government Telephones within the interprovincial and international arena of telecommunications.

I have reached the conclusion that AGT's role and relationship with Telecom Canada is relevant to the decision on AGT's own constitutional character. The facts are unequivocal that AGT is the mechanism through which the residents of Alberta send and receive interprovincial and international telecommunications services. The services are provided through both corporate and physical arrangements which are marked by a high degree of cooperation.

...

AGT's relationship with Telecom also illustrates the role AGT plays in the provision of telecommunications services to Canadians as a whole. The national telephone system exists in its present form largely as a result of the Telecom Canada arrangements. AGT is a cooperative partner in this national system and this reinforces the conclusion that AGT is not operating a wholly local enterprise.

[43]       In my view, the facts of the case before me include many of the same concepts as were considered by the Supreme Court of Canada in AGT, supra. Through the Applicant, a member of the IACS, Canadian shipowners are able to obtain financing, insure their vessels and acquire necessary certification under the Canada Shipping Act, thereby allowing full participation in the global commercial shipping community. Internationally, shipping exists in its present form largely as a result of the role of classification societies. The Applicant is a cooperative partner in this worldwide venture thus reinforcing that it is not operating as a wholly local enterprise.

[44]       The role of the Applicant was, in my view, correctly seen by the Adjudicator as extending beyond a physical connection and a mutually beneficial commercial relationship. Accordingly, with respect to this sub-issue, I conclude that the Adjudicator did not err.

Sub-issue #3: Is delegation under the Canada Shipping Act relevant?

[45]       As discussed above, the Applicant has been delegated certain inspection functions under the Canada Shipping Act. The Adjudicator saw that role as one that strengthened his view of the Applicant's functions as federal in nature. Specifically, he stated:

I have looked in vain in the reported cases cited to me for any example of an employer claiming to be under provincial jurisdiction whose personnel were, in addition to their private commercial activity, also deputized by the federal government to police a federal statute. In none of the cases where provincial jurisdiction was found has there been anything even approaching this close a relationship between the federal government, qua regulator, and the employees in question. This relationship is unique, and would be a powerful indicator by itself of federal jurisdiction.

[46]       The Applicant submits that the Adjudicator erred in relying on this relationship to reinforce his conclusion. The Applicant argues that the privatization of the regulatory function can no more transform the nature of its business than a contract to provide laundry services.

[47]       In this argument, the Applicant would have me ignore that the relationship arises directly from a federal statute. The work that the Applicant does under this statute is a direct regulatory function. Although some may exist, no examples were provided to me of other undertakings that had been delegated federal regulatory functions where the business performing the function retained its local, provincial nature.

[48]       Nevertheless, it might be possible for the federal Parliament to delegate certain functions to the private sector without automatically changing the local character of the business. Fortunately, that is not an issue that I must address. However, the response to whether such delegation is possible would, of course, depend on the nature of the work being performed under the delegation; each function would have to be examined in light of the various tests to determine if it is _integral_ to the federal competence. Accordingly, the Adjudicator may have overstated the point when he said that this relationship _would be a powerful indicator by itself of federal jurisdiction_. However, I do not see this comment as particularly material since, in this case, the delegation was not the only indicator.

[49]       Considering all aspects of the functions performed by the Applicant, the nature of the work, as shown throughout this analysis and that of the Adjudicator, is integral to shipping and, thus, properly within the jurisdiction of the federal Parliament. The delegation under the Canada Shipping Act is another indicator of the strength of that relationship.

Conclusion

[50]       For these reasons, I am satisfied that the Adjudicator did not err. Specifically, the Adjudicator:

1.         correctly stated the principles applicable to the issues before him;

2.         applied the applicable jurisprudence in a careful and correct manner;

3.         correctly concluded that the activities of the Applicant go beyond a _mutually beneficial commercial relationship_; and

4.         correctly relied on the delegation of the regulatory function as an indication or factor strengthening the relationship between the Applicant and the federal head of power.

[51]       I am convinced, as was the Adjudicator, that classification by Lloyd's Register, and all that the relationship entails, is integral to the federally regulated matter of shipping and, thus, subject to federal employment law and, specifically, the Canada Labour Code. Accordingly, the application for judicial review will be dismissed. Further, the Order of this Court staying the adjudication of the Respondent's Canada Labour Code complaint will be vacated.

[52]       The Respondent will be entitled to its costs and may have until June 30, 2004 to make submissions in respect of the award of costs. The Applicant will have until July 14, 2004 to serve and file reply submissions and the Respondent until July 21, 2004 to serve and file final submissions in response.

                                                                 ORDER

THIS COURT ORDERS THAT:

1.          The application for judicial review is dismissed with costs.

2.          Parties may make submissions with respect to the assessment of costs in accordance with the following schedule:

a)         Submissions by the Respondent to be served and filed by June 30, 2004;

b)         Submissions by the Applicant to be served and filed by July 14, 2004; and,

c)         Reply submissions of the Respondent to be served and filed by July 21, 2004.

3.         That portion of the Order of this Court dated January 28, 2003 adjourning the adjudication of the Respondent's Canada Labour Code complaint pending the outcome of the judicial review application is vacated.

        _Judith A. Snider_

Judge

                                                       FEDERAL COURT

                      NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                    T-1892-02

STYLE OF CAUSE:                    LLOYD'S REGISTER NORTH AMERICA INC.

v. JOHN DALZIEL

PLACE OF HEARING:              Halifax, Nova Scotia

DATE OF HEARING:                May 11, 2004

REASONS FOR ORDER

AND ORDER:                            The Honourable Madam Justice Snider

DATED:                                       June 9, 2004                  

APPEARANCES:

Mr. James Youden                                                                          FOR APPLICANT

Mr. Andrew Montgomery

Mr. Blair Mitchell                                                                            FOR RESPONDENT

SOLICITORS OF RECORD:

Metcalf & Company                                                                        FOR APPLICANT

Halifax, Nova Scotia

Mitchell & Ferguson                                                                        FOR RESPONDENT

Halifax, Nova Scotia