Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, [2009] 3 SCR 407

                                                 SUPREME COURT OF CANADA

Between:

Consolidated Fastfrate Inc.

Appellant

and

Western Canada Council of Teamsters, Consolidated Fastfrate

Transport Employees’ Association of Calgary and

Alberta Labour Relations Board

Respondents

‑ and ‑

Attorney General of Ontario and Attorney General of Quebec

Interveners

Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.

______________________________

Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, [2009] 3 S.C.R. 407

Consolidated Fastfrate Inc.                                                                                               Appellant

v.

Western Canada Council of Teamsters,

Consolidated Fastfrate Transport Employees’

Association of Calgary and Alberta Labour

Relations Board                                                                                                             Respondents

and

Attorney General of Ontario and

Attorney General of Quebec                                                                                           Interveners

Indexed as:  Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters

Neutral citation:  2009 SCC 53.

File No.:  32290.

2009:  February 19; 2009:  November 26.

Present:  McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.

on appeal from the court of appeal for alberta

Constitutional law — Division of powers — Labour relations — Transportation undertaking — Freight forwarding company providing consolidation and deconsolidation and pickup and delivery services to its customers across Canada — Company having integrated national corporate structure with branch offices throughout Canada and contracts with third-party interprovincial carriers — Whether labour relations of branch employees subject to provincial or federal jurisdiction — Whether company qualifies as interprovincial undertaking even though it does not itself perform interprovincial carriage of goods — Constitution Act, 1867, s. 92(10) (a).

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 Canada 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.

Held  (McLachlin C.J. and Binnie and Fish JJ. dissenting):  The appeal should be allowed.

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 operation.  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.  [3] [61] [69] [70] [72] [75]

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.  [27‑28] [35] [39]

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” consists of  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.  [3] [42‑44] [48]

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 should be respected.  [60‑61] [65] [67]

Per McLachlin C.J. and Binnie and Fish JJ. (dissenting):  Fastfrate is an interprovincial transportation undertaking and its labour relations ought to be subject to federal regulation.  In an era where contracting out elements of a service business is commonplace, the modalities of how a truly interprovincial transportation operation “undertakes” to move its customers’ freight from one part of Canada and deliver it to another should not contrive to defeat federal jurisdiction.  Checkerboard provincial regulation is antithetical to the coherent operation of a single functionally integrated indivisible national transportation service.  [83‑84] [118]

In order to be characterized as an interprovincial transportation undertaking, there is no requirement that the entity must itself physically transport goods across a provincial boundary.  Whether an undertaking, service or business is a federal one depends on the nature of its operation.  Here, Fastfrate’s undertaking is much more than that of a mere shipper.  It provides a customer‑to‑customer interprovincial service.  It handles the shipment both in the province of origin and in the province of destination.  An undertaking that offers an interprovincial service is no less an interprovincial undertaking because part of the performance of its undertaking is contracted out to unaffiliated service providers.  [85] [99] [106] [113]

The interpretation of the division of legislative powers and of how they interrelate must evolve and must be tailored to the changing political and cultural realities of Canadian society.  Although the passage of time does not alter the division of powers, the arrangement of legislative and executive powers entrenched in the Constitution Act, 1867  must be applied in light of the business realities of 2009 and not frozen in 1867.  The current Canadian economy would be unrecognizable to the statesmen of 1867.  A grown man is not expected to wear the same coat that fitted him as a child.  Today’s coat is of the same design, but the sleeves are longer and the chest is broader and the warp and woof of the fabric is more elaborate and complex.  [89‑90]

Adopting a purposive approach to constitutional interpretation, what is important is not how transportation was viewed in 1867 but rather to match in our own era the level of regulation (federal, provincial or territorial) appropriate to the nature and scope of the undertaking.  The Constitution nowhere gives the provinces general jurisdiction in relation to “Works and Undertakings”.  Section 92(10)  only gives the provinces jurisdiction over local works and undertakings.  To the extent such local works and undertakings connect the province “with any other or others of the Provinces or extending beyond the Limits of the Province”, they are now, as in 1867, regulated federally pursuant to s. 91(29).  By contracting out part of its transportation operations Fastfrate does not escape federal jurisdiction.  [84] [90] [96]

Furthermore, although the technology may differ from one industry to the other, the legal test to determine what constitutes an interprovincial undertaking under s. 92(10) (a) is the same whether it is applied to a communication or a transportation undertaking.  No distinction should be drawn and none has been drawn to date in this Court’s cases.  The test formulated in the s. 92(10) (a) cases is a functional test and it requires a court to focus on what transportation service Fastfrate undertakes to provide to its customers — local or interprovincial.  The outcome does not depend on whether, in carrying out its interprovincial freight contracts, Fastfrate does or does not contract with another corporate entity to move the goods across an interprovincial or international boundary.  The majority’s proposed test focusses on the means through which the undertaking is carried on rather than on the interprovincial service it provides to its customers.  [85‑86] [104] [107]

In this case, it is evident that Fastfrate operates as a single enterprise and one could not separate the local from the interprovincial without gutting Fastfrate’s enterprise as it presently exists.  Although Fastfrate attempted to characterize its provincial terminals as relatively independent and self‑contained, the fact is that a Fastfrate terminal at the point of a shipment’s origin has to be functionally integrated with the operation of the Fastfrate terminal at the point of delivery in order to perform its interprovincial pickup and delivery service.  This is not the case of a company that is simply present in each province with a stand‑alone operation.  On the contrary, each Fastfrate terminal is dependent on its sister terminals; the service offered depends on functional integration in the performance of Fastfrate’s contractual interprovincial undertaking to its customers.  [116‑117]

Cases Cited

By Rothstein J.

Applied:  Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112; distinguished:  Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225; disapproved:  D.H.L. International Express Ltd. (1994), 96 di 106; approved:  In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174; Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674; referred to:  Reference re Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529; Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5; Lévis (City) v. Fraternité des policiers de Lévis Inc., 2007 SCC 14, [2007] 1 S.C.R. 591; Toronto Electric Commissioners v. Snider, [1925] A.C. 396; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; R. v. Blais, 2003 SCC 44, [2003] 2 S.C.R. 236; Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767; In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304; Attorney‑General for Ontario v. Winner, [1954] A.C. 541; Consumers’ Association of Canada v. Postmaster General, [1975] F.C. 11; Re Ottawa‑Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 (1983), 4 D.L.R. (4th) 452; Public Service Board v. Dionne, [1978] 2 S.C.R. 191; Windsor Airline Limousine Services Ltd. and U.S.W.A. (1999), 56 C.L.R.B.R. (2d) 70; Canadian Pacific Railway Co. v. Attorney‑General for British Columbia, [1950] A.C. 122; City of Montreal v. Montreal Street Railway, [1912] A.C. 333.

By Binnie J. (dissenting)

United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112; Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 2 S.C.R. 225; R. v. Toronto Magistrates, Ex Parte Tank Truck Transport Ltd., [1960] O.R. 497; R. v. Cooksville Magistrate’s Court, Ex parte Liquid Cargo Lines Ltd., [1965] 1 O.R. 84; Public Service Board v. Dionne, [1978] 2 S.C.R. 191; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767; In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304; Attorney‑General for Ontario v. Winner, [1954] A.C. 541; Téléphone Guèvremont Inc. v. Québec (Régie des télécommunications) (1992), 99 D.L.R. (4th) 241, aff’d [1994] 1 S.C.R. 878; Capital Cities Communications Inc. v. Canadian Radio‑Television Commission, [1978] 2 S.C.R. 141; Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674; In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174; D.H.L. International Express Ltd. (1994), 96 di 106.

Statutes and Regulations Cited

Canada Labour Code, R.S.C. 1985, c. L‑2 .

Constitution Act, 1867, ss. 91(29) , 92(10) (a), (13) , 95 .

Railway Act, 1868, S.C. 1868, c. 68.

Authors Cited

Browne, Gerald Peter.  Documents on the Confederation of British North America.  Toronto:  McClelland and Stewart, 1969.

Coyne, H. E. B.  The Railway Law of Canada.  Toronto:  Canada Law Book, 1947.

Fraser, I. H.  “Some Comments on Subsection 92(10)  of the Constitution Act, 1867 ” (1984), 29 McGill L.J. 557.

Hogg, Peter W.  Constitutional Law of Canada, vol. 1, 5th ed.  Scarborough, Ont.:  Thomson/Carswell, 2007.

Kennedy, W. P. M.  Documents of the Canadian Constitution 1759‑1915.  Toronto: Oxford University Press, 1918.

Kennett, Steven A.  “Jurisdictional Uncertainty and Pipelines:  Is a Judicial Solution Possible?” (1997), 35 Alta. L. Rev. 553.

Labour Law Casebook Group.  Labour and Employment Law:  Cases, Materials, and Commentary, 7th ed.  Toronto:  Irwin Law, 2004.

McNairn, Colin H.  “Transportation, Communication and the Constitution:  The Scope of Federal Jurisdiction” (1969), 47 Can. Bar Rev. 355.

Whyte, John D.  “Constitutional Aspects of Economic Development Policy”, in  Division of Powers and Public Policy.  Toronto:  University of Toronto Press, 1985, 29.

APPEAL from a judgment of the Alberta Court of Appeal (Conrad, Watson and Slatter JJ.A.), 2007 ABCA 198, 79 Alta. L.R. (4th) 201, 412 A.R. 97, 404 W.A.C. 97, 285 D.L.R. (4th) 137, 147 C.L.R.B.R. (2d) 176, [2007] 11 W.W.R. 579, 67 Admin. L.R. (4th) 1, [2008] CLLC ¶220‑019, [2007] A.J. No. 857 (QL), 2007 CarswellAlta 1010, setting aside a decision of Hart J., 2005 ABQB 977, 59 Alta. L.R. (4th) 266, 390 A.R. 354, 263 D.L.R. (4th) 157, 120 C.L.R.B.R. (2d) 301, [2006] 9 W.W.R. 497, [2006] CLLC ¶220‑004, [2005] A.J. No. 1793 (QL), 2005 CarswellAlta 1923, allowing an application for judicial review of a decision of the Alberta Labour Relations Board (2005), 114 C.L.R.B.R. (2d) 1, [2005] Alta. L.R.B.R. 238, [2005] A.L.R.B.D. No. 92 (QL), 2005 CarswellAlta 940.  Appeal allowed, McLachlin C.J. and Binnie and Fish JJ. dissenting.

Thomas W. R. Ross and Trisha Gain, for the appellant.

Clayton Cook, for the respondent the Western Canada Council of Teamsters.

Shawn W. McLeod, for the respondent the Alberta Labour Relations Board.

No one appeared for the respondent the Consolidated Fastfrate Transport Employees’ Association of Calgary.

Michael T. Doi and Mark Crow, for the intervener the Attorney General of Ontario.

Alain Gingras, for the intervener the Attorney General of Quebec.

The judgment of LeBel, Deschamps, Abella, Charron, Rothstein and Cromwell JJ. was delivered by

[1]     Rothstein J. — The issue in this appeal is whether the labour relations of employees of the Calgary branch of Consolidated Fastfrate Transport Inc. (“Fastfrate”) are subject to  provincial jurisdiction under s. 92(13)  of the Constitution Act, 1867  or federal jurisdiction pursuant to the exception contained in s. 92(10) (a). 

[2]     This appeal concerns freight forwarding — an industry in which companies consolidate and deconsolidate freight and contract for its shipment with third‑party rail and truck carriers, including interprovincial ones.  Fastfrate provides consolidation and deconsolidation and pickup and delivery services to its customers across Canada.  It typically acts as the consignor and consignee for the third-party carrier such that customers receive a single bill of lading.  The question in this case is whether Fastfrate’s provision of such services qualifies it as an interprovincial undertaking even though it does not itself perform any interprovincial carriage of goods.   

[3]     I am of the view that 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 does not perform any interprovincial carriage itself.  Absent this, I see no compelling reason to depart from the general rule that works and undertakings are regulated by the provinces.  Accordingly, the labour relations of the employees of Calgary Fastfrate are subject to provincial jurisdiction.  I would therefore allow the appeal.  

I.  Facts

[4]     The market niche of freight forwarding companies is the consolidation and deconsolidation of freight.    This is their economic raison d’être.  The consolidation and deconsolidation of freight allows customers to benefit from an economy of scale when accessing third-party carriers.  As the Alberta Labour Relations Board (“ALRB”) noted, “[b]y pooling the small shipments of many customers into full‑truckload shipments, Fastfrate can realize economies of scale that the individual customer cannot easily realize, and so can pass the savings to the customer” ((2005), 114 C.L.R.B.R. (2d) 1, at para. 8).  Without this consolidation service, customers sending less‑than‑truckload and less-than-carload shipments would face substantially higher costs.  

[5]     Fastfrate is a freight forwarding company with branches across Canada, including the Calgary branch at issue in this case.  Fastfrate employees pick up and consolidate freight within the originating province and employees of another Fastfrate branch deconsolidate and deliver the freight in the receiving province.  Fastfrate contracts with third-party trucking and railway companies, primarily the Canadian Pacific Railway Company (“CPR”), for the interprovincial carriage of the goods. 

[6]     In most cases, Fastfrate and its employees play no role in the operation of CPR’s  interprovincial railway system.  As the ALRB noted, “[o]nly CP Rail employees and equipment load and unload rail cars” (para. 18).  The one exception to this rule is in Thunder Bay, where Fastfrate “has a contract to act as the yard operator for CP Rail’s small intermodal terminal facility” (para. 18). 

[7]     The ALRB also found that Fastfrate’s employees and equipment do not cross provincial boundaries, subject to one now discontinued exception.  Until November 2004, Fastfrate employees transported freight between their Ottawa and Montreal branches.  Fastfrate ceased this practice in 2004, in part, because it raised a “contentious issue” for jurisdictional determinations (para. 17).  The ALRB found these exceptions relevant only insofar as they proved the “rule” of Calgary Fastfrate’s operations:

That rule is, as we have stated: Fastfrate performs the pick-up and consolidation of freight at one end of the transaction and it performs the deconsolidation and delivery at the other end of the transaction, using its own terminal employees and mostly (but not exclusively) its own local drivers and trucks.  But any component of its service that involves transport of the freight across provincial boundaries is contracted to a third-party interprovincial road or rail carrier.  [Emphasis added; para. 19.]

[8]     In terms of corporate structure, Fastfrate’s head office is located in Mississauga, Ontario.  Fastfrate has a team of three regional vice‑presidents who, with regional managers, oversee a series of local branch offices throughout Canada, each with a branch manager.  Decisions regarding rates, asset acquisition and other matters of general profitability are made at the regional or national level (ALRB, at para. 31).  Employees at the branch offices deal directly with consignors, consignees and manage their own accounts receivable (ALRB, at para. 30).  Branch managers are responsible for the day-to-day management of each branch, including hiring, dismissing and scheduling employees.  However, regional  managers will only sign collective agreements with the approval of a regional vice‑president (ALRB, at para. 33).  

II.  Judicial History

[9]     In June 2004, the Consolidated Fastfrate Transport Employees’ Association of Calgary (“Calgary Association”) applied to the ALRB for a declaration on whether the labour relations of Calgary Fastfrate are subject to provincial or federal regulation.  This application was in response to an earlier application by the Western Canada Council of Teamsters (“Teamsters”) to be certified by the Canada Industrial Relations Board as the regional bargaining unit of Fastfrate employees for Alberta, Saskatchewan and Manitoba (ALRB, at para. 4).  The Teamsters’ consolidation application, if successful, would have had “the effect of displacing or ‘raiding’ the [Calgary] association for its Calgary bargaining unit” (ALRB, at para. 4). 

A.  Decision of the Alberta Labour Relations Board (2005), 114 C.L.R.B.R. (2d) 1

[10] In its July 2005 decision, the ALRB held that Calgary Fastfrate’s operations were within federal jurisdiction and, therefore, subject to the Canada Labour Code, R.S.C. 1985, c. L‑2 . 

[11] The ALRB considered and rejected the Teamsters’ argument that Calgary Fastfrate’s labour relations are subject to federal regulation on the basis of “‘derivative’ federal jurisdiction”.  The ALRB found that Fastfrate’s operations were not “essential or integral” to the CPR or any other interprovincial undertaking: see Reference re Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529 (the “Stevedores Reference”).  The ALRB concluded that the jurisdictional analysis must centre on the nature of Fastfrate as an undertaking in its own right. 

[12] The ALRB relied heavily on evidence of organizational integration between Fastfrate’s head office and its branches in its jurisdictional analysis.  The ALRB applied the “dominant purpose” approach adopted by the Canada Labour Relations Board (“CLRB”) in D.H.L. International Express Ltd.  (1994), 96  di 106  (“DHL”), and the “three‑fold unity” test proposed by S. A. Kennett in his article, “Jurisdictional Uncertainty and Pipelines: Is a Judicial Solution Possible?” (1997), 35 Alta. L. Rev. 553.  When the ALRB examined “the operations of the Calgary Fastfrate location and the rest of the Fastfrate organization for unity of ownership, unity of purpose and unity of control”, it concluded that “the Calgary Fastfrate location is part of a single, indivisible interprovincial undertaking” (para. 55).

[13] The ALRB distinguished the facts of the present case from In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174, and Re The Queen and Cottrell Forwarding Co.  (1981), 124 D.L.R. (3d) 674.  In Cannet and Cottrell, the Federal Court of Appeal and the Ontario Divisional Court respectively held that freight forwarders were subject to provincial jurisdiction.  The ALRB distinguished the present case on the basis that “in neither Cannet nor Cottrell was there evidence that the freight forwarder regularly engaged in deconsolidation and delivery of freight on its own account at the destination end of the shipment” (para. 51).  In the ALRB’s view, this fact, along with Fastfrate’s integrated corporate structure, was sufficient to constitute Fastfrate as an interprovincial undertaking for constitutional purposes.     

B.  Decision of the Court of Queen's Bench of Alberta (Hart J.), 2005 ABQB 977, 59        Alta. L.R. (4th) 266  

[14] Fastfrate sought judicial review of the ALRB decision.  The reviewing judge quashed the ALRB decision and held that Calgary Fastfrate’s labour relations were subject to provincial regulation.  He reaffirmed the existing provincial certification order.

[15] The reviewing judge agreed with the ALRB that derivative federal jurisdiction was not at issue in this case.  He found Fastfrate’s operations easily distinguishable from the stevedoring company in the Stevedores Reference.

[16] As for the proper characterization of Fastfrate as an undertaking, the central question for the reviewing judge was whether “Fastfrate [is] best described as a series of effectively independent intra‑provincial undertakings, albeit grouped within an overarching corporate control architecture, or . . . as a single undertaking with a dominant interprovincial purpose?” (para. 23 (emphasis in original)).  He concluded that the existence of an overarching corporate structure was insufficient to qualify Fastfrate and its provincial branches as a single federal undertaking.  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” (para. 44). 

C.  Decision of the Alberta Court of Appeal, 2007 ABCA 198, 79 Alta. L.R. (4th) 201

(i)  Watson and Slatter JJ.A. for the Majority

[17] Watson J.A. for the majority of the Court of Appeal held that the reviewing judge erred in law when he overturned the ALRB’s decision and affirmed the provincial certification order.  Watson J.A. concluded that Fastfrate “operates an interprovincial freight collection and delivery service” (para. 75) and is therefore subject to federal regulation.

[18] Watson J.A. took issue with the reviewing judge’s emphasis on physical involvement in interprovincial carriage.  On their reading, the jurisprudence does not require a “threshold of tangible and physical connection” between provinces for an undertaking to qualify as interprovincial under s. 92(10) (a) (para. 46).  Rather, the focus should be on the functional nature of the undertaking.  “[T]he test”, Watson J.A. wrote, “must consider the reality of the situation globally” (para. 53).

[19] Watson J.A. was persuaded by the CLRB’s reasoning in DHL.  In that case, the CLRB held that the freight forwarder D.H.L. International Express Ltd. (“DHL Ltd.”) was subject to federal jurisdiction.  DHL Ltd. was an “express pick‑up and delivery courier service” with offices throughout Canada (p. 107).  It contracted with commercial and charter airlines to provide express delivery to interprovincial and international destinations.  The CLRB found that even though DHL Ltd. contracted out actual interprovincial and international transportation, its “dominant purpose” was nevertheless interprovincial.  The CLRB held that DHL Ltd. was a single, indivisible federal undertaking engaged in the international and interprovincial delivery of goods and documents.  Watson J.A. concluded that “[t]he DHL case is sound” (para. 71).  

[20] Applying the reasoning in DHL to the present case, the majority of the Court of Appeal concluded that Fastfrate operates as “an interprovincial freight collection and delivery service” (para. 75).  Fastfrate’s labour relations were therefore found to be subject to federal regulation under the s. 92(10) (a) exception.

(ii)  Conrad J.A. (in Dissent)

[21] Conrad J.A. held, in dissent, that Fastfrate’s labour relations are subject to provincial regulation.  Conrad J.A. focussed on the specific services that Fastfrate performs, rather than the services which it contracts out.  She noted that Fastfrate collects, organizes, consolidates, and deconsolidates freight at a variety of branches and negotiates rates for third-party transportation (para. 82).  The only transportation services Fastfrate actually performs itself are intraprovincial pickups and deliveries.  All interprovincial transportation is carried out by third parties.  For Conrad J.A., it “follow[ed] that Fastfrate is not an interprovincial or international transportation undertaking” (para. 82).  The fact that its provincial operations are functionally integrated into a single corporate structure does not change the reality that the only transportation services Fastfrate performs itself are intraprovincial.

[22] Conrad J.A. concluded that the ALRB erred by focussing on the degree of corporate integration between Fastfrate’s provincial branches and its head office.  For Conrad J.A., the ALRB’s constitutional inquiry was skewed from the outset because it focussed on the unity of the national enterprise, rather than determining whether there was an interprovincial undertaking in the first place (para. 106).  In order to determine whether Fastfrate is an interprovincial transportation undertaking, the ALRB should have considered whether Fastfrate was actually “transporting” freight across provincial or international boundaries.  This analysis was never undertaken by the ALRB. 

[23] Unlike the majority, Conrad J.A. did not accept the CLRB’s reasoning in DHL.  She disagreed that a freight forwarder that does not itself perform interprovincial carriage of freight can nevertheless be considered an interprovincial transportation undertaking (para. 118).  In her view, the fact that a company, such as DHL Ltd. or Fastfrate, may have a national head office and an integrated network of provincial terminals does not transform it into an interprovincial undertaking subject to federal jurisdiction.  Likewise, the existence of corporate contracts between a freight forwarder and interprovincial carriers does not change the nature of the freight forwarder undertaking itself. 

[24] Conrad J.A. therefore concluded that Fastfrate was not an interprovincial undertaking pursuant to s. 92(10) (a).  She would have dismissed the appeal.      

III.  Relevant Constitutional Provisions

[25] This case concerns the classification of an “undertaking” pursuant to the Constitution Act, 1867 .  The relevant sections are:

91. . . . the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, —

                                                                            . . .

29.  Such Classes of Subjects as are expressly excepted in the Enumeration of the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces. 

                                                                            . . .

92.   In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, —

                                                                            . . .

10.  Local Works and Undertakings other than such as are of the following Classes: —

a.  Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province: 

                                                                            . . .

                          13.  Property and Civil Rights in the Province. 

IV.  Analysis

A.  Standard of Review

[26] The parties agree that the applicable standard of review in cases of constitutional interpretation is correctness: see Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5, at p. 17.  However, as the respondent Teamsters also note, the ALRB’s constitutional analysis rested on its factual findings.  Where it is possible to treat the constitutional analysis separately from the factual findings that underlie it, curial deference is owed to the initial findings of fact: see Lévis (City) v. Fraternité des policiers de Lévis Inc., 2007 SCC 14, [2007] 1 S.C.R. 591, at para. 19.   In the present case, I agree with the majority of the Court of Appeal that the ALRB’s factual findings regarding the operations and organizational structure of Fastfrate merit deference. 

B.  Constitutional Landscape of Labour Relations

[27] The basic rule in the division of powers over labour relations is that the provinces have jurisdiction over industries that fall within provincial legislative authority and the federal government has jurisdiction over those that fall within federal legislative authority: see Labour and Employment Law: Cases, Materials, and Commentary (7th ed.  2004), at p. 85.  However, as the jurisprudence makes clear, federal jurisdiction has been interpreted narrowly in this context.  In Toronto Electric Commissioners v. Snider, [1925] A.C. 396, the Judicial Committee of the Privy Council held that the s. 92(13)  provincial head of power over “Property and Civil Rights” in the provinces includes labour relations.  It is only where a work or undertaking qualifies as federal that provincial jurisdiction is ousted. 

[28] In Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115, Dickson J. (as he then was) summarized the principles that govern federal‑provincial jurisdiction over labour relations, at p. 132:

(1) Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule. 

(2) By way of exception, however, Parliament may assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject.

                                                                            . . .

(5) The question whether an undertaking, service or business is a federal one depends on the nature of its operation.  [Emphasis added.] 

Under s. 92 of the Constitution Act, 1867 , therefore, provincial jurisdiction is the norm.  Federal jurisdiction extends only to those classes of subjects expressly excepted from the provincial heads of power and those enterprises deemed integral to such federal works and undertakings.  As I will discuss, s. 92(10) (a), itself a limited carve-out, provides for such a federal exception.  The question in this case is whether the nature of the operations of Fastfrate are subject to provincial or federal jurisdiction. 

C.  Division of Powers (Sections 91  to 95 )

[29] The division of powers in ss. 91  to 95  of the Constitution Act, 1867  form the bedrock of our federal system.  They seek to preserve local diversity within the federal nation by conferring “[b]road powers” on provincial legislatures, while at the same time  “reserving to Parliament powers better exercised in relation to the country as a whole”: Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3 (per Binnie and LeBel JJ., at para. 22).

[30] Federalism exists as a fine balance between local governance and centralized decision making.  As Binnie and LeBel JJ. observed, at para. 22, in Canadian Western Bank:

The fundamental objectives of federalism were, and still are, to reconcile unity with diversity, promote democratic participation by reserving meaningful powers to the local or regional level and to foster co‑operation among governments and legislatures for the common good. 

D.   Guiding Principles: Interpreting Section 92(10)(a)

[31] It is within this federal framework that the present case arises.  This is especially true with respect to s. 92(10), which itself embodies the dual principles of local and centralized decision making that are essential to balancing local diversity with national unity.  Section 92(10) provides that “Works and Undertakings” are subject to local regulation. A work or undertaking is subject to federal jurisdiction only where an exception is made out.  Local regulation is the rule; federal regulation, the exception.

[32] Section 92(10) must be read in context.  As Professor Hogg states, while the interpretation of the Constitution Act, 1867  must be flexible enough to account for that which was unforeseen in 1867, “[c]onstitutional language, like the language of other texts, must be ‘placed in its proper linguistic, philosophical and historical contexts’” and “must be anchored in the historical context of the provision”: P. W. Hogg, Constitutional Law of Canada (5th ed. 2007), vol. 1, at p. 476, citing R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295, at p. 344, per Dickson J., and R. v. Blais, 2003 SCC 44, [2003] 2 S.C.R. 236.

(i)    History and Purpose of Section 92(10)(a)

[33] At the time of Confederation, the division of powers between the two levels of government was framed as a balance between “the general interests of the Confederacy as a whole” and “local interests”. As then Attorney General John A. Macdonald said on February 6, 1865 in the Debates in the Canadian Parliament on Confederation, 1865:

[A]ny honorable member on examining the list of different subjects which are to be assigned to the General and Local Legislatures respectively, will see that all the great questions which affect the general interests of the Confederacy as a whole, are confided to the Federal Parliament, while the local interests and local laws of each section are preserved intact, and entrusted to the care of the local bodies.  [Emphasis added.]

(Cited in W. P. M. Kennedy, Documents of the Canadian Constitution 1759-1915 (1918), at p. 613.) 

Concerning works and undertakings, specifically, he continued:

It will be seen that the local legislatures have the control of all local works; and it is a matter of great importance, and one of the chief advantages of the Federal Union and of local legislatures, that each province will have the power and means of developing its own resources and aiding its own progress after its own fashion and in its own way.  Therefore all the local improvements, all local enterprizes or undertakings of any kind, have been left to the care and management of the local legislatures of each province.  It is provided that all “lines of steam or other ships, railways, canals and other works, connecting any two or more of the provinces together or extending beyond the limits of any province,” shall belong to the General Government, and be under the control of the General Legislature.  In like manner “lines of steamships between the Federated Provinces and other countries, telegraph communication and the incorporation of telegraph companies, and all such works as shall, although lying within any province, be specially declared by the Acts authorizing them to be for the general advantage,” shall belong to the General Government.  For instance the Welland Canal, though lying wholly within one section, and the St. Lawrence Canals in two only, may be properly considered national works, and for the general benefit of the whole Federation.  Again, the census, the ascertaining of our numbers and the extent of our resources, must, as a matter of general interest, belong to the General Government.  So also with the defences of the country. [Emphasis added; p. 613.] 

In this light, it is clear that in the transportation context, only those works and undertakings that furthered the “general interest” of the emerging country were to be regulated by the federal government. Otherwise, the preference was for local regulation so that “each province will have the power and means of developing its own resources and aiding its own progress after its own fashion and in its own way”.

[34] It is interesting to note that s. 92(10) (a) of the Constitution Act, 1867  was originally conceived of as a primary grant of authority to the federal government, and not as an exception to provincial grant of authority over “Local Works”.  According to the resolutions passed by the delegates of the colonies of British North America at the Quebec Conference in October 1864, the federal government was granted primary legislative authority over:

29.  . . .

8.    Lines of Steam or other Ships, Railways, Canals and other works, connecting any two or more of the Provinces together or extending beyond the limits of any Province.

Whereas the provincial governments were granted authority over:

43.  . . .

13. Local Works.

(See G. P. Browne, Documents on the Confederation of British North America (1969), at pp. 158 and 161.)

[35] However, by the time the Constitution Act, 1867  was enacted by the British Parliament, the preference for provincial regulation had become reflected in the text of s. 92(10)  itself, as the grant of 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” became an exception to the provincial grant of authority over “Local Works and Undertakings”.

[36] Thus, while the preference in s. 92(10)  was for local regulation of works and undertakings, some works and undertakings were of sufficient national importance that they required centralized control.  The works and undertakings specifically excepted in s. 92(10) (a) include some of those most important to the development and continued flourishing of the Canadian nation.  As C. H. McNairn argues, I think persuasively, “[t]he maintenance of transport and communication facilities adequate to Canadian needs has historically been regarded as a vital factor in securing the economic and political viability of Canada as a federal union”: see “Transportation, Communication and the Constitution: The Scope of Federal Jurisdiction” (1969), 47 Can. Bar Rev. 355, at p. 355.  As Professor Whyte emphasizes, the Constitution Act, 1867  evidences a concern

with activities that produce a nation state that despite its illogicality in terms of geography, will function as a single state and as an economically viable whole.  This view explains . . . the special place of interconnecting (or nation‑creating) transportation and communication systems created by s‑ss. (a), (b) and (c) of s. 92(10) . [Emphasis added.]

(J. D. Whyte, “Constitutional Aspects of Economic Development Policy”, in Division of Powers and Public Policy (1985), 29, at p. 45)

[37] The fact that works and undertakings that physically connected the provinces were subject to exceptional federal jurisdiction is not surprising.  For example, it would be difficult to imagine the construction of an interprovincial railway system if the railway companies were subject to provincial legislation respecting the expropriation of land for the railway right of way or the gauge of the line of railway within each province.  If the legislature of the province did not grant railway companies the power of expropriation or if they refused to agree to a uniform gauge, the development of a national railway system would have been stymied.

[38] At this late date, it may be difficult for us to conceive of the national importance of a work or undertaking, such as the Intercolonial Railway. However, it is important to recall that at the time when the Constitution Act, 1867  was drafted, the Intercolonial Railway was seen as a project of vital importance, indeed as a condition of Confederation itself.  This is not surprising, given the importance of rail in connecting the colonies in British North America. As early as 1851, the colonies of British North America were tasked with creating such a railway to connect the various colonies (H. E. B. Coyne, The Railway Law of Canada (1947), at pp. v-vi).  In 1868, at the first session of the first Parliament of the Dominion, The Railway Act, 1868, S.C. 1868, c. 68, was passed.  It is clear that the types of undertakings conceived of in s. 92(10) (a) were front and centre in the emerging country’s consciousness.

[39] However, while works and undertakings such as an interprovincial railway system were  of particular importance to the new nation, this did not displace the fact that jurisdictional diversity was seen as the general path to economic development of the nation.  In my view, 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.

(ii)  Textual Analysis

[40] While the historical origins of s. 92(10) (a) illuminate the principled vision of federalism that underlies it, the words of the provision itself must be considered on their own terms.

[41] Section 92(10) (a) is structured in two parts: first, it provides a list of specific federal works and undertakings (“Lines of Steam or other Ships, Railways, Canals, Telegraphs”), and then it includes a basket clause (“other Works and Undertakings”).  All are defined as “connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province”.  “Works” refer to “physical structure[s]”;  “Undertakings” to “arrangement[s] under which of course physical things are used”: see Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767 (per Martland J., at p. 772), citing In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304 (P.C.), at p. 315; Attorney-General for Ontario v. Winner, [1954] A.C. 541 (P.C.), at p. 552.

[42] It is widely agreed among commentators that the phrase “‘other works or undertakings connecting the province with any other’, etc., is to be read ejusdem generis with the specific examples which precede it”: Hogg, at p. 645; see also McNairn, at p. 359; I. H. Fraser, “Some Comments on Subsection 92(10)  of the Constitution Act, 1867 ” (1984), 29 McGill L.J. 557, at p. 605.  If the framers had intended to subject every conceivable work or undertaking “connecting the province with any other, etc.” to federal regulation, there would have been no need to specify certain kinds of works and undertakings: see Consumers’ Association of Canada v. Postmaster General, [1975] F.C. 11 (C.A.), at pp. 15-16 (explaining the rationale for the ejusdem generis construction).  Instead, s. 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”.   

[43] The common thread among the enumerated transportation works and undertakings in s. 92(10)(a) — “Lines of Steam or other Ships, Railways, Canals” — 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 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” consists of those that physically connect the provinces through transport, not those that notionally connect them through contract.  In my view, the basket clause “other Works and Undertakings” should be interpreted in this ejusdem generis manner. 

[44] I am therefore of the view that a requirement for federal jurisdiction over transportation undertakings is that the undertaking itself physically operates or facilitates carriage across interprovincial boundaries. In my view, this approach best reflects the text of s. 92(10) and preserves the intent of the Constitution Act, 1867 , which sees federal jurisdiction over both works and undertakings and labour relations as the exception, rather than the rule.

E.      The Jurisprudential History of Freight Forwarding: Physical Carriage as a Crucial Indicator

[45] Any hope of gleaning from the jurisprudence a definitive rule that would resolve all jurisdictional questions concerning transportation works and undertakings is surely naive.  While certainty may be too lofty an ambition, a degree of consistency and predictability is still preferable and, in my opinion, attainable.  Interpretive consistency in the s. 92(10) context is important both to preserve the federal-provincial balance and to allow regulators to know the extent of their jurisdiction and parties to reasonably predict the jurisdiction under which they fall.  As Binnie and LeBel JJ. noted in their discussion of federalism in Canadian Western Bank, “a certain degree of predictability . . . is essential” (para. 23). 

[46] For constitutional purposes, predictability can be achieved by looking at industries on a broad, rather than excessively detailed basis.  If the approach in each case is to splice and dice discrete differences among companies within an industry — for example, whether a freight forwarder operates at both the originating and receiving ends or instead contracts with an independent or related company at one end, whether its local offices have autonomy or are closely managed by a head office, whether it provides customers with a single bill of lading or requires them to contract directly with third-party carriers — predictability will be hard to come by.  A better constitutional approach, in my view, is to look for commonalities within industries.  In United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112 (“UTU”), Dickson C.J. surveyed the “application of the jurisdictional test in other industries”, including pipelines and freight forwarding: pp. 1144-46.  He found common strands among these cases that gave rise to a principled analysis. 

[47] In the present case, there is an existing body of freight-forwarding jurisprudence that has been cited approvingly by our Court.  Where no convincing reason has been shown as to why we should depart from this jurisprudence, parties should be able to rely on it and organize their affairs accordingly.

[48] To this end, I am in agreement with and would uphold 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.

[49] In Cottrell, the issue was whether Cottrell Forwarding Co. Ltd. was subject to the provincial Public Commercial Vehicles Act, R.S.O. 1970, c. 375.  Cottrell had been charged with operating as an unlicensed freight forwarder contrary to the Act.  Steele J. held that Cottrell was not an interprovincial undertaking and was therefore subject to the provincial Act. 

[50] Cottrell’s business operations closely parallelled those of Fastfrate.  Like Fastfrate, Cottrell assumed sole responsibility for the shipment of goods from point of origin in Ontario to point of destination in Western Canada.  It was the only company listed on customers’ bills of lading.  As Steele J. observed, at p. 676, Cottrell’s business service allowed customers to benefit from an economy of scale in order to “reduce the otherwise applicable rate for shipment”.

[51] Steele J. found that Cottrell’s lack of physical involvement in the transport of goods or persons distinguished it from other cases where an enterprise had been found to be an interprovincial undertaking.  Steele J. concluded, at pp. 679-80:

The railway company is the only body carrying on the interprovincial undertaking and it has the physical works as well.  Clearly, if an individual customer of Cottrell wished to ship goods to the west, it could contract with the railway company to ship such goods.  The mere fact that by contract Cottrell agrees with that individual customer to enter into the contract with the railway company and become the shipper itself, does not make Cottrell anything other than a shipper. . . . To hold otherwise would mean that any travel broker or other person engaged in general commerce could, by contract, provide interprovincial undertakings, even though he had no facilities whatsoever, and thereby claim that he was not subject to provincial jurisdiction. [Emphasis added.]

[52] The respondent Teamsters submit that the reasoning in Cottrell is distinguishable from the present case.  They assert that “there was no evidence that the freight forwarder [in Cottrell] regularly engaged in the deconsolidation and delivery of its own freight at the delivery end of the shipment” (Factum, at para. 33).  This apparent lack of evidence regarding Cottrell’s presence in the destination province distinguishes it from Fastfrate, according to the Teamsters.    

[53] With respect, I am not persuaded by this argument.  Steele J. specifically observed, at p. 676, that

counsel for the Crown and [Cottrell] consented to an additional factual admission to the effect that in Western Canada the operations and offices of the accused were similar to those in Ontario in that once the goods arrived in the west they were transported either by a subsidiary company of [Cottrell] or by other independent truckers to individual locations as shown on the bills of lading.

It is clear from this statement that Steele J. was aware that Cottrell played a role, either directly or through contract, in the final delivery of goods in Western Canada. 

[54] In any event, I do not agree that a freight forwarder’s level of involvement in delivering goods at the receiving end is determinative of the jurisdictional analysis.  Steele J.’s analysis centred on the fact that Cottrell did not perform any interprovincial carriage itself.  The same is true in the present case.  

[55] The facts in Cannet are similarly straightforward.  Cottrell Forwarding Co. Ltd. was a freight-forwarding enterprise that received freight from customers in the Toronto area and contracted with the Canadian National Railway Company for shipment to Western Canada. Employees of Cannet Freight Cartage Ltd. were responsible for picking up the goods from customers and dropping them off at premises leased from Canadian National.  The Cannet employees would remove the goods from the delivery trucks and stow them in CN rail cars pursuant to the arrangements made by Cottrell with its customers. 

[56] The issue was whether the Cannet employees could be certified by the CLRB.  The Federal Court of Appeal held that they could not.  In  its view, the labour relations of Cannet were subject to provincial jurisdiction.  Jackett C.J. held, at pp. 177-78:

Even if [Cannet’s] activities and those of the Cottrell Company are viewed as integral parts of a whole, . . . the only interprovincial undertaking involved here is the Canadian National interprovincial railway.  Clearly, a shipper on that railway from one province to another does not, by virtue of being such a shipper, become the operator of an interprovincial undertaking.  If that is so, as it seems to me, the mere fact that a person makes a business of collecting freight in a province for the purpose of shipping it in volume outside the province by public carrier, does not make such a person the operator of an interprovincial undertaking. [Emphasis added.]

[57] In UTU, Dickson C.J. cited approvingly the holding in Cannet.  He said, at pp. 1146-47:

I also find it useful to refer to a series of cases commonly known as the “freight forwarder” cases. . . . The leading case is In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174, where the Federal Court of Appeal held that freight forwarding companies were subject to provincial jurisdiction.  I find the comments of Jackett C.J., at pp. 177‑78, applicable in the present appeal:

                          In my view, the only interprovincial undertaking involved here is the Canadian National interprovincial railway.  Clearly, a shipper on that railway from one province to another does not, by virtue of being such a shipper, become the operator of an interprovincial undertaking.

. . . To hold otherwise would be to undermine completely the division of powers for, absent a requirement of functional integration, virtually any activity could be said to “touch” a federally regulated interprovincial undertaking. [Emphasis added.]

While Dickson C.J. referred to Cannet when he was considering whether the impugned undertaking in UTU  was subject to derivative federal jurisdiction, he did so as part of a comparative review of s. 92(10)(a) jurisprudence across industries, including freight forwarding.  There is nothing in his analysis indicating that it was meant to apply only to cases of derivative federal jurisdiction.

[58] The respondent Teamsters argue that rather than following the Cannet and Cottrell line of cases, this Court should instead rely on the CLRB decision in DHL.  In DHL, the CLRB found that the DHL Ltd. freight-forwarding enterprise was subject to federal jurisdiction even though DHL Ltd. was not itself involved in the interprovincial transport of goods.  The CLRB reasoned:

Although evidence of regular and continuous trips across provincial lines, by the undertaking itself, would suffice to bring the operation into the federal sphere, evidence that the undertaking has as its dominant purpose an interprovincial or international operational connection extending its activities — services to its clients — “beyond the limits of the province”, on a regular and continuous basis, is likewise sufficient to determine federal jurisdiction.  [Emphasis added; p. 116.]

[59] With respect, I am not persuaded by the reasoning in DHL.  In finding DHL Ltd. to be subject to federal regulation, the CLRB applied the “regular and continuous” test in a novel, and in my view, unhelpful way.   The test had formerly been used by courts to decide whether an undertaking was involved in “regular and continuous” physical transportation across boundaries: see Re Ottawa‑Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 (1983), 4 D.L.R. (4th) 452 (Ont. C.A.).  The CLRB instead considered whether a “dominant [interprovincial] purpose”, defined in terms of contractual services offered to clients , was “regular and continuous”.  The focus shifted from the nature of the operations of the undertaking to the nature of the contractual service it provides.  

[60] It is true that in the communications context, the constitutional inquiry has at times focussed on “the service that is provided and not simply . . . the means through which it is carried on”: Public Service Board v. Dionne, [1978] 2 S.C.R. 191, at p. 197.  The difference between the communications and transportation contexts, however, is that communications undertakings can operate and provide international and interprovincial communication services from a fixed point.  If one were to focus only or primarily on the means by which a communication undertaking provides interprovincial services to its customers, the result could be that two companies operating and providing identical services would be subject to different jurisdictions depending on their modes of transmission (i.e. whether they send and receive signals from one fixed location or whether they have an interprovincial presence). 

[61] 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, of course, 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, however.  The fact that customers may be unaware that the intermediary company is not in fact performing the interprovincial carriage is, in my view, irrelevant to the constitutional inquiry.  Section 92(10)(a) is concerned with the nature of undertakings, not how they are subjectively understood by consumers.  As this Court emphasized in Northern Telecom, at p. 132, “[t]he question whether an undertaking, service or business is a federal one depends on the nature of its operation.” 

[62] The  “dominant purpose” test in DHL — measured in terms of the contractual service offered rather than the actual operations of the undertaking — has the potential to sweep under federal jurisdiction many enterprises that heretofore have been understood as being subject to provincial jurisdiction based on their actual operations.  As the intervener the Attorney General of Ontario observed, travel agencies whose “regular and continuous” dominant purpose is to facilitate interprovincial and international travel could become subject to federal jurisdiction, as could online companies that regularly arrange for the door-to-door delivery of their products (Factum, at paras. 22-26).  This kind of indeterminate fluidity in the division of powers surely cuts against the balance that underlies our federal system.  

[63]  The respondent Teamsters suggest that Alberta Government Telephones v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 2 S.C.R. 225 (“AGT”), nevertheless supports the view that a transportation undertaking can be subject to federal jurisdiction even where its physical equipment and operations remain within the province.  In UTU, this Court, interpreting its decision in AGT, found, at p. 1135, that it was “by virtue of [AGT’s] role in Telecom Canada and its bilateral contracts with other telephone companies [that AGT] was able to provide its clients with an interprovincial and, indeed, international telecommunications service”.  The Teamsters analogize AGT’s web of contractual relations to Fastfrate’s.  They argue that “[t]hrough the coordinated relationship between the operations at Fastfrate facilities and through the contracts that Fastfrate has with other parties, Fastfrate is able to connect the provinces and provides its clients with an interprovincial transportation service” (Factum, at p. 15).

[64] With respect, I am not persuaded that the analogy is an apt one.  It should be recalled that in AGT, there was no question that AGT was itself operating and providing interprovincial telephony services.  As Dickson C.J. noted at p. 260, “[t]he involvement of AGT in the transmission and reception of electronic signals at the borders of Alberta indicate that AGT is operating an interprovincial undertaking.”  The question was whether this physical reception and delivery of signals was sufficient to ground federal jurisdiction.   The Court held that the physical reception and delivery of interprovincial signals, in combination with AGT’s commercial arrangements with other interprovincial providers, was sufficient to attract federal jurisdiction.   

[65] However, the starting point in the transportation context differs from that in the communications context.  As Dickson C.J. observed in UTU, at p. 1144, “it must not be forgotten that the nature of telecommunication systems is quite different from the railway business”.  As I noted above, whereas communication works and undertakings can facilitate interprovincial communication from a fixed location, transportation, by definition, involves mobility of goods, persons, and transportation equipment (equipment for the carriage of persons or freight) across territory.  Thus, as Dickson C.J. further noted in UTU, at p. 1146, while “spatial boundaries limit the range of [transportation] business’ operations, [this] can less easily be said with regard to broadcasting systems, where territorial boundaries are not extremely critical to the nature of the enterprise”. 

[66] This distinction likely accounts for the Court’s willingness to find that contractual relations, in addition to the physical reception and delivery of interprovincial signals, qualified AGT as an interprovincial undertaking.  As Professor Hogg observes:

The result in AGT probably owes a good deal to the unique character of telecommunication, which permits instantaneous two-way communication between people in different provinces and different countries.  In other contexts, cooperative arrangements between an independently-managed local undertaking and extraprovincial undertakings would not suffice to transform the local undertaking into an interprovincial undertaking. [p. 646]

The distinction that Professor Hogg cites is the very distinction between transportation and communication undertakings at issue in this case. 

[67] In my view, 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 be respected.        

V.  Application to This Case

[68] The history, purpose, and text of s. 92(10)(a) suggest that federal jurisdiction is exceptional and should be treated as such.  The historical roots of the provision reflect a concern that works and undertakings of national importance be subject to federal authority in order to prevent fragmentary legislative authority that might stymie such  undertakings.  The text of the provision indicates that a limited genus of works and undertakings should qualify as federal.  The provision contemplates interprovincial transportation works and undertakings themselves, not merely those connected to such works or undertakings by contract.

[69] In light of this context, I am of the view that the employees of Fastfrate Calgary are properly subject to provincial jurisdiction.  There is no sound jurisprudential basis for reading “other Works and Undertakings” in the expansive manner that the respondent Teamsters suggest.

[70] In the present case, Fastfrate’s operations are entirely intraprovincial.  Neither Fastfrate employees, nor its equipment, are involved in any actual interprovincial transport.  We are not faced here with the question of whether federal jurisdiction should apply to an undertaking that conducts a de minimis amount of interprovincial transport: see, e.g., Windsor Airline Limousine Services Ltd. and U.S.W.A. (1999), 56 C.L.R.B.R. (2d) 70; Re Ottawa‑Carleton Regional Transit Commission.   On the contrary, in the case of Fastfrate, it performs no interprovincial transport.  As the ALRB observed, “any component of [Fastfrate’s] service that involves transport of the freight across provincial boundaries is contracted to a third-party interprovincial road or rail carrier” (para. 19).

[71] The respondent Teamsters submit that Fastfrate’s web of contractual relations with third-party carriers and its customers means that it functions as an undertaking connecting the provinces pursuant to s. 92(10)(a).  The fact that Fastfrate provides “an interprovincial transportation network for its customers” should, according to the Teamsters, qualify it as a federal undertaking (Factum, at para. 53). 

[72] The difficulty with this argument is that the text of s. 92(10)(a) 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.  I am not persuaded that there is a justifiable basis for expanding the scope of s. 92(10)(a) in the manner proposed by the Teamsters.    

[73] Even where a recognized federal undertaking exists, not every part of its enterprise will necessarily be subject to federal jurisdiction.  Distinct local works or undertakings may remain subject to provincial jurisdiction.  In the Empress Hotel case (Canadian Pacific Railway Co. v. Attorney-General for British Columbia, [1950] A.C. 122 (P.C.)), the issue was whether the employees of a hotel owned and operated by the CPR were subject to federal regulation.  The appellants in that case argued that the hotel’s employees were subject to federal regulation because the hotels were part of an integrated national transportation system.  They maintained that

th[e] unified system [of rail and hotel services] is a national [transportation] undertaking which cannot reasonably be viewed as a conglomeration of local works and undertakings. . . .  The Empress Hotel [as the material in the record shows] is an integral part of this unified system. [p. 127]

[74] The Privy Council rejected this argument.  Lord Reid said, at p. 140:

[T]heir Lordships can find neither principle nor authority to support the competence of the Parliament of Canada to legislate on a matter which clearly falls within the enumerated heads in s. 92 and cannot be brought within any of the enumerated heads in s. 91  merely because the activities of one of the parties concerned in the matter have created a unified system which is widespread and important in the Dominion. [Emphasis added.]

Lord Reid distinguished between CPR’s operation of a national transportation undertaking and the Empress Hotel’s local role within that system.  In other words, the common ownership of complementary interprovincial and intraprovincial works or undertakings will not mean that the otherwise local enterprise is subject to federal regulation, unless it forms an integral or essential part of the interprovincial work or undertaking.  This is true even where, as Lord Reid says, the commonly owned undertakings create a “unified system”.  In the case of Fastfrate, which conducts only local operations, I am not persuaded that its contractual relations with third-party carriers should attract federal jurisdiction any more than the Empress Hotel’s operational and corporate relationship with the CPR did.    

[75] The operational reality of Fastfrate is that it depends on third-party interprovincial carriers to conduct its business.  It is in precisely the inverse situation of those undertakings that have been found to be subject to derivative federal jurisdiction because they are integral to a recognized interprovincial work or undertaking.  As Professor Hogg observes, “[t]he relationship of dependency that will bring a local undertaking into federal jurisdiction is the dependency of the interprovincial undertaking on the local undertaking, not the other way around” (p. 654).  This accords with the Federal Court of Appeal’s observation in Cannet that “the only interprovincial undertaking involved . . . is that of the CNR and that a shipper on that railway from one province to another does not, by such activity, become the operator of an interprovincial undertaking”: p. 182 (per Heald J., agreeing with Jackett C.J.’s comments at p. 178).  I share the view that 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. 

[76] There has also been discussion in the lower courts of the fact that Fastfrate is an integrated national company with branches across Canada.  The case law has  consistently held that corporate structure is not determinative of the jurisdictional analysis under s. 92(10)(a).  As this Court affirmed in Northern Telecom, at p. 133, “the judgment is a functional, practical one about the factual character of the ongoing undertaking and does not turn on technical, legal niceties of the corporate structure or the employment relationship”.  In my view, the functional analysis must centre on what operations the undertaking actually performs.     

[77] The constitutional inquiry should not be diverted by minor differences in the operations of otherwise similar undertakings.  In the freight-forwarding industry, if, as the Teamsters argue, the fact that Fastfrate operates at both the originating and terminating ends of a shipment distinguishes it from a freight forwarder that contracts with a related company at the receiving end, a corporate restructuring whereby separate but related companies operate at various locations would determine the constitutional question.  Generally, constitutional jurisdiction should not be determined at this level of detail, nor should it be subject to “technical, legal niceties of the corporate structure or the employment relationship”: see Northern Telecom, at p. 133.

[78] The physical connection cases further demonstrate that merely facilitating interprovincial transport will not, without more, attract federal jurisdiction.  In City of Montreal v. Montreal Street Railway, [1912] A.C. 333, the Privy Council held that a mere physical connection between a local railway and an interprovincial railway was an insufficient basis to subject the local railway to federal regulation.  The fact that the intraprovincial and the interprovincial railways had an arrangement “by which the cars of each railway run over the lines of the other, and passengers are conveyed from points on one system to points on the other over the permanent way of both” did not transform the intraprovincial railway into an interprovincial one for the purposes of s. 92(10)(a) (pp. 338 and 345-46). 

[79] Likewise, in UTU,  Dickson C.J. stated, at p. 1147, “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” (emphasis added).  He concluded this despite the fact that the rail cars originating on the Central Western line were taken by the Canadian National Railway across provincial boundaries.  In other words, even where an intraprovincial work or undertaking originates freight traffic that is carried interprovincially by an interprovincial railway company, that does not transform the intraprovincial railway into an interprovincial one.

[80] In my view, the “something more” that would be required is the actual transportation of goods or persons across provincial boundaries: see, e.g., Winner (a bus company was an interprovincial undertaking because it transported passengers across provincial borders); Re Ottawa‑Carleton Regional Transit Commission (the transport of passengers across the Quebec boundary qualified OC Transpo as a federal undertaking). It is the business performing the interprovincial operations (i.e. the interprovincial transportation) that is subject to federal jurisdiction.  A shipper, whether it is a plant that ships its own rail cars or a freight forwarder that ships its own boxes or envelopes, still remains a shipper.  The business that performs the interprovincial transportation — the carrier that crosses provincial boundaries — is the undertaking that attracts federal jurisdiction under s. 92(10)(a).  The operations of Fastfrate are not in this category.     

VI.  Conclusion

[81] I would allow the appeal with costs in this Court and in the Court of Appeal.  The decision of the Court of Queen’s Bench is restored.  The labour relations of the Calgary operation of Fastfrate Inc. are subject to provincial jurisdiction.

The reasons of McLachlin C.J. and Binnie and Fish JJ. were delivered by

[82] Binnie J. (dissenting) — For the past 30 years, this Court’s approach to determining whether a particular transportation or communication undertaking is federally regulated (including its labour relations) has depended on the precise nature and scope of the service it provides.  In this respect “the test should be flexible and attentive to the facts of each particular case” (United Transportation Union v. Central Western Railway Corp., [1990] 3 S.C.R. 1112, at p. 1140).  In this case, the Alberta Labour Relations Board concluded that the appellant provides a transportation service to its customers that extends “beyond the Limits of the Province” of Alberta in the words of s. 92(10) (a) of the Constitution Act, 1867 , which provides:

92.  In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, —

                                                                            . . .

10.  Local Works and Undertakings other than such as are of the following Classes: —

a.    Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province: . . . .

[83] Fastfrate, the Board found, “operates an interprovincial undertaking because it regularly picks up, consolidates, deconsolidates and delivers freight on its own account in many provinces, at either end of the shipments that it contracts out to an interprovincial carrier” ((2005), 114 C.L.R.B.R. (2d) 1, at para. 51).  It is this intermediate “contracting out” feature that forms the basis of the contrary opinion taken by my colleague Justice Rothstein.  However, methods of transportation and communication have evolved since 1867, as have the methods by which businesses organize themselves to deliver such services.  In an era where contracting out elements of a service business is commonplace, the modalities of how a truly interprovincial transportation operation “undertakes” to move its customers’ freight from one part of Canada and deliver it to another should not contrive to defeat federal jurisdiction.  Checkerboard provincial regulation is antithetical to the coherent operation of a single functionally integrated indivisible national transportation service.

[84] I agree with the Alberta Labour Relations Board and the majority view of the Alberta Court of Appeal that by “contracting out” part of its transportation “operations”, Consolidated Fastfrate does not escape federal jurisdiction, as it seeks to do on this appeal.  Consolidated Fastfrate is an interprovincial transportation undertaking.  I would dismiss the appeal.

I.  Overview

[85] In 1979 in  Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115, at p. 132, Dickson J. (as he then was) laid out six basic principles to be considered in assessing whether an undertaking falls under federal or provincial jurisdiction, including the proposition that:

The question whether an undertaking, service or business is a federal one depends on the nature of its operation.

Ten years later, in Alberta Government Telephones v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 2 S.C.R. 225 (“AGT”), the Court interpreted “nature of the operation” to include in federal regulation a provincial Crown telephone system that relied on contractual arrangements with out-of-province utilities to provide interprovincial and international service.  Fastfrate, unlike Alberta Government Telephones (“AGT”), provides a customer-to-customer interprovincial service.  It handles the shipment both in the province of origin and in the province of destination.  Technology in the communications industry obviously differs from that in the transportation of goods, but no distinction has been drawn in our cases to date between the legal test applicable to communication undertakings and that applied to transportation undertakings.  Although Northern Telecom was concerned with communications workers, the test used by Dickson J. in that case was confirmed in Central Western Railway, at pp. 1138-40, and in AGT, at pp. 257-58, where as Chief Justice he wrote that “[t]here is ample authority for the proposition that the crucial issue in any particular case is the nature or character of the undertaking that is in fact being carried on” (emphasis added).  At pp. 259-60 of AGT, Dickson C.J. continued:

The fact that a company does not own or operate physical facilities outside a particular province does not mean that the company’s undertaking is necessarily local in nature (see: R. v. Toronto Magistrates, Ex Parte Tank Truck Transport Ltd., [1960] O.R. 497, and R. v. Cooksville Magistrate’s Court, Ex parte Liquid Cargo Lines Ltd., [1965] 1 O.R. 84 (H.C.), at p. 89, per Haines, J.).

Both of the authorities cited in AGT by Dickson C.J. (Tank Truck Transport and Liquid Cargo Lines) were transportation cases.  AGT was a communications case.  The technology may be different, but the legal test was (and is) the same.

[86] In my opinion, the test formulated in the s. 92(10) (a) cases is a functional test, and it requires the Court to focus on what transportation service Fastfrate undertakes to provide to its customers — local or interprovincial.  The outcome does not depend on whether, in carrying out its interprovincial freight contracts, Fastfrate does or does not contract with another corporate entity to move the goods across an interprovincial or international boundary.  The question is the nature of the service Fastfrate undertakes to provide, not the modalities of performance as they may exist from time to time.

[87] My colleague Rothstein J., on the other hand, prefers a narrower approach “anchored in the historical context”.  He concludes that federal jurisdiction under s. 91(29)  and s. 92(10) (a) should be read “narrowly” (para. 27), noting the reference in that section to physical works such as railways, canals and telegraph poles that were perceived in 1867 to be essential to nation-building (para. 36).  My colleague infers from the text of s. 92(10) (a) that transportation (which he distinguishes from communications) works and undertakings are restricted to undertakings that themselves “physically connect the provinces” (paras. 43-61).  Instead of being “attentive to the facts of each particular case”, my colleague prefers to look “at industries on a broad, rather than excessively detailed basis” because to “splice and dice discrete differences among companies within an industry” undermines “predictability” (para. 46).  Rothstein J. rejects the applicability of cases such as Public Service Board v. Dionne, [1978] 2 S.C.R. 191, and AGT on the basis that they deal with communications rather than transportation (paras. 60 and 66).  Transportation is different because while communications operators can provide their services interprovincially and internationally from a fixed point (e.g. by satellite systems), transporters operate under physical and spatial limitations that require them physically to move goods across the provincial or international boundaries.  Accordingly, my colleague concludes, what is required in the transportation field is that in order to be subject to federal jurisdiction, the undertaking must itself “physically transport the freight interprovincially” (para. 72).

[88] In my view, the relevant distinction in the s. 92(10) (a) jurisprudence is not between undertakings engaged in transportation and those engaged in communications, but between local undertakings within the province and undertakings whose service (whether transportation or communication) extends beyond the province.  In this respect, there is no difference between the test for transportation cases and the test for communications cases.  This was confirmed (again) by Dickson C.J. in the last of his series of “interprovincial undertaking” cases where he made a direct comparison between the scope of the intraprovincial transportation “service” offered in Central Western Railway with the interprovincial communications “service” offered by AGT (p. 1135).  On this point, I agree with Watson J.A., speaking for the majority in the court below:

In our view, the jurisprudence does not give trumping status to, let alone mandate, the factor of physical transition as a pre‑condition to finding an interprovincial work or undertaking. . . .  More important than a physical connection is whether the functional nature of the operation is to connect the provinces. [Emphasis in original.]

(2007 ABCA 198, 79 Alta. L.R. (4th) 201, at para. 53)

[89] Canadian courts have never accepted the sort of “originalism” implicit in my colleague’s historical description of the thinking in 1867.  The persistent feebleness of the federal power over trade and commerce and the eclipse of the federal authority related to peace, order and good government bear witness to the ascendancy of the “living tree” approach.  As our Court recently stated in relation to the division of legislative authority in Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, “the interpretation of these powers and of how they interrelate must evolve and must be tailored to the changing political and cultural realities of Canadian society” (para. 23).  This is not to say that the passage of time alters the division of powers.  It is to say that the arrangement of legislative and executive powers entrenched in the Constitution Act, 1867  must now be applied in light of the business realities of 2009 and not frozen in 1867.

[90] The current Canadian economy would be unrecognizable to the statesmen of 1867 and, to borrow an analogy from Thomas Jefferson, one would not expect a grown man to wear a coat that fitted him as a child.  The coat is of the same design, but the sleeves are longer and the chest is broader and the warp and woof of the fabric is more elaborate and complex.  Adopting a purposive approach to constitutional interpretation, as we must, what is important is not how transportation was viewed in 1867 but rather to match in our own era the level of regulation (federal, provincial or territorial) appropriate to the nature and scope of the undertaking.  Now, as in 1867, when a transportation undertaking connects or extends “beyond the Limits of the Province” its regulation is assigned by the Constitution Act, 1867  to the federal level of authority.

II.  Facts

[91] Fastfrate has its head office in metro Toronto, major terminal facilities in Montreal, Toronto, Winnipeg, Regina, Saskatoon, Edmonton, Calgary and Vancouver, and smaller facilities elsewhere (Board decision, at para. 4).  The current status of Fastfrate’s labour relations presents a patchwork quilt.  The Alberta, Manitoba and British Columbia provincial labour boards have taken jurisdiction to certify Fastfrate bargaining units.  On the other hand, the federal board has certified units in Saskatchewan, Edmonton, Toronto and Montreal.  Fastfrate’s interprovincial undertaking would be frustrated, for example, if its employees in Calgary, governed by Alberta rules, were to dispatch freight to Montreal where Fastfrate employees are governed by different (provincial) rules and are on strike.

[92] At its Calgary terminal, the Alberta Board found, Fastfrate owns and maintains terminal premises with cross-docks and warehousing space, and trucks, tractors and trailers for pickups and deliveries.  It employs drivers, warehouse personnel, office and clerical employees, sales personnel, and managers to perform this business (paras. 9-10).  Similar terminal facilities exist at the point of deconsolidation and delivery in other provinces.  In this respect, Fastfrate’s personnel and “physical” equipment would seem to meet Rothstein J.’s test that to be federally regulated, it is necessary that “the undertaking itself physically operates or facilitates carriage across interprovincial boundaries” (para. 44 (emphasis added)).

[93] Fastfrate also maintains a network of contractual relationships with freight transporters.  In some local markets, these contractors supplement Fastfrate’s own forces for local pickup and delivery.  Fastfrate generally does not transport its freight interprovincially using its own property or employees; for that intermediate segment of carriage Fastfrate uses contractors, either interprovincial line-haul truckers by road, or Canadian Pacific Railway by rail (Board decision, at para. 9).

[94] The Alberta Board found that whether a Fastfrate shipment travels interprovincially by CP Rail or by a third-party road carrier, the presence of the interprovincial carrier is invisible to both the consignor and the consignee.  The only undertaking they deal with is Fastfrate.  The same is true of local pickup and delivery by third-party carriers.  The consignor of a Toronto-to-Calgary shipment, for example, will receive one bill of lading from Fastfrate for the entire shipment from pickup to ultimate delivery.  Customers will not know from the documentation which (if any) third parties handled any part of their shipment.  Fastfrate assumes liability for any claims for damage or non-delivery along the entire routing and carries comprehensive insurance to manage this liability.  If damage or loss occurs during carriage by a subcontractor, e.g. CP Rail, Fastfrate would be liable to the customer and would in turn pursue its own claim against CP Rail (para. 27).

[95] In terms of corporate organization, the Calgary branch is not a stand-alone local undertaking.  All branches are served by a common information technology system centred in Toronto (Board decision, at para. 32).  Fastfrate’s regional vice-president for Western Canada (Thunder Bay to Vancouver Island) acknowledged that he has “100% power to modify branch operations anywhere in western Canada” (Board decision, at para. 31).  Fastfrate’s collective bargaining is not handled at the branch level.  Even the Regional Manager would not sign a collective agreement without the approval of the Regional Vice-President.  In other words, the interprovincial undertaking is managed interprovincially.  What is important, of course, is not that Fastfrate is managed interprovincially but that its undertaking is interprovincial transportation.

III.  Analysis

[96] Generally speaking, labour relations are provincially regulated because most works and undertakings are local and s. 92(10)  gives the province jurisdiction over “Local Works and Undertakings”.   The question is, as the Alberta Board formulated it, whether Fastfrate is one interprovincial transportation undertaking or many local ones (paras. 55-58).  The manner in which the Constitution Act, 1867  is structured does not mean that federal jurisdiction over interprovincial undertakings should receive a cramped interpretation.  On this rather fundamental point, I respectfully disagree with my colleague Rothstein J. when he writes:

Section 92(10)  provides that “Works and Undertakings” are subject to local regulation.  A work or undertaking is subject to federal jurisdiction only where an exception is made out.  Local regulation is the rule; federal regulation, the exception. [para. 31]

The Constitution nowhere gives the provinces general jurisdiction in relation to “Works and Undertakings”.  Section 92(10) , as stated, gives the provinces jurisdiction only over local works and undertakings, and even this grant is qualified to the extent such local works and undertakings connect the province “with any other or others of the Provinces, or extending beyond the Limits of the Province”, in which case they are regulated federally pursuant to s. 91(29) .

[97] This point was adverted to by Dickson J. in Northern Telecom, at pp. 128-29:

Colin McNairn in his “Transportation, Communication and the Constitution: The Scope of Federal Jurisdiction” (1969), 47 Can. Bar Rev. 355, at 393, took the view that the exceptions as exceptions ought to be narrowly construed against federal power.  W.R. Lederman in his illuminating article, “Telecommunications and the Federal Constitution of Canada” in H.E. English, ed., Telecommunications for Canada (1973), 339 at 360, puts much greater stress upon the effect of s. 91(29)  in converting these exceptions to an exclusive head of federal power and thus supports a broader reading of federal authority.

Although Dickson J. did not provide an explicit answer to his question, his description of Professor Lederman’s article as “illuminating” indicates a preference for Professor Lederman’s “broader reading of federal authority”, as indeed is apparent in his various judgments on the topic in the 11 years from Northern Telecom in 1979 to AGT in 1989 and Central Western Railway in 1990.  In AGT, for example, he framed the issue neutrally and not as “an exception” as follows:

It was conceded that AGT is an “undertaking” within the meaning of s. 92(10) (a) (see Reed J. supra, at p. 532), and the issue is whether it is a “local” undertaking and therefore within provincial jurisdiction, or an undertaking “connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province”, and therefore within federal jurisdiction. [p. 258]

The question, in short, is what precisely is the nature of the transportation service provided by Fastfrate — local or interprovincial?  On this point, the Alberta Board is emphatic.  The Fastfrate undertaking is dedicated to the interprovincial pickup and delivery of freight.

A.  Historical Background

[98] Justice Rothstein fairly lays out some of the constitutional thinking in 1867.  The contemplated balance between federal and provincial authority was reflected in the general language of the Constitution Act, 1867 , which has been interpreted and re-interpreted as Canadian society has evolved.  As mentioned, the drafters of s. 92(10) (a) understood interprovincial communication in terms of wires strung along telegraph poles. In 1867, physical connection was essential.  It is therefore not surprising that s. 92(10) (a) would list physical works. Yet, as Rothstein J. acknowledges, “undertakings” is a much broader concept than works, and includes “arrangement[s] under which of course physical things are used”: Commission du salaire minimum v. Bell Telephone Co. of Canada, [1966] S.C.R. 767 (per Martland J., at p. 772), citing In re Regulation and Control of Radio Communication in Canada, [1932] A.C. 304 (P.C.), at p. 315, and Attorney-General for Ontario v. Winner, [1954] A.C. 541 (P.C.), at p. 552. Nowhere in these cases is it suggested that the “arrangement” precludes contracting out elements of the service provided. 

B.  The AGT Decision

[99] AGT rejected the argument that to be characterized as an interprovincial undertaking, an entity must itself physically transport (e.g. by rail) or communicate (e.g. by a telephone cable or telegraph line) across a provincial boundary.  The evidence in that case was that the facilities of the Alberta Government Telephones System were physically located entirely in Alberta although it “connected” with the cable and microwave equipment of other companies at the Alberta border.  Our Court held that “mere interconnection of physical facilities in one province with those in a neighbouring province, territory or state may not be sufficient to attract the characterization of the undertaking involved as interprovincial in nature” (p. 262).  However, by reason of AGT’s contractual arrangements with out-of-province communications providers both directly and through Telecom Canada, AGT was able to provide its Alberta customers with an interprovincial and international communications service.  AGT resisted federal regulation, but Dickson C.J. held:

In my view, Reed J. found that AGT itself is operating an interprovincial undertaking and that it does so primarily through bilateral contracts, its role in Telecom Canada, and the physical interconnection of its system at the borders of Alberta.  I agree with that conclusion. [Emphasis deleted; p. 263.]

See also Téléphone Guèvremont Inc. v. Québec (Régie des télécommunications) (1992), 99 D.L.R. (4th) 241 (Que. C.A.), aff’d [1994] 1 S.C.R. 878.

[100]      It was said in AGT that “one could not separate the local from the non-local without emasculating AGT’s enterprise as it presently exists” (p. 255).  The same is true of Fastfrate.

[101]      If AGT is subject to federal regulation by reason of its provision of interprovincial and international services, which can only be performed by relying on contractual arrangements with other facilities providers, Fastfrate should receive similar treatment, especially as its facilities (unlike those of AGT) are engaged at both pickup and delivery.

C.  The Central Western Railway Decision

[102]      Justice Rothstein’s response is that communication technology is different from transportation technology, and so it is, but that does not lead to a different legal test under s. 92(10) (a).  On the contrary, when in Central Western Railway (1990), Dickson C.J. was confronted with his decision in AGT (1989), he did not distinguish AGT as a communications case whereas Central Western Railway was a transportation case.  Acknowledging that different technologies are involved, he distinguished the cases on the basis of the nature of the service — intraprovincial or interprovincial — being provided to “its clients”.  He wrote:

The linchpin in the A.G.T. v. C.R.T.C. decision was this Court’s finding that A.G.T., by virtue of its role in Telecom Canada and its bilateral contracts with other telephone companies, was able to provide its clients with an interprovincial and, indeed, international telecommunications service. In contrast, the appellant Central Western does not (through bilateral arrangements or otherwise) provide an interprovincial service to its clients: it simply moves grain within central Alberta. [Emphasis added; p. 1135.]

[103]      In support of his contrary view, Rothstein J. states, at para. 65, that “the starting point in the transportation context differs from that in the communications context”, citing two passages from Dickson C.J. in Central Western Railway in support of his proposition.  That case concerned a rail line which had formerly been owned by CN Rail but had been leased and then sold to an independent company.  The rail line operated solely within the province of Alberta.  The Court held that “[t]he crucial determination is not simply whether there has been a change of corporate control, but whether the work in question can properly be described, with regard to its nature of operations, as being interprovincial” (p. 1131).

[104]      For convenience, I reproduce the two passages from Central Western Railway with the words excerpted by Rothstein J. underlined.  The first passage appears in the judgment of Dickson C.J., at p. 1144:

While the general approach to jurisdictional questions adopted in the Northern Telecom cases is critical to the disposition of this appeal, it must not be forgotten that the nature of telecommunication systems is quite different from the railway business.

In my view, Dickson C.J.’s observation that the general approach adopted in the [communications] cases “is critical to the disposition of this [transportation] appeal” is of greater interest than the underlined observation that the technologies differ.  Dickson C.J. continued:

It is worthwhile, therefore, to consider other cases which deal with the same division of powers issues under s. 92(10) (a), but with respect to different industries.  In doing so, it will become apparent that the application of the Northern Telecom approach is consistent with jurisdictional rulings made in other cases.  [pp. 1144-45]

In my view, with respect, far from saying that the legal focus is different in transportation and communication cases, Dickson C.J. is emphasizing that the focus is the same.  The technology may differ from one industry to the other, the Chief Justice acknowledges, but the test set out in the context of a communications undertaking in Northern Telecom is “consistent with jurisdictional rulings made in other cases” and is therefore applicable to the transportation undertaking in Central Western Railway (p. 1145).

[105]      My colleague also quotes the passage from Dickson C.J., at pp. 1145-46 of the Central Western Railway decision:

Central Western is physically contained within the province of Alberta, much like the pipeline in National Energy Board (Re).  In both instances, spatial boundaries limit the range of the business’ operations, something which can less easily be said with regard to broadcasting systems, where territorial boundaries are not extremely critical to the nature of the enterprise. 

With respect, I read this passage as simply elaborating the view that “different industries” have different technologies, as referred to in the first quoted passage.  Nowhere does Dickson C.J. say the test is anything other than the scope of the service — within the province or extending beyond the province — provided by the undertaking whose labour relations are at issue.

[106]      Accordingly, unless we are to reverse AGT and Central Western Railway on the fundamental test, it seems to me the Court has already decided that an undertaking that offers an interprovincial service is no less an interprovincial undertaking because part of the performance of its undertaking is contracted out to unaffiliated service providers.

D.  Communications Cases Were Relied on in the Transportation Cases and Vice Versa

[107]      The reasoning of the then Chief Justice in AGT drew on a pair of earlier Supreme Court decisions in Capital Cities Communications Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141, and Dionne, both of which challenged the right of the CRTC to regulate cable television companies whose physical works and customers were situate entirely within a single province.  The cable distributors in both cases picked up signals that emanated from other provinces and/or the United States.  In both cases, this Court concluded that the cable undertaking was interprovincial and thus under federal jurisdiction.  In Dionne, Laskin C.J. stated:

The fundamental question is not whether the service involved in cable distribution is limited to intraprovincial subscribers or that it is operated by a local concern but rather what the service consists of.  This is the very question that was faced by the Privy Council in the Radio case, supra, (in a different context, it is true) and which was also before that body in Attorney General of Ontario v. Winner.  [Emphasis added; p. 197.]

Winner, of course, dealt with an interprovincial bus carrier.  Laskin C.J. perceived no need to make any distinction between the legal test for transportation and communication undertakings as is urged in this case by my colleague Rothstein J.  In fact, Laskin C.J. continued:

In all these cases, the inquiry must be as to the service that is provided and not simply as to the means through which it is carried on.  [Emphasis added; p. 197.]

Justice Rothstein’s proposed test, in my view, stands Laskin C.J.’s proposition on its head by focussing on the means through which the undertaking is carried on rather than on the interprovincial service it provides to its customers.

E.  The Ejusdem Generis Principle

[108]      As my colleague notes, the words “other Works and Undertakings” are to be read as being of the same type as the transportation (such as railways) and communication (such as telegraph) works and undertakings referred to.  The genus thus includes both transportation and communications.  No one on this appeal contended that undertakings not engaged in interprovincial transportation and communications are included.  Thus s. 92(10)(a) is of limited application and as interpreted it does not threaten the appropriate equilibrium between federal and provincial authority.

[109]      As to what constitutes an interprovincial or international undertaking in transportation or communications, the ejusdem generis interpretive principle provides no help, in my opinion. 

F.  Reliance on Prior Lower Court Decisions

[110]      I would characterize the prior lower court jurisprudence in the freight pickup and delivery cases as a mixed bag.

[111]       Rothstein J. cites Re The Queen and Cottrell Forwarding Co. (1981), 124 D.L.R. (3d) 674, a 1981 decision of the Ontario Divisional Court which was taken neither to this Court nor to the Ontario Court of Appeal.  In that case, Steele J.’s  passing reference (at p. 676) to Cottrell’s Western Canada operations as “similar to those in Ontario” prompted the majority in the Court of Appeal in this case to say that “[a] reference to something being ‘similar’ is not revealing, and certainly does not clarify how integrated the system might be when viewed overall from the perspective of management, interdependency, unifying characteristics and so on” (para. 66).  In other words, the report of the Cottrell case, unlike the decision of the Alberta Board in this case, lacked the necessary factual foundation to characterize the service offered by Cottrell as an interprovincial undertaking.  If in fact Cottrell’s undertaking was the same as Fastfrate’s then, with respect, I think the decision of the Ontario Divisional Court was wrong.

[112]      As to my colleague’s reliance on In re Cannet Freight Cartage Ltd., [1976] 1 F.C. 174 (C.A.), the facts are easily distinguishable.  All of Cannet’s operations occurred in Ontario.  As Rothstein J. notes, at para. 55, Cannet was a company related  to Cottrell.  Cottrell solicited freight from customers in the Toronto area for forwarding to Western Canada and contracted with the Canadian National Railway Company for shipment of the freight.  Cannet’s role was limited to picking up the freight from customers (primarily in the Toronto area but never outside of Ontario) and loading the goods onto CN rail cars. Cannet had no further involvement with the shipment or delivery of the freight.  Given that Cannet’s operations were entirely contained within the province of Ontario, the decision in Cannet has little bearing on the present case.

[113]      Dickson C.J. cited with approval Cannet (but not Cottrell) in Central Western Railway for the proposition that “a shipper on that railway from one province to another does not, by virtue of being such a shipper, become the operator of an interprovincial undertaking” (p. 1146, citing Cannet, at p. 178).  This is an uncontentious starting point, but is not determinative of the issue in this case.  Fastfrate’s undertaking is much more than that of a mere shipper.  It undertakes to collect freight from a consignor in one province and deliver it to the consignee in another.

[114]      Reference is also made by my colleague to the decision of the Canada Labour Relations Board (“CLRB”) in D.H.L. International Express Ltd. (1994), 96 di 106.  That case concerned an “express pick‑up and delivery courier service” utilizing a network of 14 offices across Canada — 8 of which it owned and 6 of which were franchised.  Items in Calgary were picked up by DHL employees and returned to its local office where they were sorted by destination.  Goods being delivered out of the province were then driven to the airport where they were loaded on a commercial or charter airplane and delivered to their destination.  At the receiving end, the goods were recovered by DHL employees and delivered.  All of this was co‑ordinated through the DHL’s head office in Mississauga.  Over 90 percent of DHL’s deliveries  handled by the Calgary office were interprovincial or international.

[115]      The CLRB found that DHL was engaged in an interprovincial and international goods and document delivery service that was part of one indivisible core federal undertaking.  Noting that DHL did not actually transport freight across provincial boundaries, relying instead on contracted airlines, the CLRB held that this did not exclude federal jurisdiction.  This outcome, of course, is quite consistent with AGT.

G.  Application to the Fastfrate Facts

[116]      It is evident that Fastfrate operates as a single enterprise, subject to common management, control and direction.  There is, of course, some managerial discretion at the local level, but the facts set out by the Alberta Board show that the “single enterprise” element is met.  Not only that, but as was said of AGT, one could not separate the local from the interprovincial without gutting Fastfrate’s enterprise as it presently exists.  Of course, central management is not determinative of the issue, but it is a factor that may be considered in characterizing the undertaking.

[117]      Although Fastfrate attempted to characterize its provincial terminals as relatively independent and self-contained, the fact is that a Fastfrate terminal at the point of a shipment’s origin has to be functionally integrated with the operation of the Fastfrate terminal at the point of delivery in order to perform its pickup and delivery service.  This is not the case of a company that is simply present in each province with a stand-alone operation — like a chain of clothing stores.  On the contrary, each Fastfrate terminal is dependent on its sister terminals; the service offered depends on functional integration in the performance of Fastfrate’s contractual interprovincial undertaking to its customers.

[118]      What Fastfrate does — the service it provides, its “undertaking” — is to move freight from the hands of a customer in one part of the country to the hands of a customer in another part of the country.  Based on the facts found by the Alberta Board, I agree with its conclusion that Fastfrate’s labour relations are subject to federal regulation.

IV.  Conclusion

[119]      I would dismiss the appeal.

Appeal allowed with costs, McLachlin C.J. and Binnie and Fish JJ. dissenting.

Solicitors for the appellant:  McLennan Ross, Calgary.

Solicitors for the respondent the Western Canada Council of Teamsters:  McGown, Johnson, Calgary.

Solicitor for the respondent the Alberta Labour Relations Board:  Alberta Labour Relations Board, Edmonton.

Solicitor for the intervener the Attorney General of Ontario:  Attorney General of Ontario, Toronto.

Solicitor for the intervener the Attorney General of Quebec:  Attorney General of Quebec, Sainte‑Foy.