C. Jurisdiction over Works and Undertakings
| Author | Patrick J. Monahan - Byron Shaw |
| Pages | 379-396 |
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Section 92(10) has been the greatest single source of constitutional litigation in the field of transportation. The principles the courts have developed in their interpretation of this provision make up the bulk of the constitutional jurisprudence in the area of transportation.
Section 92(10) of the Constitution Act, 1867 provides that the provincial legislatures have exclusive power to make laws in relation to local works and undertakings other than those in 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;
(b) Lines of Steam Ships between the Province and any British or Foreign Country;
(c) Such Works as, although wholly situate within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the Provinces.
Although section 92(10) is framed as a grant of legislative power to the provinces, the "exceptions" in subsections (a), (b), and (c) provide a source of exclusive federal jurisdiction over interprovincial and international works and undertakings.
The relationship between federal and provincial authority under section 92(10) was discussed by the Supreme Court of Canada in the 2009 decision of Consolidated Fastfrate Inc. v. Western Canada Council
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of Teamsters.5 Rothstein J., for the majority, advocated a narrow scope of federal jurisdiction:
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.6Rothstein J.’s comments in this regard are somewhat surprising. Roth-stein J. himself noted that section 92(10)(a) was "originally conceived as a primary grant of authority to the federal government."7He noted that resolutions passed at the Quebec Conference in October 1864 provided that the federal government would have primary legislative authority over "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" and that the provincial governments would have authority over "Local Works." However, Rothstein J. asserted that ultimately, a "preference for provincial regulation" had been expressed by the British Parliament in the text of section 92(10), apparently because federal authority was framed as an exception from provincial jurisdiction.
However, it is far from clear that a narrow interpretation of federal authority over transportation was intended by the text of section 92(10). As Binnie J. stated for the minority in Fastfrate:
The manner in which the Constitution Act, 1867 is structured does not mean that federal jurisdiction over interprovincial undertakings should receive a cramped interpretation.
...
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).8Furthermore, prior to Fastfrate, both the Privy Council and the Supreme Court had interpreted federal authority over local works and
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undertakings relatively broadly.9In any event, regardless of the breadth of federal jurisdiction under section 92(10), it is clear that the "exceptions" in subsections (a), (b), and (c) are an important source of federal jurisdiction.
Section 92(10) draws a distinction between "works" and "undertakings." The courts have interpreted an "undertaking" as involving both a physical and an organizational element. Viscount Dunedin in the 1932 Radio Reference referred to an undertaking as "not a physical thing, but ... an arrangement under which ... physical things are used."10In the 1954 Winner case,11the Privy Council held that Parliament possessed jurisdiction not only over the buses that provided the interprovincial transportation but also over the bus company itself. This functional approach means that federal authority over interprovincial undertakings extends to all aspects of the organization or enterprise that provides the service in question.
The Courts have held that jurisdiction over a work or undertaking must be allocated to a single level of government. The courts have consistently rejected the idea of dividing jurisdiction between the federal and the provincial governments over a single undertaking. This principle was first established in the Bell Telephone case of 1905.12The Privy Council held that a telephone company’s long-distance business and its local business could not be separated for the purpose of allocating legislative jurisdiction. The Board held that the telephone company was engaged in an interprovincial undertaking and thereby the whole of the company’s business, including its strictly local activity, fell under federal jurisdiction.13
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This "undivided" approach is quite different from the Privy Council’s interpretation of the federal trade and commerce power. As discussed in Chapter 9, the Privy Council restricted federal authority over trade and commerce to the interprovincial or international aspects of trade; the local aspects of trade remained subject to exclusive provincial jurisdiction.14By contrast, once an undertaking is classified as interprovincial, federal jurisdiction extends to all aspects of the enterprise, including features that are strictly local. This has meant that federal authority to regulate transportation undertakings has been much more extensive and more effective than in other areas of federal jurisdiction such as trade and commerce.
The courts’ resistance to dual jurisdiction in the transportation field has had important implications in terms of the central issues that have emerged in litigation surrounding section 92(10). The allocation of jurisdiction has been treated by the courts as "an all or nothing affair";15a transportation undertaking is subject either to federal jurisdiction or to provincial jurisdiction but not simultaneously to both. As a result, the key question for purposes of section 92(10) is one of characterization: is the undertaking interprovincial or merely local? This has led, in turn, to two recurring questions that continue to dominate the jurisprudence in this area:
· What extent of interprovincial activity or connection is necessary to qualify as an interprovincial as opposed to a merely local undertaking?
· To what extent can federal jurisdiction be extended to an otherwise local undertaking by virtue of its integration or connection with an interprovincial undertaking?
The bar for interprovincial activity required for an undertaking to qualify as interprovincial has been set fairly low. The courts have consistently held that an undertaking falls within federal regulatory authority even if only a small percentage of its business activity is interprovincial or international. The primary test is whether the interprovincial or
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international services are a "continuous and regular" part of the under-taking’s operations. If this requirement is met, then the undertaking is subject to exclusive federal regulation.
In Re Tank Truck Transport,16the Ontario High Court of Justice held that the Ontario Labour Relations Act did not apply to an Ontario trucking company whose operations were predominantly confined to the province of Ontario. In 1959, the trucking firm had completed 94 percent of its trips within the province, with just 6 percent extending beyond provincial borders. However, the court held that the interprovincial activity was a "continuous and regular" aspect of the trucking firm’s operations and, as a result, the whole of the undertaking, including the local operations within Ontario, was subject to the exclusive authority of Parliament.17A similar ruling was made in the Liquid Cargo case,18where only 1.6 percent of a trucking firm’s trips extended beyond provincial boundaries.
In Alberta Government Telephones (AGT),19the Supreme Court held that agt, a provincial Crown corporation operating a telephone system in Alberta, fell under federal authority. AGT’s physical facilities were located entirely within the province of Alberta, and the system could carry telephone messages only within the province. However, the AGT system was connected with other telephone companies outside the province to enable local subscribers to make telephone connections outside the province. agt argued that it fell under provincial regulatory authority because its activities were totally confined to the province of Alberta. The Supreme Court unanimously rejected this argument and held that AGT was subject to exclusive federal authority.20In reaching this conclusion, the Court articulated a number of general principles that should guide the section 92(10)(a) analysis:
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The location of the physical apparatus of an undertaking in a single province and the fact that all the recipients of a service are within a single province will not preclude a finding that an...
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