Date: 19980729
Docket: T-1175-97
BETWEEN:
ZINCK'S BUS COMPANY LIMITED
Applicant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR ORDER
WETSTON J.
[1] The Applicant seeks to have a payment order, dated 23 May 1997 and issued pursuant to s. 251.1(1) of the Canada Labour Code (the "Code") quashed, on the grounds that there was no jurisdiction to issue it. The inspector who issued this order, Ms. B. Allard, was appointed by the Minister of Labour pursuant to s. 249(1) of the Code. It is argued that Ms. Allard either did not have jurisdiction to issue the order, as the business in respect of which she purported to issue the order did not fall under the jurisdiction of the Parliament of Canada, and thus within the scope of the Code, or, alternatively, as a result of her failure to observe the requirements of procedural fairness.
[2] The payment order issued against the Applicant relates to the period from 1 June 1993 to 2 June 1995. During this period, the Applicant operated a bus business. Its operations include providing: school bus services to the Halifax District School Board, bus services for disabled persons to the Halifax-Dartmouth Metropolitan Authority, a regularly scheduled passenger and parcel service between Halifax and Sherbrooke, a shuttle bus service between the Halifax International Airport and the metropolitan Halifax area, and an on-demand charter service, available for inter and intraprovincial trips.
[3] There is no dispute that the various bus operations of the Applicant were conducted as a single, integrated undertaking. In particular, it should be noted that the Applicant's inter and intraprovincial charter services were maintained using a common pool of drivers, mostly the same equipment, common management and administration.
[4] Until 2 June 1995, the Applicant held an interprovincial licence which permitted it to offer round-trip, specialty charter services to destinations in New Brunswick and Prince Edward Island. The Applicant's charter service advertisement in the yellow pages did not indicate the geographic areas or destinations covered by the service. Of a total 3206 charter trips completed by the applicant between 1 November 1993 and 15 November 1994, only 30 (less than 1%) extended beyond the Nova Scotia border. Interprovincial charters represented approximately 1.5% of the Applicant's revenues, and approximately 2% of total kilometres driven, during this period.
[5] During the period in question, the Applicant did not generally participate in the bus industry practice of "interlining", whereby tickets could be issued by one carrier for destinations beyond the licensed service area of that carrier, through use of transfer and revenue sharing agreements made amongst major carriers. Therefore, to travel from a location outside Nova Scotia to a destination on the Eastern Shore covered by the Applicant's service, one would be required to purchase another ticket. Similarly, to travel from a location on the Eastern Shore to a point beyond Halifax, the southern terminus of the Applicant's route, one would be required to purchase a separate ticket from another carrier.
[6] The circumstances which gave rise to the issuance of the payment order are as follows: On 27 June 1994, two employees of the Applicant filed complaints with Human Resources Development Canada (the "Department") claiming general holiday, overtime and vacation pay pursuant to the Code. Ms. Allard attended at the Applicant's premises in July 1994 to discuss these complaints. Ms. Allard again contacted the Applicant in December 1994, and was informed shortly thereafter, by the Applicant, that the issue of whether the Applicant's business was under federal jurisdiction was pending before the Canada Labour Relations Board (the "CLRB"). The Minister therefore permitted the matter to lapse until the CLRB issued its finding.
[7] The CLRB certified the Amalgamated Transit Union as the bargaining agent for the Applicant's employees in April 1995. This certification was made notwithstanding the fact that the Union had already been certified as the bargaining agent for the employees, in May 1993, by the Nova Scotia Labour Relations Board. ("the NSLRB"). Following the CLRB decision, Ms. Allard again contacted the Applicant to request that the claims be satisfied within two weeks. Once this period had elapsed, Ms. Allard contacted the Applicant on two more occasions to obtain payroll information, which was promised to her by the Applicant, but never provided.
[8] During her discussions with the Applicant, in May 1995, Ms. Allard indicated that the Department would no longer consider that the applicant's business fell within the scope of the Code if it surrendered its interprovincial charter licence. Accordingly, on 2 June 1995, the Applicant abandoned its interprovincial licence and ceased making interprovincial charter trips.
[9] The outstanding claims were settled by way of direct payment by the Applicant to the complainants in November 1995. However, in January 1996, the Department received 25 new complaints from other employees of the Applicant, concerning the same compensation issues and time period in respect of which the earlier claims had been submitted and settled, i.e. prior to 2 June 1995.
[10] In June 1996, Ms. Allard contacted the Applicant regarding these new complaints. However, resolution of the claims was not achieved. In September 1996, Mr. John Murphy, M.P. wrote to the Minister requesting that the file in respect of these new claims be placed in abeyance. The Minister denied the request, but did write to the Applicant to confirm that he had not considered the Applicant's business to be under federal jurisdiction since 2 June 1995.
[11] In November and December 1996, Ms. Allard continued to request the Applicant to provide her with access to its payroll records to facilitate calculation of the claims. Ms. Allard's requests were refused by the Applicant, who indicated that she did not have jurisdiction to investigate the complaints. The Applicant admits that its lack of cooperation with Ms. Allard was designed to bring the matter before the courts, so that resolution of the question of federal jurisdiction could be resolved.
[12] Having failed to obtain payroll information from the Applicant, Ms. Allard requested each individual claimant to provide her with the information necessary for her to calculate the amounts owed to each employee under the Code. After receiving this information from the claimants, Ms. Allard made a final attempt to obtain the Applicant's payroll records in May 1997, which was again refused.
[13] At this time, the Applicant requested the information upon which Ms. Allard based her calculations. Notwithstanding the Applicant's request, she did not provide access to the information made available to her by the claimants and instead issued a payment order based upon her calculations using the information available to her at the time.
[14] There are two issues in this judicial review:
(1) should the payment order be set aside because the inspector failed to observe the principles of natural justice, and
(2) should the order should be set aside because the application of the Code to the applicant's business was ultra vires?
[15] The Applicants argue that Ms. Allard's failure to provide it with access to the information she used to calculate the quantum of the payment order is a violation of procedural fairness, and that this violation was aggravated by an alleged misrepresentation of the information she had before her. I cannot accept this argument. First, I am not satisfied that the evidence demonstrates that Ms. Allard made such a misrepresentation.
[16] In her correspondence with the Applicant concerning the information she had received from the Applicant's employees, Ms. Allard wrote: "My determination is based on the payroll information provided by the employees concerned (pay stubs, T-4 slips, etc.)". Upon cross-examination, Ms. Allard admitted that her calculations were based solely upon the statutory declarations of the claimants. It is clear, however, that Ms. Allard had asked the claimants to use documents such as T-4 slips or pay stubs to provide her with the required information. As such, it would not be appropriate to characterize Ms. Allard's statement to the Applicant as a misrepresentation, though it could have been stated more clearly.
[17] Second, while it might otherwise be a breach of procedural fairness for an inspector formulating a payment order to refuse an employer access to the information upon which the quantum is based, it is clear that in this case, it is the lack of cooperation provided by the Applicant which precipitated Ms. Allard's actions. The principle of natural justice at issue in this case is the right to be heard. Having refused to participate in the process on so many occasions, in order to bring this matter before the court, the Applicant cannot now claim that it was treated unfairly by not being granted access to the information in Ms. Allard's possession. In this case, I do not agree that the breach of natural justice can be alleged under circumstances where the breach, if any, was precipitated by the applicant's conduct.
[18] I now turn to the constitutional issue. First, it should be noted that the evidence in support of the assertion of federal jurisdiction over the Applicant's business undertaking is not extensive. The main facts are contained within a report prepared for the CLRB for its consideration of whether to certify the Union as a bargaining agent for the Applicant's employees, under the Code.
[19] Section 86 of the Code provides that Part III of the Code applies only in respect of employees who are employed upon or in connection with the operation of any federal work, undertaking, or business. Section 2 of the Code defines "federal work, undertaking or business" as any work, undertaking or business that is within the legislative authority of Parliament, including: "a railway, canal, telegraph or other work or undertaking connecting any province with any other or others of the provinces, or extending beyond the limits of a province". This definition reflects the wording of s. 92(10)(a) of the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, which, in conjunction with s. 91(29) of the Constitution Act, 1867, provides a limited exception to the plenary authority of provincial legislatures over local works and undertakings.
[20] While labour relations are normally a subject which falls under the exclusive jurisdiction of a province, as a matter of property and civil rights within the terms of s. 92(13) of the Constitution Act, 1867, Parliament may exercise exclusive jurisdiction if that jurisdiction is an integral part of its competence in some other federal subject: Construction Montcalm Inc. v. Minimum Wage Com'n., [1979] 1 S.C.R. 754 at 768-769. In this case, therefore, the Applicant's business would be subject to the Code only if it could be demonstrated that it fell within the ambit of s. 92(10)(a) of the Constitution Act, 1867, as an undertaking which connected Nova Scotia with another province, or extended beyond the limits of Nova Scotia.
[21] In order to determine whether a business, service or undertaking falls within the ambit of s. 92(10)(a), it is necessary to ascertain the essential nature of its operation, i.e. whether the undertaking, "in pith and substance" is interprovincial: A.-G. Ont. v. Winner, [1954] 4 D.L.R. 657 at 680 (P.C.). In so doing, one must examine the "normal or habitual activities of the business as a 3going concern3, without regard for exceptional or casual factors": Northern Telecom v. Communications Workers of Canada, [1980] 1 S.C.R. 115 at 132.
[22] In this case, it is clear that the essential nature of the Applicant's business was to provide transportation bus services to persons located in and around Halifax, including the Eastern Shore. The question to be determined is whether the nature and degree of the interprovincial charter transportation service provided by the Applicant is, in pith and substance, sufficient to find that the Applicant's undertaking constituted a federal undertaking, i.e. one that connected Nova Scotia with another province or extended beyond the limits of Nova Scotia.
[23] To answer such questions in other transportation cases, courts have inquired into whether the undertaking at issue is "continuous and regular" or "casual and unscheduled": RE: Ottawa-Carleton Regional Transit Commission Amalgamated Transit Union, Local 279 (1983), 4 D.L.R. (4th) 452 at 460 (Ont. C.A.) ("OC Transpo"). Generally, a relatively low threshold of interprovincial activity has been sufficient to support a finding that a particular undertaking qualifies as an interprovincial one. Courts have often held that an undertaking falls within federal regulatory authority even if a small percentage of its business activity is interprovincial or international. However, the primary indicia for determination of whether a transportation undertaking is, in pith and substance, federal remains whether the interprovincial services are a continuous and regular part of the undertaking's operations. If this requirement is met, then the whole undertaking has generally been found to be subject to exclusive federal oversight.
[24] In determining whether the interprovincial portion of an undertaking is continuous and regular, a 'percentage of interprovincial' business test should not be relied upon: OC Transpo at 46. However, it may be useful to consider the frequency of interprovincial traffic, relative to the overall traffic involved in operating the undertaking, to determine whether the interprovincial portion of an undertaking can properly be described as continuous and regular: R. v. Manitoba Labour Board, ex parte Invictus Limited (1967) 65 D.L.R. (2d) 517 (Man. Q.B.).
[25] Even a marginal amount of unscheduled, interprovincial traffic (relative to the overall traffic engaged in by a business, or expressed as a percentage of business revenue) may be sufficient to find that an undertaking is regular and continuous, and therefore essentially "interprovincial". This is the case if it can be established that the Applicant "stands ready at any time" to conduct such a service, that the Applicant has gone to the expense of acquiring the necessary licences and permits, and that there is sufficient frequency in the interprovincial trips made: R. v. Cooksville Magistrates Court, ex parte Liquid Cargo Lines Ltd. (1964), 46 D.L.R. (2d) 700 (Ont. H.C.); RE: Tank Truck Transport Ltd. (1960), 25 D.L.R. (2d) 161 at 704-5 (Ont. H.C.).
[26] In this case, there was evidence that the Applicant stood ready to provide interprovincial charter service, subject to equipment availability and price. However, while it may have stood ready to provide such services, it did so only 30 times over a one-year period, representing less than 1% of all of the Applicant's charter traffic.
[27] The only other evidence with respect to the Applicant's charter business is a single "Yellow Pages" advertisement which does not even mention that the Applicant was engaged in the interprovincial bus business. This advertisement stands in sharp contrast to that of its competitor, Acadian Lines Limited, which explicitly advertised its interprovincial services. Recently, the CLRB determined, in a case relied on by the Respondent, that Acadian Lines Limited stood ready to provide interprovincial charter service, and that its business was therefore properly subject to federal labour regulation: Acadian Lines Limited v. C.A.W. Canada (1994), 96 di 41.
[28] In my opinion, the low volume and limited frequency of the Applicant's unscheduled, interprovincial trips indicates that the "interprovincial" portion of the Applicant's business was exceptional, rather than "normal or habitual" or "regular and continuous". Evidence that the Applicant has not engaged in "interlining", as have larger carriers, also suggests that its bus business was not interprovincial in scope.
[29] From a practical perspective, the Applicant's occasional, infrequent and unscheduled interprovincial charter service can be described as being merely incidental to what was, in pith and substance, a local transportation undertaking: R. v. Manitoba Labour Board, supra. Therefore, the Applicant's business did not fall within the ambit of s. 92(10)(a) of the Constitution Act, 1867, during the relevant time, and did not meet the definition of "federal work, undertaking or business" contained within s. 2 of the Code. Accordingly, the payment order against the applicant is ultra vires.
[30] The payment order dated 23 May 1997 shall therefore be set aside. I do not consider this to be an appropriate case for costs pursuant to Rule 400 of the Federal Court Rules, 1998.
Judge
Ottawa, Ontario
29 July 1998