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Labour - Jurisdiction - Federal versus Provincial. Holland L.P. v. Labourers International Union of North America et al.
In Holland L.P. v. Labourers International Union of North America et al. (Ont Div Ct, 2026) the Ontario Divisional Court dismissed a labour JR, here regarding a dispute between Ontario and federal labour jurisdiction:[26] The starting point is the presumption that labour relations are a provincial matter engaging the provincial authority over property and civil rights under section 92(13) of the Constitution Act, 1867. That presumption can be rebutted in two circumstances: when the employment relates to a work, undertaking or business within the legislative authority of Parliament; or when the work is an integral part of a federally regulated jurisdiction (“derivative jurisdiction”): Tessier Ltee. v. Quebec, 2012 SCC 23, [2012] 2 S.C.R. 3, at paras. 17 and 18.
[27] In this case, CN and CP are clearly engaged in an interprovincial undertaking within the meaning of section 92(10)(a) of the Constitution Act, 1867. The Applicant, however, is not engaged in a direct federal undertaking. Therefore, the question is whether, by virtue of their involvement in CN and CP’s operations, the Applicant’s work should also fall under federal jurisdiction.
[28] In Tessier, the Court reviewed the case-law on the scope of derivative jurisdiction. The Court summarized that review as follows (at paras. 45-46):[45] McLachlin J., writing in dissent, framed the case differently and in a way that is of particular assistance in this case. After noting that the gathering and processing plants themselves were not inter-provincial transportation undertakings (the direct jurisdiction test), she held that they could only be subject to federal regulation if they were integral to the inter-provincial pipelines. In applying the derivative approach, she emphasized that exceptional federal jurisdiction would only be justified when the related operation was functionally connected to the federal undertaking in such an integral way that it lost its distinct provincial character and moved into the federal sphere (para. 111). Like Dickson C.J. in United Transportation Union, McLachlin J. noted that the test is flexible. Different decisions have emphasized different factors and there is no simple litmus test (paras. 125 and 128). She considered the common management of and interconnection between the facilities and the pipeline and the dependency of the pipeline on the facilities and concluded that the facilities retained their distinct non-transportation identity. They were not vital, in the requisite constitutional sense, to the inter-provincial pipeline.
[46] So this Court has consistently considered the relationship from the perspective both of the federal undertaking and of the work said to be integrally related, assessing the extent to which the effective performance of the federal undertaking was dependent on the services provided by the related operation, and how important those services were to the related work itself. [29] The parties agree that the Board correctly identified this test (see paragraph 49 of the reasons). The test is also set out in recent jurisprudence of the Court of Appeal: see Ramkey Communications Inc. v. Labourers International Union of North America, 2019 ONCA 859, 149 O.R. (3d) 1, at para. 62.
[30] In applying this test, it must also be remembered that the federal power in this area is exceptional and should be confined to situations where it is required to meet the exception embodied in section 92(10)(a) of the Constitution Act, 1867: Tessier, para. 45, Westcoast Energy Inc. v. Canada (National Energy Board), 1998 CanLII 813 (SCC), [1998] 1 S.C.R. 322.
[31] In Westcoast, McLachlin J. (dissenting) noted (at para. 116) that “[b]ecause the federal power is exceptional, it follows that it should be extended as far as required by the purpose that animates it, and no further.” Although this passage was set out in dissent, the principle has found substantial support in subsequent case-law.
[32] The parties do not take issue with these principles and are ad idem that the Board properly identified them. The Applicant takes issue with how the Board applied these principles in three ways:a. That the Board fundamentally misapplied the derivative jurisdiction principle by, among other things, erring in its’ characterization of the Applicant’s operations, creating an artificial distinction by distinguishing between the technology used by the Applicant and the work performed by the Applicant and by adopting an unreasonably narrow view of what was required for CN and CP to operate effectively;
b. Failing to consider the relationship of the federal undertaking and the Applicant’s employees from the perspective of the Applicant and not just CN and CP; and
c. Wrongly following the Quebec Court of Appeal’s decision in Madysta Telecom Ltee c. Commission des normes, de l’equite, de la sante et de la securite du travail, 2020 QCCA 183. [33] I start with the Board’s analysis of the derivative jurisdiction principles. Counsel for the Applicant argued that the approach adopted by the Board was too narrow, as it in essence reads out the concept of derivative jurisdiction. I disagree for two key reasons. First, the broad reading proposed by the Applicant would extend federal jurisdiction well beyond “the purpose that animates it”, by including maintenance and construction work that is not integral to the operation of the railway under federal jurisdiction. Just as in Ramkey, the work being done in this case is being done on the infrastructure of the railway and not its’ operation.
[34] In Ramkey, the Court set out the appropriate analytical focus in a case such as this (at para. 66):[66] Respectfully, the Divisional Court erred by considering the extent to which the delivery of telecommunications services by Rogers and other telecommunications companies like Rogers was dependent on having a functioning network line and on work of the type performed by Ramkey's construction technicians. The proper focus is the extent to which Rogers and the other telecommunications companies, to which Ramkey's construction technicians provided construction services, were dependent on the services of Ramkey's construction technicians -- the particular employees under scrutiny: Tessier, at para. 38. [35] The focus, in other words, is on CN and CP’s dependence on these services. In this case, the Board grappled with the interrelationship between the railways and the Applicant. I see no error in that analysis, particularly since CN took some of the flash-butt welding work in-house at one point in the past, and that there are other provincially regulated contractors that perform thermite welding. The companies performing thermite welding appear to be in a similar position to the provincially-regulated companies providing services to Rogers in Ramkey.
[36] The Applicant argues that they are the only business that performs flash-butt welding and, as a result, their operations are integral to the operations of CN and CP. The problem with that argument is that it distinguishes the Applicant from the other provincially regulated companies that provide thermite welding on the basis of the technology that they are using rather than the function that they are engaged in. The boundaries that determine whether a business falls under provincial or federal jurisdiction should not be drawn based on the nature of the equipment that is used to perform the work. The boundaries should be drawn on a functional basis, which means considering what work is actually performed and how it fits into the federally regulated business.
[37] In this case, the work that is actually performed is on the maintenance of the infrastructure of the railways and not on the operation of the railways themselves. This can be contrasted with the decision in Labourers International Union of North America, Local 183 v. Rail-Term Inc, 2014 CanLII 19409. In Rail-Term, the Board considered the issue of derivative jurisdiction. Rail-Term moved trailers and containers throughout the rail yard to enable trains to be loaded and unloaded. Rail-Term was found to be federally regulated under the derivative jurisdiction principle. The reasoning in Rail-Term was, simply put, that unloading the train at the end of an interprovincial trip is an integral part of the trip itself. This made the work that Rail-Term was engaged in at the yard a federal undertaking.
[38] This case also illustrates that, even on a narrow interpretation of derivative jurisdiction, there will be cases that are caught by it. The fact that derivative jurisdiction has a narrow application is part of the design of the concept, as derivative jurisdiction is not supposed to go beyond the bounds of the “purpose that animates it”.
[39] The second reason why I disagree with the Applicant’s view that the Board’s analysis of the derivative principles is too narrow focuses on the specific facts of the relationship. I acknowledge (as the Board did) that the Applicant is “on call” for CN and CP. However, neither railway directly supervises the Applicant’s employees. Instead, it provides instructions to the Applicant. The Applicant’s employees are independent from the railways, and the Board was correct in its’ conclusion that their work is “far removed” from the operation of an interprovincial railway.
[40] This brings me to the other two decisions that the Applicant relies on. Both of them are decisions of the British Columbia Labour Relations Board: Re R.F. Welch British Columbia Ltd., 1982 CarswellBC 3675 and Murrin Construction Ltd. v. CSWU, Local 1611, 2002 CanLII 53412. Both of these cases are distinguishable from the facts before us. In R.F. Welch, the employees were integrated into the railway’s operation in such a complete way that they were actually supervised by railway supervisors. Murrin is closer to the facts in this case, but it can also be distinguished on the basis that CN was far more dependent on Murrin than either CN or CP was in this case (see para. 85 of Murrin).
[41] In the end, the Board in this case conducted a holistic analysis of the various facets of the relationship between the Applicant and the Respondent. That analysis took into account the various factors required in the analysis, and in particular the extent to which the effective performance of the railways was dependent on the services provided by the Applicant. Accepting the underlying facts as found by the Board, I see no error in this analysis.
[42] Given this analysis, the second and third arguments made by the Applicant can be briefly disposed of. I reject the Applicant’s argument that the Board failed to consider the relationship between the Applicant and the federal undertaking from the Applicant’s perspective. The Board grappled with the fact that the Applicant had proprietary technology that gave the Applicant a unique ability to provide a superior service to CN and CP. However, the mere existence of this proprietary technology is not sufficient to bring what would otherwise be a provincially regulated entity under federal jurisdiction. Further, the Board considered the amount of work the Applicant did for CN and CP from the Applicant’s perspective, which was not determinative. I have set out my reasons for concluding that this would be a provincially regulated entity above.
[43] Finally, there is the Board’s alleged error in relying on the Madysta decision. It is worth setting out the Board’s conclusion about Madysta in its entirety (para. 75):75. In reaching the conclusion on the facts before me that the presumption of provincial jurisdiction has not been displaced, I also note that the Quebec Court of Appeal decision in Madysta Télécom ltée v. Commission des normes, de l’équité, de la santé et de la sécurité du travail, 2020 QCCA 183 (CanLII) at para. 86 suggests that, in order to fall under derivative federal jurisdiction, a local entity has to be an integral part of a single federal undertaking or business. In that case, the Court held that, since Madysta performed a similar amount of work for five different telecommunications companies, it was not integrated into any single federal undertaking. Similarly, in the present case, Holland did roughly the same amount of work for each of the two Class 1 railways in 2017 and a substantial amount of work for each of them in other years. As noted in Madysta, cited above, in order to fall under derivative federal jurisdiction, the entity at issue must be integral to a single federal undertaking rather than to a group of companies or to a sector. [44] As I have noted above, the analysis in these types of cases is multifactorial. The fact that the Applicant worked for more than one railway was simply one more of the factors that the Board considered when it was analyzing the factual matrix in this case. When considered in the context of the whole analysis, I do not view the Board’s reliance on Madysta as an error. . East Coast Hydraulics & Machinery (2009) Limited v. International Longshoremen's Association, Local 1976
In East Coast Hydraulics & Machinery (2009) Limited v. International Longshoremen's Association, Local 1976 (Fed CA, 2025) the Federal Court of Appeal allowed a labour JR from a CIRB order that "certified the respondent as the bargaining agent for a group of persons employed by the applicant as longshoring workers", here "solely on jurisdictional grounds – that is, on the basis that the subject matter of the Order is within provincial jurisdiction":[4] The only question raised on this judicial review is whether the Board erred in taking jurisdiction and issuing the certification Order. The main provisions at issue are the divisions of federal and provincial powers in sections 91 and 92 of the Constitution Act, 1867. The question of jurisdiction is subject to correctness review: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at paras. 53, 55.
[5] The applicant did not have legal representation before the Board and the issue of jurisdiction was not raised by either party. In addition, the Board did not discuss jurisdiction in its brief Order granting certification. Rather, it appears that the Board assumed that because the workers were engaged in longshoring, the subject matter of the Order was within federal jurisdiction.
[6] In this Court, the applicant submits that the Board erred in taking jurisdiction since the labour relations of the longshoring employees fall within provincial jurisdiction: they are a severable group of employees working exclusively for fishing vessels, which do not constitute a federal undertaking. The respondent, on the other hand, submits that the Board made no error in issuing the Order and that the application should be dismissed.
[7] There are several significant judicial decisions which discuss the applicable legal framework. These include: Northern Telecom v. Communications Workers, 1979 CanLII 3 (SCC); Northern Telecom v. Communication Workers, 1983 CanLII 25 (SCC); Tessier Ltée v. Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23 [Tessier], and Jim Pattison Enterprises Ltd. v. British Columbia (Workers’ Compensation Board), 2011 BCCA 35. Together they illustrate that the legal framework is complex and the determination of jurisdiction factually suffused.
[8] Based on these decisions, it is clear that labour relations in the longshoring industry do not always fall within federal jurisdiction. In Tessier, the Supreme Court of Canada instructed that "“a stevedoring work or undertaking will be subject to federal labour regulation if it is integral to a federal undertaking in a way that justifies imposing exceptional federal jurisdiction”": at para. 28. Accordingly, the Board should not have taken jurisdiction without considering these legal principles and erred in doing so.
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