Total Oilfield Rentals Limited Partnership v Canada(Attorney General), 2013 ABQB 263

Court of Queen ’ s Bench of Alberta Citation: Total Oilfield Rentals Limited Partnership v Canada(Attorney General), 2013 ABQB 263 Date: 20130503 Docket: 1201 00477 Registry: Calgary Between: Total Oilfield Rentals Limited Partnership Applicant - and - The Attorney General of Canada Respondent - and - The Attorney General of Alberta Intervenor _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R. J. Hall _______________________________________________________ [ 1 ] The issue in this matter is whether the Applicant is subject to federal jurisdiction pursuant to the Motor Vehicle Transport

Act and Commercial Vehicles Drivers’ Hours of Service Regulations, or whether it is subject to the Alberta Provincial Traffic Safety Actand regulations made thereunder.

Also argued before me is whether the Applicant is subject to the Canada Labour Code, or whether it issubject to Provincial labour legislation. [2] Subsection 91(29) of the Constitution Act provides that the matters within the exclusive legislative authority of theParliament of Canada are those classes of subjects expressly excepted from Provincial Jurisdiction: 91 . . . the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjectsnext 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 assignedexclusively to the Legislature of the Provinces. [3] Subsection 92(10) of the Constitution Act provides: 92 In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects nexthereinafter 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 withany other or others of the Provinces, or extending beyond the Limits of the Province . . . [emphasis added] [4] That is to say, local works and undertakings are governed exclusively by the Province, unless they are lines of steams orother ships, railways, canals, telegraphs, and other works and undertakings connecting the Province with any other or others of theProvinces, or extending beyond the limits of the Province.

The words “and other works and undertakings” are to be interpreted ejusdemgeneris with the words preceding them. If the works and undertakings fall within the exception, then they are subject to the exclusivelegislative authority of the Parliament of Canada. [5] The Applicant states, and the Respondents concede that the question of whether an undertaking, service or business isProvincial or Federal depends upon the nature of its operation. The Court must assess whether the business or undertaking’s essentialoperational nature brings it within a federal head of power.

In order to determine the nature of an operation, the Court must look at thenormal or habitual activities of the business as a going concern. The exceptional aspects of an enterprise do not determine its essentialoperational nature. It is the essential nature of the undertaking that determines constitutional jurisdiction.

See Tessier Lteé v Quebec(Commission de la santé et de la sécurité du travail, 2012 SCC 23 , [2012] 2 SCR 3 (“Tessier”). [6] At paragraphs 18 and 19 of Tessier, the Supreme Court of Canada states as follows: In the case of direct federal labour jurisdiction, we assess whether the work, business or undertaking’s essential operational nature bringsit within a federal head of power. In the case of derivative jurisdiction, we assess whether that essential operational nature renders thework integral to a federal undertaking.

In either case, we determine which level of government has labour relations authority by assessingthe work’s essential operational nature. (underlining added) In this functional inquiry, the court analyzes the enterprise as a going concern and considers only its ongoing character: Commission dusalaire minimum v. Bell Telephone Co. Of Canada. The exceptional aspects of an enterprise do not determine its essential operationalnature.

A small number of exceptional extra-provincial voyages which are not part of the local transportation company’s regularoperations, for example, do not determine the nature of a maritime transportation operation (Agence Maritime Inc. v. Conseil canadien

des relations ouvrières, (CSC), [1969] S.C.R. 851), nor does one contract determine the nature of a constructionundertaking (Construction Montcalm Inc. v. Minimum Wage Commission, (SCC), [1979] 1 S.C.R. 754). Nor will a smallamount of local activity overwhelm the nature of an undertaking that is otherwise an integral part of the postal service (Letter Carriers’Union of Canada v. Canadian Union of Postal Workers, (SCC), [1975] 1 S.C.R. 178). [emphasis added] [7] In this case we are dealing with direct jurisdiction.

In Tessier the Court was dealing with a case of derivative jurisdiction;however the passage quoted above sets out the test endorsed by the Supreme Court of Canada, for both direct and derivative jurisdiction,at least at the outset of the inquiry.

If the essential operational nature of the enterprise is not one that attracts federal jurisdiction then theenterprise is governed by provincial legislation. [8] If the essential nature of the enterprise is transportation of goods or people, then a second inquiry is necessary to determinewhether the enterprise regularly and continuously transports goods or people interprovincially. [9] Total Oilfield is in the business of renting oilfield equipment. Not only does it rent the equipment to others, but it willtransport that equipment to the job site.

In its website, Total Oilfield holds itself out as follows: Total Oilfield Rentals LP is engaged in the rental and transportation of drilling, completion and production equipment in the oil andnatural gas prone areas of British Columbia, Alberta, South-Eastern Saskatchewan and North Dakota. . . . Total Oilfield Rentals LP has a large fleet of modern, well maintained oilfield trucks, including boom trucks, bed trucks, texas beds,winch tractors, service trucks and trailers.

This transportation fleet not only enables us to mobilize our rental equipment, but also allowsus to offer a premier general oilfield hauling service. [10] Total Oilfield invoices its customers for rental of the equipment and also for transport of the equipment. Approximately 35%of Total Oilfield’s revenue is from the transportation of the oilfield equipment. Occasionally, Total Oilfield transports the equipment ofothers on its vehicles (5 to 10% of its business). [11] Total Oilfield has 14 branches in Alberta, 3 in British Columbia and 2 in Saskatchewan. It has its head office in Whitecourt,Alberta.

All of its trucks are registered in Alberta and it is part of the Out of Province Travel Program known as ProRate, whereby theregistration fees and taxes are prorated across all of the jurisdictions in which the trucks have travelled, based on the percentage of totaldistance travelled within each jurisdiction.

Through this program the participating jurisdictions are paid for the use of their road systemson an equitable basis. [12] While most of Total Oilfield’s rental equipment is delivered by it to its customers within a province (intraprovincially), about20 to 30% of Total Oilfield’s trucks travel between provinces (interprovincially) over the course of a year. Approximately 21% of TotalOilfield’s deliveries of rental oilfield equipment are interprovincial. [13] The Applicant maintains, that its essential operational nature – the core of its business – is oilfield equipment rental.

Thetransportation of its equipment to job sites is supportive of its core business, but is not its essential operational nature.

Therefore, it issubject to provincial Traffic Safety Act regulations only. [14] The intervenors argue that Total Oilfield’s business is oilfield equipment rental and transportation; and as the interprovincialtransportation is regular and continuous, Total Oilfield is subject to the Federal Motor Vehicle Transport Act and the CommercialVehicles Drivers’ Hours of Service Regulations. [15] Much of the case law in the area involves enterprises whose core business was admittedly transportation of goods or peoplefor hire.

The essential operational nature of their businesses was conceded to be transportation, and the analysis then moved to theinterprovincial aspects of such transportation, to determine if they were regular and continuous. [16] Here, however, we do not reach the regular and continuous analysis unless the essential operational nature of Total Oilfield isdetermined to be transportation.

[17] I cannot conclude that it is. Total Oilfield is an oilfield equipment rental company. In order to be competitive in marketing itsoilfield equipment, it transports the equipment to the job site. [18] While Total Oilfield invoices for the transportation as a separate invoice item from the rental charges, the transportationremains incidental and supportive of its core rental business. [19] In Conklin & Garrett Ltd v Ontario, (ON SC), [1989] OJ No. 1840 the Court considered whether anamusement ride operator which transported its equipment interprovincially was subject to provincial or federal legislation.

The Courtfound that transporting its own equipment interprovincially did not put Conklin & Garrett Ltd. in the transportation business. [20] Our Alberta Court of Appeal appears to have accepted that same principle in R v Foremost Transport Personnel andManagement Services Ltd, [1982] A.J. No. 581. In that case Foremost Transportation contracted with Sears to carry Sears’ goodsinterprovincially. At paragraph 3 the Court stated: During the course of argument two critical concessions emerged.

The Attorney General acknowledges that, viewed separately, Foremostwould not be subject to Alberta labour regulation as it is carrying out an interprovincial undertaking. Foremost acknowledges that ifSears were itself carrying out the work entrusted to Foremost it would continue to be subject to Provincial law as the transportation ofmerchandise is merely incidental to Sears’ main activity of retail selling. While the passage above is not a ruling of the Court, it appears to be a concession exacted by the Court during argument. [21] In

summary then, the fact that total Oilfield transports its goods to the oilfield for rental to its customers does not maketransportation the core of its business. Nor does it make oilfield equipment rental and transportation the core of its business. The core ofits business is oilfield equipment rental.

While 5 to 10% of Total Oilfield’s transportation revenue is derived from transportingequipment for third parties, that does not change Total Oilfield’s essential operational nature. [22] Accordingly, Total Oilfield is governed by provincial highways and motor vehicle legislation and regulations and is notsubject to the Federal Motor Vehicle Transport Act and Commercial Vehicles Drivers’ Hours of Service Regulations. [23] I will not formally decide the Labour law jurisdictional issue urged upon me by Total Oilfield, since the matter is before theOccupational Health and Safety Tribunal Canada.

Because the administrative tribunal appeal process has not yet been exhausted, butrather has been adjourned, that process should be completed before further consideration by the Court. [24] If costs cannot be agreed upon the parties may address me further. Heard on the 03rd day of April, 2013. Dated at the City of Calgary, Alberta this 3rd day of May, 2013.

R. J. Hall J.C.Q.B.A. Appearances: Grant Stapon, Q.C./Alison J. Gray for the Applicant Christine Ashcroft for the Respondent Attorney General of Canada Lillian Riczu for the Respondent Attorney General of Alberta