2017 FC, 2017 FC 1057

Date: 20171122 Docket: T-1110-15 Citation: 2017 FC 1057 Toronto, Ontario, November 22, 2017 PRESENT: The Honourable Mr. Justice Diner BETWEEN: TOKMAKJIAN INC. Applicant and EMPLOYEES LISTED IN

SCHEDULE “A” ED ACHORN Respondents Table of Contents I. Background . 4 II. Decision under Review .. 7 A. Factual context 7 B. Referee’s analysis . 9 III. Standard of Review .. 11 IV. Analysis . 12 A. The presumption of provincial jurisdiction over labour relations . 12 B. Rebutting the provincial presumption: “direct” and “derivative” federal jurisdiction . 18 C. Determining the number of undertakings . 21 D. The relationship between the “single undertaking” test and “derivative” federal jurisdiction . 30

(1) The “single undertaking” test 35

(2) The “derivative jurisdiction” test 37 E. Application of the law to the facts of this case . 39

(1) Did the Referee apply the tests correctly? . 39

(2) Are the Transit Employees federally or provincially regulated? . 42 V. Costs . 49 JUDGMENT AND REASONS [ 1 ] This is an application for judicial review [Application] of the decision of a referee [Referee] appointed under

section 251.12 of the Canada Labour Code , RSC, 1985, c L-2 [ Code ] finding that the Respondents were federally regulated for labour relations purposes. [ 2 ] The Applicant, Tokmakjian Inc. [Tokmakjian], is based in Vaughn, Ontario and provides interprovincial charter and coach bus services. Until 2010, Tokmakjian also provided municipal transit services in York Region, Ontario. These two divisions operated as “Can-Ar Coach” [Coach] and “Can-Ar Transit Services” [Transit], respectively. [ 3 ] The Respondents are former Transit employees [Transit Employees].

When the contract between Tokmakjian and York Region ended in July 2010, so did the Transit Employees’ employment. After termination, the Transit Employees filed a complaint under the Code for severance pay. An inspector ordered payment, and Tokmakjian appealed, arguing that the Transit Employees were not entitled to severance under the Code because they were governed by provincial rather than federal labour laws. The hearing of the appeal took place over four days between November 2013 and February 2014.

On June 1, 2015, the Referee rendered her decision, concluding that the Transit Employees fell under federal jurisdiction for labour law purposes [Decision]. [ 4 ] I have considered the matter within this complex area of law, and concluded that the Referee erred: it is my view that the Transit Employees indeed fell under provincial jurisdiction.

I. Background [5] Tokmakjian began under the name “SN Diesel Service” in about 1971, servicing and repairing diesel engines [Diesel].About ten years later, Tokmakjian bought a charter bus service, which it operated as Coach, starting out with only three buses. Around1985, the City of Vaughan asked Tokmakjian to run its municipal bus service.

Meanwhile, Coach had grown to 40 buses. [6] Tokmakjian’s full-time Transit drivers were initially represented by the Can-Ar Transit Operators’ Association, whichmerged in 1995 with the Amalgamated Transit Union, Local 1587 [Local 1587], and then applied for a declaration that it had acquired itspredecessor’s rights, privileges, and duties. The issue of jurisdiction was raised on the application before the Canada Labour RelationsBoard [CLRB].

At that time, Tokmakjian had one location (in Vaughan), one operations manager that oversaw both Coach and Transitemployees, a central management team, and a single dispatch office.

In addition to its 40 Coach buses, Tokmakjian also had 12 Transitbuses. [7] The CLRB’s decision ((7 November 1995), Toronto 580-280, 1482 (CLRB) at 4 [the 1995 CLRB Decision]) contained aconstitutional analysis consisting of a single paragraph, stating that the CLRB had considered “such elements as the existence of a singlereporting facility, common employee manuals, and the centralization of employee dispatch, of vehicle service, and of decision makingwith respect to labour relations”.

Based on these considerations, and citing no authority, the CLRB found that Transit was “notseverable” from Tokmakjian’s interprovincial transportation business. The CLRB then concluded that Tokmakjian was a federalundertaking for the purposes of the Code, relying on Charterways Transportation Ltd, (OLRB) [Charterways]. Thus,the CLRB found that Transit’s labour relations came within federal jurisdiction. [8] In 2002, Tokmakjian moved its Coach operations to Mississauga (Transit and Diesel stayed in Vaughan), hiring a separateoperations manager for Coach, and dividing its dispatch.

Tokmakjian also introduced different software and payroll systems for Coachand Transit. [9] In 2003, the Employment Equity Office of Human Resources Development Canada [HRDC] instructed Tokmakjian tocomply with federal employment equity requirements.

Because of Coach’s move to Mississauga, Tokmakjian requested a ruling onwhether all its operations remained under federal jurisdiction (at that time, Tokmakjian had two main divisions, Diesel and Coach, thelatter of which was divided into “Can-Ar Highway Coach” and “Vaughan Transit”). [10] In the resulting HRDC decision, the inspector determined — based on information provided by Tokmakjian — that Dieseland “Vaughan Transit” both fell under provincial jurisdiction, whereas “Can-Ar Highway Coach” fell within federal jurisdiction due toits extra-provincial transportation services [the 2003 HRDC Decision].

It is noteworthy that the inspector who authored the 2003 HRDCDecision was the same inspector who prepared the report relied upon by the CLRB in issuing the 1995 CLRB Decision. [11] After September 11, 2001, the amount of interprovincial and international travel by Coach decreased drastically: ultimately,Coach was downsized later in 2003 and moved back to Vaughan.

A few years later, in 2006, Tokmakjian was awarded a major contractto operate municipal transportation for York Region Transit, which it did for the next four years. [12] In early 2010, after Tokmakjian learned it was losing its contract with York Region, Local 1587 was granted decertification onan application to the Canada Industrial Relations Board [CIRB] (previously the CLRB). The issue of jurisdiction was not considered. [13] Shortly afterwards, Amalgamated Transit Union, Local 113 [Local 113] applied to the Ontario Labour Relations Board[OLRB] for certification to represent the Transit Employees.

Tokmakjian opposed the certification on the basis that all its operationswere federally regulated. The matter was not resolved prior to the end of July 2010, when Tokmakjian’s contract with York Regionended and the contract was awarded to another company, Veolia Transportation Services (Canada) Inc. [Veolia].

Local 113 then obtainedprovincial certification to represent Veolia’s transit employees, who were largely individuals previously employed in Tokmakjian’sTransit division. [14] Following the termination of their employment, the Transit Employees filed a complaint seeking severance pay under section235 of the Code. After an order was issued for payment, Tokmakjian brought a wage recovery appeal under

Part III of the Code, arguingthat its Transit operations fell under provincial jurisdiction. The Decision resolving that appeal is now the subject of this Application. [15] The Transit Employees affected by the appeal fall into three groups: (i) 145 drivers covered by a collective agreement, (ii) 19mobility drivers covered by a different collective agreement and represented by a different union, and (iii) seven management employees.All these employees were hired by Veolia after the termination of their employment with Tokmakjian; no employee lost any work timeas a result of the change of contract. II.

Decision under Review A. Factual context [16] The Referee found that, as of July 31, 2010, Coach and Transit employees worked out of the same location in Vaughan. Thismeant sharing the same workplace facilities (including breakroom, washrooms, and the parking lot), and using the same third-partypayroll provider. [17] The Referee also found that the two divisions had different managers, dispatchers, dispatch systems, and payroll accounts.Tokmakjian gave evidence that the terms and conditions of Coach and Transit employees’ employment were also different, as was themanagement of the two divisions.

The Referee found that Coach’s 45 workers — which included non-unionized employees drivers andindependent contractors — and Transit’s 245 unionized employees had different managers. It was also a condition of Tokmakjian’s

contract with York Region that the company would adhere to Ontario’s health and safety and human rights legislation when managingTransit employees. [18] The Referee found that drivers for both Coach and Transit were required to have the same class of license. Tokmakjian’sevidence was that Coach driving was regulated by provincial law and Transit driving was regulated by the Transit Employees’ collectiveagreement. [19] Coach and Transit used different buses. Different rates of pay applied for Transit and Coach driving.

Tokmakjian’s evidencewas that Transit driving was considered more complex and, as such, required more detailed training than Coach, being heavily guided byTokmakjian’s contract with York Region.

While the same individuals provided training to both Coach and Transit employees, thetraining itself differed (including the use of different training manuals), although there was also some evidence before the Referee thatCoach and Transit drivers received the same customer service training. [20] While the factual record before the Referee was largely undisputed (the parties simply disagreed on its constitutionalimplications), one contested fact was the percentage of the Transit Employees’ payroll generated by Coach driving. The evidence wasthat somewhere between 0.85% and 1.5% of Transit drivers drove for Coach.

There was evidence before the Referee that at least fourCoach drivers drove Transit routes between 2009 and July 31, 2010. The Transit Employees gave evidence that Coach dispatchers wouldsometimes approach Transit drivers and request that they take on Coach shifts, and that other drivers would cover Transit routes ifnecessary. As such, the Referee accepted that the dispatchers did not operate in “watertight compartments”. [21] The Referee also heard evidence about Tokmakjian’s operations during the G20 Conference in Toronto, which took place inJune 2010.

The Transit Employees led evidence that, at that time, there was a sudden and greatly increased need for Coach drivers, andmany Transit drivers drove for Coach for much or all of that pay period. B. Referee’s analysis [22] The Referee introduced the “Decision”

section of her analysis as follows: The parties have been raising the issue of constitutional jurisdiction between them for many years. It is unfortunate that the issue was leftto be determined on an ad hoc basis, rather than being brought before the CIRB or the OLRB, either of which would have had moreexpertise in this complex area of the law.

However, I must do my best to determine the proper constitutional jurisdiction of Transit, sinceif Transit is not within federal jurisdiction I have no authority to deal with the matter of severance pay, based on s. 167 of the CanadaLabour Code. [23] The Referee recognized that employment matters fall presumptively under provincial jurisdiction.

However, she also reliedheavily on the 1995 CLRB Decision, writing that “stability is an important value”, and “once a determination is made that an employeris within federal jurisdiction, […] its status should remain constant unless and until it can be shown that there has been a substantivechange in the business since the last jurisdictional ruling”.

The Referee did not, however, take the 2003 HRDC Decision intoconsideration, finding that it had been rendered for a specific purpose in a non-adversarial context, at a time when Coach and Transitwere operating from separate locations. [24] From this starting point, the Referee cited Tessier Ltée v Quebec (Commission de la santé et de la sécurité du travail), 2012SCC 23 [Tessier] for the proposition that she had to first answer whether Coach and Transit were a “single undertaking” or “two separateundertakings”.

She then examined the evidence before her for commonalities and differences between the operations and “nature of thework” of the two divisions, and found: Based on my analysis of the facts overall, it seems that many of them could support either result.

However, in my view there is a slightpreponderance of factors indicating that there is a single undertaking rather than two separate undertakings. [25] With respect to the jurisprudence before her, the Referee distinguished many of the cases provided to her by Tokmakjianbecause they dealt with “derivative” jurisdiction and not whether two operations were “one undertaking”.

She considered Trentway-Wagar Inc, (OLRB) [Trentway-Wagar] to be “most similar on its facts, and in the legal question being asked”, anddetermined that “the degree of centralization versus autonomy” was “about the same” in Trentway-Wagar as in the case before her.

TheReferee disregarded the dissent in Trentway-Wagar, finding that it erroneously dealt with derivative jurisdiction. [26] The Referee ultimately concluded that Transit and Coach were a “single undertaking” providing interprovincial transportationservices, and that the Transit Employees were thus federally regulated for labour relations purposes. [27] The Referee also noted that, if she were wrong and Transit and Coach were two undertakings, she would not have concludedthat the Transit Employees fell under federal jurisdiction under a “derivative” analysis.

Her comments on this point, which amount toobiter dicta (i.e., incidental or extraneous remarks), were as follows: It is certainly easy to imagine how the two lines of business could be quite easily separated. The degree of interchange or cross-overbetween the two lines of business is not large, in the ordinary course of events. If the facts as they existed were sufficient to establish twoundertakings, then I would also have to conclude that there was insufficient dependence or integration to lead to derivative federaljurisdiction applying to Transit. III.

Standard of Review [28] Whether the Transit Employees are federally or provincially regulated is a constitutional question. The Federal Court ofAppeal [FCA] recently confirmed in Sawyer v Transcanada Pipeline Limited, 2017 FCA 159 [Sawyer] that constitutional questionsattract a correctness standard of review:

7 […] Constitutionality is one of the few issues that remain subject to correctness review. This has been the case since Dunsmuir v.New Brunswick, 2008 SCC 9 at para. 58, [2008] 1 S.C.R. 190 [Dunsmuir] and remains so today: Edmonton (City) v. Edmonton East(Capilano) Shopping Centres Ltd., 2016 SCC 47, [2016] 2 S.C.R. 293 [Edmonton East]. 8 The rationale underlying this principle is that the expertise of the Board is not in respect of legal analysis of the constitution:Dunsmuir at paras. 58-61; Westcoast Energy Inc. v.

Canada (National Energy Board), (SCC), [1998] 1 S.C.R. 322 atpara. 40, 156 D.L.R. (4th) 456 [Westcoast Energy]. This point is underscored by considering that the premise that underlies deference,the existence of a range of possible outcomes, recognizes that reasonable people may take different, but equally acceptable views on thesame point: Canada (Canadian Human Rights Commission) v.

Canada (Attorney General), 2011 SCC 53, [2011] 3 S.C.R. 471.Governance of the Canadian federation would not be well served by the application of deference, and its tolerance for divergent butequally sustainable outcomes, with respect to legislative jurisdiction. [29] The FCA also applied a correctness standard for the constitutional questions at issue in both Nishnawbe-Aski Police ServiceBoard v Public Service Alliance of Canada, 2015 FCA 211 [Nishnawbe] (at para 6) and National Automobile, Aerospace, Transportationand General Workers Union of Canada (CAW-Canada, Local 114) v Pacific Coach Lines Ltd, 2012 FCA 329 [PCL (FCA)] (at para 18).The Supreme Court of Canada [SCC] refused to grant leave to appeal in both cases (2016 CarswellNat 962 (WL Can); 2013 CarswellNat1865 (WL Can)). [30] Accordingly, no deference is owed by this Court to the Referee’s constitutional determination.

IV. Analysis A. The presumption of provincial jurisdiction over labour relations [31] Legislative power in Canada is shared by the federal and provincial governments (see Peter W Hogg, Constitutional Law ofCanada, 5th ed (Canada: Thomson Reuters, 2007) (loose-leaf 2016 supplement) ch 5.1 [Hogg]). The division of powers between thefederal and provincial governments is set out in the Constitution Act, 1867.

Generally speaking, the provincial legislatures are assignedbroad powers over local matters, while the federal government has those powers which are better exercised at the national level (seeConsolidated Fastfrate Inc v Western Canada Council of Teamsters, 2009 SCC 53 at paras 29-30 [Fastfrate]). [32] The Transit Employees only have rights to severance pay under the Code if the federal government had constitutionaljurisdiction to regulate Transit’s labour relations.

I must therefore determine which level of government had jurisdiction over the TransitEmployees. [33] To begin with, the Constitution Act, 1867 does not tell us whether “labour relations” are a federal or provincial matter; it doestell us, however, that the provinces have jurisdiction, under section 92(13), to regulate local “property” and “civil rights” matters.

Thecourts have interpreted these powers to include labour and employment matters (Tessier at para 11). [34] Although the provinces have jurisdiction over labour matters because of section 92(13), the federal government nonethelesshas exceptional jurisdiction over labour matters of “federal” works and undertakings — i.e., operations that fall under federal jurisdiction(NIL/TU,O Child and Family Services Society v BC Government and Service Employees’ Union, 2010 SCC 45 at para 12 [NIL/TU,O]).In other words, where the federal government has constitutional authority over an enterprise, the federal government also has the powerto regulate the labour relations of that enterprise (see Tessier at para 15, referring to Reference re Industrial Relations and DisputesInvestigation Act, (SCC), [1955] SCR 529 (SCC) [Stevedores Reference]).

This is because an appropriate level of controlover labour relations is needed to effectively manage an enterprise. [35] The upshot of the Constitution Act, 1867’s division of powers is that the provinces have “presumptive” jurisdiction overlabour relations under section 92(13) and the federal government has jurisdiction over labour relations only when necessary (NIL/TU,O atpara 11). Federal jurisdiction over labour matters is the exception, not the rule.

For federal jurisdiction to apply to the labour relations ofan undertaking, the provincial presumption must be rebutted (Nishnawbe at para 29). [36] The Referee referenced the presumption of provincial jurisdiction over labour matters as follows: Although there is a presumption that employment is a matter of provincial regulation, once a determination is made that an employer iswithin federal jurisdiction, it seems to me that its status should remain constant unless and until it can be shown that there has been asubstantive change in the business since the last jurisdictional ruling.

Stability is an important value, and an organization’s constitutionaljurisdiction should not change back and forth easily or frequently, unless there is a compelling reason to do so. [37] In this Application, Tokmakjian argues that the Referee erred by failing to start with the provincial presumption, insteadbeginning with a preference for “stability”. [38] I agree with Tokmakjian that it was indeed an error for the Referee to mention the provincial presumption, but then fail toapply it.

This was similar to the error made in Nishnawbe, in which Justice Stratas criticized the CIRB for referring to the provincialpresumption in its decision but failing to engage with it (at paras 29-33). Because the provincial presumption derives from theConstitution Act, 1867, decision-makers must remember that federal jurisdiction over labour matters is exceptional, and narrowlyinterpret the situations where provincial jurisdiction is “ousted” (Fastfrate at para 27; NIL/TU,O at para 11).

OLRB Chair BernardFishbein, for instance, observed recently in a comprehensive constitutional analysis that “courts will not quickly displace thepresumption of provincial jurisdiction over labour relations” (Ramkey Communications Inc, (OLRB) at para 153[Ramkey]). [39] Also instructive is the dissent of Justice McLachlin (as she then was) in Westcoast Energy Inc v Canada (National Energy

Board), (SCC), [1998] 1 SCR 322 (SCC) [Westcoast], which has since garnered support (see Tessier at para 45).Justice McLachlin wrote that, where a federal power is exceptional, “it should be extended as far as required by the purpose thatanimates it, and no further” (Westcoast at para 116). [40] Thus, where federal jurisdiction over a matter is the exception, not the rule, decision-makers must take that as the startingpoint — any alternative approach risks undermining the division of powers (see Westcoast at para 161, citing United TransportationUnion v Central Western Railway Corp, (SCC), [1990] 3 SCR 1112 (SCC) at 1146, 1990 CarswellNat 1029 (WL Can)at para 60 [Central Western]). [41] The Transit Employees argue that the Referee assigned the 1995 CLRB Decision its correct significance and rely on Fastfratefor the proposition that consistency and predictability on constitutional questions is “essential” (Fastfrate at para 45). [42] First, I am unpersuaded that the provincial presumption falls away merely because there has been a determination by a labourtribunal on the constitutional issue — especially where such a prior determination is cursory, and predates important developments inconstitutional law.

In this case, the 1995 CLRB Decision predated both Westcoast and Tessier, as well as appellate jurisprudence that hasinterpreted those cases (including Sawyer, Total Oilfield Rentals Limited Partnership v Canada (Attorney General), 2014 ABCA 250[Total Oilfield], and Actton Transport Ltd v British Columbia (Employment Standards), 2010 BCCA 272 [Actton Transport], which areall examined further below). [43] Second, the SCC comments on constitutional “predictability” in Fastfrate do not support the proposition advanced by theTransit Employees.

In Fastfrate, the SCC referenced “predictability” in endorsing an existing body of case law specific to Fastfrate’sfreight-forwarding business. This makes sense, because much of the jurisprudence in this area of law is industry-specific. But Fastfratedid not use “consistency” to displace the provincial jurisdictional presumption that flows from the division of powers set out in theConstitution Act, 1867.

To the contrary, the SCC in Fastfrate gave full effect to the provincial presumption by interpreting theConstitution Act, 1867 in a manner that saw federal jurisdiction over labour relations as “the exception, rather than the rule” (Fastfrate atpara 44). The Transit Employees’ reliance on Fastfrate for the principle of “consistency” in this context is therefore misplaced. [44] The Transit Employees further argue that, notwithstanding the Referee’s comments on “consistency”, she nonethelesscorrectly conducted her own analysis and did not simply follow the 1995 CLRB Decision.

In oral argument, counsel for the TransitEmployees further suggested that the Referee looked at the facts as they existed in July 2010 and did not “look backward”. [45] Again, I disagree. The Referee found that the constitutional ruling in the 1995 CLRB Decision should “remain constant”absent a “compelling reason” and a “substantive change” to Tokmakjian’s business.

Indeed, the Referee found that a “key factor” in herconstitutional analysis was that the “same types of business had been carried out since the original certification decision” and that the“fundamental nature of the undertaking” was still the same as it had been at the time of the 1995 CLRB Decision. She went on toconclude that “an existing constitutional jurisdiction decision” should not be affected by changes in the “proportions” of a business’federal and provincial work, absent some other substantive change in the business’ activities.

As such, I cannot accept the TransitEmployees’ argument that the Referee did not “look backward”. [46] Moreover, and although I am satisfied that the Referee erred in departing from the provincial presumption, I note that theReferee’s “consistency” rationale was itself inconsistent: she relied heavily on the 1995 CLRB Decision and placed no weight on the2003 HRDC Decision. The parties to this litigation have switched their positions over the years with respect to which side of theconstitutional divide they fell into, depending on what suited them at the time.

Because of this, it was incumbent upon the Referee toexamine Tokmakjian’s operations as of July 2010, and not selectively rely on an early, cursory, and dated constitutional determination. [47] In sum, I find that the Referee erroneously focused on “compelling” reasons to depart from the 1995 CLRB Decision, and thatshe did not engage with whether the Transit Employees had successfully rebutted the presumption of provincial jurisdiction overTransit’s labour matters. B.

Rebutting the provincial presumption: “direct” and “derivative” federaljurisdiction [48] The courts have spent the better part of the past century grappling with how to determine constitutional jurisdiction overlabour relations. Having reviewed the jurisprudence, the one thing that is clear to me in this area of law is that it is unclear. Indeed, inRamkey — a 229-paragraph decision — Chair Fishbein observed that the law in this area is a “sea of confusing and often contradictoryjurisprudence” (at para 5).

While I do not propose to go to the lengths Chair Fishbein did in his effort to navigate these treacherouswaters, I will try to outline my view of what the law requires in a constitutional analysis of labour relations — at least with respect totransportation undertakings. [49] As explained above at paragraphs [34] to [35], the federal government has exceptional jurisdiction over the labour relations of“federal” undertakings.

Whether an undertaking is “federal” — and the provincial presumption therefore rebutted — depends on thenature of the undertaking’s operations, assessed on the basis of the “normal and habitual activities of the business” and disregarding“exceptional or casual factors” (NIL/TU,O at para 14, excerpting from Northern Telecom v Communications Workers, (SCC), [1980] 1 SCR 115 (SCC) at 132, 1979 CarswellNat 639F (WL Can) [Northern Telecom 1] at para 31 ).

This is known as the“functional test” (NIL/TU,O at para 14). [50] If the “functional test” is inconclusive, then the decision-maker must also consider whether provincial jurisdiction over theundertaking’s labour relations would “impair the core of the federal head of power at issue” (NIL/TU,O at para 18). [51] In its recent Tessier decision, the SCC clarified how the “functional inquiry” in fact contains two pathways through which thefederal government may assert jurisdiction over an undertaking’s labour relations (Tessier at paras 18-19).

[52] Under the first path, the federal government has jurisdiction over the labour relations of an undertaking that is itself “federal”.Under the second path, the federal government has jurisdiction if the undertaking is not itself “federal”, but is instead “integral” toanother federal undertaking. Tessier labelled these two pathways as “direct” and “derivative” jurisdiction, respectively.

The SCCexplained that both pathways focus on the “essential operational nature” of the undertaking whose labour relations are at issue: 17 […]this Court therefore established that the federal government has jurisdiction to regulate employment in two circumstances:when the employment relates to a work, undertaking, or business within the legislative authority of Parliament; or when it is an integralpart of a federally regulated undertaking, sometimes referred to as derivative jurisdiction.

Dickson C.J. described these two forms offederal jurisdiction over labour relations as distinct but related in United Transportation Union v. Central Western Railway Corp., (SCC), [1990] 3 S.C.R. 1112, at pp. 1124-25. 18 In the case of direct federal labour jurisdiction, we assess whether the work, business or undertaking’s essential operationalnature brings it within a federal head of power. In the case of derivative jurisdiction, we assess whether that essential operational naturerenders the work integral to a federal undertaking.

In either case, we determine which level of government has labour relations authorityby assessing the work’s essential operational nature. [Emphasis added] [53] The portion of Central Western, referenced above in Tessier, reads as follows: There are two ways in which Central Western may be found to fall within federal jurisdiction and thus be subject to the Canada LabourCode. First, it may be seen as an interprovincial railway and therefore come under s. 92(10) (

a) of the Constitution Act, 1867 as a federalwork or undertaking. Second, if the appellant can be properly viewed as integral to an existing federal work or undertaking it would besubject to federal jurisdiction under s. 92(10) (a). For clarity, I should point out that these two approaches, though not unrelated, aredistinct from one another. For the former, the emphasis must be on determining whether the railway is itself an interprovincial work orundertaking.

Under the latter, however, jurisdiction is dependent upon a finding that regulation of the subject matter in question isintegral to a core federal work or undertaking [Emphasis in original] [54] In a typical application of the functional test, the decision-maker will examine whether the constitutional character of anundertaking is itself federal, and, if it is not, the decision-maker may look at the relationship between that undertaking, and anotherfederal undertaking. [55] On occasion, the functional test is complicated by the fact that a single enterprise can carry on more than one “undertaking” inthe relevant constitutional sense.

For instance, in Re Employees of the Canadian Pacific Railway in Empress Hotel (City), the PrivyCouncil held that the appellant conducted two undertakings: a railway company and a hotel business, rather than a single railwayundertaking ( (UK JCPC), [1950] 1 DLR 721 (Judicial Committee of the Privy Council) at para 14, 1949 CarswellBC115 (WL Can) at para 14). Where the number of undertakings is in dispute, the functional inquiry first requires that the decision-makerdetermine whether the operations form a “single” undertaking or not. C.

Determining the number of undertakings [56] The federal power that concerns the Court on this Application is found in section 92(10)(

a) of the Constitution Act, 1867,which provides that a “local” work or undertaking falls under provincial jurisdiction, unless it connects two provinces, or extends beyondthe limits of a province, in which case the federal government has jurisdiction (see Total Oilfield at paras 34-41). Section 92(10)(

a) hasbeen interpreted to mean that the provincial governments have authority over intraprovincial transportation undertakings, while thefederal government has jurisdiction over interprovincial and international transportation undertakings (Total Oilfield at para 39). [57] Tokmakjian is a transportation business because it uses buses to transport people (Total Oilfield at para 43; Fastfrate at para65). However, its transportation activities only fall under federal jurisdiction if those activities are interprovincial.

A transportationundertaking is “interprovincial” for the purposes of section 92(10)(a), if it “continuously and regularly” crosses provincial borders, evenif those interprovincial operations are only a small fraction of its overall transportation activities (Tessier at paras 51-52; Total Oilfield atparas 71, 74).

The “continuous and regular” test therefore means that a single transportation undertaking with predominantlyintraprovincial activities can still be federally regulated. [58] The background provided in the two paragraphs above helps to explain why the question of whether there are one or moreundertakings makes a great deal of difference when it comes to the constitutional character of transportation businesses. [59] In this Application, Tokmakjian argues that Coach and Transit were two undertakings as of July 2010. If that was the case,then only Coach would be subject to federal jurisdiction under section 92(10)(

a) and, by extension, only Coach employees would begoverned by the Code, because only Coach’s operations “regularly and continuously” crossed provincial borders. [60] The Transit Employees assert, conversely, that Coach and Transit comprised one “single” transportation undertaking.

Coachand Transit would then both be federally regulated because they constituted one undertaking whose operations “continuously andregularly” crossed provincial borders — even though cross-border trips were a small part of Coach’s operations, and represented adiminishing portion of Tokmakjian’s overall business after September 11, 2001. [61] This type of “one undertaking or two” dispute was first considered in Ontario (Attorney General) v Winner, (UK JCPC), [1954] 4 DLR 657 (Judicial Committee of the Privy Council), 1954 CarswellNB 40 (WL Can) [Winner].

In that case,MacKenzie Coach Lines operated a bus service from Maine through New Brunswick to Nova Scotia, with some passengers getting onand off in New Brunswick. New Brunswick argued that it had the authority to regulate those trips that started and ended in the province.

[62] The Privy Council ruled that it might have accepted such an argument if there had been evidence that “Mr. Winner wasengaged in two enterprises, one within the province and the other of a connecting nature” (Winner at para 50 (DLR), at para 50 (WLCan)).

However, the Privy Council held that there was no evidence to support such a finding, writing that “[t]he same buses carried bothtypes of passenger along the same routes; the journeys may have been different, in that one was partly outside the province and the otherwholly within, but it was the same undertaking which was engaged in both activities” (Winner at para 50 (DLR), at para 50 (WL Can)). [63] In Winner, the Privy Council rejected the argument that a distinction could be drawn between the “essential” interprovincialand the “incidental” intraprovincial portions of the business, ultimately finding that: The question is not what portions of the undertaking can be stripped from it without interfering with the activity altogether; it is ratherwhat is the undertaking which is in fact being carried on.

Is there one undertaking, and as part of that one undertaking does therespondent carry passengers between two points both within the province, or are there two? [Winner at paras 51-52 (DLR), at paras 51-52 (WL Can)] Winner held that the transportation undertaking was “in fact one and indivisible” and whether or not it might have been carried outdifferently was irrelevant (Winner at para 55 (DLR), at para 55 (WL Can)). [64] The analysis in Winner was then relied upon by the Ontario Court of Appeal in ATU, Local 279 v Ottawa-Carleton RegionalTransit Commission, (ON CA), 4 DLR (4th) 452 (ONCA), 1983 CarswellOnt 599 (WL Can) [OC Transpo].

In thatcase, OC Transpo operated primarily in the Ottawa-Carleton area of Ontario, but a small percentage of its operations consisted of busroutes crossing into Hull, Quebec. [65] OC Transpo argued that it was a municipal transportation system subject to provincial jurisdiction because the Hull routeswere very minor and non-essential to its operations and could be discarded without affecting OC Transpo’s essential nature (OC Transpoat 458 (DLR)). [66] The Court of Appeal, however, found that the analysis in Winner was “a complete answer to the submission that the busroutes to Hull could be severed from the operations of OC Transpo”, holding that the Hull routes were an “integral and historical part” ofthe transportation undertaking (OC Transpo at 460 (DLR)).

Therefore, because it was a single undertaking with interprovincialtransportation services, OC Transpo fell under federal jurisdiction, even though its interprovincial routes were only a small fraction of itsoverall operations (OC Transpo at 458 (DLR )). [67] At the hearing of this Application, counsel for the Transit Employees argued that Winner and OC Transpo were dispositive ofthe constitutional question.

These cases, it was argued, set out the correct principles for determining whether a transportation businesscomprises one or more undertakings, and that these principles have since been applied and developed by various labour boards anddecision-makers, including in Charterways at paragraphs 20 and 29, Transit Windsor, (OLRB) at paragraphs 9-10[Transit Windsor], 1113666 Ontario Limited cob Deluxeway Bus Lines, [1995] OLRD No 1603 (OLRB) at paragraph 14 [Deluxeway],Supply Chain Express Inc, (OLRB) at paragraph 44 [Supply Chain], Trentway-Wagar at paragraph 46, and Q-TekTankers Ltd, 2016 CarswellNat 4625 (WL Can) (Canada Adjudication) at paragraphs 18 and 38-43 [Q-Tek]. [68] The Transit Employees’ counsel also submitted that these cases set out the relevant factual indicia for determining whether asingle transportation undertaking exists, and that the Referee correctly considered those indicia. [69] I do not agree that the constitutional question in this Application starts and ends with Winner and OC Transpo and the variouslabour decisions that followed.

This is because it was not until 1999 in Westcoast — well after both OC Transpo and Winner weredecided — that the SCC dealt squarely with the test for a “single undertaking”.

In Westcoast, the SCC considered whether federal orprovincial jurisdiction applied to certain natural gas gathering pipelines and processing plants that were located entirely within BritishColumbia but fed natural gas to an interprovincial, mainline pipeline. [70] Building on the test for constitutional jurisdiction set out in Central Western, the Westcoast majority determined that thegathering pipelines and processing plants would fall under federal jurisdiction only if they either (

i) constituted a “single” federalundertaking with the mainline pipeline, or (ii) were “integral to” the mainline pipeline (Westcoast at paras 45-46). In other words, andusing the language later adopted in Tessier, if a single undertaking was found, then the whole undertaking was “directly” federal becauseof the interprovincial character of the mainline pipeline.

If the provincially-bounded facilities were a separate undertaking, they mightstill be found to be integral to the interprovincial pipeline, in which case they would have a “derivative” federal character. [71] In determining whether the gathering pipelines, processing plants, and mainline pipeline were a “single” undertaking, themajority in Westcoast noted that a physical connection or common commercial ownership between the operations would not, withoutmore, lead to a finding of a single undertaking (Westcoast at para 48).

Rather, the SCC wrote that there had to be a more fundamental andsubstantive interrelationship: 49 In order for several operations to be considered a single federal undertaking for the purposes of s. 92(10) (a), they must befunctionally integrated and subject to common management, control and direction. Professor Hogg states, at p. 22-10, that “[i]t is thedegree to which the [various business] operations are integrated in a functional or business sense that will determine whether theyconstitute one undertaking or not”.

He adds, at p. 22-11, that the various operations will form a single undertaking if they are “actuallyoperated in common as a single enterprise”. In other words, common ownership must be coupled with functional integration andcommon management. A physical connection must be coupled with an operational connection. A close commercial relationship isinsufficient.

See Central Western, supra, at p. 1132. [72] Westcoast also adopted the principle set out in Winner that “the manner in which the undertaking might have been structuredor the manner in which other similar undertakings are carried on is irrelevant” to whether it is a “single” undertaking or not (at para 53). [73] The FCA recently relied on Westcoast in Sawyer, a decision which I referred to above in the standard of review analysis.

Sawyer held that the National Energy Board had incorrectly applied the “single undertaking” test set out in Westcoast by failing to focuson the concept of “functional integration”, explaining that: 44 […] The test is whether the parts of the undertaking are functionally integrated and, if so, how they work together and for whatpurpose. Only when these criteria are taken into account can the [constitutional] nature of the undertaking be determined. […] 47 Put otherwise, the Board did not direct its mind to the nature of the enterprise or undertaking in issue.

There was considerableevidence before the Board, none of which was in dispute, that the purpose of the PRGT was to move gas from the WCSB for export tointernational markets. The Board looked at where the pipeline was, and did not ask what it did. [74] Because Sawyer was published after the hearing of this Application, I invited the parties to make submissions about Sawyer’streatment of Westcoast, and about whether these cases were distinguishable.

In their post-hearing submissions, the parties agreed that thetest in Westcoast was indeed relevant to the determination of this Application. [75] The Transit Employees submitted that the “single undertaking” test set out in Westcoast, and developed in Sawyer, wasappropriate in the labour relations context, and noted that the concepts of common management, control, and direction were widelyapplied in labour adjudication. [76] Tokmakjian pointed out that this test was used in the labour context in Pacific Coach Lines Ltd, 2012 CIRB 623 at paragraphs65-70 [PCL (CIRB)], a labour board case which was put before the Referee, and which she considered in detail in her Decision. [77] Of paramount note, the FCA subsequently upheld the CIRB’s decision in PCL (FCA), writing that the CIRB had instructeditself correctly on the applicable law, applied the correct analytic framework, and correctly declined jurisdiction due to its constitutionalanalysis and conclusion (PCL (FCA) at paras 24-25). [78] In this Court, the principles underlying Westcoast were also recently applied in Berens River First Nation v Gibson-Peron,2015 FC 614, when Justice Strickland upheld an adjudicator’s analysis on the basis that (

i) direct federal jurisdiction requires anexamination of an entity’s essential operational nature, and (ii) “functional integration” must be considered as part of that inquiry (at para90). [79] The principles in Westcoast have also been applied by other labour tribunals when determining jurisdiction where a companyperforms multiple services (for instance, see Rivtow Marine Ltd and Tiger Tugz Inc, 1999 CIRB 30 at paras 19-23 and 26-29; SeaspanInternational Ltd, 2004 CIRB 267 at paras 47-48).

Indeed, in Trentway-Wagar, which the Referee relied upon in her Decision, althoughthe OLRB cited neither Central Western nor Westcoast, it nevertheless framed the issue of the number of undertakings in terms of the“functional integration” principle, writing: “is the Whitby transit work functionally integrated into a single, unified undertaking?” (atpara 37).

Similarly, in Supply Chain, which is relied upon by the Transit Employees in this Application, the OLRB referenced Westcoastand ultimately concluded: “[t]he emphasis of the examination of businesses by courts and labour boards has been on the functionalintegration of the operations” (at para 90). [80] The other four labour decisions relied upon by the Transit Employees, and listed at paragraph [67] of these Reasons, do notcite Westcoast.

However, Transit Windsor, Q-Tek, and Deluxeway found the entities at issue to be “integrated” (at paras 9, 18, and 14,respectively), while in Charterways the OLRB took a “functional and practical” view in determining the number of undertakings (at para28). [81] I would also make two final observations on Westcoast’s application in the labour relations context, in light of the SCC’sother jurisprudence. [82] First, Westcoast followed and developed the two-part test set out in Central Western, which was itself a labour relations case. [83] Second, Westcoast was most recently summarized by the SCC in the labour relations case Tessier as an example of “direct”federal jurisdiction.

The SCC noted that Westcoast had operated a single, “indivisible” undertaking in a federal field (Tessier at para 44).Indeed, Tessier implicitly confirmed that the “single undertaking” analysis is needed to properly perform the second-stage, derivativeanalysis; the SCC ruled that “if there is an indivisible, integrated operation, it should not be artificially divided for purposes ofconstitutional classification” (at para 55).

The Court contrasted this situation with those in which a “functionally discrete unit” of anotherwise provincially-regulated entity performs integral services for a related federal undertaking (see Tessier at para 49, referring toNorthern Telecom v Communication Workers, (SCC), [1983] 1 SCR 733 (SCC) at 770-771, 1983 CarswellNat 535 (WLCan) at para 68 [Northern Telecom 2]). [84] I am therefore satisfied that Westcoast governs when the number of undertakings is disputed in cases determiningconstitutional jurisdiction over labour relations, and will consider this Application in its light.

In other words, I conclude that Westcoastsets out the test by which decision-makers determine whether an undertaking is “single”, in the constitutional sense of being“indivisible” and “integrated” (see Tessier at para 55). Therefore, where a decision-maker considers the issue of federal jurisdiction overlabour relations, and the parties dispute whether the relevant entity’s operations comprise one or more undertakings, the decision-makermust apply the “single undertaking” test set out in Westcoast as part of the first stage “direct” jurisdictional analysis. D.

The relationship between the “single undertaking” test and “derivative”federal jurisdiction [85] The parties to this Application disagree over the distinction between the “single undertaking” test as a part of “direct” federaljurisdiction on the one hand, and the test for “derivative” federal jurisdiction on the other. The distinction matters in this Application forthree reasons.

[86] First, the Referee distinguished analyses in the cases before her where they involved “derivative” considerations, including thedissent in Trentway-Wagar. [87] Second, in her Decision, the Referee characterized only “derivative” jurisdiction as requiring “functional integration”, ratherthan having that analysis also apply to the first stage “single undertaking” assessment. [88] Third, and perhaps most significantly, while the Referee concluded that Coach and Transit were one undertaking, she alsonoted that she would not have held that derivative jurisdiction applied had they been two undertakings (as excerpted at paragraph [27] ofthese Reasons, in the Referee’s obiter comments). [89] Tokmakjian argues that the Referee erroneously characterized the relevant tests and that her obiter comments are inconsistentwith a correct “direct” jurisdiction analysis.

Tokmakjian submits that the Referee was required to consider such concepts as functionalintegration, dependency, and indivisibility as part of the first stage “single undertaking” test, and not defer these considerations to the“derivative” stage. [90] The Transit Employees, on the other hand, asserted before the Referee that functional integration was irrelevant to thequestion of direct federal jurisdiction. They continue to argue in this Application that Tokmakjian fundamentally misunderstands andconflates the two stages of the functional test.

They concede some irregularities in the Referee’s phrasing, but essentially argue forfunction over form, submitting that the Referee’s Decision is a thorough and careful analysis of all relevant indicia, and their correctconstitutional implications. Finally, they argue that nothing turns on the Referee’s obiter and in any event contest that it is inconsistentwith the substance of the Referee’s overall conclusion. [91] I am not persuaded by the Transit Employees’ arguments.

The overlap between the “single undertaking” and “derivativejurisdiction” tests was addressed by Justice McLachlin in her dissenting opinion in Westcoast. Justice McLachlin found that the first-stage “single undertaking” test was duplicative of the second-stage “derivative” test, writing in reference to the majority decision: 108 My colleagues Justice Iacobucci and Justice Major seem to take a different view of the two branches of Central Western, supra.Essentially, they say that the two ways a work or undertaking can fall within the residual clause of s. 92(10) (

a) are: (1) by being part of asingle integrated interprovincial work or undertaking; and, (2) by being “integral” to an interprovincial work or undertaking (see para.45). With respect, it seems to me these amount to the same thing.

Under either alternative (1) or (2), the inquiry is whether the work orundertaking is part of an integrated scheme. [Emphasis added] [92] Thus, according to Justice McLachlin’s reasoning, the analysis of functional integration is “the same thing” at whicheverpoint it is conducted, making the two parts of the test arguably duplicative of one another. [93] This overlap between the “single undertaking” and “derivative analysis” tests was also noted by the British Columbia Court ofAppeal [BCCA] in Actton Transport: [39] Whether an aspect of a business should be considered part of a single federal undertaking (the appellants’ position in this case) oras an operation functionally integral to a federal undertaking, it all comes down to functional integration.

This is what I understand themajority to have said in Westcoast Energy Inc. v. Canada (National Energy Board): [49] In order for several operations to be considered a single federal undertaking for the purposes of s. 92(10)(a), they must befunctionally integrated and subject to common management, control and direction. Professor Hogg states, at p. 22-10, that “[i]t is thedegree to which the [various business] operations are integrated in a functional or business sense that will determine whether theyconstitute one undertaking or not”.

He adds, at p. 22-11, that the various operations will form a single undertaking if they are “actuallyoperated in common as a single enterprise”. In other words, common ownership must be coupled with functional integration andcommon management. A physical connection must be coupled with an operational connection. A close commercial relationship isinsufficient. See [United Transportation Union v.

Central Western Railway Corp., (SCC), [1990] 3 S.C.R. 1112] at p.1132. [Emphasis added] [94] It is noteworthy that the SCC in Tessier referenced Actton Transport as a case where “certain workers were severable fromtheir employer’s overall operation” (at para 49).

Tessier also endorsed the manner in which Justice McLachlin framed her dissentingreasons in Westcoast, noting that Justice McLachlin had “framed the case differently” than the majority, in a way that was “of particularassistance” to the SCC (Tessier at para 45). [95] There is also significant terminological fluidity between first stage “direct” and second stage “derivative” analyses in the caselaw, which further supports Justice McLachlin’s observations in Westcoast that the two tests “amount to the same thing”, or that, as theBCCA put it in Actton Transport, “it all comes down to functional integration”.

In Winner, for instance, the Privy Council based its“single undertaking” conclusion on considerations of “indivisibility” (Winner at para 55), while OC Transpo found “one undertaking”because the Hull routes were an “integral” part of OC Transpo’s operations (OC Transpo at para 14).

In Northern Telecom 1, JusticeDickson, writing for the SCC, referred to a seminal SCC case involving stevedores as involving a finding of “one single and indivisibleundertaking” (Northern Telecom 1 at 134 (SCR), at para 36 (WL Can), citing the Stevedores Reference), while Tessier subsequentlyclarified that the Stevedores Reference has been “interpreted as a case of derivative jurisdiction” (Tessier at para 33). [96] Indeed, going back to Central Western, Justice Dickson analysed in that case whether Central Western was directly a“federal” undertaking by virtue of its “operational connection” and “functional integration” with Canadian National Railway (at 1135-1136 (SCR), at paras 36-37 (WL Can)), but then also considered “functional integration” alongside the primary factor of “dependency”in analysing whether Central Western was an “integral part of” Canadian National Railway (at 1136-1140, 1141-1142 (SCR), at paras38-43, 49-51 (WL Can)).

[ 97 ] Notwithstanding the overlap in the development of the stage one “single undertaking” and stage two “derivative jurisdiction” tests, they both remain operative. Sawyer confirms that the Westcoast ’s majority test is good law, and both parties to this Application agree. [ 98 ] Indeed, no other test exists by which to determine whether an undertaking is “single” , in the “integrated” and “indivisible” sense contemplated by Tessier . Thus this Court must determine how the stage one “single undertaking” and stage two “derivative” tests work together for the purposes of this Application, given the Referee’s discussion of and findings under both stages.

(1) The “single undertaking” test [ 99 ] In my view, the “single undertaking” test set out in Westcoast addresses situations where one organization contains discrete operations or divisions that are prima facie distinguishable from one another by some feature (for instance, by geographical scope or service type).

Thus, the “single undertaking” test begins from the premise that mere corporate organization is insufficient to result in a finding of a “single enterprise” because a single company can carry on separate undertakings, which may fall under different jurisdictions. [ 100 ] The jurisprudence is clear that a physical connection between two operations, which can happen in certain common ownership or close commercial relationships, is insufficient to establish a “single undertaking” ( Westcoast at paras 48-49).

Where two or more operations under a single corporate umbrella are analysed for their constitutional character, it is the actual, functional, practical, and factual reality that matters — not the “corporate costume” worn by the entity at issue (see Sawyer at paras 68-69 ; Northern Telecom 1 at 133 (SCR), at para 32 (WL Can)). [ 101 ] The “single undertaking” test therefore guards against the danger that a decision-maker will erroneously confuse a company’s particular commercial arrangement with the functional integration of its related operations required under constitutional law.

As stated in Sawyer , “the commercial arrangement may inform the question of common control and management and hence functional integration, but it does not define the enterprise” and “it is only relevant insofar as it informs the degree of functional integration” ( Sawyer at paras 38 and 65 , citing Westcoast at para 49). [ 102 ] In Sawyer , the FCA provided further direction on how to properly apply the “single undertaking” test: the focus should not be on whether two related operations are functionally different, but on the degree and quality of functional integration — including how and for what purpose the operations “work together” ( Sawyer at para 44 ).

This is particularly important where one aspect of a business’ operations is confined within a province. In such cases, it is an error to look at only where an operation is , and fail to ask what the operation does ( Sawyer at paras 37, 46-47 ). Decision-makers must consider the nature of the project as a whole, and not take a myopic view of the geographical boundaries of the operation under scrutiny. [ 103 ] As the SCC stated in Westcoast , the test for a “single undertaking” is fact-based and thus difficult to summarize comprehensively (at para 64).

But certain questions can guide the analysis, such as considering the primary purpose of the operation under scrutiny; whether it is dedicated exclusively or even primarily to the operation of the core interprovincial undertaking; whether the goods or services provided by one operation are for the sole benefit of the other operation and/or its customers, or are generally available ( Westcoast at paras 70, 54, and 65 respectively); and whether the operations are functionally interdependent, in the sense that one would not exist without the other ( Sawyer at para 49 ).

(2) The “derivative jurisdiction” test [ 104 ] Turning now to the “derivative” jurisdictional analysis, this second stage test addresses the varying factual situations where a particular undertaking is not itself federal in nature, but may be drawn into federal jurisdiction by virtue of its association with another federal undertaking. There may be no common management and control between the two undertakings, although that is not necessarily the case (see Northern Telecom 2 at 771 (SCR), at para 70 (WL (Can)). [ 105 ] Tessier ’s lengthy review of the case law in this area again suggests that no comprehensive test is possible, but the SCC offered the following

summary at paragraph 46: [T]his 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. [ 106 ] At paragraph 55 of Tessier , the SCC also quoted with approval from paragraph 124 of Justice McLachlin’s Westcoast dissent: The local work or undertaking must, by virtue of its relationship to the inter-provincial work or undertaking, essentially function as part of the inter-provincial entity and lose its distinct character.

In the context of an inter-provincial transportation or communication entity, to be functionally integrated, the local work or undertaking, viewed from the perspective of its normal day-to-day activities, must be of an inter-provincial nature — that is, be what might be referred to as an “interconnecting undertaking”...

If the dominant character of the local work or undertaking, viewed functionally, is something distinct from inter-provincial transportation or communication, it remains under provincial jurisdiction. [Emphasis added by the SCC in Tessier ] [ 107 ] Thus, although the test for derivative federal jurisdiction may focus on whether the subsidiary operation is “vital” , “essential” , or “integral” to the federal undertaking ( Tessier at para 37 , excerpting from Northern Telecom 1 at 132 (SCR), at para 32 (WL Can)), functional integration matters to this second stage analysis just as much as it does in the first stage “single undertaking” analysis.

In Syndicat des débardeurs du Port de Québec (CUPE, Local 2614) v Société des arrimeurs de Québec Inc , 2011 FCA 17 , for instance, the FCA described derivative jurisdiction as engaging considerations of both dependency and integration:

[48] These factors set out in Northern Telecom, 1980, are not intended to be applied in a strict or rigid manner; instead, the test shouldbe flexible and attentive to the facts of each particular case. The test involves determining in a functional and practical manner whetherthe undertakings at issue depend on one another such as to be operationally integrated: United Transportation Union v.

Central WesternRailway Corp., (SCC), [1990] 3 S.C.R. 1112, at pages 1139-40. [49] The degree of operational integration may vary, but it must be substantial and important, as well as vital, essential orfundamental… [Emphasis added] [108] Both the “single undertaking” and the “derivative jurisdiction” tests are thus characterized by an “integration” inquiry, whethersuch integration flows, for instance, from a federal undertaking’s dependency on a subsidiary operation, or from the functionalinterrelationship between two commonly-controlled operations. [109] I note that, in the Decision under review, the Referee determined incorrectly that “functional integration” was relevant only tothe “derivative jurisdiction” test and not the “single undertaking” test.

My focus here has therefore been on the overlap between thesetests, and in particular how “functional integration” operates in both analyses. However, I do not wish to be taken as finding that there areno differences at all between the “single undertaking” and “derivative jurisdiction” tests. [110] One such distinction is the “directionality” of the dependence, or “who depends on whom”.

The case law states that for“derivative” jurisdiction to be established, the federal undertaking must be dependent upon the services of the subsidiary operation(Tessier at para 46), and not the other way around (Fastfrate at para 75). It is not clear to me, however, that such a rule exists in the“single undertaking” test (see Westcoast at para 54). [111] There may well be other distinguishing features one could find in the vast jurisprudence that applies to other (non-transportation) industries.

However, that is neither my focus nor task, which is rather to apply the correct legal test to the facts of the casebefore me. E. Application of the law to the facts of this case

(1) Did the Referee apply the tests correctly? [112] Having considered the applicable law, and notwithstanding the Referee’s laudable effort to provide a thorough and carefulanalysis in her lengthy and comprehensive Decision, I conclude that she did not select or apply the correct constitutional tests. In fairness,I do not believe that the relevant constitutional framework was articulated before her with as much clarity as it was in this Application. [113] I have already found that the Referee did not give effect to the presumption of provincial jurisdiction over labour relations.

Ifurther find that, although the Referee correctly identified that her first task was to determine whether one or more undertakings existed,she did not conduct her analysis with reference to the constitutional principles set out in Westcoast, which were in the materials beforeher, and ought to have guided her analysis. [114] I find that the Referee focused instead on the degree of “centralization” and effectively directed herself not to consider“functional integration” unless a derivative analysis arose.

Although it was not necessarily an error for the Referee to distinguish lines ofreasoning in other labour adjudications which dealt with derivative analyses, I am persuaded that the Referee did so because shemisunderstood the role that “functional integration” plays in both direct and derivative jurisdiction, as is further demonstrated in herobiter comments excerpted at paragraph [27] of these Reasons. [115] The Referee’s obiter comments were in addition to her finding that while many facts could support “either result”, there was a“slight preponderance” indicating that Coach and Transit were a “single” undertaking, as excerpted at paragraph [24] of these Reasons.This reference to merely a “slight preponderance” of facts in favour of a “single” undertaking is also significant: in my view, a “single”undertaking cannot be found on such a low standard.

Such an outcome would not be consistent with the exceptional quality of federaljurisdiction over labour relations, nor would it be in accordance with the concepts that animate both the “single undertaking” test and the“derivative” jurisdiction test, which suggest that a substantial degree of interrelationship is required.

It is important to distinguish the“functional integration” inquiry into jurisdiction over labour relations, from the issue of whether a business is an interprovincialtransportation undertaking: it is only the latter where even a de minimus amount of interprovincial transport results in a finding that theenterprise is a “federal” undertaking under the Constitution Act, 1867 (see Consumers’ Gas Co v Canada (National Energy Board)(1996), 195 NR 150 (FCA) at para 10, 1996 CarswellNat 335 (WL Can) at para 10, cited in Tessier at para 52). [116] However, an adjudicator’s errors in the constitutional analysis do not automatically mean that an incorrect decision has beenreached (Nishnawbe at para 46).

Indeed, the Transit Employees argued in their post-hearing submissions that the Referee’s analysis wasin substance consistent with both Westcoast and Sawyer, such that any technical irregularities in her statements of the law wereinconsequential. [117] It remains, then, for this Court to determine the constitutional question on this Application.

Given that the parties agree on theapplicable law and that the evidence before me is largely documentary, undisputed, and summarized by the Referee in her Decision, I seeno reason not to undertake the analysis: to send this matter back for readjudication would further and unnecessarily prolong a dispute thathas been ongoing for nearly eight years since the Transit Employees moved to a different employer. To require another hearing, giventhe largely undisputed factual findings, would not serve the interests of the parties or the justice system.

As Justice Karakatsanis wrote inHryniak v Mauldin, 2014 SCC 7 at paragraph 25, “[p]rompt judicial resolution of legal disputes allows individuals to get on with theirlives.” [118] Where the essential facts have been determined or are not in dispute, this Court has the ability — and, in my view, theresponsibility — to answer the central question of whether the Applicant is federally or provincially regulated (Nishwabe at para 46;

TurnAround Couriers Inc v Canadian Union of Postal Workers , 2012 FCA 36 ; Syndicat des agents de sécurité Garda,

Section CPI-CSN v Garda Canada Security Corporation , 2011 FCA 302 [ Garda ]; Native Child and Family Services of Toronto v Communication, Energy and Paper workers Union of Canada , 2008 FCA 338 , aff’d 2010 SCC 46 ; Fox Lake Cree Nation v Anderson, 2013 FC 1276 ). Further, at paragraph 29 of Garda , Justice Mainville held that deference is owed to an adjudicator’s underlying factual findings if they can be separated from the constitutional analysis, as they can be in this Application.

(2) Are the Transit Employees federally or provincially regulated? [ 119 ] I begin with the presumption that both Coach’s and Transit’s labour relations are provincially regulated ( NIL/TU,O at para 11). The only relevant federal power in this Application is section 92(10)(

a) of the Constitutional Act, 1867 , through which the federal government has jurisdiction over interprovincial transportation undertakings. It is undisputed that, as of July 2010, Tokmakjian was a transportation business. Coach’s operations regularly and continuously crossed provincial borders. Therefore Coach was an interprovincial undertaking within the meaning of section 92(10)(a).

This means that it was a “federal” undertaking for the purposes of the functional test, and the provincial presumption is rebutted with respect to Coach’s labour relations at that time. [ 120 ] On its face, Transit’s operations, by contrast, were intraprovincial: there is no evidence before me that could support a finding that Transit drivers or buses regularly and continuously crossed provincial borders. Therefore, the only way that Transit’s labour relations could fall under federal jurisdiction would be by virtue of its relationship with Coach, an interprovincial transportation undertaking.

To rebut the provincial presumption, I must find that Transit was a “federal” undertaking either because it was (

i) a “single” undertaking with Coach (direct jurisdiction), or (ii) “integral” to Coach (derivative jurisdiction).

Otherwise, the provincial presumption over Transit’s labour relations prevails. [ 121 ] To find a “single” undertaking, and thus that Transit was “directly” a federal undertaking, I must find that Transit and Coach were “functionally integrated” and subject to “common management, control and direction” ( Westcoast at para 65). [ 122 ] To find “derivative” federal jurisdiction, I must find that Transit’s “essential operational nature” rendered it “integral” to Coach by assessing the extent to which Coach’s effective performance depended on Transit’s services, and how important those services were to Transit itself ( Tessier at paras 18 and 46 ). [ 123 ] These analyses speak to the two-stage “functional test” and raise overlapping considerations of integration.

I must focus on the “normal and habitual activities of the business” and disregard “exceptional or casual factors” ( NIL/TU,O at para 14). Because in this Application both the “direct” and “derivative” tests turn on the relationship between Coach and Transit, I will holistically consider both analyses. [ 124 ] I am not persuaded by Tokmakjian’s argument that the Transit Employees’ submissions before the OLRB in 2010 are corroborative of Tokmakjian’s position on this Application.

I do not believe that any of the prior labour board applications are of much assistance, either because they were never adjudicated or because they were decided long ago, in a cursory manner, and without reference to the governing legal principles at the time. Those principles have evolved, as has Tokmakjian.

In making this finding, however, I do not foreclose the possibility that prior labour adjudications may assist other decision-makers in determining whether a given undertaking is “federal”, and the provincial presumption is therefore rebutted. [ 125 ] At the relevant time, Coach performed charter services and Transit performed municipal services.

I do not find that Transit and Coach worked together towards any purpose ( Sawyer at para 44 ) — except if that purpose was “bus transportation” , which in the circumstances of this case is both too broad to be meaningful, and too unresponsive to Tokmakjian’s operational realities. [ 126 ] The Transit Employees submit, in reliance on Sawyer , that Transit’s municipal activities were contractual and therefore a mere business or commercial arrangement ancillary to its integrated nature.

This argument is unpersuasive, because I must consider how Transit and Coach actually operated ( Sawyer at para 38 ), not how they “could have” operated if differently organized ( Westcoast at para 53). The fact that Transit’s operations in York Region arose from a contract does not assist in this analysis.

And as an aside, the fact that upon Tokmakjian’s loss of the York Region contract, the Transit Employees were terminated and immediately re-hired by Veolia, undercuts the Transit Employees’ submission on this point. [ 127 ] I do not find that anything turns on the use of shared facilities, because a physical connection is insufficient to establish a single undertaking ( Westcoast at para 48).

According to the testimony before the Referee, Coach and Transit operated out of a single physical location as a matter of business convenience only, since Coach operations dwindled after September 11, 2001 and did not justify a separate facility. I do not find that the use of a single structure facilitated or furthered any common, integrative purpose. The same can be said for shared use of breakrooms, washrooms, and the parking lot. [ 128 ] Similarly, I find that many factors relied upon by the Referee indicated only business convenience.

For instance, the Referee found it significant that Transit drivers who drove Coach were paid for both types of work on a single paycheque and inferred, from the lack of financial evidence before her, that Tokmakjian took a “single pot” approach to finances.

Indeed, the Referee found financial separation to be a “key factor” in her analysis, writing that, without evidence that Coach and Transit’s financial details were separated, she “could not” conclude that “two distinct businesses or enterprises [were] being run by Tokmakjian” . [ 129 ] With these findings in mind, I do not agree with the Transit Employees’ post-hearing submissions that the Referee’s analysis was in substance consistent with Sawyer , which specifically instructs that “commercial and billing arrangements” are “tangential” factors ( Sawyer at para 38 ). [ 130 ] Unlike the Referee, I do not find it helpful to characterize Tokmakjian’s contract with York Region as “a repeating and very large charter contract” .

Transit and Coach each had their own dispatch systems, drivers, and equipment. At a practical, functional, and factual level, these differences responded to, and thus indicated, the different purposes each division served — one, a charter bus service providing interprovincial travel; the other, a municipal bus service that only had routes in Ontario.

[ 131 ] These different purposes were further reflected in differences in payment (Coach drivers were paid per trip, Transit drivers per hour) and separate training. To the extent that there was overlap in the training received by Transit and Coach drivers, the evidence indicates that it was only with respect to the narrow matter of customer service, and not training drivers to perform their primary function. [ 132 ] I do not find that Transit supported or performed its work for Coach, whether entirely or at all, in the manner envisioned by Westcoast .

I further do not find that Coach’s effective performance depended upon Transit in any way, whether for the supply of employees or use of equipment or other services, as stipulated in Tessier . To the contrary, the Referee held that Coach and Transit had “different pools” of drivers, which were not treated as interchangeable, and that driver intermingling was neither frequent nor widespread. I also note that Tokmakjian’s evidence was that such intermingling was voluntary and not dictated by Tokmakjian through formal channels.

In that respect, it is not the quantum of cross-over but its nature that is significant: Tokmakjian did not call upon Transit employees to drive Coach, except in the exceptional circumstance of the G20 Conference, which I must not take into account given its unprecedented and therefore exceptional occurrence in Ontario ( NIL/TU,O at para 14). Indeed, the most significant factual dispute before the Referee centred on whether 0.85% or 1.5% of Transit drivers drove for Coach — a negligible percentage under either statistic.

Again, any Transit driving done for Coach was both voluntary and minimal. [ 133 ] The Transit Employees have encouraged me to focus on the “control” aspect of the Westcoast “single undertaking” test, suggesting that Tokmakjian’s high-level control over Coach and Transit superseded differences in management at the divisional level. [ 134 ] I do not find that any such high-level control was used in furtherance of a common, integrative purpose, as in Sawyer. Tokmakjian’s evidence was that driver cross-over was extremely limited, and purely voluntary.

In this regard, the Referee accepted that Tokmakjian did not rigorously record driver cross-over, either because such cross-over “did not matter” or because it was “done casually” . [ 135 ] Furthermore, contrary to the Transit Employee’s position on common control, the record shows that Transit was too large to be managed by the same individuals as Coach; by July 2010, Tokmakjian had outgrown a system of centralized management.

I do not find that there was a meaningful degree of “common management or control” over the two divisions: managers largely had control over their own employees, including hiring and firing, and these processes necessarily worked differently, since Transit employees fell under the terms of a collective agreement, while Coach employees and contractors were not unionized. [ 136 ] Considering all these facts, which are either undisputed or flow from the Referee’s findings to which this Court owes deference, I conclude that Transit was neither a “single” undertaking with Coach, nor “integral” to its operations, and that it was therefore not “federal” for the purposes of rebutting the presumption of provincial jurisdiction over its labour relations under either a “direct” or a “derivative” analysis. [ 137 ] I have made my determination that Coach and Transit were, at the material time, not functionally integrated, by focusing on what Coach and Transit did, not where they were ( Sawyer at para 47 ): indeed, what Coach and Transit did defined the geographical scope of their operations, and not the other way around.

I have considered indicia of integration, not difference ( Sawyer at para 44 ), and the operations each division actually performed ( Sawyer at para 38 , citing Fastfrate at para 76 ), while disregarding matters of mere corporate or commercial convenience ( Westcoast at para 66), all without regard to exceptional or casual factors or how Tokmakjian “could” have operated if differently organized ( NIL/TU,O at para 14; Westcoast at para 53).

The provincial presumption has not been rebutted. [ 138 ] As this analysis is conclusive, there is no need for me to consider whether provincial regulation of Transit would impair the “core” of a federal head of power ( Nishnawbe at para 72 ). [ 139 ] This Application for judicial review is accordingly granted, and the Decision set aside. As Transit is not within federal jurisdiction, but rather falls under provincial regulation, the Referee has no authority to deal with the matter of severance pay based on

section 167 of the Code . V. Costs [ 140 ] At the hearing of this Application, the parties agreed that costs would go to the successful party. Accordingly, Tokmakjian is entitled to its costs against the Transit Employees. JUDGMENT in T-1110-15 THIS COURT’S JUDGMENT is that 1. The Application is allowed; 2. The decision of the Referee dated June 1, 2015, is set aside because the Respondents are not governed by the Canada Labour Code , RSC 1985, c L-2; and 3. Costs are awarded to the Applicant. “Alan S. Diner” Judge

Schedule “A” List of Employees (Respondents), that are complainants in file numbers: YM2727-3244, YM2727-3308 and YM2727-3309 Vella Sam Schembri Mike Van Bebber Andreas Passaro Rosa Gosney David Civichino Frank Stoltenhoff Vince Walker Noel Ash Chris Kumar Sarita Quinche Liberta Castro John Castro Leopoldina McKenzie Hamlet Arasakula Jalan Rowsell Bruce Khan Zahid Santarita Alda Annamalai Vijay Rabinovich Manuel Walji Nazim Zamora Blanca Lue Gregory Singh Kerlaminar Desai Abdul Thacius Abraham Amirthalingam Arunan Mahadeo Elena Rajenthram Siva Sel

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