A-231-80
In re a Reference by the Canada Labour Relations
Board and in re applications by Communications
Workers of Canada and Canadian Union of Com
munications Workers for certification with
respect to employees of Northern Telecom Canada
Limited
Court of Appeal, Thurlow C.J. and Ryan and Le
Dain JJ.—Ottawa, March 9, 10, 11, 12, 13 and
May 12, 1981.
Labour relations — Jurisdiction of the Canada Labour
Relations Board — Reference under s. 28(4) of the Federal
Court Act as to the constitutional jurisdiction to grant an
application for certification with respect to Northern Telecom
Canada Limited installers — Whether Parliament has author
ity, by reason of Bell being a federal undertaking, to legislate
in respect of the labour relations of the installers — Canada
Labour Code, R.S.C. 1970, c. L-1, s. 108 — Federal Court
Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28(4).
This is a reference under subsection 28(4) of the Federal
Court Act by which the Canada Labour Relations Board asks
the Court to determine whether the Board has constitutional
jurisdiction to grant an application for certification with respect
to installers employed by Northern Telecom Canada Limited
("Telecom Canada") sought to be represented by the Com
munications Workers of Canada and the Canadian Union of
Communications Workers respectively. The issue is whether
Parliament has authority, by reason of the telecommunications
undertaking of Bell being a federal undertaking and subject to
exclusive federal legislative authority, to legislate in respect of
the labour relations of the Telecom Canada installers. To
resolve the issue, elements such as the core federal undertaking
(i.e. Bell), the subsidiary operation, i.e. Telecom Canada, and
the relationship of the latter's activities to the core federal
undertaking must be taken into account.
Held, the question referred is to be answered in the affirma
tive. The core federal undertaking (Le. Bell) includes not only
the transmission of messages for customers but as well the
installation of telephones, transmission equipment and
exchanges necessary to provide the service. What the installers
are doing, day in day out, during 80% of their working time, is
participating in the carrying on of the federal undertaking itself
which by reason of its nature requires a constant program of
rearrangement, renewal, updating and expansion of its switch
ing and transmission system and the installation of telecom
munications equipment designed to carry out that need. The
fact that 20% of the installers' work is not done for Bell does
not change the conclusion.
Also, per Le Dain J.: The installers must be regarded as
employed upon or in connection with the operation of the Bell
undertaking as their work has a direct and immediate impact
upon effective operation.
Northern Telecom Ltd. v. Communications Workers of
Canada [ 1980] 1 S.C.R. 115, applied. The Letter Carriers'
Union of Canada v. Canadian Union of Postal Workers
[1975] 1 S.C.R. 178, applied. Construction Montcalm Inc.
v. The Minimum Wage Commission [1979] 1 S.C.R. 754,
distinguished.
REFERENCE.
COUNSEL:
W. H. Deverell for Canada Labour Relations
Board.
Hélène LeBel and Janet Cleveland for Com
munications Workers of Canada.
Philip Cutler, Q.C. and Pierre Langlois for
Canadian Union of Communications Work
ers.
W. L. Nisbet, Q.C. for Attorney General of
Canada.
W. S. Tyndale, Q.C. for Northern Telecom
Canada Limited.
J. Cavarzan, Q. C. for Attorney General of
Ontario.
Jean-François Jobin and Louis Crete for
Attorney-General of Quebec.
SOLICITORS:
Deverell, Harrop, Vancouver, for Canada
Labour Relations Board.
Jasmin, Rivest, Castiglio, Castiglio & LeBel,
Montreal, for Communications Workers of
Canada.
Robinson, Cutler, Sheppard, Borenstein,
Shapiro, Langlois, Flam & Green, Montreal,
for Canadian Union of Communications
Workers.
Deputy Attorney General of Canada for
Attorney General of Canada.
Ogilvy, Renault, Montreal, for Northern
Telecom Canada Limited.
Deputy Attorney General of Ontario,
Toronto, for Attorney General of Ontario.
Boissonneault, Roy & Poulin, Montreal, for
Attorney-General of Quebec.
The following are the reasons for judgment
rendered in English by
THURLOW C.J.: This proceeding is a reference
under subsection 28(4) of the Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, by which the
Canada Labour Relations Board asks the Court to
determine the question:
Does the Board have constitutional jurisdiction to grant an
application for certification with respect to the employees
sought to be represented in these two applications for
certification?
The applications referred to are separate
applications to the Board made by the Communi
cations Workers of Canada and the Canadian
Union of Communications Workers on May 30,
1978 and September 19, 1978, respectively, for
certification under Part V of the Canada Labour
Code, R.S.C. 1970, c. L-1, as the bargaining agent
for a unit composed of all Northern Telecom
Canada Limited Eastern Region installers. These
applications and the present reference represent
further stages in a long series of legal disputes as
to the jurisdiction of the Canada Labour Relations
Board, the Ontario Labour Relations Board and
the Quebec Labour Relations Board with respect
to employees of Northern Telecom Limited (here-
inafter Telecom) and its subsidiary, Northern
Telecom Canada Limited (hereinafter Telecom
Canada).
The reference to this Court was made following
six days of hearing testimony and argument solely
on the question of the Board's jurisdiction and the
filing of a seventy-four-page document in which
the Board related the history of the disputes and
included a discussion of the subject and of its
opinion on the matter and of its reasons for refer
ring the question to the Court. The record of the
proceedings before the Board, including a tran
script of the evidence taken at the Board's hearings
and copies of exhibits presented, constitute the
material before the Court on which the question is
to be determined. None of the parties sought to
add anything to it. In brief, the Board's reason for
referring the question to the Court was that the
view it had formed was contrary to that reached by
the High Court of Ontario and the Quebec Court
of Appeal on facts which the Board did not consid
er to be substantially different from those before
it.
At one point in the hearing before this Court it
was submitted by counsel for the Canadian Union
of Communications Workers, though it had not
been raised in its memorandum of argument, that
before answering the question referred to it by the
Board, the Court should undertake a study as to
whether it has jurisdiction to decide it. Counsel,
however, would not be drawn into taking a position
on the point, preferring, as it seemed to me, to
simply raise it and leave it in the air. No other
counsel objected to the Court's jurisdiction or sug
gested that there was any doubt about it. Indeed,
they disassociated themselves from it. They sought
an answer to the question referred by the Board.
For my part, I have not had any doubt as to the
jurisdiction of this Court under section 28 of the
Federal Court Act to entertain the reference. The
Canada Labour Relations Board is a federal
board, commission or tribunal within the meaning
of section 2 of the Federal Court Act. It has the
authority conferred on it by the Canada Labour
Code. The extent of that authority depends on the
extent of the authority of the Parliament of
Canada. When a particular question as to the
extent of the authority of the Board under the
Code turns on the extent of the authority of Parlia
ment, it becomes necessary, in order to determine
the Board's authority, to determine as an inciden
tal or involved question whether the authority of
Parliament extends to the particular subject-
matter. The Board has authority under subsection
28(4) of the Federal Court Act to refer to this
Court for determination any question or issue of
jurisdiction. In the present instance, the Board has
before it two applications for certification under
the Canada Labour Code which, under section 108
and Division III of Part V of the Code, the Board
has jurisdiction to entertain if Parliament has
legislative authority to confer such power on the
Board. The question of the Board's jurisdiction is
thus dependent on the extent of the authority of
Parliament. Consideration of the authority of Par
liament is thus necessarily involved in the con
struction and application of the Code and in par
ticular of its section 108. Faced with the problem,
the Board could have taken a position on the
question and proceeded to deal with the applica
tions accordingly. Had it done so, the decision
made might then have been the subject of review
in the Court under section 28 on the question of
the Board's jurisdiction. Had that occurred, in my
opinion, this Court would have had jurisdiction to
determine the question. But the Board also had
open to it the course which it adopted of referring
the question to this Court for determination and in
my opinion, the jurisdiction of the Court to decide
the question on the Board's reference is precisely
the same as it would have been on a section 28
application to review the Board's decision. In my
opinion, therefore, there is no occasion to doubt
this Court's jurisdiction to consider and answer the
question referred to it by the Board.
The constitutional issue raised by the question is
whether Parliament has legislative jurisdiction
with respect to the labour relations of the installers
employed by Telecom Canada who are included in
the group for which certification of the Board is
sought by the two competing unions. The Com
munications Workers of Canada and the Attorney
General of Canada supported an affirmative
answer. The Canada Labour Relations Board,
Telecom Canada, Canadian Union of Communica
tions Workers, the Attorney General of Ontario
and the Attorney-General of Quebec sought a
negative answer.
The constitutional principles applicable for
resolving the issue are set out in the reasons for
judgment of the Supreme Court delivered by Dick-
son J., in Northern Telecom Limited v. Communi
cations Workers of Canada' in a passage covering
some four pages commencing at page 131. The
following are excerpts from it:
In the case at bar, the first step is to determine whether a
core federal undertaking is present and the extent of that core
undertaking. Once that is settled, it is necessary to look at the
particular subsidiary operation, i.e., the installation department
of Telecom, to look at the "normal or habitual activities" of
that department as "a going concern", and the practical and
functional relationship of those activities to the core federal
undertaking.
Any core federal undertaking present in this case must be
found within the telephone and telecommunications system.
[Page 133.]
1 [1980] 1 S.C.R. 115.
At a minimum, it can be asserted that Bell Canada's opera
tions have been found to be a federal undertaking: see City of
Toronto v. Bell Telephone Co. of Canada ([1905] A.C. 52),
and Quebec Minimum Wage Commission v. Bell Telephone
Co. of Canada ([1966] S.C.R. 767).
In the field of transportation and communication, it is evi
dent that the niceties of corporate organization are not deter-
minative. [Pages 133-134.]
Another, and far more important factor in relating the
undertakings, is the physical and operational connection be
tween them. Here, as the judgment in Montcalm stresses, there
is a need to look to continuity and regularity of the connection
and not to be influenced by exceptional or casual factors. Mere
involvement of the employees in the federal work or undertak
ing does not automatically import federal jurisdiction. Certain
ly, as one moves away from direct involvement in the operation
of the work or undertaking at the core, the demand for greater
interdependence becomes more critical.
On the basis of the foregoing broad principles of constitution
al adjudication, it is clear that certain kinds of "constitutional
facts", facts that focus upon the constitutional issues in ques
tion, are required. Put broadly, among these are:
(1) the general nature of Telecom's operation as a going
concern and, in particular, the role of the installation depart
ment within that operation;
(2) the nature of the corporate relationship between Telecom
and the companies that it serves, notably Bell Canada;
(3) the importance of the work done by the installation
department of Telecom for Bell Canada as compared with
other customers;
(4) the physical and operational connection between the
installation department of Telecom and the core federal
undertaking within the telephone system and, in particular,
the extent of the involvement of the installation department
in the operation and institution of the federal undertaking as
an operating system. [Pages 134-135.]
The basis for the position that Parliament has
legislative jurisdiction in the matter is the work
that Telecom Canada installers do in connection
with the communications system of Bell Canada.
It is common ground that Bell Canada operates a
telecommunications system in Ontario and Quebec
and that the operation is a federal undertaking. It
was so held in the two Bell cases mentioned in the
excerpt I have cited. The Newfoundland Tele
phone Company is a subsidiary of Bell. The New
Brunswick Telephone Company and the Maritime
Telegraph and Telephone Company, which oper
ates in Nova Scotia and owns the Island Telephone
Company, which operates in Prince Edward
Island, are what are referred to in the evidence as
affiliates of Bell. In 1979, of some fifteen million
telephones in Canada, Bell itself had in service
some nine million and its subsidiary and affiliates
one million. As a federal communications under
taking, it is subject to federal regulation by the
Canadian Radio-television and Telecommunica
tions Commission and I think it is to be assumed
that the undertaking is a public utility and that in
the communities that it serves Bell has a legal duty
to provide telephone service.
The object of the undertaking is to transmit
messages for subscribers for a fee or toll. But the
undertaking is not confined to that. In order to
provide the service telephones with lines to them
must be installed in subscribers' premises. Bell's
undertaking includes that. It is not unheard of for
telephone companies to charge for that service.
The work is mostly done by Bell's own technicians
and no one questions that both installations and
removals and repairs to keep the telephones in
operation are part of the Bell undertaking. Tele
phone lines must also be installed to connect sub
scribers' premises to Bell's central exchanges
where a subscriber's call is switched to the line of
the subscriber who is being called. Such work is
also carried out by Bell and again no one questions
that it is part of Bell's telecommunications
undertaking.
The system also requires the installation of
equipment for Bell's central exchanges. It requires
as well, on a continuing basis, the maintenance,
renewal, rearrangement, addition to and updating
of such equipment as it becomes necessary to meet
the expanding demands of a growing population of
subscribers and to keep the system abreast of
technical developments in the telecommunications
field. The day-to-day maintenance of such central
exchange equipment is, as I understand it, general
ly carried out by Bell technical personnel. How
ever, in general, the installation of additional and
renewal equipment as well as the rearranging and
updating of existing equipment is done by Telecom
Canada installers. The installation, rearrangement
and improvement and the expansion of the capaci
ty of microwave radio transmitting equipment for
Bell in relay stations, to perform the function of
and eliminate the need for long distance cables, is
also carried out by Telecom Canada installers.
Bell's policy with respect to the provision of new
or additional switching and transmission equip
ment is to have it installed and ready for opera
tion, as nearly as possible, just in time to meet the
forecast requirement for it.
So much for what is referred to as the core
federal undertaking. In my view, it includes not
only the transmission of messages for customers
but as well the installation of telephones, transmis
sion equipment and exchanges necessary to provide
the service.
I turn now to the subsidiary operation i.e. the
installation department of Telecom Canada, its
normal and habitual activities and the relationship
of those activities to the operations of Bell's tele
communications system.
Telecom Canada, the employer of the installers
in question, is a subsidiary of Telecom which is
60.5% owned and is controlled, at the board of
directors' level, by Bell Canada. Though it is a
subsidiary and indeed an offshoot of Bell's under
taking, Telecom is in itself a large undertaking
with subsidiaries operating in a number of coun
tries. The combination makes up the sixth largest
telecommunications manufacturer in the world,
the second largest in North America and the
largest in Canada. It has assets of some 1.3 billion,
it operates some 56 manufacturing plants through
out the world, has some 32,000 employees and in
1978 had 1.5 billion in sales.
The largest of Telecom's subsidiaries is Telecom
Canada. It has some 15,000 employees, operates
26 plants in Canada and in 1978 had about 1
billion in sales.
Telecom Canada is a manufacturer and supplier
of telecommunications equipment. It also instals
such equipment, whether of its own make or that
of another manufacturer. Telecom Canada's larg
est customer is Bell Canada. It sells the bulk of its
products to Bell on contracts which include instal
lation of the equipment on Bell premises or on
premises of Bell's subscribers. It also instals for
Bell equipment that Bell buys elsewhere, chiefly
equipment manufactured in the United States by
another Telecom subsidiary.
Bell buys 90% of its switching and transmission
equipment from Telecom Canada and 95% of all
such equipment bought by Bell is installed by
Telecom Canada. Installation work for Bell
accounts for 80% of the work of the Telecom
Canada installers. A more simple procedure for
concluding contracts between Telecom Canada
and Bell, than between Telecom Canada and its
other customers is in effect and as the largest
customer of Telecom Canada, Bell has the benefit
of lower prices. When urgent short term installa
tion work is required by Bell, the ordinary contract
procedure is by-passed.
Of the 15,000 employees of Telecom Canada,
some 820 are installers, 460 of whom are included
in the bargaining unit here in question. They are
based in the company's Eastern Region, which
includes the Eastern part of Ontario, the Province
of Quebec and the Atlantic Provinces. The other
360 are based in the company's Western Region.
Within Telecom Canada there are four manu
facturing groups designated as (1) Switching
Group (2) Transmission Group (3) Cable Group
and (4) Subscriber Equipment Group. The install-
ers are personnel of the Switching and Transmis
sion groups. The former manufactures central
office switching equipment. It has 4,833 employees
of whom 665 are installers. The latter group
manufactures microwave radio systems, multiplex
systems, line carrier systems, line conditioning
equipment and subscriber carrier systems. The
group has 2,097 employees of whom 155 are
installers. While within the company organization,
the installers are personnel of these two groups
they never work on their employer's premises.
They report for work only on customers' premises
or the premises of the customer's subscribers. That
is because they are engaged exclusively in install
ing the equipment for use by the customer or its
subscribers. They have nothing to do with the
manufacture of the equipment they instal and
there is no contact at work between the installers
and the manufacturing personnel of the group to
which they belong. As a class, they are readily
identifiable and severable from the other
employees of the Switching and Transmission
groups. To the extent that their duties involve
contact or cooperation with personnel other than
their own supervisors, they work or cooperate with
Bell employees.
As the Bell communications network has been
set up and in operation over a long period, what
the installers are chiefly engaged in doing for Bell
is the installation work involved in the ongoing
overall expansion and modernization of the net
work. The bulk of this work consists in rearrang
ing, updating and adding to existing installations.
This involves their doing their work in ways and by
means and with the cooperation of Bell personnel
so arranged as to permit the system to be kept, so
far as possible, in operation while the work is being
done.
With respect to the corporate relationship be
tween Telecom Canada and the companies it
serves, I have already mentioned that Telecom,
which owns 100% of Telecom Canada, is 60.5%
owned and is controlled by Bell Canada. Telecom,
when set up, was known as Northern Electric
Company Limited. It was at one time owned 60%
by Bell and 40% by Western Electric. Thereafter
for some years prior to 1973, it was 100% owned
by Bell but, since expanding its business into coun
tries other than Canada, a part of the stock has
been sold to the public.
Bell's share may drop from its present 60.5%
holding but Bell intends to retain control. Since
December 1979, the Chairman and Chief Execu
tive Officer of Bell has been the Chairman of
Telecom. Since early 1980, the President and
Chief Executive Officer of Telecom has been a
director of Bell. There is some movement of man
agement personnel between the companies. Bell
does not intervene in the day-to-day operations of
Telecom. There is close collaboration between Bell
and Telecom in research and the development of
new product lines. It does not appear that there is
any corporate relationship between Telecom
Canada or Telecom and any other customer of
Telecom Canada.
The position taken by the parties who seek a
negative answer to the question referred by the
Board focussed on a view of the Bell telecommuni
cations undertaking as consisting of the transmis
sion of messages for customers for a fee, on the
treatment of the work of the installers as the final
phase of the performance by Telecom Canada of
its contracts for the sale of its equipment on an
installed basis and to some extent on the fact that
Telecom Canada installers do not work exclusively
on installations of equipment sold to Bell. These
views of the situation tend to suggest that jurisdic
tion over the labour relations of the installers is in
the provincial field. But I do not think it advances
the solution to dwell unduly on aspects of the
situation which tend to show that the jurisdiction
is provincial. The jurisdiction is provincial—unless
it is federal. The only inquiry, therefore, that is
necessary is whether the jurisdiction is federal,
that is to say, whether Parliament has authority,
by reason of the telecommunications undertaking
of Bell being a federal undertaking and subject to
exclusive federal legislative authority, to legislate
in respect of the labour relations of the Telecom
Canada installers.
In the view I have of the matter the close
corporate relationship between Bell and Telecom
Canada is of little or no consequence. It is some
thing of a makeweight, in the sense that the com
panies are closer than if there were no such corpo
rate relationship, but, without the features
mentioned in what follows, the relationship would
be consistent with either conclusion. Of somewhat
greater importance is the fact that these installers
have really no relationship with the other
employees of Telecom Canada, but have some
relationship in their work with personnel of Bell,
do not work on their employer's premises, but do
most of it on Bell premises, and are a class by
themselves doing a kind of work different from
that being done by the engineering and manufac
turing employees of Telecom Canada. They also
have no function but to instal telecommunications
equipment, mostly for Bell.
But the feature of the case that appears to me to
be of the greatest importance and to point with
telling effect to the conclusion that the jurisdiction
is federal is the fact, as I see it, that what the
installers are doing, day in day out, during 80% of
their working time, is participating in the carrying
on of the federal undertaking itself which by
reason of its nature requires a constant program of
rearrangement, renewal, updating and expansion
of its switching and transmission system and the
installation of telecommunications equipment
designed to carry out that need. With 80% of the
work these installers are doing on a continuing
basis being work done in Bell's undertaking, I am
of the opinion that there is a foundation for the
assertion of federal jurisdiction over their labour
relations and that the Board should assume and
exercise it in accordance with the Canada Labour
Code. Further, in my view, the fact that 20% of
the installers' work is not done for Bell does not
change the conclusion 2 .
I do not propose to review the many cases to
which we were referred. They are all different in
one way or another on the facts and some differ as
well by reason of their being concerned with areas
of federal jurisdiction other than that in relation to
federal undertakings. I would answer the question
referred in the affirmative.
* * *
RYAN J.: I agree.
* * *
The following are the reasons for judgment
rendered in English by
LE DAIN J.: I agree that the question put by the
Board should be answered in the affirmative on
the ground that the installers of Northern Telecom
2 Compare The Letter Carriers' Union of Canada v. Canadi-
an Union of Postal Workers [1975] 1 S.C.R. 178. The fact that
some of the work of the employees in question was done for
customers other than the Post Office did not influence the
result.
are employed upon or in connection with the oper
ation of a federal undertaking or business within
the meaning of section 108 of the Canada Labour
Code. The case is nicely balanced, as the Board
suggested, but I think that the close functional
relationship of the work of the installers to the
operation of the Bell undertaking tips the balance
in favour of federal jurisdiction. There are obvi
ously two undertakings or enterprises involved: the
Bell undertaking, which is federal, and Northern
Telecom, a manufacturing enterprise the labour
relations of which are prima facie within provin
cial jurisdiction. While the operation carried on by
Northern Telecom was in its origin a department
of the Bell undertaking, it has grown to be an
enterprise with a life of its own, with public par
ticipation in its ownership and a substantial share
of its market with customers other than Bell.
Clearly a decision was taken by Bell at one point
to let it develop to its maximum potential as a
self-sustaining operation so that it could be a
supplier of equipment to Bell on the most favour
able terms. Bell retains control of it and remains
its most important customer, but Northern Tele-
com has become a major manufacturing enterprise
in its own right. Installation is an important, if not
essential, part of its operation. Because of the
highly technical nature of the equipment it manu
factures and sells, a high proportion of its sales
contracts calls for installation, which is really only
a particular form of delivery. It is this aspect of
the case which argues strongly for provincial juris
diction. But the installation is related in a very
close and complex manner to the operation of the
telecommunications equipment which is the heart
of the Bell undertaking. Because of the effect
which installation necessarily has on operation
there must be close cooperation and coordination
between the installers and the Bell technicians
responsible for operation. In order to assure the
maintenance of operation as effectively as possible
installation is carried out according to an agreed
predetermined plan or schedule. The installers and
Bell technicians work side by side in this process
which is going on all the time as part of the effort
to improve capacity. The work of the installers has
a direct and immediate impact upon effective
operation. For this reason I think they must be
regarded as employed upon or in connection with
the operation of the Bell undertaking. Their rela
tionship to the operation of the Bell undertaking is
more dominant and critical from a labour relations
point of view than their relationship to the manu
facturing and sales aspects of the Northern Tele-
com operation. I come to this conclusion by
application of the test affirmed by Mr. Justice
Dickson in Northern Telecom Limited v. Com
munications Workers of Canada [ 1980] 1 S.C.R.
115 at page 133: the "practical and functional
relationship" of the work of the installers to the
Bell undertaking.
Those who appeared in support of provincial
jurisdiction placed particular reliance on the
implications of the judgment of the Supreme
Court of Canada in Construction Montcalm Inc. v.
The Minimum Wage Commission [ 1979] 1 S.C.R.
754. I do not, with respect, think there is any real
analogy between the construction by a general
contractor of airport runways in accordance with
specifications laid down by the federal authority
and the regular or virtually continuous installation
of new or replacement equipment into an operating
telecommunications system.
* * *
RYAN J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.