Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court considered whether an Economic and Social Development Canada (ESDC) officer correctly found that Westower Communications Ltd. falls under federal labour jurisdiction through derivative constitutional jurisdiction.
   
• Federal jurisdiction over labour relations can arise directly or derivatively, and this case turned entirely on the derivative branch established in Tessier Ltée v. Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23.
   
• Uncontested evidence showed that roughly 85 percent of the applicant's business involved wireless and wireline construction, with 90 percent of the wireless work performed for Rogers, Bell, and Telus.
   
• Conflicting appellate authority exists on whether a federal undertaking can consist of a group of companies rather than a single entity, with the Ontario and Quebec Courts of Appeal reaching different conclusions on this point.
   
• Admissibility of new affidavit evidence was also at issue, since both parties submitted affidavits containing information not before the original decision-maker.
   
• Its position rested on the applicant's status as one of several competing construction contractors bidding for the same telecommunications work.
   

Facts of the case

Westower Communications Ltd. (referred to in the reasons as WesTower) provides wireless and wireline construction services to federal telecommunications companies. From 1992 until 2021, the applicant was treated as subject to federal jurisdiction for labour legislation purposes. In 2021, an ESDC officer investigated the applicant and, by letter dated July 16, 2021, concluded that the applicant was instead subject to provincial jurisdiction, reasoning that the applicant had not shown it was vital, essential, and integral to a specific federally regulated telecommunications company. In 2023, a different ESDC officer reopened the question after discovering more than 100 prior federal intervention activities involving the applicant dating back to 1992. Following an investigation that included meetings with the applicant's senior employees and an exchange of questions and submissions, the officer issued a letter dated April 2, 2024, and a covering email dated April 3, 2024 (together with an undated Case Summary, collectively "the Decision"), concluding that the applicant was subject to federal jurisdiction under Part II of the Canada Labour Code on the basis of derivative federal jurisdiction. The Case Summary found that WesTower had between 400 and 600 employees, that wireless construction made up 85 percent of its work (90 percent of which was performed for Rogers, Bell, and Telus), and that approximately 9 percent of its business was fabrication of towers and components. WesTower applied for judicial review of that Decision. On the application, the applicant filed an affidavit from its chief financial officer, Mr. Poon, updating the wireless/wireline breakdown to 63 percent and 22 percent respectively (still totaling approximately 85 percent), and the respondent filed an affidavit from an ESDC employee, Ms. Smith, listing the historical intervention activities.

Policy and legislative provisions at issue

The central legislative provision at issue was Part II of the Canada Labour Code, R.S.C., 1985, c. L-2, which governs labour standards for federally regulated undertakings. The constitutional framework arises from sections 91 and 92 of the Constitution Act, 1867, which do not expressly assign jurisdiction over labour relations to either level of government; labour relations are presumptively provincial, but Parliament may regulate them where jurisdiction over the underlying work is an "integral part" of a federal head of power, as recognized since the Reference re: Industrial Relations and Disputes Investigation Act, [1955] SCR 529 (the Stevedores Reference). The applicable test for derivative federal jurisdiction was set out by the Supreme Court of Canada in Tessier Ltée v. Quebec (CSST), 2012 SCC 23, which asks whether the related undertaking's essential operational nature renders it integral to a federal undertaking, assessed from the perspective of both the related operation and the federal undertaking's dependency on it. The Federal Court of Appeal's decision in Telecon Inc. v. International Brotherhood of Electrical Workers (Local Union 213), 2019 FCA 244, applying this test to a similar telecommunications construction company, was treated as binding on the Federal Court. The applicant also relied on two provincial appellate decisions, Ramkey Communications Inc. v. Labourers' International Union of North America, 2019 ONCA 859, and Madysta Télécom ltée c. Commission des normes, de l'équité, de la santé et de la sécurité du travail, 2020 QCCA 183, both of which found provincial jurisdiction over construction companies serving telecommunications clients.

Reasoning and analysis

Justice Little applied a correctness standard of review to the constitutional question, consistent with Telecon and XL Digital Services Inc. v. Communications, Energy and Paperworkers Union of Canada, 2011 FCA 179. On the admissibility of new affidavit evidence, the Court admitted most of the Poon affidavit — including updated employee numbers, office locations, and the revised wireless/wireline breakdown — as permissible background or corrective information, but excluded paragraphs 10 to 15 concerning the termination provisions of the applicant's Master Service Agreements (MSAs), finding that this material went to the merits rather than constituting non-argumentative background. The Smith affidavit listing historical ESDC interventions was admitted in full. On the substantive question, the Court found that the Decision correctly applied the Tessier framework: WesTower's wireless and wireline construction work, comprising approximately 85 percent of its business and performed predominantly for Rogers, Bell, and Telus under MSAs, was integral to the ongoing functioning of those companies' telecommunications networks, and those companies were dependent on WesTower because they lacked the in-house capacity to design, fabricate, or construct the towers and network infrastructure themselves. The Court held that Telecon was binding and materially similar, since it too involved services provided to multiple telecommunications companies and to their networks collectively, rejecting the applicant's argument that derivative jurisdiction requires dependency on a single federal company. The Court found Ramkey Communications distinguishable because that case involved a narrow subset of employees whose work Rogers was not shown to depend on, and found it unnecessary to resolve the disagreement between Madysta Télécom and Ontario authority (LeBlanc & Royle Telecom) on whether a federal undertaking can comprise a group of companies, since Telecon already bound the Court to that conclusion. The Court further held that the existence of competing construction firms bidding for the same telecommunications work did not preclude a finding of dependency, citing XL Digital Services in support. Finally, the Court declined to find that ESDC's reversal of position between 2021 and 2024 was arbitrary or capricious, noting the genuine complexity of the constitutional analysis.

Ruling and overall outcome

The Federal Court dismissed the application for judicial review, upholding the ESDC officer's Decision that Westower Communications Ltd. is subject to federal jurisdiction under Part II of the Canada Labour Code by virtue of derivative federal jurisdiction. The successful party was the respondent, the Attorney General of Canada (the style of cause having been amended under Rule 303(2) of the Federal Courts Rules to substitute the Attorney General of Canada for Employment and Social Development Canada). No monetary award, damages, or costs were ordered — the Court exercised its discretion to direct that each party bear its own costs, reasoning that the applicant had reasonably brought the application to obtain certainty given ESDC's shifting position in 2021 and 2024.