Canada: Constitutional Issues In Construction Projects

Construction projects are usually governed by provincial law, which is enacted pursuant to s. 92(13) of the Constitution Act, 1867 ("property and civil rights in the province"). Municipal bylaws may also apply. They also come within provincial authority, either under s. 92(13) or s. 92(8) ("municipal institutions in the province"). Construction projects raise many difficult legal issues, but only occasionally do they give rise to constitutional issues. The Canadian Charter of Rights and Freedoms is rarely relevant because the Charter does not normally apply to matters of property and contract. Federalism issues can arise, however, when the apparently governing provincial (or municipal) law encroaches in some fashion on a federal matter (a matter outside provincial jurisdiction). This situation is illustrated by a number of recent cases, which are the topic of this article. Constitutional challenges to a provincial law fall into three categories:

1. The provincial law is ultra vires and invalid because it is in relation to a matter within federal jurisdiction;

2. The provincial law is valid but inapplicable by reason of interjurisdictional immunity;

3. The provincial law is valid but inoperative by reason of federal paramountcy.

This article covers these three categories.

The Doctrine of Ultra Vires

A provincial law is ultra vires (beyond the powers of) and invalid if it is, in its pith and substance, in relation to a matter coming within federal jurisdiction. This is the fate of a provincial (or municipal) law that fails to keep within the heads of power assigned to the provinces in s. 92 of the Constitution Act, 1867.

In Quebec v. Lacombe (2010), the plaintiff cottage owners constructed aerodrome facilities on a lakeside property in Quebec, and then used the lake as a water aerodrome for a commercial air taxi service that used a fleet of float planes. The plaintiffs had selected the lake for the aerodrome without any input or permission from the Federal Department of Transport. However, they had registered the lake as an aerodrome with the Department, which was all that was needed to dedicate the lake as an "aerodrome" (as opposed to an "airport", which is subject to serious regulatory standards). The commercial air taxi service required a licence from the Department and the plaintiffs had duly obtained that licence.

In Lacombe, the problem was that the lake was within a municipality that had enacted a bylaw prohibiting the use of that lake (and others in the same area), as an aerodrome. The plaintiffs brought proceedings attacking the validity of the bylaw. The Supreme Court of Canada (SCC) held that the pith and substance of the bylaw, which explicitly prohibited the construction of aerodromes, was aeronautics, which is a federal head of power.1 Therefore the bylaw was ultra vires the province and the municipality and was accordingly invalid. The plaintiffs were entitled to continue to use the lake as an aerodrome despite the contrary bylaw, as it was subject to federal jurisdiction. The takeaway from Lacombe is that provincial, or in this case municipal, law cannot control the location of airfields.

In Lacombe, McLachlin CJ, writing for the majority, added that, if the bylaw had been a valid law in relation to land use in the province, she would still have held that it was inapplicable to the water aerodrome, by virtue of the doctrine of interjurisdictional immunity. That was the holding in the companion case of Quebec v. Canadian Owners and Pilots Association (2010), which we discuss next under the heading of "interjurisdictional immunity".

The Doctrine of Interjurisdictional Immunity

If a valid provincial law of general application has the effect in one of its applications of impairing the "core" of a federal head of power, the provincial law is inapplicable to the federal subject matter by virtue of the doctrine of interjurisdictional immunity.
COPA was another case in which Quebec landowners had established a small local aerodrome (this one on dry land) in breach of a zoning regulation. In this case, the regulation was not a municipal bylaw, but a provincial law that designated parts of the province as agricultural zones from which all non-agricultural uses were prohibited. Unlike the bylaw in Lacombe, the law did not single out aeronautics. However, the law did purport to prohibit the aerodrome because it was a non-agricultural use of land within an agricultural zone.

McLachlin CJ, writing for the majority, held that the pith and substance of the provincial law was not aeronautics, but land use, a matter within the provincial head of power of property and civil rights in the province (s. 92(13)). Unlike the bylaw in Lacombe, this law was valid. However, she held that the law was inapplicable to the aerodrome by virtue of the doctrine of interjurisdictional immunity. The location of aerodromes and airports was part of the core of the federal power over aeronautics, and provincial regulation would impair that power. This was so even though Parliament had not in fact regulated the location of aerodromes; in this case, the location of the aerodrome had been chosen by the landowners and simply registered with the Federal Department of Transport. The absence of any federal law regulating the location of aerodromes was fatal to a paramountcy argument,2 but it did not matter for interjurisdictional immunity. The result was that the doctrine of interjurisdictional immunity exempted the aerodrome from the provincial law prohibiting non-agricultural uses of the land. Like Lacombe, COPA reinforced the rule that provincial law cannot control the location of airfields.

In Vancouver International Airport v. Lafarge Canada (2011), the issue was whether creditors of the contractors who had constructed improvements to the Vancouver International Airport could register liens against the leasehold interest of the Vancouver International Airport Authority, which was the company that leased the Airport land and operated the Airport. Under British Columbia's Builders Lien Act, the lien imposed a charge on the owner's interest in the land which, if not discharged by payment of the debt, entitled the holder of the lien to obtain a court order for the sale of the owner's interest. There was no doubt that this Act, which had counterparts in the other provinces, was a valid provincial law under property and civil rights in the province (s. 92(13)). The B.C. Court of Appeal followed COPA to hold that the Vancouver International Airport Authority was a federal undertaking within the core of the federal power over aeronautics. The mere registration of a lien on the land would impair a vital part of the undertaking by diminishing the Authority's ability to raise money for the operation or improvement of the Airport, and the execution of the lien by the sale of the Authority's leasehold interest could bring the operations of the Airport to a halt. Smith JA, writing for the Court, held that the doctrine of interjurisdictional immunity exempted the Airport land from the Act. The creditors were not permitted to secure their debts by registering liens against Airport land.3 This case serves as a reminder that contractors and suppliers on federal projects may not be protected by provincial liens if their invoices go unpaid, and should obtain other forms of security such as bonds.

The permissive federal regime for the siting of aerodromes (as opposed to airports) was relied upon by the owner of a disused quarry in Scugog Township, Ontario. The owner was filling the quarry to bring the site up to grade for a purpose that was never entirely clear. After a soil sample taken by the Township indicated that refuse was being dumped into the quarry, the Township took legal action to enforce compliance with its "fill bylaw", which imposed quality standards on the methods and materials used to fill a quarry. The owner responded by erecting a sign on the site proclaiming that it was a federal aerodrome and explaining that filling activities on the site were henceforth in pursuit of this new purpose and were "purely a matter of federal jurisdiction under the Aeronautics Act".

In 2241960 Ontario Inc. v. Scugog Township (2011), the Ontario Divisional Court was unimpressed. Swinton J, writing for the Court, pointed out that the owner had taken no steps to plan or design an aerodrome. Despite the posting of the sign, she found that the owner was not engaged in the construction of an aerodrome. In any case, she held that compliance with the Township's fill bylaw would not preclude the later construction of the runway and hangars that would be needed for an aerodrome. Therefore, the core of the federal aeronautics power was not impaired, the doctrine of interjurisdictional immunity did not apply and the Township's bylaw had to be followed. Scugog Township stands for the principle that simply stating that a project is for a federal purpose will not make it so.

Another case in which the doctrine of interjurisdictional immunity did not apply is Tessier v. Quebec (2012). Tessier was a company that rented out cranes and provided operating services to the renters. Its operations were limited to the province of Quebec, but the company invoked the doctrine of interjurisdictional immunity to avoid paying provincial occupational health and safety contributions that had been assessed against it by the relevant provincial agency. The company's argument was that its cranes were used for stevedoring (the loading and unloading of ships) and that the activity of stevedoring came within the federal power over navigation and shipping (s. 91(10)). A difficulty with this argument was that the stevedoring operations accounted for only 14% of the company's earnings and 20% of the company's payroll. Moreover, the stevedoring services were not performed by a separate unit of the company: an employee who operated a crane at the port one day might be working on a construction site the next day.

The SCC held that the company was a local undertaking that was bound by provincial law. The federal activity was only "a minor part" of the company's business which was otherwise within provincial jurisdiction. Only if the "dominant character" of the company's business had been stevedoring would the company's business have been within federal jurisdiction. That was not the case here, and the doctrine of interjurisdictional immunity did not exempt the company from the province's occupational health and safety regime. Therefore, if only a minor part of a business is within federal jurisdiction, provincial regulation will apply.

The Doctrine of Federal Paramountcy

A valid provincial law (or municipal bylaw) that is in conflict with a valid federal law will be inoperative by virtue of the doctrine of federal paramountcy.

In British Columbia v. Lafarge Canada (2007), Lafarge proposed to build a "concrete batch plant" on land in the port of Vancouver. That location was suitable because the aggregate could be shipped by barge and directly unloaded at the plant where it would be mixed with cement and then transported to construction sites in the Vancouver area. The Vancouver Port Authority had jurisdiction over land-use regulation at the port under the Federal Canada Marine Act, enacted under Parliament's power over navigation and shipping (s. 91(10)). The Port Authority approved the project. Unfortunately, no fewer than eight municipalities also intersected with the port lands, and Lafarge's proposed site was within the boundaries of the City of Vancouver. It was argued that a City bylaw required a development permit from the City, which had not been obtained. This would seem to be a clear case for interjurisdictional immunity, since federal regulation of the port lands would be stultified if the lands were blanketed with a patchwork of municipal regimes.

In the SCC, that was the reasoning of Bastarache J, who described this as a "jurisdictional nightmare". He held that a construction project on the port lands was within the core of s. 91(10) and could not be impaired by municipal bylaws. But that was a single concurring opinion. Binnie and LeBel JJ, writing for six of the seven judges, held without explanation that the project "lies beyond the core of s. 91(10))", and was therefore unprotected by interjurisdictional immunity. However, they reached the same result through the doctrine of federal paramountcy, holding that the mere requirement of approval in the City of Vancouver bylaw was in conflict with the approval of the Port Authority, and the bylaw was therefore inoperative in its application to the project. As a result, if interjurisdictional immunity does not apply, federal paramountcy may.

Conclusion

We have discussed how provincial laws that govern (or purport to govern) construction projects that touch on areas of federal jurisdiction raise interesting questions of constitutional law. Although an infrequent occurrence, seemingly straightforward development plans will be greatly complicated if a project's jurisdiction is challenged on constitutional grounds.

Footnotes

1 Aeronautics is a federal head of power under the national concern branch of the federal peace, order, and good government power in the opening words of s. 91: Johannesson v. West St Paul, [1952] 1 SCR 292.

2 The Court was unanimous that the permissive language of the federal law with respect to the location of aerodromes gave rise to no conflict with the provincial zoning law.

3 See Campbell-Bennett v. Comstock Midwestern, [1954] SCR 207 (provincial builders' lien legislation inapplicable to interprovincial pipeline), and Greater Toronto Airports Authority v. Mississauga (2000), 50 OR (3d) 641 (CA) (provincial building code inapplicable to airport construction project).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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