[1994] 3 .F.C. 140
T-1586-88
Canadian Union of Postal Workers (Plaintiff)
v.
Canada Post Corporation (Defendant)
Indexed as: Canadian Union of Postal Workers v. Canada Post Corp. (T.D.)
Trial Division, MacKay J.—Halifax, March 30, 31 and April 1, 2, 1992; Ottawa, March 14, 1994.
Postal services — Action for declaration franchising of post offices contrary to law, beyond defendant’s jurisdiction under Canada Post Corporation Act, s. 14(1) — Dealership agreement between Canada Post and independant contractor stating rights granted to sell designated products and services non-exclusive — No agency relationship between parties — Canada Post not trading away exclusive privilege — Act, s. 14(1) not limiting exclusive privilege of Canada Post — Dealership agreement serving Corporation’s statutory purposes — Defendant entitled to contract with others to act on its behalf in collecting, delivering letters.
Construction of statutes — Statutory interpretation of Canada Post Corporation Act, s. 14(1) — Words “sole and exclusive privilege of collecting … and delivering letters” not limiting capacity of defendant to contract with others to act on its behalf — “Subject to this Act” in s. 16(1) adding to capacity of Canada Post — Act, ss. 12, 14 imposing no limitation on exercise of exclusive privilege of collecting, delivering letters — Dealership Agreement reasonable means to achieve objects of Corporation.
This was an action for a declaration that the franchising of post offices by Canada Post is contrary to law and beyond the defendant’s jurisdiction under subsection 14(1) of the Canada Post Corporation Act. The defendant Corporation, which was created by the Act in 1981, began five years later a ten-year program to “privatize” its “retail” operations by arrangements known as “franchising”. Under that program, a Dealership Agreement was concluded between Canada Post and Crowell’s Pharmacy Ltd. (Crowell) granting to the dealer the non-exclusive right to operate a retail outlet and to sell the products and services set out in a schedule, in a defined territory, to consumers. It was specifically agreed that the dealer was not acting as an “agent” of Canada Post and that the latter reserved the right to sell the products and services within the territory to any person, or to franchise or licence or allow any other person to sell them to purchasers other than consumers. The plaintiff submitted that the words of subsection 14(1) do not permit Canada Post to contract with others for the “collection” or “delivery” of letters; the defendant replied that subsection 14(1), construed in the context of the Act as a whole, does not limit the general authority of Canada Post, with powers of a natural person under section 16 of the Act, to contract for services to be performed by others for it. The main issue, one of statutory interpretation, was whether the arrangements made by Canada Post by contracts with others, as illustrated by the contracts with Crowell, were beyond its jurisdiction, in light of the sole and exclusive privilege to collect, transmit and deliver letters granted to the Corporation by subsection 14(1) of the Act.
Held, the action should be dismissed.
The words “sole and exclusive privilege of collecting … and delivering letters” in subsection 14(1) of the Act do not in themselves answer the question raised herein. The acts of collecting and delivering letters, in which Crowell was involved, were authorized and directed by the Dealership Agreement, even if it also expressly provided that Crowell is an independent contractor and denied any general agency relationship between the parties. Moreover, the agreement stated that the rights granted to Crowell to sell designated products and services are non-exclusive. Canada Post has not given or traded away its exclusive privilege since it reserved the right to sell the same products and services in the same territory, or to franchise or licence others to sell to purchasers other than consumers. At most, the agreement permitted or licenced Crowell, in addition to the non-exclusive right to sell certain products and services, to collect and deliver letters for Canada Post in accord with its detailed instructions.
As a matter of statutory interpretation, subsection 14(1) does not expressly state nor does it imply that Canada Post may not contract with others to act on its behalf in the collection, transmission or delivery of letters. That provision is an empowering provision, vesting in Canada Post an absolute privilege that no one else may claim a lawful right to exercise, at least so long as that privilege is not amended by Parliament itself. The manner in which the exclusive privilege granted by subsection 14(1) is to be exercised depends not on that provision but on the powers of the Corporation. Those powers are basically set out by subsection 16(1) vesting in the defendant, in carrying out its duties and objects, subject to the Act, the rights, powers and privileges of a natural person. The words of subsection 14(1) do not limit the exclusive privilege of Canada Post. Under its general powers within subsection 16(1), the defendant has the authority to contract with Crowell, or others, for them to act on its behalf in collecting and delivering letters. The words “subject to this Act”, in the grant of power in subsection 16(1), add to the capacity of Canada Post, in addition to “the rights, powers and privileges of a natural person”, the sole and exclusive privilege to collect, transmit and deliver letters. A franchise agreement, such as that with Crowell, could be found to be ultra vires only if it purported to grant an exclusive privilege to collect, transmit or deliver letters, or if it could be established that the agreement did not serve the objects of the Corporation. That was not the case herein. The Dealership Agreement was a reasonable means, within the powers of Canada Post’s Board of Directors to approve for its operations, to achieve the objects of the Corporation. The general structure of the Act and the broad powers granted to the new Corporation, when compared with the arrangements under the earlier legislation and the specific powers previously granted to the Postmaster General, underline the intent of Parliament to empower the new Corporation so that it might most effectively pursue the general objects set out in section 5, in times of significant and rapid change in technology and in marketing of services. It would be contradictory to this general intent to construe the authority assigned under the new Act more narrowly than the provisions of the Post Office Acts set out in relation to the powers of the Postmaster General. Neither section 12 nor section 14 of the Act can be read as imposing a limitation on how the Corporation’s employees should be organized in relation to the services it performs, including the exercise of its exclusive privilege of collecting and delivering letters.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Labour Code, R.S.C. 1970, c. L-1, s. 144.
Canada Labour Code, R.S.C., 1985, c. L-2, s. 44.
Canada Post Corporation Act, S.C. 1980-81-82-83, c. 54, ss. 2, 16 (as am. by S.C. 1984, c. 31, s. 14), 17(1).
Canada Post Corporation Act, R.S.C., 1985, c. C-10, ss. 5(1)(a),(2), 10(1), 11(a),(d), 12, 13(5), 14(1), 16(1),(2), 19(1)(a), 40(2), 56, 58.
Federal Court Act, R.S.C., 1985, c. F-7, s. 28.
Financial Administration Act, R.S.C., 1985, c. F-11.
Letter Definition Regulations, SOR/83-481.
Post Office Act, R.S.C. 1970, c. P-14, ss. 5(1)(o) (as am. by R.S.C. 1970 (2nd Supp.), c. 23, s. 1), 6 (as am. idem, s. 2).
Post Office Act (The), 1867, S.C. 1867, c. 10, s. 10.3.
CASES JUDICIALLY CONSIDERED
APPLIED:
Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607; (1986), 33 D.L.R. (4th) 321; [1987] 1 W.W.R. 603; 23 Admin. L.R. 197; 17 C.P.C. (2d) 289; 71 N.R. 338; French v. Canada Post Corp., [1988] 2 F.C. 389; (1987), 14 F.T.R. 40 (T.D.); affd French et al. v. Canada Post Corp. (1988), 87 N.R. 233 (F.C.A.).
DISTINGUISHED:
Bury v. Saskatchewan Government Insurance (1990), 75 D.L.R. (4th) 449; [1991] 4 W.W.R. 1; 91 Sask. R. 39; 47 C.C.L.I. 56 (C.A.).
CONSIDERED:
Canada Post Corp. v. C.U.P.W., [1989] 1 F.C. 176; (1987), 46 D.L.R. (4th) 716; 88 CLLC 14,006; 82 N.R. 249 (C.A.); Rural Dignity of Canada v. Canada Post Corp. (1991), 78 D.L.R. (4th) 211; 7 Admin. L.R. (2d) 242; 40 F.T.R. 255 (F.C.T.D.); affd Rural Dignity of Canada v. Canada Post Corp. (1992), 88 D.L.R. (4th) 191; 7 Admin. L.R. (2d) 242; 139 N.R. 203 (F.C.A.); Canada Post Corp. v. C.U.P.W., A-762-87, Pratte J.A., judgment dated 28/1/88, F.C.A., not reported; Canada Post Corporation and Crowell’s Pharmacy Ltd. et al. (1991), 86 di 135 (C.L.R.B.).
REFERRED TO:
Nepean (City of) and Canada Post Corp., Re (1986), 57 O.R. (2d) 297; 32 D.L.R. (4th) 765 (H.C.); Ashbury Rail. Carriage and Iron Co. (Lim.) v. Riché (1875), 44 Law J. Rep. (N.S.) Exch. 185 (H.L.).
AUTHORS CITED
Shorter Oxford English Dictionary, 3rd ed., Vol. II, Oxford: Clarendon Press, 1968. “privilege”.
Words and Phrases Legally Defined, 3rd ed., Vol. 3, London: Butterworths, 1989. “privilege”.
ACTION for a declaration that the franchising of post offices by Canada Post Corporation is contrary to law and beyond its jurisdiction under subsection 14(1) of the Canada Post Corporation Act. Action denied.
COUNSEL:
Joel E. Fichaud and Dennis Ashworth for plaintiff.
John B. Laskin and Thomas P. Donovan for defendant.
SOLICITORS:
Patterson Kitz, Halifax, for plaintiff.
Tory Tory DesLauriers & Binnington, Toronto, for defendant.
The following are the reasons for judgment rendered in English by
MacKay J.: By its statement of claim, filed August 11, 1988, the plaintiff Canadian Union of Postal Workers (CUPW), which represents certain employees of the defendant Canada Post Corporation (“Canada Post” or the “Corporation”), sought certain declarations that the “privatization” or “franchising” program of the defendant is contrary to law and beyond jurisdiction of the defendant under the Canada Post Corporation Act, R.S.C., 1985, c. C-10, as amended (the Act, originally enacted by S.C. 1980-81-82-83, c. 54). An injunction to restrain the defendant from further breaching the Act, particularly with respect to agreements between Canada Post and Crowell’s Pharmacy Limited (Crowell), located at Spryfield in the city of Halifax, was also originally sought.
When this matter was heard counsel for CUPW advised that the only relief sought was a declaration that the “franchising” of post offices by Canada Post, in particular under contracts in the form of those with Crowell, is contrary to law, namely to Canada Post’s “sole and exclusive privilege to collect, transmit and deliver letters” under subsection 14(1) of the Act, and beyond the jurisdiction of the defendant under the Act. Claims originally made for declaratory relief based on paragraph 5(1)(a) of the Act and for an injunction were abandoned by CUPW at the hearing.
Two preliminary issues raised by pleadings of the parties were not issues argued when the matter was heard. The first concerns the standing of the plaintiff to bring the action, a matter specifically pleaded in CUPW’s statement of claim. By agreement between the parties that was accepted by Canada Post when, following CUPW’s abandonment of an appeal from an interlocutory order of Martin J. striking portions of the statement of claim, an amended defence was filed by the defendant admitting paragraph 19 of the statement of claim “for purposes of this proceeding and without prejudice to [the defendant’s] rights in any other proceeding.” That paragraph provides:
19. CUPW, on its own behalf, and on behalf of its members, has sufficient interest to seek the relief claimed in this action, including an injunction.
While consent of the parties does not resolve a serious issue of standing, there is no issue between the parties here, and it is my conclusion that CUPW has interests, on its own behalf and on behalf of its members, which support its standing to seek the declaratory relief sought at the hearing, in accord with the principles enunciated in Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607.
The second preliminary issue, raised by the defence and amended defence filed by Canada Post, is the submission that this proceeding is an abuse of the Court’s process, on the ground that the subject-matter of the plaintiff’s claim was the basis of a complaint to the Canada Labour Relations Board that the “franchise agreement” with Crowell resulted in successor rights for the plaintiff pursuant to section 44 (previously section 144 [R.S.C. 1970, c. L-1]) of the Canada Labour Code [R.S.C., 1985, c. L-2]. This was not addressed as a preliminary issue by counsel for the defendant when this action was heard, although it was referred to in argument that the results of those and other proceedings between the parties supported the conclusion that Canada Post could be deemed to be performing its responsibilities itself, through contract arrangements with Crowell. While I express no final opinion upon the matter, it seems to me that the plaintiff’s written submissions, in its pre-trial memorandum, have merit, that the interpretation of subsection 14(1) of the Act is an issue not raised in any other proceedings, including those before the Canada Labour Relations Board. While in the final analysis I consider this preliminary issue to be abandoned by the defendant, in my view an action based on a legal issue not yet determined can hardly be seen as an abuse of the Court’s process.
The plaintiff’s case was presented entirely by production of documents, six volumes in all, which included discovery evidence of the principal witness for Canada Post, exhibits from discovery including those produced on undertakings by the defendant, and documents agreed to be submitted, including portions of transcripts of hearings before the Canada Labour Relations Board in other proceedings between the parties. In addition, the defendant also introduced 12 volumes of documents, which were admitted by agreement. The defendant called as its principal witness Mr. Frank Smith, Corporate Manager, Retail and Commercial Development, Canada Post, and two other witnesses. Mr. David Flemming, Manager, Retail Operations Support for the Atlantic Postal Division, of the defendant Corporation, testified concerning retail operations, of the former Post Office from his experience commencing in 1976 and of Canada Post from his continuing experience with the Corporation after its creation in 1981. By agreement of counsel, after conclusion of the main argument on behalf of both parties, a further witness was called, Mr. John Cochrane, now retired from employment which began with the Post Office Department in 1947 and continued with Canada Post until his retirement in 1982. He testified concerning the employment status of those engaged in local postal retail operations under arrangements of the Post Office prior to the creation of Canada Post.
Following the hearing of the action additional written submissions were made by the defendant and responded to by the plaintiff, including a motion by Canada Post that additional evidence be accepted by the Court after the hearing. I dismissed that motion. The evidence sought to be adduced, concerning regulations amending requirements for an oath of office to be sworn by postal employees, was available to the defendant at the time of the hearing. The submissions received following the hearing have not been relied upon in my conclusion. In my view, they added nothing of significance to the submissions made at the hearing, at least for purposes of my determination.
Considerable evidence and argument of the parties concern the history of postal operations in Canada, the legislation under which it was directed and the record of practices by the former Post Office, particularly in relation to the operations of the postal outlets, including the status of staff there employed. In so far as it is relevant to particular aspects of the issue here raised, the history is reviewed.
The issue
The defendant Corporation was created by the Act in 1981, replacing the Post Office which had existed as a department of government under earlier legislation from The Post Office Act, 1867, S.C. 1867, c. 10 to [Post Office Act], R.S.C. 1970, c. P-14 which was repealed by the Act. In 1986 Canada Post began a ten-year program to “privatize”, in substantial part by arrangements it describes as “franchising”, its “retail” operations. For the plaintiff, those “retail” operations of significance are the services offered by postal outlets, like Crowell, to the public involving the collection of letters over the counter, and delivery of letters over the counter or to lock boxes, accessible by key by the box user, in the postal outlet.
The plaintiff’s claim is that the franchising arrangements provide for private outlets to collect and to deliver letters contrary to the sole and exclusive privilege vested in Canada Post under subsection 14(1) of the Act. That subsection provides:
14. (1) Subject to section 15, the Corporation has the sole and exclusive privilege of collecting, transmitting and delivering letters to the addressee thereof within Canada.
(Section 15, here referred to, which provides for specific exemptions from the exclusive privilege vested by subsection 14(1), is not relevant to the issue in this case.) Prior to 1981 a similar exclusive privilege was vested in the Postmaster General, who was responsible for postal services and the Post Office Department, ever since 1867.
The issue presented by the plaintiff’s claim is whether the arrangements made by Canada Post by contracts with others, as illustrated by the contracts with Crowell, are beyond the jurisdiction vested in the Corporation by Parliament, in light of the sole and exclusive privilege to collect, transmit and deliver letters granted to the Corporation by subsection 14(1) of the Act. That issue is one of statutory interpretation.
The plaintiff submits that the words of subsection 14(1), whether construed by themselves, or in the context of the Act as a whole, or in light of the history of legislation and practice concerning postal services in this country, do not permit Canada Post to contract with others for the “collection” or the “delivery” of letters. For the defendant it is urged that subsection 14(1), construed in the context of the Act as a whole, does not limit the general authority of Canada Post, with powers of a natural person under section 16 of the Act, to contract for services to be performed by others for it and performance of others under contract is performance by it of its statutory duties. Moreover, Canada Post submits that the history of legislation and practices under it in relation to postal services do not support the claim of the plaintiff.
Background
A brief overview of the organization of postal services in Canada, with particular reference to the evolution of the defendant’s program to privatize its “retail operations”, and of the arrangements relating to Crowell, provides the context in which the issue here presented arises for resolution.
Under legislation of the Parliament of Canada from 1867 until enactment of the Act in 1981, postal services were the responsibility of a department of government, the Post Office, or later, the Canada Post Office, presided over by the Postmaster General. The sole and exclusive privilege now vested in the Corporation was formerly vested in the Postmaster General from 1867. That privilege was described in slightly different words as “collecting, conveying and delivering letters within Canada”, which was changed in 1981 to “collecting, transmitting and delivering letters to the addressee thereof within Canada”, a change which is of no significance for this case.
The Act of 1981 marks a distinct change in the organization of postal services and, not surprisingly, in the statutory regime under which they are organized. It established Canada Post Corporation, as an agent of Her Majesty in right of Canada, provided for its objects, and for a Board of Directors to direct and manage the affairs of the Corporation, to be appointed by the Governor in Council as are principal officers of the Corporation. The Corporation is empowered to employ other officers and employees, who, unlike their predecessors under the Post Office Acts, are not deemed to be employed in the public service of Canada. Under section 16 the Corporation is expressly vested with the “capacity, and subject to this Act, the rights, powers and privileges of a natural person.” Of course, among the privileges of the Corporation not exercised by a natural person is the sole and exclusive privilege under subsection 14(1).
In speaking of the Act, with reference to the general authority under section 16, Addy J. commented in French v. Canada Post Corp., [1988] 2 F.C. 389 (T.D.), at page 395:
The Act differs markedly from its predecessor legislation, the Post Office Act [R.S.C. 1970, c. P-14], where, instead of a broad authority, the legislation specifically listed the purposes for which and the means by which the Postmaster General could act.
Illustrative of the change in approach adopted in 1981 are the general provisions then made for management of the postal services when compared with the specific provisions for contracting, for the establishment of sub post offices and the appointment of postmasters and their employment status under the Post Office Acts from 1867. Under The Post Office Act in 1867 (S.C. 1867, c. 10, section 10.3) and until its last successor (R.S.C. 1970, c. P-14, paragraph 5(1)(o)) the powers vested in the Postmaster General specifically included authority to enter into and enforce “contracts relating to the conveyance of mail or to any other business of the Canada Post Office,” The earlier acts specifically provided for the Postmaster General to enter into contracts for the conveyance of mail and directed how that contracting should be carried out, though “mail contractors” were excluded from the definition of “postal employees”. He was also specifically authorized to establish post offices and sub post offices and to appoint postmasters and assistants, and postmasters were defined as “postal employees”. No comparable list of specific powers is included in the 1981 Act. Rather, it provides for general powers of the Corporation or its Board of Directors, and, subject to approval of the Governor in Council, general regulatory powers are now vested in the Corporation.
With the reorganization of postal services under the Act in 1981, the list of detailed powers, duties and functions of the Postmaster General formerly set out in the Post Office Acts (see e.g. R.S.C. 1970, c. P-14, subsection 5(1) [as am. by R.S.C. (2nd Supp.), c. 23, s. 1], which includes no less than 26 specific functions) was replaced by a statement of general objects of the Corporation and matters to which regard is to be had in meeting those objects. Thus section 5 of the Act provides:
5. (1) The objects of the Corporation are
(a) to establish and operate a postal service for the collection, transmission and delivery of messages, information, funds and goods both within Canada and between Canada and places outside Canada;
(b) to manufacture and provide such products and to provide such services as are, in the opinion of the Corporation, necessary or incidental to the postal service provided by the Corporation; and
(c) to provide to or on behalf of departments and agencies of, and corporations owned, controlled or operated by, the Government of Canada or any provincial, regional or municipal government in Canada or to any person services that, in the opinion of the Corporation, are capable of being conveniently provided in the course of carrying out the other objects of the Corporation.
(2) While maintaining basic customary postal service, the Corporation, in carrying out its objects, shall have regard to
(a) the desirability of improving and extending its products and services in the light of developments in the field of communications;
(b) the need to conduct its operations on a self-sustaining financial basis while providing a standard of service that will meet the needs of the people of Canada and that is similar with respect to communities of the same size;
(c) the need to conduct its operations in such manner as will best provide for the security of mail;
(d) the desirability of utilizing the human resources of the Corporation in a manner that will both attain the objects of the Corporation and ensure the commitment and dedication of its employees to the attainment of those objects; and
(e) the need to maintain a corporate identity program approved by the Governor in Council that reflects the role of the Corporation as an institution of the Government of Canada.
Whatever may now be done in relation to contracts, or to the creation of sub post offices and appointment of postmasters must be within the following provisions.
10. (1) The Board shall direct and manage the affairs of the Corporation and may for such purposes exercise all the powers and perform all the duties of the Corporation.
…
11. The Board may make by-laws
(a) for the administration, management and control of the property and affairs of the Corporation;
…
(d) respecting administration of contracts relating to any business of the Corporation.
12. The Corporation may employ such officers and employees and may engage the services of such agents, advisers and consultants as it considers necessary for the proper conduct of its business, and may fix the terms and conditions of their employment or engagement, as the case may be, and pay their remuneration.
…
14. (1) [the sole and exclusive privilege quoted earlier in these reasons].
…
16. (1) In carrying out its objects and duties under this Act, the Corporation has the capacity, and subject to this Act, the rights, powers and privileges of a natural person.
(2) Without limiting the generality of subsection (1), the Corporation may acquire, hold, lease, sell or dispose of any real or personal property.
…
19. (1) The Corporation may, with the approval of the Governor in Council, make regulations for the efficient operation of the business of the Corporation and for carrying the purposes and provisions of this Act into effect, and, without restricting the generality of the foregoing, may make regulations …
(then are listed paragraphs (a) to (s) including two very general subject areas, compared with regulation-making authority formerly vested in the Postmaster General in paragraphs (a) to (x), all quite narrow specific matters, in the last Post Office Act, R.S.C. 1970, c. P-14, s. 6 [as am. by R.S.C. 1970 (2nd Supp.), c. 23, s. 2]).
I note for the record that I was not referred to any regulations under subsection 19(1), or any by-laws under section 11, relating to arrangements for privatizing, or franchising, services by Canada Post, and I assume there are none.
Unlike its predecessor statutes, the 1981 Act includes in its definitions a “mail contractor” meaning “a person who has entered into a contract with the Corporation for the transmission of mail, which contract has not expired or been terminated” and implicitly this recognizes the long standing practice of the Post Office in earlier years in contracting for conveyance of mail under the specific statutory provisions and authority of the Postmaster General included in earlier statutes. The term “mail contractor” is found in only two provisions of the current Act, subsection 13(5) which excludes a mail contractor from those governed by Part I of the Canada Labour Code (continuing, in effect, the exclusion from “postal employees” of “mail contractors” as had been the situation under earlier Post Office Acts), and subsection 40(2) which exempts a mail contractor from liability to third parties for loss of mail. The definition in the 1981 Act does not provide authority for contracting for the transmittal of mail, which must be found in the general powers of Canada Post.
After its creation, Canada Post initiated a variety of steps to change the arrangements for its services. Some changes led to earlier litigation which provides context and has some relevance for this case. In French v. Canada Post Corp., supra, Addy J. found that the Corporation had authority under section 16 [as am. by S.C. 1984, c. 31, s. 14] to close post offices in the absence of regulations enacted under subsection 17(1) (now subsection 19(1)), a permissive power to make regulations including paragraph (p) providing for the closure of post offices. On appeal to the Court of Appeal, Mr. Justice Hugessen, speaking for the Court in dismissing the appeal, commented (at (1988), 87 N.R. 233, at page 235):
… we do not view the words “subject to this Act” in the grant of power in section 16(1), as being in and by themselves effective to limit that grant. In order to have that effect, they must be nourished by some other words of limitation elsewhere in the Act. As we have already indicated, paragraph 17(1)(p) is not such a limitation.
In Canada Post Corp. v. C.U.P.W., [1989] 1 F.C. 176 (C.A.), the Court of Appeal quashed a decision of the Canada Labour Relations Board which had determined that subsection 13(6) (now subsection 13(5)) of the Act, which excludes mail contractors from employees subject to jurisdiction of the Board, did not apply to rural route mail couriers, so that in effect those couriers were not mail contractors under the Act. Mr. Justice Hugessen, speaking for the majority of the Court, indicated that merely because rural couriers also collected and delivered mail, as well as transmitting it, did not exclude them from “mail contractors” as defined under the Act. In his view the words of the Act were clear and unambiguous, and “transmit” as used in the definition of “mail contractor” had a broad meaning, consistent with its use in the Act as a whole, which embraced the reception and delivery of mail within the meaning of “transmit”. Moreover, the inclusion of rural route couriers within “mail contractors” meant their exclusion under then subsection 13(6) (now subsection 13(5)) from employees. This was consistent with the historic practice of the Post Office prior to 1981 and in his Lordship’s view there was evidence from parliamentary debates at the time the Act was introduced that continuance of the status of rural route carriers as independent contractors was intended under the Act.
In Rural Dignity of Canada v. Canada Post Corp. (1991), 78 D.L.R. (4th) 211 (F.C.T.D.), upheld on appeal, (1992), 88 D.L.R. (4th) 191 (F.C.A.), Martin J. dealt, inter alia, with argument that the Corporation was in breach of its statutory duty under subsection 5(2) of the Act to maintain customary postal services in four rural communities where it had closed post offices and replaced them with retail outlets operating much like Crowell in the case at bar. Relying on Maloney J. in Nepean (City of) and Canada Post Corp., Re (1986), 57 O.R. (2d) 297 (H.C.), at page 299, a case raising similar argument in support of an alleged duty on Canada Post to maintain door-to-door delivery of mail, Martin J. concluded that subsection 5(2) imposed no duty on the Corporation to provide a local post office in each community. The duty, if any, imposed by that section is to have regard to the matters there set out and not an absolute duty to provide particular services.
Arrangements under Canada Post’s franchise agreements have been at the root of proceedings between the plaintiff and the Corporation before the Canada Labour Relations Board, principally concerning the issue of successor rights claimed by the plaintiff pursuant to the Canada Labour Code provision relating to sale of a business, now section 44. In one case, where there was closure of a staff office operated by Canada Post in the Fairview Mall shopping centre in Winnipeg and the opening two days later in the same mall of a franchise outlet in a drugstore, the Board found there had been sale of a business within the meaning of the Code. An application for judicial review of that decision, pursuant to then section 28 of the Federal Court Act [R.S.C., 1985, c. F-7] was dismissed by the Court of Appeal. (See Canada Post Corp. v. C.U.P.W., not reported, Court file A-762-87, January 28, 1988 (F.C.A.).) In the course of disposing of argument that the outlet within a retail store was within provincial legislative jurisdiction, and thus not subject to the Canada Labour Code, Pratte J.A., for the Court, commented:
It is clear the Manly’s pharmacy business is provincial; but it is equally clear, in our view, that the post office it operates under the franchise agreement is an integral part of the postal service of Canada over which, under subsection 91(5) of the Constitution Act, 1867, the Federal Parliament has exclusive legislative jurisdiction. We see no merit in Mr. Robinette’s submission that Manly does not participate in the operation of the postal service but merely permits its customers to have access to it. Among the activities conducted at Manly’s post office, there is the registration of mail, the issuance and cashing of money orders and the making of arrangements for special delivery of mail. All those activities, in our opinion, form an integral part of the operation of the postal service.
In another proceeding, in Canada Post Corporation and Crowell’s Pharmacy Ltd. et al. (1991), 86 di 135 (C.L.R.B.), a case concerning the retail operations of Crowell, and certain other retail outlets in the Halifax area, under the franchise agreement here in issue, the Board dismissed applications that the applicant union had successor rights as bargaining agent in relation to employees engaged in the retail postal outlets which rights the union claimed on the ground that the Corporation had sold a portion of its business within the meaning of section 44 of the Canada Labour Code. The Board’s conclusion, differing from that reached on the facts found in the Manly/Fairview shopping centre case, was that the Corporation had not sold a portion of its business to Crowell, and others.
Thus “privatization” of some operations through “franchising” of retail outlets by Canada Post has been a matter of contention. Previously the Post Office, in addition to its main outlets staffed by its employees, had established outlets known as sub post offices, primarily in urban centres. These operated in premises owned by someone else, usually in a retail store. A person responsible for the sub post office, usually the proprietor or a senior staff member, was appointed postmaster and was paid a salary, based largely on commission on products sold or fees for services provided. While the evidence was not, in my view, entirely definitive, I accept for these reasons that at least for many purposes the postmaster was considered an employee of the Post Office, and he or she and any assistants were required to swear an oath of allegiance upon assumption of their responsibilities. Supplies of stamps and other products were provided on consignment and remained the property of the Post Office until sold, and the proceeds of products and services sold were deposited to a bank account held for the Post Office. Equipment was provided by the Post Office on loan. In an administrative sense, the system of sub post offices required substantial accounting and auditing of supplies and equipment and of moneys received by the sub post office outlets.
After the creation of Canada Post, commencing in 1983 a committee of senior officers, reviewing the organization of its arrangements for service to the public, developed a program to “privatize” many of its outlets by franchise agreements with others who were themselves engaged in retail trade. That program is based on typical wholesale/retail relationships for the sale of products, stamps and other items issued by Canada Post. Those products are purchased by the retail contractor at wholesale prices, they are thereafter the property of the retailer who can do with them as he or she determines except that they may not be sold for more than the face or other fixed value of the product. While the retailer is also paid a fee for certain designated services, the basic change in arrangements for products held in the outlet led to the use of the name “gross margin outlet” or “GMO” for this type of retail operation. In addition to purchase of products, the retailer also purchases the equipment required. Under these agreements a standard range of services is offered, and a standard visual appearance, including the use of trade-marks and symbols of Canada Post, is provided by all GMOs. These outlets are established after substantial analysis of locational and demographic data, to ensure ready access by the public, with adequate parking, and hours of operation consistent with retail operations in the area served. No capital expenditures for space, facilities or equipment are required of Canada Post. The contracting retailer is not designated by Canada Post as a postmaster or postmistress and no one serving in a GMO is considered an employee of Canada Post, though they are provided with standard training programs, stressing customer service and the requirements of Canada Post. The operations of the GMO are subject to detailed regulation under the agreement with the retailer, which agreement incorporates one or more Canada Post manuals concerning operations.
Among services of the GMO, in addition to sale of standard products and services, is the receipt or collection of mail, including letters, brought to the GMO by customers, and the delivery of mail, including letters to members of the public. That delivery may be over the counter upon presentation of a “call for” card previously delivered to the addressee advising that a letter or parcel may be picked up on presentation at the local GMO or retail outlet. Delivery may also be, as it is in the case of Crowell, by leaving letters in lock boxes located in premises of the GMO.
The arrangements made with Crowell
Crowell became a sub post office by agreement with the Post Office in 1960 and it operated generally in accord with the arrangements earlier described until, by agreement with Canada Post in 1987 it became a GMO early in 1988. Originally in 1960 Robert G. Crowell, a pharmacist and proprietor of the drugstore, was appointed postmaster. Arrangements for continuing as a sub post office continued under Canada Post after 1981 but at some point the practice of appointing an individual as postmaster was discontinued and by agreements relating to its operations in 1983 and 1985, the corporate entity Crowell’s Pharmacy Ltd., as a party to agreements with Canada Post, was designated as sub postmaster.
Under those agreements, called Sub Post Office Agreements, the Corporation granted to Crowell “the right to operate a Sub Post Office business as an independent Sub Postmaster in accordance with the terms” agreed upon. Crowell undertook to maintain a stock in trade, an inventory of postal values, stamps and other items including money orders supplied by Canada Post for sale to the public, within limits established by the Corporation, and it was not permitted to sell these or services at a discount or at any amount other than that chargeable by Canada Post for those supplies and services. No salary was provided, but payment was made to Crowell, for postal services rendered, on a commission basis related to its volume of monthly sales. Hours of service were agreed upon and the services to be provided by Crowell were set out including the processing of first, third and fourth class mail for onward dispatch, sale of stamps, postal values and designated services, the acceptance of metered or prepaid parcels or COD or registered items for mailing, and call-for service. Both agreements included a clause described as “Independent Business”, in the following terms (see e.g., clause 26.1 of the 1983 agreement):
It is understood and agreed that the Sub Postmaster will carry on an independent business as Sub Postmaster as authorized by and under this agreement, and there is no relationship of joint venture, partnership or agency between The Corporation and the Sub Postmaster and any act or omission of either shall not bind or obligate the other except as expressly set forth in this agreement.
These arrangements were changed by the Dealership Agreement concluded in November 1987, to be effective in February 1988 for a term of ten years, under which Crowell became a GMO (though the term “gross margin outlet” is not used in the agreement). By its recitals, the agreement sets out that the Corporation operates a postal service and is the owner of trade-names, trade-marks and logos concerning “Canada Post/Postes Canada”, that it has developed a system of uniform methods, procedures, merchandising and advertising for the operation of retail outlets for the sale of stamps and other postal products and services, and that the “dealer” (i.e. Crowell, by its corporate name), wishes to operate a retail outlet at the same time as it carries on other activities. By clause 2.1 the agreement grants to the dealer “the non-exclusive right to sell the Products and Services” set out in a schedule, in a defined territory, to consumers. A consumer is defined as a natural person who purchases products and services for his own individual use and does not include “a person who buys in the course of carrying on business, or an association of individuals, a partnership or a corporation”. Canada Post expressly preserves the right to sell the products and services within the territory to any person, or to franchise or licence or allow any other person to sell them to purchasers other than consumers. The size and layout of the premises comprising the outlet is fixed by agreement. Equipment is to be purchased or leased by the dealer as approved by the Corporation. Training and technical assistance is to be provided by Canada Post. The dealer purchases all requirements for all products and services from the Corporation at the latter’s discount prices, and products purchased remain the property of the Corporation only until paid for, within normal commercial terms, by the dealer. The dealer pays a non-refundable franchise fee on execution of the agreement, and thereafter pays the Corporation a royalty on all purchases made. The dealer assumes certain obligations relating to the manner of operating the outlet, including one to sell products and services at prices no higher than those established by the Corporation, but they may be sold at lower prices. The schedule of products and services includes postal items on which a discount margin is specified, for example, stamp sales have a margin of 20%. A list of service items on which a fee is specified to be paid to the dealer is also included in the schedule, for example, 25 for a money order sold or cashed, 25 for accepting a designated pre-paid item, and $1 for setting a postage meter.
The agreement also includes a term, clause 17.1, concerning the relationship of the parties, which provides:
17.1 The Dealer is an independent contractor, and nothing herein shall be construed so as to constitute the Dealer as a partner, joint venturer, agent, employee or representative of the Corporation for any purpose whatsoever. The Dealer shall use its own name in all transactions and shall clearly indicate that it is acting on its own behalf and not for the Corporation.
A similar term is included in two subsequent service agreements between the parties, which amend the original agreement of 1987 by providing for lock boxes to be maintained in the outlet, for which the dealer pays an annual fee to the Corporation.
Preliminary findings
For CUPW it is argued that the evidence supports a conclusion that Canada Post by its organization, planning and practice has come to treat its activities as two distinct phases: the distribution system involving the transmission of mail and the retail system involving the more than 17,000 outlets or interfaces, both urban and rural, with the public that it serves. Certainly much of the evidence before me, from the defendant’s principal witness Mr. Smith, and from transcripts of hearings of Corporation witnesses before the CLRB would support that view, though I recognize that the witnesses concerned were persons with responsibilities for implementing the “Corporate Representation Plan”, the name adopted circa 1986 to describe the defendant’s evolving plans to privatize postal outlets through franchising arrangements. Those plans have seen the evolution of Canada Post’s operations through GMOs from only two in 1987 to more than 1,500 in 1991. Yet it is unnecessary to determine whether the plaintiff’s perception is a fair depiction of the Corporation’s operations, for even if that were accepted it would not assist resolution of the issue before the Court.
The evidence is clear that the system for franchising has become a major element of Canada Post’s corporate operations strategy, and that sub post offices as they once were known are expected to be phased out and replaced by GMOs, though perhaps not as quickly as the original 10-year plan in 1986 may have anticipated. There was evidence from Mr. Smith that a few “corporate outlets”, i.e. outlets staffed and managed by Canada Post, though originally not planned for, have been established as well since 1986, and current planning at the time of trial included provision for some further corporate outlets, in addition to main post office operations, in urban areas at least. Whatever its plans may be, the issue here presented is the authority of Canada Post, in light of subsection 14(1) of the Act, to create GMOs under agreements like those with Crowell.
The plaintiff submits that the agreements with Crowell result in Crowell, as an independent contractor in accord with those agreements, collecting and delivering letters from consumers. This submission is dealt with as a principal issue by CUPW. That conclusion is not seriously disputed by Canada Post, though it is urged by defendant’s counsel that, by incorporation in the agreement of operating manuals of Canada Post, any collecting and delivering is done only in accord with the specific and detailed directions of the Corporation so that the Corporation’s duties were fulfilled under contract arrangements as though that were by Canada Post itself. Moreover, the defendant submits that this Court and the Canada Labour Relations Board, in Rural Dignity of Canada and in the Board’s decision No. 903 concerning Canada Post and Crowell, have held that postal services provided through retail postal outlets are nonetheless provided by Canada Post. In my view, neither decision actually determined that to be the case. Rather, as I read the decisions, retail postal outlets like Crowell make it possible for Canada Post to meet its responsibilities by contracts with others, and contracts of this kind do not generally constitute a sale of Canada Post business that would give rise to successor rights.
I conclude on the evidence that by receiving mail, including letters over the counter for onward dispatch, and by delivery of letters on a call-for basis or to lock boxes located in its premises, Crowell does collect and does deliver letters. The latter action clearly qualifies as “delivery” as that term is defined in subsection 2(2) of the Act. These acts, as any others done by Crowell under the Dealership Agreement, by clause 17.1 of the 1987 agreement, are specifically agreed not to be done as “agent” of Canada Post, though clearly they are done within the contract terms.
Argument and analysis
As earlier indicated, the plaintiff’s argument is essentially threefold. First, CUPW submits that as a matter of interpretation, the words used in subsection 14(1) clearly limit collecting and delivering letters to Canada Post itself, precluding it from contracting with others, like Crowell, to perform those tasks for it. Second, it is said that interpretation is supported in the context of the statute as a whole; and third, that interpretation is supported by the history of legislation and practices in regard to postal services. The first of those submissions is addressed by the defendant primarily in its pre-trial memorandum, and in argument it is urged that in the context of the Act as a whole, particularly subsection 16(1), and in light of the history of postal legislation and practice, the words of subsection 14(1) should not be interpreted as a limitation on the general authority conferred under subsection 16(1) to contract with others in relation to the services provided by Canada Post.
I deal first with the words of subsection 14(1) which, as we have seen, provide that “the Corporation has the sole and exclusive privilege of collecting, transmitting and delivering letters to the addressee thereof within Canada.”
For CUPW it is acknowledged that it is settled by the decision of the Court of Appeal in Canada Post Corp. v. C.U.P.W., supra, that the defendant may contract for the transmission of letters, just as was done by the Postmaster General under specific authority delegated under previous legislation even where the contract involves collecting and delivering letters. It is urged, however, that where the contract does not concern the transmission of letters but provides only for collecting and delivering of mail including letters, and other matters, as in the case of the Dealership Agreement of 1987 with Crowell, then the contract is beyond the defendant’s authority in light of the exclusive privilege granted under subsection 14(1).
The plaintiff submits that the words “sole” and “exclusive” mean that nobody except Canada Post may collect or deliver letters, and this is reinforced by the word “privilege”. Definitions of the word “privilege” are offered, for example:
from Saunders, Words and Phrases Legally Defined (1989, 3rd ed., Butterworths, London)
PRIVILEGE
A “privilege” describes some advantage to an individual or group of individuals, a right enjoyed by a few as opposed to a right enjoyed by all. Le Strange v Pettefar (1939) 161 LT 300 at 301, per Luxmoore LJ
and from the Shorter Oxford English Dictionary (1968, 3rd ed., Clarendon Press, Oxford):
Privilege…. 2. A right, advantage, or immunity granted to or enjoyed by a person, or class of persons, beyond the common advantages of others ….
6. A grant of special rights or immunities to an individual, corporation, community, or place; a franchise, monopoly, patent….
The plaintiff also urges that “collecting” and “delivering” are active tense verbs which, linked with “sole and exclusive privilege” mean that only Canada Post, no one else, may collect and deliver letters.
In my view the words “sole and exclusive privilege of collecting … and delivering letters” do not in themselves answer the question here raised. That question is, given that the Corporation is vested with that privilege, may it contract with someone else to collect or deliver letters on its behalf, which the Dealership Agreement with Crowell provides. The Corporation, in which the privilege is vested, can only act through human beings. If they be officers, directors or employees of the Corporation acting within the scope of their responsibilities their acts are those of the Corporation. If they be agents, or servants of agents, bound by contract to act on behalf of the Corporation, those acts within terms of an agency agreement would be acts done on behalf of the principal, Canada Post, for which the principal is ultimately responsible. In this case, the acts of collecting and delivering letters in which Crowell is involved, are authorized and directed by the Dealership Agreement, even if it also expressly provides that Crowell is an independent contractor and denies any general agency relationship between the parties by virtue of clause 17.1.
As the earlier brief review of the 1987 Dealership Agreement with Crowell indicates, the franchise arrangements authorize Crowell to sell designated products and services within a defined territory. I have found that the agreement also authorizes collecting and delivering of letters in accord with specific instructions under Canada Post manuals, incorporated by reference in the agreement. Specific discounts, fees and royalties for particular products and services are set out, but no charge or rental or fee payable by or to Crowell is specified for merely collecting or delivering letters, or any other mailable matter. The rights granted to Crowell under the agreement are not exclusive; indeed, the agreement states that the rights granted, to sell designated products and services, are “non-exclusive”. The rights are to sell to “consumers”, defined as natural persons purchasing products or services for their individual use, excluding a person buying in the course of business, an association of individuals, a partnership or a corporation. Moreover, Canada Post reserves the right to sell the same products and services in the same territory, or to franchise or licence others to sell to purchasers other than consumers. I do not accept the plaintiff’s suggestion that the defendant has conveyed its exclusive privilege under the agreement, at least in the normal use of the word convey, for it has not given or traded away its exclusive privilege. At most, the agreement permits or licences Crowell, in addition to the non-exclusive right to sell certain products and services, to collect and deliver letters for Canada Post in accord with detailed instructions of Canada Post.
The interpretation urged by the plaintiff for subsection 14(1) of the Act, as a limitation on the power of Canada Post, which precludes it from leasing, licensing or permitting others to collect or deliver letters is said to be supported by other sections of the Act and by the practice of the Post Office under predecessor legislation which informs us of the intent of Parliament in enacting the Act in 1981. A partial statement of the argument of CUPW from its pre-trial memorandum is as follows:
46. Canada Post’s exclusive privilege is not for “operating a system” of collection and delivery, where others may perform the “collecting” and “delivering”. Canada Post’s exclusive privilege attaches to the acts of “collecting” and “delivering”. The exclusive privilege attaches to each of “collecting” and “delivering”. These two points are clear from Section 56 of the CPC Act:
“Every person who, in violation of the exclusive privilege of the Corporation under Section 14, collects, transmits or delivers to the addressee thereof or undertakes to collect, transmit or deliver to the addressee thereof, any letter within Canada or receives or has in its possession within Canada any letter for the purpose of so transmitting or delivering it, commits an offence in respect of each such letter.” [Emphasis added.]
47. This interpretation is fully consistent with the practice of the Post Office up to 1981. The former Post Office Acts of 1952 and 1970 (and predecessor legislation) expressly authorized the Postmaster General to contract with independent “mail contractors” for the transportation of mail. The Postmaster General did so. The CPC Act also authorizes contracts with “mail contractors” for the “transmission of mail”, defined as “sending or conveying” of mail. So contracts for the transportation of mail with independent contractors have been legislatively exempted from the exclusive privilege.
48. The Postmaster General before 1981 did not contract out the “retail” functions of “collection” of mail over the counter, and “delivery” over the counter into lock boxes. The network of sub-post offices, referred to in Canada Post’s Defence (paragraphs 4-8) were operated by “postmasters”. The “postmasters” and their assistants were defined by the Act and caselaw as “postal employees” of the Crown. Mr. Smith, Canada Post’s Corporate Manager of Retail Development testified that the sub-post office “was us” and agreed that the sub-Postmaster was “not independent” of Canada Post.
49. This was the context of the enactment of the CPC Act in 1981. Canada Post’s Corporate Representation Plan of retail privatization was not contemplated in 1981.
Section 12
50. Section 12 of the CPC Act (R.S.C. 1985) states:
“The Corporation may employ such officers and employees and may engage the services of such agents, advisors and consultants as it considers necessary for the proper conduct of its business, and may fix the terms and conditions of their employment or engagement, as the case may be, and pay their renumeration [sic].” [Emphasis added.]
51. Canada Post legally could operate its sub-post office system as the Postmaster General did before 1981. Canada Post could operate a sub-post office, for instance from Crowell’s Pharmacy, under the control of an “employee” of Canada Post. This could be a “postmaster” as Mr. Crowell was before the CPC Act, or simply an “employee” or “agent” of Canada Post. Then “Canada Post” would be “collecting” and “delivering” letters at the postal outlet on the private premises or in the host business. This was how Parliament in 1981 contemplated the postal network under ss. 12 and 14(1).
52. This interpretation is confirmed by Sections 56 and 58(1) of the CPC Act:
“56 Every person who, in violation of the exclusive privilege of the Corporation under Section 14, collects, transmits or delivers to the addressee thereof, or undertakes to collect, transmit or deliver to the addressee thereof, any letter within Canada, or receives or has in his possession within Canada any letter for the purpose of so transmitting it or delivering it, commits any offence in respect of each such letter.” [Emphasis added.]
“58 (1) Every person commits any offence who, without the written consent of the Corporation places or permits or causes to be placed or to remain on his premises the words post office or any other word or mark suggesting that such premises are a post office or a place for the receipt of letters.” [Emphasis added.]
53. Section 58(1) permits Crowell to call itself a “post office” with “the written consent of the Corporation”. But Section 56 has no such exception. Section 56 does not say that Crowell may “collect, transmit or deliver” a letter with “the written consent of the Corporation”.
54. The CPC Act contemplated that “Canada Post” would, through its “employees” or “agents”, “collect” and “deliver” letters in the postal outlets, but that the postal outlets could be on private premises, or host businesses, where sub-post offices and revenue offices had been located for decades before 1981.
Section 16(1)
55. Section 16(1) of the CPC Act states:
“In carrying out its objects and duties under this Act, the Corporation has the capacity, and subject to this Act the rights, powers, and privileges of a natural person.”
56. Canada Post’s “rights, powers and privileges” are expressly “subject to this Act”. They are subject to the “sole and exclusive privilege” in Section 14(1). Nothing in Section 16(1) may diminish the effect and meaning of the words “sole”, “exclusive” and “privilege” in Section 14(1). In French v. Canada Post Corporation (1987), 87 N.R. 233 (FCA), [Appendix “B”, p. 71] affirming F.T.R. 40 (TD) at 235, Mr. Justice Hugessen stated that the words “subject to this Act” in Section 16(1) mean that the grant of powers in Section 16(1) does not expand any restriction on Canada Post which is “nourished by some other words of limitation elsewhere in the Act”.
57. If section 14(1) has the meaning which the Plaintiff respectfully submits to this Court, it is submitted that Section 16(1) does not further expand the powers of Canada Post.
The plaintiff relies significantly upon the decision of the Saskatchewan Court of Appeal in Bury v. Saskatchewan Government Insurance (1990), 75 D.L.R. (4th) 449. There the Court was concerned with the validity of a plan under which Saskatchewan Government Insurance (SGI) proposed to dispose of its general insurance business to a company also controlled by the Crown at that stage but which it was intended would sell a majority of shares to the public. The purpose of the plan was to privatize the general insurance business of SGI, a provincial Crown corporation created by statute with authority to engage in and carry on the business of insurance and reinsurance in all of its branches, and in which was vested the exclusive authority to engage in basic compulsory automobile insurance in the province. The plan did not include provision for conveyance of the automobile insurance business, but only the general insurance, in relation to other risks, which SGI had developed, for which the plan would transfer all assets to the second company. The Saskatchewan Court of Appeal held the planned transaction to be ultra vires SGI. It referred to the doctrine of Ashbury Rail. Carriage and Iron Co. (Lim.) v. Riché (1875), 44 Law J. Rep. (N.S.) Exch. 185 (H.L.), that a statutory corporation possesses only the powers granted expressly or implicitly under its incorporating statute. The Court interpreted the authority of SGI to engage and carry on the business of insurance and reinsurance in all of its branches as clearly implying an intention of the legislature to impose a duty on SGI to provide the service so described as a matter within the public interest. The proposed disposition of its general insurance business was found to derogate from its ability to carry out that statutory duty and thus was ultra vires. After reviewing jurisprudence on the matter, Sherstobitoff J.A. speaking for the majority of the Court, said (at pages 469-470):
The principle to be derived from the review of authorities is that where a company has been incorporated by the legislature for the purpose of providing a service for the public benefit, the incorporating statute may, either expressly or by inference, impose a statutory duty on the company to establish and maintain that service. A consequence of such a statutory duty is that there are statutory limitations upon the power of such companies to dispose of assets necessary to provide the service, to give enforceable security against such assets, to abandon any of the undertakings authorized by the statute, to delegate their statutory powers, to fetter their statutory discretion, or to amalgamate with other companies. The courts will apply the doctrine of ultra vires to set aside any transactions which exceed the limitations imposed by the statute.
The principle enunciated in Bury is simply that the authority and capacities of a corporation created by statute to provide a service for the public benefit must be found, expressly or impliedly, set out in the enabling legislation. The application of that principle in this case depends upon interpretation of the Act incorporating Canada Post.
Here the Canada Post Corporation Act expressly vests in the corporation “the rights, powers and privileges of a natural person”, subject to the Act; no such capacity was vested in SGI under the Saskatchewan legislation creating the corporation, with which the Court dealt in Bury. Moreover, in that case, SGI proposed to dispose of assets related to its general insurance business and to withdraw from participation in that business. Here Canada Post gives up no assets, and does not purport to grant an exclusive licence; rather it grants a non-exclusive licence, reserving the right to market the same products and services in the same territory as Crowell whose licence was limited to sales to individuals, not including those buying in the course of carrying on business or associations of individuals, partnerships or corporations. In my view, the circumstances of this case are distinguishable from those in Bury in these two important respects.
For the defendant it is urged that the primary section of the Act concerning the powers of Canada Post is subsection 16(1) and that subsection 14(1) is not a limitation on the powers provided by subsection 16(1) for the Corporation to exercise rights, powers and privileges of a natural person in carrying out its objects and duties under the Act. Moreover, it is said that section 56 does not support the plaintiff’s argument that Canada Post may not authorize or licence Crowell to collect and deliver mail, for the purpose of the section is to ensure that no one other than Canada Post may collect and deliver, to the addressee, letters unless authorized by Canada Post even if words of exception for those authorized are not set out.
The defendant also refers to the definitions in subsection 2(1) of the Act of “post” and of “post office” as supportive of its position that acting under subsection 16(1), the Corporation may authorize others to collect and deliver letters on its behalf. Those definitions are as follows:
2. …
“post” means to leave in a post office or with a person authorized by the Corporation to receive mailable matter;
“post office” includes any place, receptacle, device or mail conveyance authorized by the Corporation for the posting, receipt, sorting, handling, transmission or delivery of mail.
In my view, that argument has merit only if the plaintiff’s submission, that subsection 14(1) limits Canada Post’s authority to authorize others to act for it, is not accepted. The definitions do not create authority or imply any authority not vested in the Corporation by other sections in the Act.
Further arguments on behalf of the defendant are also not determinative of the issue, in my view. Thus, the fact that under paragraph 19(1)(a) the Corporation may prescribe what is a letter and what is non-mailable matter does not, in my view, respond to the plaintiff’s principal argument about the limitation implied by the sole and exclusive privilege. At most, if regulations be enacted under paragraph 19(1)(a), as there are (see SOR/83-481, Letter Definition Regulations), this merely permits the Corporation, with approval of the Governor in Council, to define what constitutes a letter, to which the exclusive privilege of Canada Post applies. Nor is the plaintiff’s argument met by the submission that Parliament has implicitly accepted, and approved, Canada Post’s franchising activities by acceptance and implied approval of annual reports submitted to Parliament, through the Minister responsible for government interests in its operations, under the Financial Administration Act [R.S.C., 1985, c. F-11].
Finally, the evidence adduced by the defendant includes a number of contracts made by the Postmaster General under earlier legislation, offered as illustrative of former practices said to be substantially similar to the arrangements made under the Dealership Agreement with Crowell. However, all of those contracts involve the transmission of mail and they are not directly relevant to the issue here raised for the plaintiff does not dispute that historic record or the capacity of Canada Post to contract with others for transmission of mail, including letters.
As the plaintiff argues the issue here is one of statutory interpretation of the Canada Post Corporation Act. If subsection 14(1) is construed as the plaintiff submits, the limitation that provision imposes on the powers of the defendant can only be changed by an amending act passed in formal process by Parliament.
Construction of the statute
I turn to resolution of the issue of construction of the Act, particularly with reference to subsections 14(1) and 16(1).
In my opinion subsection 14(1) does not expressly state nor does it imply that Canada Post may not contract with others to act on its behalf in the collection, transmission or delivery of letters. That provision is an empowering provision, vesting in Canada Post a privilege, one that by use of the adjectives “sole” and “exclusive” Parliament intended should be the only and absolute privilege of its kind, one that no one else may claim a lawful right to exercise, at least so long as that privilege is not amended by Parliament itself. But the section does not speak, expressly or impliedly of how that privilege may be exercised.
The privilege is reinforced by section 56, which makes it an offence for anyone to act, or undertake, to violate the exclusive privilege of the Corporation. In my view, the application of section 56 would, in practice, require a complaint by or a complaint supported by Canada Post for a prosecution to be instituted for violation of its exclusive privilege. There can be no offence by Crowell in collecting and delivering letters for Canada Post in accord with the licence to do so under the Dealership Agreement. The fact that the words of exclusion from the offence, of those with written consent of the Corporation, are omitted from section 56, but are included in section 58, creating an offence for unauthorized use of the words “post office” or words to similar effect, is not, in my opinion, significant in relation to the authority for the Corporation to contract, either for others to act on its behalf or to use the name post office. The purpose of section 58, in my opinion, is to create a parallel to civil protection of trade-mark interests by establishing an offence to protect the public interest in the name “post office” as defined in the Act.
The manner in which the exclusive privilege granted by subsection 14(1) is to be exercised depends not on that provision but on the powers of the Corporation. Those powers are basically set out by subsection 16(1) vesting in the defendant, in carrying out its duties and objects, subject to the Act, the rights, powers and privileges of a natural person. The Corporation also has the power to make regulations, as approved by the Governor in Council under subsection 19(1) and it may employ officers and employees and may engage the services of agents, advisers and consultants under section 12. The latter section was not argued as a basis for the agreement with Crowell and for these reasons I consider it is irrelevant; it appears in the Act under the heading “Staff” with other sections relating to the status of those employed or whose services are contracted and moreover, in this case, the Dealership Agreement specifically describes Crowell as an independent contractor and not as an “agent, employee or representative of the Corporation for any purpose whatever.”
The exclusive privilege granted by subsection 14(1) includes not only the collecting and delivering of letters but also their transmission. While the question here raised, of limits implicit in the exclusive privilege as granted, was apparently not raised in Canada Post Corp. v. C.U.P.W., supra, in the result the decision of the Court of Appeal implicitly recognizes the authority of Canada Post to contract with rural route couriers for the transmission, including the collecting and delivering of mail, including letters. That authority for contracting for transmission must be found under section 12, or more likely, in my view, under subsection 16(1). If the authority to contract with a courier for the transmission of letters exists, despite the sole and exclusive privilege granted to the Corporation by subsection 14(1), that authority is based in the Act, not in the historic practice of the post office under earlier legislation, and the authority must similarly extend to contracting in relation to the collection and delivering of letters. I can find no basis in the Act for distinguishing the latter two functions from the third function included in subsection 14(1), transmitting of letters. Subsection 14(1) does not preclude contracting for transmission of letters by others on behalf of the Corporation and it cannot preclude contracting for collecting or delivering letters on its behalf.
When the matter was heard no argument was addressed to the capacity which a natural person might have in relation to an exclusive privilege granted to him or her by Parliament. It seemed to be assumed that the powers granted to the Corporation under subsection 16(1) included the power to contract with another to exercise the exclusive privilege, unless the privilege itself was limited to prevent this. I have found that the words of subsection 14(1) do not so limit the exclusive privilege of Canada Post. In my opinion, under its general powers within subsection 16(1), the Corporation has the authority to contract with Crowell, or others, by contract that expressly does not purport to extend to the Dealer an exclusive licence, for Crowell to act on behalf of Canada Post in collecting and delivering letters.
I note that the words “subject to this Act” in the grant of power in subsection 16(1), in the terms referred to by Hugessen J.A. in French v. Canada Post Corp., supra, do “nourish” that grant, in relation to subsection 14(1). As earlier noted, they do add to the capacity of Canada Post, in addition to “the rights, powers and privileges of a natural person”, the sole and exclusive privilege to collect, transmit and deliver letters.
A franchise agreement, such as that with Crowell, in my view could be found to be ultra vires in two circumstances. If it purported, as the agreement with Crowell does not, to grant an exclusive privilege to collect, transmit or deliver letters, it would probably contravene the principle identified in Bury, if the Corporation purported, expressly or impliedly, to withdraw from the exercise of the exclusive privilege which Parliament has granted to it. Another possibility might occur if it could be established that the agreement did not serve the objects of the Corporation. Here the evidence of the defendant’s principal witness, Mr. Smith, leads me to conclude that the Dealership Agreement in this case serves the Corporation’s statutory purposes. It seeks to provide service for collection and delivery of mail, and it provides products and services necessary or incidental, in the opinion of the Corporation, to the postal service, with a view to improving and extending its products and services while conducting its operations on a self-sustaining financial basis and providing a standard service to meet the needs of the people of Canada, and maintaining a corporate identity program reflecting the role of the Corporation as an institution of the Government of Canada, in the words of section 5. Like other GMO outlets, Crowell’s operations under the Dealership Agreement provide services in an area of concentrated population and without capital or ongoing administrative expenses, at least of significance, for the Corporation so that its goal of self sufficiency, a goal that had proved to be beyond the reach of its predecessor operating as a government department, may be achieved. I am satisfied that the evidence supports a conclusion that the Dealership Agreement is a reasonable means, within the powers of Canada Post’s Board of Directors to approve for its operations, to achieve the objects of the Corporation.
Finally, in my view, the construction of the Act as I have found it to be is consistent with the general purposes of the Act, perceived as those must be from the history of legislation in relation to postal services. When the Act was introduced in Parliament by the Postmaster General at second reading in October 1980, he emphasized that the Bill was the result of discussion with interested parties, including the postal unions, after a decade of disharmony in labour management relations within the Post Office Department, after a series of substantial deficits in its operations, and following a number of studies and earlier proposals. The change from a department to a Crown corporation was expected to result in three specific benefits: management accountability, improved financial procedures, and more effective labour negotiations. The earlier Post Office Department was subject to controls of various other departments; the new Corporation would have full responsibility under its Board of Directors for operations of the postal service, and the independence to function effectively in the market. The importance of its general objects and the factors to be considered in their attainment, set out in section 5, were stressed. The daily management of the postal service is to be assured by the Board of the Corporation, empowered to establish general policy and to make decisions concerning finance and personnel management without the restrictions generally inherent in the public service. As in the case of the Post Office Department, the Corporation would have “a monopoly to transport letters, so as to have a guaranteed source of revenue allowing it to ensure the universality of services”, so the Minister of the day commented.
The general structure of the Act and the broad powers granted to the new Corporation, when compared with the arrangements under the earlier legislation and the specific powers previously granted to the Postmaster General, in my view, underline the intent of Parliament to empower the new Corporation so that it might most effectively pursue the general objects set out in section 5, in times of significant and rapid change in technology and in marketing of services. It would be contradictory to this general intent to construe the authority assigned under the new Act more narrowly than the provisions of the Post Office Acts set out in relation to the powers of the Postmaster General. The earlier legislation (see, e.g. R.S.C 1970, c. P-14, paragraph 5(1)(o) and the analogous provision in S.C. 1867, c. 10, section 10.3) included a specific power for the Postmaster General to “enter into and enforce contracts relating to the conveyance of mail or to any other business of the Canada Post Office.” While it is true that the Postmaster General did not act under the earlier legislation to contract in the same manner as Canada Post has now done by its Dealership Agreement with Crowell, subject to provisions under earlier legislation concerning postal employees, had he done so that action would, in my view, have been within the specific powers assigned to him. Indeed, as I understand it, the plaintiff concedes that but argues that the practices prevailing under earlier legislation whereby postal employees, as employed by the former department, were intended by Parliament to be continued in the collection and delivering of letters by the new Corporation, Canada Post. In my view, such a reading of Parliament’s intent as expressed in the Act would be contrary to the general purposes of the statute, to vest in Canada Post the authority to employ individuals or agents under section 12 as it sees fit and to exercise all the powers of a natural person, subject to any limitations expressed in the Act, to achieve the objects of the Corporation. Neither section 12 nor section 14, in my view, can be read as imposing a limitation on how the Corporation’s employees should be organized in relation to the services it performs, including the exercise of its exclusive privilege of collecting and delivering letters.
Conclusion
For the reasons set out, I conclude that subsection 14(1) does not expressly or impliedly limit the capacity of Canada Post to contract, by grant of a non-exclusive licence to others under agreements similar to that concluded with Crowell, for the contracting party to act on its behalf in the collecting and delivering of letters.
In the result, an order goes dismissing the plaintiff’s action for a declaration, with costs.