Focus: Hamilton has ‘arguable case’ in Canada Post appeal

While the Ontario Superior Court of Justice has shot down the City of Hamilton’s bylaw aimed at regulating Canada Post Corp.’s placement of community mailboxes within its boundaries, at least one prominent lawyer thinks the municipality has a feasible argument to appeal the ruling.

“In my view, the City has a good arguable case to go forward to the Court of Appeal,” wrote former Supreme Court justice Ian Binnie in a June 16 letter to Hamilton city solicitor Janice Atwood-Petkovski.

Binnie, now counsel at Lenczner Slaght Royce Smith Griffin LLP, wrote the letter in response to Atwood-Petkovski’s request for an opinion on the merits of an appeal of Justice Alan Whitten’s June 11 decision in Canada Post v. City of Hamilton. In that decision, Whitten declared Hamilton bylaw No. 15-091 to be inapplicable and inoperative when it comes to community mailboxes planned by Canada Post. Hamilton city council voted to appeal the decision last week.

The Crown corporation, of course, has been moving to phase out mail delivery to individual homes in response to financial pressures and declining mail volumes. The plan has drawn fire from several cities, including a group of Montreal-area municipalities that are joining a legal challenge launched by the Canadian Union of Postal Workers.
Hamilton chose to regulate the issue through its bylaw that subjects Canada Post to a permit acquisition process at the discretion of the director of engineering services with the public works department or a designate. The bylaw, which regulates the installation of equipment, placed a moratorium on new community mailboxes that would run for 120 days from whenever Canada Post paid the city a permit application fee that Whitten said would add up to $100,000.

The bylaw followed concerns raised by city councillors after Canada Post provided municipal officials with 1,000 community mailbox locations in three wards. The councillors then directed staff to prepare a report to prevent the installation of the mailboxes pending an agreement with the Crown corporation on locational criteria and other issues. A subsequent update to the city’s equipment installation manual prohibited locations that encourage illegal parking, obstruct residents’ view or interfere with their privacy. It also said the equipment shouldn’t be overly intrusive on neighbouring residential and commercial uses and permit applications should explain why a community mailbox couldn’t abut a corner lot or non-arterial road.

The key question was whether the city had the authority to enact the bylaw in light of issues such as federal paramountcy. Canada Post challenged the bylaw, arguing it was invalid under both municipal and constitutional law. Among other things, it suggested the bylaw was void for vagueness and uncertainty; conflicted with the Canada Post Corporation Act and the mail receptacles regulation; was inapplicable to community mailboxes due to the doctrine of interjurisdictional immunity; and was of no effect under the doctrine of paramountcy.

“When I looked at the bylaw, it clearly seemed to conflict directly,” says John Mascarin, a partner at Aird & Berlis LLP who notes the court showed “disdain” for the city’s position.

Among other things, Whitten found the bylaw would create significant difficulties for Canada Post given the tight timelines it faces in converting to community mailboxes. Among other things, it has to carry out a volume count before restructuring its routes, a two-week process that, under Canada Post’s collective agreement with its workers, can’t take place in July, August, December or any two-week period that contains a statutory holiday.
“One can readily see how the indeterminate application process and the moratorium would wreak havoc with these timelines,” wrote Whitten, noting the Crown corporation can’t install the community mailboxes during the winter. As a result, he found the effect of the permit process “jeopardizes the timelines” of Canada Post.

On the issue of vagueness, Whitten found the city’s language around the standards it would consider for the placement of community mailboxes to be “generic and imprecise.” The result, he wrote, would be an “open-ended process” dependent on what the city’s director considers appropriate. “Even after the permit is issued, pursuant to 6.4 the Director on his own initiative can alter, revoke or impose new terms.”

When it came to the conflict with federal law, Whitten found against the city as the bylaw gave it a final say over the location of the mailboxes.

One notable issue in Whitten’s findings on that question was his emphasis on Canada Post’s need to carry out its business plan due to financial pressures. “As mentioned declining mail usage in the face of electronic communications at the same time as an increase in the number of residences has made door-to-door delivery of transactional mail the most expensive form of delivery,” he wrote, citing Canada Post’s need to reduce its labour force and meet its goal of carrying out its mandate on a self-sustaining basis.

In his opinion on the merits of an appeal, Binnie made reference to the question of Canada Post’s financial viability and suggested it’s not necessarily determinative of the constitutional issue. “The Court of Appeal might conclude that whether a super box is located at one end of the block or the other or within the required setbacks is unlikely to jeopardize the ‘economic viability’ of Canada Post,” he wrote.

And on the question of interjurisdictional immunity, he referred to the Supreme Court of Canada’s 2007 ruling in Canadian Western Banks v. Alberta that dealt with arguments by federally regulated banks that provincial consumer legislation regulating the sale of insurance didn’t apply to them because they were a federal undertaking.

“The fact that the business plan was to improve the profits of the banks by selling insurance did not expand federal jurisdiction at the expense of the provinces even when the insurance was sold to secure bank loans,” wrote Binnie.

“Equally, in the present case, it is certainly arguable that the laudable desire of Canada Post’s business plan to achieve ‘cost reductions’ is without constitutional significance.”

In addition, Binnie raised questions about the arguments dealing with federal paramountcy or frustration of a federal purpose. “Quite apart from the Municipal Act it is well established as a matter of constitutional law that where there is an operational conflict between a valid federal regulation and an otherwise valid municipal bylaw, the federal regulation will prevail. However, in order for ‘federal paramountcy’ to apply, it must be impossible for Canada Post to comply with both the federal regulation and, at the same time, comply with the Hamilton municipal bylaw,” he wrote.

“It is certainly arguable by the City that there is no such frustration,” he added, suggesting Canada Post could potentially implement community mailboxes while complying with the city’s requirements for  road safety and good planning.

“Undoubtedly it would be more convenient for Canada Post to proceed to install super boxes without compliance with the City’s procedures but Canada Post’s convenience is not the constitutional test,” he wrote.

Ultimately, Binnie found the case raises several “difficult constitutional issues” when it comes to the interaction of federal and municipal enactments. “These are all legal questions deserving of consideration by the Ontario Court of Appeal if not by the Supreme Court of Canada,” he wrote, suggesting that while there’s no guarantee of success, there’s good reason to challenge some of Whitten’s conclusions.

Mascarin, however, believes Hamilton went too far with its bylaw. Noting Canada Post has set up a mechanism to consult with communities on its new mailboxes, he says that process should cover its obligations in that regard.

“If Canada Post had not had any consultation process, it might have been a little different,” he says, noting the case reflects municipalities’ legitimate concerns as the Crown corporation moves from installing the community mailboxes in subdivisions planned around such a system to placing them in existing urban areas. “I certainly see where the cities and municipalities are coming from,” he adds.

“It’s something that’s a real municipal issue.”

The conflict between actions in the federal sphere and municipal concerns isn’t new, however. As Mascarin points out, municipalities have long conflicted with federal agencies over issues such as railways, airports, and telecommunications. “Now, it has just taken itself into a different realm here,” he says.

In his opinion, Binnie made reference to such a dispute involving the City of Hamilton many years ago.

The Canada Post case, he wrote, is similar to the lengthy battles between the city and the Hamilton harbour commissioners in the 1960s and ‘70s. In that case, he noted, the commissioners sought immunity from the city’s regulatory authority over concerns that municipal land-use bylaws impaired their plans to develop harbour lands.
But unlike in the Canada Post matter so far, at least, the city in that case was victorious, he pointed out.

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