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A Canada Post letter carrier puts mail in a new Canada Post super box in Calgary, Alberta, October 20, 2014.The Globe and Mail

Ontario's highest court has ruled in favour of Canada Post in a dispute which saw the City of Hamilton go up against the Crown corporation over the placement of community mailboxes.

The legal battle was closely watched by municipalities across the country as the case dealt with just how much of a say local governments could have over where the controversial mailboxes could be installed.

Hamilton brought in a bylaw last year after city residents raised complaints about safety, privacy, litter and traffic when the community mailboxes were installed in what they considered less-than-ideal locations.

The bylaw required Canada Post to obtain a $200 permit per site to install boxes on municipal land. City staff would assess each mailbox's location to ensure it met city standards before granting the permit.

Canada Post ignored the bylaw – saying it infringed on federal rules that grant it final say over the location of mail receptacles – and the issue ended up in court, where last June an Ontario judge found the bylaw did not apply to the Crown corporation.

The city appealed that ruling but the Ontario Court of Appeal ruled on Wednesday that the bylaw conflicts with federal legislation, which takes precedence.

"Although the subject matter of the bylaw comes within the City's jurisdiction, it nevertheless conflicts with federal legislation and is therefore inoperative under the doctrine of paramountcy," the appeal court said in its written decision.

"The power of the Postmaster General (and its successor, Canada Post) to locate mail receptacles in its national network, free of interference, has existed from Confederation and has been continuously exercised. Canada Post is not displacing any pre-existing local initiatives."

Canada Post welcomed the appeal court's decision.

"We respect the unanimous ruling and remain committed to working with municipalities as the postal system evolves to meet the changing needs of Canadians," it said in a statement.

The City of Hamilton, however, said it was "disappointed" and would be considering its options moving forward.

"The City of Hamilton's objective, shared by many other municipalities, was to have Canada Post meaningfully consult and co-operate with municipalities so that community mailbox locations could meet the needs of their communities," the city said in a statement.

The appeal court ruling comes as Canada Post's community mailbox plan is currently uncertain.

In the face of declining traditional mail volumes, the corporation had announced a plan in December 2013 to end door-to-door delivery and gave itself five years to implement the move to community mailboxes. About 100,000 made the transition in 2014, and another 900,000 households were expected to switch to community mailboxes in 2015.

Prime Minister Justin Trudeau made a verbal promise, however, to "restore" door-to-door home mail delivery.

But so far, the Liberal government, which came into power a year ago, has committed only to stopping any further reduction in home delivery while it conducts a review of Canada Post's operations.

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