Reference re Maritime Freight Rates Act

Reference re Maritime Freight Rates Act
Collection
Supreme Court Judgments
Date
1933-06-08
Report
[1933] SCR 423
Judges
Duff, Lyman Poore; Rinfret, Thibaudeau; Smith, Robert; Cannon, Lawrence Arthur Dumoulin; Crocket, Oswald Smith
On appeal from
Canada
Subjects
Transportation
Decision Content
Supreme Court of Canada
Reference re Maritime Freight Rates Act, [1933] S.C.R. 423
Date: 1933-06-08.
In the matter of the Maritime Freight Rates Act, 1927 (17 Geo. V, Ch. 44); and
In the matter of the Maritime Freight Rates Act (R.S.C., 1927, Ch. 79).
Reference by The Board of Railway Commissioners for Canada
1933: February 13; 1933: June 8.
Present: Duff C.J. and Rinfret, Smith, Cannon and Crocket JJ.
Railways—Board of Railway Commissioners for Canada—Jurisdiction— Maritime Freight Rates Act, R.S.C, 1927, c. 79 (original Act, 17 Geo. V, c. 44), ss. 3, 7, 8, 9—Approval by Board from time to time of tariffs filed by “other companies” (s. 9) specifying tolls lower than those specified in tariffs originally filed and approved under s. 9—Board certifying from time to time normal tolls differing from those originally certified at time of approving of tariffs originally filed and approved under s. 9—Reimbursement to company of difference between lower tolls and modified normal tolls.
It is within the jurisdiction of the Board of Railway Commissioners for Canada (a) to approve from time to time, under s. 9 of the Maritime Freight Rates Act (R.S.C., 1927, c. 79), tariffs filed by “other companies” therein referred to (companies other than the Canadian National Railways), specifying tolls lower than those specified in the tariffs originally filed and approved (which provided for reductions in rates of approximately 20%) under s. 9; (Cannon J., dissenting, held that any special or competitive tariffs filed by “other companies” of their own motion, specifying tolls lower than those specified in the tariffs originally filed and approved under s. 9, are not to be taken as filed under said Act, but under the Railway Act, and there can be no approval thereof under said s. 9); (b) to certify from time to time (as distinct from the provision in s. 9 (4) for certifying in every third year, etc., as to revision of the normal tolls and subsequent use of revised normal tolls) normal tolls in respect of particular freight movements differing from those originally certified at the time of approving the tariffs originally filed and approved under said s. 9; (Cannon J., dissenting, contra); and (c) to certify as the amount of reimbursement to the company the difference between the lower tolls referred to in (a) supra and the modified normal tolls referred to in (b) supra; (Cannon J., dissenting, contra).
The Board’s ruling of September 23, 1932, to the effect that, where a railway company, under said s. 9, has made an approximate 20% reduction in its rates, and subsequently publishes a tariff making a further reduction in rates, to meet water or truck competition, or for other reasons, such tariff containing the further reduced rates should be published under the general provisions of the Railway Act, and the company is not entitled to any reimbursement under said s. 9 with respect to such rates, and there should be no reference on such tariff to the Maritime Freight Rates Act, was not a correct one. (Cannon J., dissenting, contra).
Subs. 2 of s. 3 of the Maritime Freight Rates Act, as contained in R.S.C., 1927, c. 79, applies to “other companies” referred to in s. 9 of said Act (notwithstanding the rearrangement in R.S.C., c. 79, of the subsees of sec. 3 as contained in the original Act, and s. 9 (2) in each Act making applicable “the provisions of subs. 2 of s. 3 * * * of this Act”).
Having regard to the general scope and terms of the Maritime Freight Rates Act, tariffs filed by “other companies” referred to in s. 9 are lawful tariffs until disallowed, notwithstanding that subs. 3 of s. 3 (being the same as subs. 2 of s. 3 of the original Act) is not now expressly referred to in s. 9. (Cannon J. held that “competitive tariffs filed by other companies are lawful tariffs until disallowed under the express terms of sees. 331 and 332 of the Railway Act; and to reach this conclusion, it is not necessary to have regard to the general scope and terms of the Maritime Freight Rates Act or to subs. 3 of s. 3 thereof”).
The intent and scheme of the Maritime Freight Rates Act as to above matters, discussed, with particular regard to ss. 3, 7, 8 and 9 thereof.
REFERENCE by the Board of Railway Commissioners for Canada, upon a case stated, under s. 43 of the Railway Act (R.S.C., 1927, c. 170), for the opinion of the Supreme Court of Canada on certain questions of law arising under the Maritime Freight Rates Act (R.S.C., 1927, c. 79; and the original Act, 17 Geo. V, c. 44).
The stated case and the questions for decision are set out in the judgment of Duff, C.J., now reported.
A. G. Blair, K.C., for the Board of Railway Commissioners for Canada.
W. N. Tilley, K.C., and E. P. Flintoft, K.C., for the Canadian Pacific Ry. Co. and the Dominion Atlantic Ry. Co.
C. B. Smith, K.C., for the Provinces of Nova Scotia, New Brunswick and Prince Edward Island.
H. P. Duchemin, K.C., for the Sydney & Louisburg Ry. Co. Ltd. and others.
J. L. Ilsley, K.C., for the Nova Scotia Shippers’ Association and others.
The judgment of the majority of the court (Duff C.J., and Rinfret, Smith and Crocket JJ.) was delivered by
Duff C.J.—This appeal concerns the interpretation of the Maritime Freight Rates Act, which, as originally enacted, contained a recital to the effect (inter alia) that it was expedient to put into practical operation the recommendations of the Royal Commission on Maritime Claims respecting Transportation and Freight Rates, for the purpose of removing the burden imposed upon the trade and commerce of the Maritime Provinces since 1912, in so far as it might be reasonably possible to do so, without disturbing unduly the rate structure in Canada. The statute required the Canadian National Railways, and permitted other companies, to lower their tolls in the Maritime Provinces by approximately 20%, and the deficits in respect of the Maritime section of the C.N.R. were to be paid by the Government, and other companies adopting the lower standard were to be reimbursed the difference between normal tolls and the lower tolls.
For a complete understanding of the bearing and significance of the questions with which we have to deal, it is convenient to transcribe the statement of facts and the questions now put before us by the Order of the Board of Railway Commissioners in the case stated for the opinion of this Court under the authority of section 43 of the Railway Act.
“1. The Maritime Freight Rates Act, 17 Geo. V, chapter 44 (Appendix A hereto), assented to on 14th April, 1927, entitled ‘An Act Respecting The Canadian National Railways and the Tariffs of Tolls to be charged on certain Eastern Lines,’ directed that from and after 1st July, 1927, a reduction of approximately 20% be made in the tariffs of tolls to be charged in respect of movements called ‘Preferred Movements’ of freight traffic upon or over the ‘Eastern Lines,’ as defined, of the Canadian National Railways. Revenues and expenses of the Eastern Lines were to be kept separate from other accounts in connection with the Canadian National Railways and the deficits of the Eastern Lines were to be included in the estimates annually submitted to Parliament.
“2. The Act also provided by section 9 that with respect to freight movements similar to the ‘Preferred Movements,’ other companies operating in the ‘Select Territory’ as defined might file tariffs of tolls ‘meeting the statutory rates’. The Board of Railway Commissioners was by the Act to approve these tariffs and certify the normal tolls which but for the Act would have been effective and ascertain and certify to the Minister of Railways and Canals the amount of the difference between the tariff tolls and the ‘normal tolls’ on traffic moved by the company each year under the tariffs so approved. “3. The Act is now chapter 79 of the Revised Statutes of 1927 (Appendix B). As originally passed it contained a preamble reciting that the Act was passed to carry out the recommendations contained in the Report of a Royal Commission on Maritime claims.
“4. The Board of Railway Commissioners by section 11 of the Act was authorized to hear and determine all questions arising under the Act, subject, however, to appeal as provided in the Railway Act. The Board, acting under this section and in response to application of other companies referred to in section 9, made rulings set out in its Circular No. 213, dated 18th June, 1927 (Appendix C), as to the interpretation to be given the following expressions found in section 9 of the Act: (a) ‘Select Territory’; (b) ‘Freight movements similar to the preferred movements’; and (c) ‘meeting the statutory rates.’ Subsequently certain companies, including the Canadian Pacific Railway, the Dominion Atlantic Railway and others, elected to meet the statutory rates, and then filed tariffs pursuant to section 9 of the Act.
“5. Prior to 1st July, 1927, it was the practice in the territory covered by the Act, as in other parts of Canada, for railway companies to make adjustments in rates from time to time to meet changing industrial or traffic conditions, including competition with other transportation agencies, and since the Act came into effect, the Canadian National Railways and also the companies referred to in section 9 of the Act have found it necessary to adjust and vary the tolls originally filed under the Act, from time to time, as new industrial and traffic conditions arose.
“6. In the autumn of 1927, the question was raised as to whether the companies referred to in section 9 were entitled to reduce the rates that had been published in compliance with the Act and still continue to be reimbursed for the difference between the normal rate and the rate originally published in compliance with the Act. There are attached (Appendix D) copies of letters dated 25th November, 1927, and 10th January, 1928, from E. P. Flintoft, Assistant General Solicitor, Canadian Pacific Railway, to the Secretary of the Board and letters dated 16th January, and 1st February, 1928, from the Secretary of the Board to Mr. Flintoft, containing the decision made by the Board with respect to the questions raised. “7. In continuance of the practice referred to in section 5 hereof and under authority of the decision of the Board as set out in section 6 hereof the companies referred to in section 9 of the Act have from time to time filed with and had approved by the Board tariffs containing reductions in various tolls below those originally filed and approved under the said section 9.
“8. (a) All tariffs subsequently filed were approved by Orders in the form set out in Appendix E (1) in which the Board also certified what purported to be the normal rates which, but for the Act, would have been effective.
“(b) In some cases the normal rates specified in the Order were arrived at strictly in conformity with the decision referred to in section 6 hereof by adding to the new reduced rates specified in the tariff the same differentials as existed between the original normal rates and the reduced rates originally filed under the Act.
“Example: Board’s Order No. 47304, dated 2nd September, 1931, as amended by Order No. 47339, dated 10th September, 1931, re rates on apples from Dominion Atlantic stations to Halifax for export. (Appendix E (2)).
“(c) In a large proportion of the cases, however, the Board adopted the practice of certifying in such order as normal such rates as it considered would have been adopted by the companies to meet the new industrial and traffic conditions, had the Act not been passed.
“Example: Board’s Order No. 40130, dated 7th January, 1928, re rates on fruits and vegetables, canned, and apples, evaporated, from Port Williams and Sheffield Mills, N.S., via Dominion Atlantic and connecting lines to destinations in the Canadian Northwest. (Appendix E (3)).
“9. At a meeting of the Board on 23rd September, 1932, its ruling of 30th January, 1928, as contained in the Secretary’s letter of 1st February, 1928, to Mr. Flintoft, was rescinded and the decision embodied in the letter from the Secretary of the Board, dated 12th October, 1932, was adopted. (Appendix F.)
“10. Rate adjustments of the character referred to in sections 5 and 7 hereof may be illustrated under the following four general headings under each of which are set out examples of particular conditions met and reference to the tariffs filed and the Board’s Orders approving the same:— “(1) Rates published on a basis lower than the rates originally approved under the Act to meet the needs of an industry established at a point where no similar industry previously existed, or to place it in proper relationship with similar industries at other points on the same railway which enjoyed the benefits of commodity rates as reduced under the Act:—
“(a) Effective 12th December, 1927, rates on fruits and vegetables, canned, and apples, evaporated, from Port Williams and Sheffield Mills, N.S., via Dominion Atlantic and connecting lines to points in the Canadian Northwest, were reduced under the Act to the same basis as applied from other canning points on the Dominion Atlantic in Nova Scotia, such as Aylesford, Berwick, Bridgetown, Kingston, Lakeville and Waterville, to place the two canneries at Port Williams and Sheffield Mills on a competitive basis with those other canning plants. The rates previously in effect were the class rates as reduced under the Act. The tariff giving effect to the further reductions was Supplement No. 3 to C.P. Tariff No. E-4530, C.R.C. No. E-4318, Item No. 80-A, approved under the Act by the Board’s Order No. 40130, dated 7th January, 1928.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix G (1).
“(6) Effective 19th April, 1929, rates on potatoes, carloads, for manufacturing into starch, from points on the Canadian Pacific Railway in New Brunswick to Hartland, N.B., were reduced below the basis originally approved under the Act, in order to enable the new industry at Hart-land to obtain the raw material it required for manufacture. The tariff giving effect to these further reductions was Supplement No. 14 to C.P. Tariff No. E-4524, C.R.C No. E-4312, Item No. 532, approved under the Act by the Board’s Order No. 42665, dated 20th May, 1929.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix G (2).
“(2) Rates published on a basis lower than the rates originally approved under the Act to place an industry on the originating line on a competitive basis with similar industries located on the Canadian National Railways:— “(a) Effective 3rd February, 1931, rates on pit props and pit timber, Glennie to Minto, N.B., via Fredericton and Grand Lake Coal and Railway, were reduced to the same basis as in effect between certain points on the Canadian National. The rates previously in effect were on the mileage scale as originally reduced under the Act. The Tariff providing for the further reductions was Supplement No. 26 to F. & G.L. Tariff No. 108, C.R.C. No. 157, Item No. 205, approved under the Act by the Board’s Order No. 46267, dated 12th February, 1931.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix H (1).
“(b) Effective 15th December, 1931, rates on potato starch and potato flour, carloads, from Hartland, N.B., via Canadian Pacific to destinations in the Provinces of Ontario and Quebec, were reduced under the Act to the same level as the rates on the same commodities via the Canadian National from Charlottetown and Hunter River, P.E.I., to Ontario and Quebec destinations. The only rates in effect previously from Hartland were the class rates as reduced under the Act, and the further reductions were made to enable the mill at that point to compete with the mills established at the points on the Canadian National. The tariff giving effect to such further reductions was Supplement No. 43, to C.P. Tariff No. E-1360, C.R.C. No. E-4312, Item No. 534, approved under the Act by the Board’s Order No. 47896, dated 22nd December, 1931.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix H (2).
“(3) Rates published on a basis lower than the rates originally approved under the Act to enable industries to reach additional markets or to compete at destination with products from other sources of supply:—
“(a) Effective 9th November, 1927, rates on wood-pulp, carloads, from Saint John, West Saint John, Saint George, Fairville and Edmundston, N.B., to Gatineau, Quebec, via Canadian Pacific, were reduced under the Act to the same basis as in effect from the same shipping points to Ottawa, in order to enable shipments to be made to the new paper mill established at Gatineau. The rate previously applicable to this movement was the class rate as reduced under the Act. The tariff giving effect to such further reductions was Supplement No. 1, to C.P.R. Tariff No. E-4516, C.R.C. No. E-4304, approved under the Act by the Board’s Order No. 40134, dated 7th January, 1928.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix I (1).
“(b) Effective 29th August, 1931, rate on peat moss, carloads, from Saint Stephen, N.B., via Canadian Pacific to Montreal, was reduced to enable the shippers at Saint Stephen to compete in the Montreal market with imported moss. The only rate previously in effect was the class rate as reduced under the Act. The tariff giving effect to the further reduction was Supplement No. 40 to C.P. Tariff No. E-1360, C.R.C No. E-4312, Item No. 482, approved under the Act by the Board’s Orders No. 47491, dated 7th October, 1931, and No. 47638, dated 10th November, 1931.
“Copies of the Board’s Orders and of the relevant portions of the said Supplement are attached hereto as Appendix I (2).
“(4) Reductions forced upon the railway company in order to hold the traffic against some other competitive transportation agency, either water or highway, such reductions being in some cases seasonal, that is, effective only during the season of navigation or during that part of the year when the highway competition is more acute:—
“(a) Effective 3rd August, 1931, the rate on lumber from Falmouth, N.S., via Dominion Atlantic to Halifax, was reduced under the Act to meet motor truck competition. This was lower than the basis originally approved under the Act and expired 31st December, 1931. The tariff giving effect to the further reduction was Supplement No. 33, Item No. 60, to D.A.R. Tariff No. CT-388, C.R.C. No. 817, section 3, approved under the Act by the Board’s Order No. 47406, dated 24th September, 1931.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix J (1).
“(b) Effective 28th August, 1931, rates on apples, carloads, from Berwick, N.S., and other points, via Dominion Atlantic to Halifax for export, were reduced below the level originally approved under the Act, to meet competition by motor truck and water via Kingsport and Port Williams. The tariff giving effect to the further reduction was D.A.R. Tariff No. CT-418, C.R.C. No. 863, approved under the Act by the Board’s Orders, No. 47304, dated 2nd September, 1931, and No. 47339, dated 10th September, 1931.
“Copies of the Board’s Orders and of the relevant portions of the said tariff are attached hereto as Appendix J (2).
“(c) Effective 15th April, 1932, rates on pulpwood from Annapolis Royal, N.S., via Dominion Atlantic, to Middle-town, N.S., for furtherance, were reduced below the basis originally approved under the Act to meet water competition. The tariff giving effect to such further reductions was Supplement No. 44 to D.A.R. Tariff No. CT-388, C.R.C. No. 817, Item No. 156, approved under the Act by the Board’s Order, No. 48423, dated 13th April, 1932.
“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix J (3).
“The foregoing examples are typical of many similar reductions of the several classes referred to that have been made since the coming into force of the Act.
“The questions for decision are:—
“1. Whether, having regard to the facts above set out and to the relevant provisions of the Maritime Freight Rates Act and of the Railway Act, it is within the Board’s jurisdiction:—
“(a) To approve, from time to time, under section 9 of the Maritime Freight Rates Act, tariffs filed by other companies referred to in the said section specifying tolls lower than those specified in the tariffs originally filed and approved under the said section, the tariffs last referred to having provided for reductions in rates of approximately 20%.
“(b) To certify, from time to time, as distinct from every third year as provided in subsection 4 of the said section, normal tolls in respect of particular freight movements differing from those originally certified at the time of approving the tariffs originally filed and approved under the said section; “(c) To certify to the Minister of Railways and Canals as the amount of reimbursement to the company, the difference between the lower tolls, referred to in clause (a), and the modified normal tolls referred to in clause (b).
“2. Whether the Board’s ruling dated 23rd September, 1932, set out in Appendix “F” is correct.
“3. Whether subsection (2) of section 3 of the Maritime Freight Rates Act, as contained in the Revised Statutes of Canada, 1927, applies to “other companies”, referred to in section 9 of the said Act.
“4. Whether, having regard to the general scope and terms of the said Act, tariffs filed by other companies referred to in section 9 are lawful tariffs until disallowed, notwithstanding that subsection (3) of section 3 is not now expressly referred to in section 9.”
The Maritime Act, by the general declaration of policy in its preamble, left little room for doubt as to the governing purpose of it. There is, besides, a specific declaration in section 8 that the purpose of the Act is to give certain statutory advantages in rates in the “Select Territory”, and that these “statutory rates” are not based upon a principle of fair return to the railways for the carriage service.
The general reduction of 20% primarily affects rates for what are called “preferred movements”, which are, broadly speaking, movements upon the “Eastern Lines” of the Canadian National Railways, that is to say, lines in the Maritime Provinces and in a limited area in Eastern Quebec. Since the declared policy of the statute is to give certain advantages to persons and industries in the region described as the “Select Territory”, it was not within the purview of that policy to confine such advantages to shippers on the Canadian National Railways. Accordingly, by section 9, provision is made enabling other companies operating within the areas affected, to frame and file tariffs “meeting” the “statutory” tariffs. It is not disputed that both before and since the passing of the Act adjustments of freight rates have constantly been necessary in the Select Territory, as in other parts of Canada, to meet changing industrial and traffic conditions. With the establishment of a new industry at a point where no similar industry existed, it is often expedient, to encourage its development, to reduce the rates applicable to the movement inwards of its raw material and outwards of its finished product; again, in order to insure continuance of traffic on its line, a railway company finds it desirable to establish a basis of rates for industries thereon comparable to that enjoyed by competing industries on another line; furthermore, in order to enable shippers, particularly of low priced commodities, to reach more distant markets or to compete with shippers at other sources of supply, it often becomes necessary to accord special rates for such shippers. Another example of adjustments that must take place is furnished by those necessitated by the competition of other transportation agencies, particularly by highway and water.
The general rules governing the practice in fixing freight rates are laid down in the Railway Act (R.S.C., c. 170), under the heading “Traffic, Tolls and Tariffs”—sections 312 to 359 (inclusive). By ss. 328 to 332 (inclusive), tariffs may be issued under three heads, viz., standard, special and competitive. Sections 336 to 341 (inclusive) provide for the issue of joint tariffs where traffic is to pass over two or more lines of railway.
These enactments are so designed as to enable railway companies to adjust and vary their tolls to meet the exigencies arising from alterations in industrial and traffic conditions, and to enable them to compete with other agencies of transport.
It must, of course, be assumed that the Maritime Freight Rates Act was passed in contemplation of the practice founded upon this state of the law which was well known. The C.P.R. Co. and the Dominion Atlantic Co. elected to act under section 9 of the Act, which is in these terms:
9. (1) Other companies owning or operating lines of railway in or extending into the select territory may file with the Board tariffs of tolls respecting freight movements similar to the preferred movements, meeting the statutory rates referred to in section seven of this Act. The Board, subject to all the provisions of the Railway Act respecting tariff of tolls, not inconsistent with this Act, shall approve the tariffs of tolls filed under this section.
(2) The provisions of subsection two of section three and of sections seven and eight of this Act shall apply to the tariffs of tolls filed under this section.
(3) The Board on approving any tariff under this section shall certify the normal tolls which but for this Act would have been effective and shall, in the case of each company, at the end of each calendar year promptly ascertain and certify to the Minister of Railways and Canals the amount of the difference between the tariff tolls and the normal tolls above referred to on all traffic moved by the company during such year under the tariff so approved. The company shall be entitled to payment of the amount of the difference so certified, and the Minister of Railways and Canals shall submit such amount to Parliament if then in session, (or if not, then at the first session following the end of such calendar year) as an item of the estimates of the Department of Railways and Canals.
Subsection 2 of section 3, designated in section 9 (2), is as follows:
2. The Board of Railway Commissioners, hereinafter called the Board, is authorized and directed to
(a) approve such cancellations, and, subject to the provisions of the Railway Act, respecting tariffs of tolls for the carriage of freight, where not inconsistent with this Act, to approve all tariffs of tolls so substituted;
(b) maintain or cause to be maintained such substituted tariffs, subject to all provisions of the Railway Act respecting tariffs of tolls not inconsistent with this Act, on the general rate of level approximately twenty per cent. below the tolls or rates existing on the first day of July, one thousand nine hundred and twenty-seven, while the cost of railway operation in Canada remains approximately the same as at the said date, but the Board may allow the increase or reduction of such tolls or tariffs from time to time to meet increases or reductions, as the case may be, in such cost of operations;
(c) adjust or vary such substituted tolls or rates from time to time as new industrial or traffic conditions arise, but always in conformity with the intent of this Act as expressed in sections seven and eight and other relative sections hereof.
The form of order which the Board adopted and has employed in approving tolls under section 9 is this:
1. The Board Orders that the tolls published in (particulars of tariff), filed by the Company under Section 9 of the Maritime Freight Rates Act be and they are hereby approved subject to the provisions of subsection 2 of section 3 of the said Act.
2. And the Board Hereby Certifies that the normal tolls which but for the said Act would have been effective in lieu of tolls published in the said (same particulars of tariff) approved herein, are as follows:—
(Sgd.) Chief Commissioner, B.R.C.
There is not the least dispute that, in practice, during a period of years, it was considered that both the C.N.R. and the other railways must vary their tariffs from time to time and that the Maritime Act was applicable to the tariffs so varied; and upon this view the Board acted in ascertaining and certifying “normal rates”.
In response to an application of the companies affected for a ruling as to the interpretation to be put upon certain expressions in s. 9, the Board made certain rulings or decisions, set out in its Circular No. 213 (Appendix C), interpreting section 9 of the Act. The general effect of these rulings was to authorize the application, in respect of rate reduction, of the same principles to the Canadian National Railways and to other companies within the “Select Territory”.
Relying on this ruling, it is stated that the Canadian Pacific Railway Company and the Dominion Atlantic Railway Company, as well as other companies, and as to this there is, in point of fact, not the slightest controversy, elected to bring their rates into conformity, in principle, with the “statutory rates” and framed their tariffs accordingly. Later, a question was raised whether the companies to which section 9 is applicable were entitled to reduce rates that had been published under that section, and still retain their right to reimbursement under the terms of its provisions. The Board decided this question in the affirmative.
Relying, again, it is said, on the decision of the Board (and, again, there is no dispute about the fact), these companies, from time to time, filed with the Board, in supposed compliance with section 9, new tariffs effecting reductions in various tolls, as originally filed and approved, and these reduced tolls were approved by the Board.
The Board’s power under section 9 (1) to approve the reduced tolls was not exhausted, it is contended, upon approval of the tariffs setting forth the reductions first made upon the Act becoming effective. The practical working of the scheme of the Act required, in view of considerations already explained, an interpretation of the Board’s powers, under that section, as being continuing powers exercisable from time to time, whenever changed industrial or traffic conditions, in its judgment, might demand or render expedient further adjustments or variations of tolls. Otherwise, it is said, the Act, instead of endowing the shippers of the Maritime Provinces with the benefits it was designed to bestow, must prove an actual hindrance to the industrial and commercial development of the areas within the “Select Territory”. This appears to have been the view accepted by the Board in approving the reductions already alluded to.
It should, perhaps, be observed that apart from the standard rates, which constitute the maxima of rates that may in any case be charged, the only rates available be- tween many points are the so-called class rates payable in respect of the various classes of commodities specified in the Canadian Freight Classification. Now, when a new industry is established at a point where no such industry previously existed, and there are flourishing similar industries at other places, with which the new establishment has to compete and which are in the enjoyment of lower rates than the class rates, the rates for the new establishment must, as a condition of its existence, be put upon a basis below the class rates, comparable to that of the rates enjoyed by the competing establishments. This is but one example of the numerous types of cases in which rate reductions become necessary and are constantly taking place.
In June, 1927, when the initial reduction of 20% went into operation, the only rates (other than standard rates) then in effect in a large proportion of cases were these so-called class rates, while in other cases “commodity rates” were in effect, calculated, for various reasons, upon a lower basis. These rates were reduced approximately 20%. Almost immediately new conditions arose which called for further reductions, and the Board had to then deal with the question above indicated, which was decided, as already observed, in the manner contended for by the railways.
A brief commentary upon the examples given in paragraph ten of the case will be useful:
Heading 1 (a). This is the case of a new plant brought into competition with plants at other points. Successful operation would have been, it appears, commercially impossible if the “class” rates, even as originally reduced under the Act, had been payable; a further reduction was sanctioned as necessary.
(b) The starch manufacturer, it is explained, could not afford to pay on his raw material the ordinary rates paid on potatoes for domestic consumption, even as reduced under the Maritime Act, and a further reduction was required.
Heading 2. These are cases of what, it appears, is sometimes called “market competition.” That is to say, the railway finds it necessary to reduce its rates in order to put shippers on its line in a position to compete with shippers on another line (in this case the Canadian National Railways) in common markets. This expansion of business would not have been possible if the further reductions had not been made.
Heading 3 (a). In this case a prospective purchaser developed after the first reduction had been put into effect. The commodity was of a low grade, and the traffic could not, it is explained, bear the class rate, even as reduced under the Act, so a further reduction was necessary to enable the shippers to reach this additional market.
(b) This is another case of market competition, though the rival shipper was overseas. It also illustrates the necessity of a further reduction to enable the shipper of this relatively low grade commodity to reach an additional market.
Heading 4. These examples are said to illustrate one of the commonest conditions with which the railway companies are faced to-day, viz., the necessity of reducing their rates to preserve their traffic against other competitive agencies of transportation. In the examples given are the cases of highway competition, water competition and combined water and highway competition. These competitive conditions change almost from day to day and demand frequent readjustments of rates.
From these illustrations it is argued that any construction of the Act which would prevent the railway companies affected by section 9 from moulding their tariffs to meet these constantly changing conditions, and while leaving the Canadian National Railways free to reduce its tariffs, would constitute discrimination between persons and industries served by the different systems; a result obviously not within the scheme of the Act as designed. The intent of the statute which aims at relief for shippers in the whole of the “Select Territory” would be largely frustrated by permitting such discrimination.
The Board has until recent months given full operation to this interpretation of the section. Cases in which further reductions were made were approved by orders of the Board specially issued in the individual case, and in each of these orders the Board certified the normal rates that would be applicable to such case.
We have come to the conclusion that the practice followed by these companies with the approval of the Board, as indicated in the examples given, is in accord with the proper construction of section 9. In view of the conditions with which the Act deals, the better construction of the section would appear to be that the Board’s power to certify normal tolls was not exhausted with the first certification. (Boon v. Howard[1]; Reg. v. Clarence[2]; The Duke of Buccleugh[3].)
The practice which has been followed is not, we think, inconsistent with the provisions of subsection 4 of section 9, which contemplates a general revision of rates, brought about by changes in wages or other costs of operation in the territory at large. The practice now under review deals with individual rates which, as already stated, must be subject from time to time to adjustment to enable individual shippers served by the railways concerned to hold their own as against shippers served by other lines or other transport agencies. We are satisfied that regional discrimination could not have been contemplated.
It will be convenient now to summarize the grounds we have indicated in this rather lengthy discussion, upon which we think the interpretation of the Maritime Act advanced by the appellants ought to be accepted.
The key to that interpretation seems to be given by sections 7 and 8. By force of section 7, the tariffs of tolls “provided for” in the Act are “to be deemed statutory rates” and are “to be deemed” to be rates not “based on any principle of fair return to the railway for services rendered in the carriage of traffic Accordingly, these rates must not be taken into account in determining the “reasonableness” of “other rates” By section 8, the “purpose of this Act” is explicitly declared to be the purpose of “giving certain statutory advantages” in respect of charges for railway transport to the “persons and industries” in the select territory; and the Board is expressly prohibited from approving or allowing any tariffs which may “destroy or prejudicially affect” such advantages “in favour of persons or industries located elsewhere than in such select territory”.
Shippers, in Nova Scotia, of apples, for example, destined for Montreal, are to enjoy the reduced rates which are to go into effect immediately on the passing of the statute (rates 20% below the existing rates) ; and to the extent of this reduction the Board is required to maintain a “discrimination between” (Railway Act, s. 314) the select territory and other localities where apples are produced and shipped—the apple districts of Ontario, for example, and British Columbia.
There can, we conceive, be no question as to the scope of sections 7 and 8. They apply to all rates “specified in the tariffs of tolls in this Act provided for”. They apply to the substituted tariffs which are to be “prepared and submitted to the Board” immediately upon the passing of the Act. They apply also, and this it is important to emphasize, to these tariffs, as varied and adjusted (under subs. 2 (c) of s. 3) “as new industrial or traffic conditions arise”. By the explicit terms of s. 9 (2) they apply to the tariff tolls to be approved under that section. In performing the duty of the effecting or sanctioning of such variations and adjustments, the Board is required to act “always in conformity with the intent of the Act as expressed in sections 7 and 8”. The “intent of the Act as expressed” in these sections, which is to govern the Board in effecting or sanctioning such variations and adjustments, is that persons and industries in the select territory, as to the “preferred movements” are to enjoy a statutory preference of 20% in respect of railway rates over persons and industries “located” elsewhere. As already observed, we think the phrase “the rates specified in the tariffs of tolls in this Act provided for” must be read as including the variations and adjustments brought into force under section 3 (2c); and that the effect of the words of this last mentioned enactment “always in conformity wit