British Columbia (Attorney General) v. Canada (Attorney General); An Act respecting the Vancouver Island Railway (Re)

British Columbia (Attorney General) v. Canada (Attorney General); An Act respecting the Vancouver Island Railway (Re)
Collection
Supreme Court Judgments
Date
1994-05-05
Report
[1994] 2 SCR 41
Case number
22758
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
British Columbia
Subjects
Constitutional law
Statutes
Transportation
Notes
SCC Case Information: 22758
Decision Content
British Columbia (Attorney General) v. Canada (Attorney General); An Act respecting the Vancouver Island Railway (Re), [1994] 2 S.C.R. 41
The Attorney General of Canada Appellant
v.
The Attorney General of British Columbia Respondent
Indexed as: British Columbia (Attorney General) v. Canada (Attorney General); An Act respecting the Vancouver Island Railway (Re)
File No.: 22758.
1993: December 2; 1994: May 5.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the court of appeal for british columbia
Constitutional law ‑‑ British Columbia Terms of Union ‑‑ Vancouver Island railway ‑‑ Whether Canada owes British Columbia constitutional obligation to ensure operation of train service between Victoria and Nanaimo ‑‑ British Columbia Terms of Union, R.S.C., 1985, App. II, No. 10, Term 11 ‑‑ An Act respecting the Vancouver Island Railway, the Esquimalt Graving Dock, and certain Railway Lands of the Province of British Columbia, granted to the Dominion, S.C. 1884, c. 6, preamble, schedule ‑‑ An Act relating to the Island Railway, the Graving Dock, and Railway Lands of the Province, S.B.C. 1884, c. 14, preamble.
Railways ‑‑ Discontinuance of passenger‑train services ‑‑ Vancouver Island railway ‑‑ Whether Canada has authority under Railway Act or National Transportation Act, 1987 to discontinue passenger‑train service between Victoria and Nanaimo ‑‑ Whether special federal legislation necessary ‑‑ Railway Act, R.S.C., 1985, c. R‑3, ss. 3(1)(b), 7 ‑‑ National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), s. 64 ‑‑ An Act respecting the Vancouver Island Railway, the Esquimalt Graving Dock, and certain Railway Lands of the Province of British Columbia, granted to the Dominion, S.C. 1884, c. 6, s. 2, schedule.
Statutes ‑‑ Agreement in schedule ‑‑ Statutory ratification and confirmation of scheduled agreement ‑‑ Whether agreement incorporated into statute ‑‑ An Act respecting the Vancouver Island Railway, the Esquimalt Graving Dock, and certain Railway Lands of the Province of British Columbia, granted to the Dominion, S.C. 1884, c. 6, s. 2, schedule.
Railways ‑‑ Discontinuance of passenger‑train services ‑‑ Federal agency order for non‑discontinuance of passenger‑train service not reconsidered within five years as prescribed by railway legislation ‑‑ Whether Governor in Council had jurisdiction under s. 64 of National Transportation Act, 1987 to vary order after five‑year period ‑‑ National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), s. 64 ‑‑ Railway Act, R.S.C., 1985, c. R‑3, s. 268(2).
When British Columbia joined Confederation in 1871, Canada agreed, pursuant to Term 11 of the British Columbia Terms of Union, to commence within two years, construction of a railway connecting the "seaboard of British Columbia with the railway system of Canada" and to complete the railway within ten years. In return, British Columbia agreed to convey to Canada a contiguous strip of land on Vancouver Island and on the mainland to secure the development of the railway. Delays in the construction of the railway led to negotiations and to a settlement in 1883, which was in turn ratified and embodied in both federal ("Dominion Act") and provincial ("Provincial Act") legislation. Under the terms of the 1883 settlement, British Columbia confirmed and renewed the grant of contiguous land along the Island rail corridor. In turn, Canada agreed to contribute $750,000 toward the cost of constructing the Esquimalt to Nanaimo line and to convey the granted lands to the contractors that would build the line. Canada then entered into a contract with the Dunsmuir railway syndicate, which agreed to construct the railway line and "continuously and in good faith operate the same". The Dunsmuir Agreement was ratified by, and attached as a schedule to, the Dominion Act. The line from Esquimalt to Nanaimo was completed in 1886 and extended to Victoria. The Dunsmuir Agreement was performed by the E & N Railway Co., which was purchased by the CPR in 1905. In the same year, Parliament passed a statute declaring the railway to be a work for the general advantage of Canada ("1905 Declaratory Act"). Anticipating the extension of the railway line to Courtenay, British Columbia passed a statute in 1912 exempting the extension lands from taxes. In the scheduled agreement to the 1912 Act, the E & N Railway Co. agreed to construct and "continuously operate" the extension. Pursuant to s. 2 of the 1912 Act, the provisions of the schedule formed an integral part of the Act. The extension was completed in 1914.
Following an application by the CPR, the Canadian Transport Commission ("CTC") declared in April 1984 that the Victoria to Courtenay passenger‑train service was uneconomic but directed that service on the line not be discontinued. Pursuant to s. 64 of the National Transportation Act, 1987, the Governor in Council varied the CTC order in October 1989, ordering the termination of the Victoria‑Courtenay passenger‑train service. Upon a petition by the province, the British Columbia Supreme Court granted a declaration that Canada has a perpetual constitutional obligation to maintain the rail service on the Victoria‑Nanaimo portion of the railway. The Nanaimo‑Courtenay portion, however, was expressly excluded from the declaration. In 1990, the Governor in Council revoked part of the 1989 Order‑in‑Council and amended the CTC order again, ordering the termination of the passenger‑train service only between Nanaimo and Courtenay. In a second petition, the province challenged the validity of the 1990 Order‑in‑Council. The British Columbia Supreme Court declared that it was made without jurisdiction by reason of the failure of the National Transportation Agency ("NTA"), the CTC's successor, to conduct a review of the CTC order within five years, as contemplated by s. 268(2) of the Railway Act. The court found that the effect of a failure to review within the five‑year period was to terminate the CPR's application to discontinue the service. After April 1989, there was therefore no order in existence upon which the jurisdiction of the Governor in Council under s. 64(1) of the National Transportation Act, 1987 could be founded. Both petition judgments were appealed. The Court of Appeal upheld the constitutional declaration in effect, although a continuing rather than a perpetual obligation on the part of Canada to ensure operation of rail service was recognized. The court also held that the 1990 Order‑in‑Council was ultra vires the Governor in Council.
Held (Lamer C.J. and McLachlin J. dissenting): The appeal should be allowed.
(1) Constitutional Issue
Canada does not owe a constitutional obligation to British Columbia in respect of the operation of the Victoria to Nanaimo Vancouver Island rail line. Although constitutional terms must be capable of growth, constitutional interpretation must nonetheless begin with the language of the constitutional law or provision in question. The wording of Term 11 is clear on its face and imposed only an obligation of construction on Canada, not an obligation of operation. Since there is no suggestion in the language of Term 11 that Canada has a continuing constitutional obligation to operate the Island rail line, British Columbia cannot assert that such an obligation, located in another instrument which is not itself constitutional, somehow attained constitutional status. Indeed, while the 1883 arrangements were an important way of implementing Term 11 and were the culmination of a nation‑building effort, such arrangements could not create obligations of a constitutional kind unless those obligations were already specifically envisioned by the language of Term 11. To assert otherwise is to suggest that British Columbia and Canada, acting alone in 1883, could agree upon, and give effect to, a constitutional amendment. Prior to 1949, constitutional amendments required the participation of the Imperial Parliament, since the Constitution Act, 1867 was an Act of that Parliament. Further, not all acts of nation building attain constitutional status. The 1883 arrangements resolved a constitutional dispute, but that resolution was part constitutional, part political. The principal constitutional part was the implementation of Term 11 obligations through the resolution of land‑grant issues. The political part was anything not specifically contemplated by the language of Term 11. Accordingly, if an obligation on behalf of Canada to operate the Vancouver Island rail line arose in 1883, that obligation resulted only from a political compromise intended to resolve a constitutional impasse. Finally, the case law in no way interferes with the conclusion that Canada has no constitutional obligation in respect of the operation of the Victoria to Nanaimo Vancouver Island rail line.
(2) Statutory Interpretation Issue
Per La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.: The Dunsmuir Agreement, which contains an undertaking to "continuously" operate the railway, was not given statutory force as part of the Dominion Act, a federal "special Act" which prevails over inconsistent provisions in the Railway Act by virtue of s. 3(1)(b) of the latter Act. In order to make an agreement scheduled to an Act a part of the Act itself, it is not sufficient to find words in the statute merely confirming and validating the agreement; rather, words in the statute must be found which demonstrate that the agreement was intended to have statutory force. All the tools of statutory interpretation can be called in aid to determine whether incorporation is intended. Here, the Dominion Act simply confirmed and ratified the Dunsmuir Agreement and did nothing more. Further, the fact that Parliament passed an Act in 1886 to alter curve radius requirements in the Agreement does not indicate that the Agreement was given statutory force by the Dominion Act. The 1886 Act was necessary to continue the Governor in Council's supervisory authority given by s. 2 of the Dominion Act over the amended version of the Agreement. Additionally, in establishing that curves of a particular radius could be accepted by the Governor in Council with the consent of the province, the 1886 Act may have had the unique purpose of achieving a form of federal/provincial cooperation. Finally, s. 4 of the 1905 Declaratory Act, which specifically maintained certain rights and liabilities arising out of the Provincial Act, did not operate to preserve any operational obligations apparent in the latter Act.
Although the scheduled agreement to the 1912 Act ‑‑ a provincial "special Act" ‑‑ was "apparently" given statutory force by s. 2 of that Act, the "continuous operation" provision contained in the schedule did not take effect notwithstanding the Railway Act by virtue of s. 7 of the latter Act. In 1912, British Columbia was not competent to legislate in respect of the Island rail line's operation. Having obtained jurisdiction over the line by virtue of the 1905 Declaratory Act, Canada had the exclusive ability to legislate in such a fashion. British Columbia was competent to exact a contractual promise of continuous operation from the E & N Railway Co. and this promise could receive statutory authorization in the 1912 Act, but the promise could not be elevated to the status of a statutory obligation by that Act. It is trite law that the Railway Act definition of "special Acts" encompasses only intra vires provisions of such Acts.
Since the "special Act" exemption in the Railway Act has no application in this case, Parliament need not enact special legislation to order the discontinuance of passenger‑train service on the Vancouver Island railway between Victoria and Nanaimo; reliance may instead be placed on the termination provisions of the Railway Act or s. 64 of the National Transportation Act, 1987.
Per Lamer C.J. (dissenting): When seeking to ascertain the meaning of a particular ratifying provision, one should not differentiate between mere "validation" and "incorporation into a statute" simply by looking at the words of the legislative provision which refers to the contract. The overall context and the aims pursued by the legislator must be taken into account. Here, the general context which led to the Dunsmuir Agreement and the nature of the duties contained therein strongly suggest that the provisions of the Agreement were given statutory force by the Dominion Act and, therefore, prevail over the inconsistent provisions of the Railway Act. First, the duty to "continuously" operate the railway found in the Agreement is more in the nature of a public duty, in the sense that it is owed to the public in general and not only to the other party to the contract. The public nature of the duty is the indication of an intent to incorporate the Agreement into the Dominion Act and thus to give it statutory force. Second, where statutes are enacted to give effect to a constitutional settlement, courts should not give them a narrow interpretation allowing one party to modify unilaterally the terms of the settlement. To do so would foster distrust between governments. It is clear that the Dunsmuir Agreement was part of the constitutional settlement between British Columbia and Canada. While it is a document distinct from the federal‑provincial agreement, its provisions are so intertwined with the provisions of the latter that it should not be regarded as some sort of accessory agreement between Canada and a private company. Finally, the fact that Parliament chose in 1886 to pass an Act to modify the Dunsmuir Agreement further demonstrates that it was of the view that the Agreement had been incorporated into the Dominion Act.
(3) Administrative Issue
Per La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, Iacobucci and Major JJ.: The Governor in Council had the authority under s. 64 of the National Transportation Act, 1987 to vary the CTC order, despite the fact that no review occurred within five years, as contemplated by s. 268(2) of the Railway Act. The Governor in Council has a vast discretion under s. 64 to vary a CTC or NTA order and the s. 64 power can be exercised at any time if such an order exists. Here, there was a valid and subsisting order at the time of the 1990 Order‑in‑Council. An order not to discontinue service made pursuant to s. 268(2) does not lapse in the event that a review of the application for discontinuance does not occur within five years. Under s. 268(2), the NTA is not required to reconsider its continuation order within five years; the NTA is only required to reconsider the application for discontinuance which originally led to that order. There is thus nothing in s. 268(2) to suggest that the status of an NTA order should change if a review does not take place within five years. The silence of the Railway Act with respect to the term of the order suggests that the order will persist as issued until varied or set aside. The CTC order is consistent with this interpretation of s. 268(2). It was not limited in time, nor do its terms suggest that failure to conduct a review of the application to discontinue will affect its persistence. These comments are sufficient to dispose of the third issue.
Alternatively, the word "shall" in s. 268(2) of the Railway Act is directory and not mandatory in its effect. There are significant adverse consequences associated with finding that s. 268(2) is mandatory in respect of applications to discontinue. If, at the end of a five‑year period, such an application automatically expired, a straightforward reading of the Railway Act leads to the conclusion that the railway company would be obliged by law to continue to operate the uneconomic service, but would lose the benefit of the subsidy which Parliament intended it to receive. To demand continued operation in the absence of otherwise available subsidy support is to deny the economic reality of the situation. The "mandatory" label is thus associated with an eventuality to be avoided. That eventuality is seriously inconvenient. Hardship would result from the operation of the statute itself and can be identified without independent evidence. Mandamus is not available to compel the NTA to reconsider the application to discontinue within the five‑year period. Until this period expires, the s. 268(2) prescription has not been contravened.
Per Lamer C.J. and McLachlin J. (dissenting): The 1990 Order‑in‑Council, made pursuant to s. 64 of the National Transportation Act, 1987, was ultra vires by reason of the NTA's failure to reconsider the CTC order within the five‑year period prescribed by s. 268(2) of the Railway Act. Under s. 268(2), it is not possible to sever the application for discontinuance of an uneconomic passenger‑train service from the order which follows and to devote the s. 268(2) reconsideration only to the former. To do so would be inconsistent with the scheme of the Railway Act and the wording of the section. It would also render the process of reconsideration meaningless since the only purpose of this process is to reconsider the decision that the uneconomic railway should continue to operate in light of current circumstances. In so far as one does so, one is considering the order. The CTC order was thus subject to a reconsideration within five years. The duty of reconsideration under s. 268(2) is mandatory and the NTA's failure to conduct a reconsideration within the time allotted by the Act has rendered the CTC order null and void. This result does not work serious general inconvenience to the railway company. The obligation to run the railway would continue, as it did before the railway's application for discontinuance. No case has been made that the subsidies that compensate the railway company for operating an uneconomic service would be affected, so hardship on that ground cannot be claimed. It was also open to the railway company to move to have the NTA reconsider the application within the five‑year period or to bring a new application upon the expiry of that period.
Cases Cited
By Iacobucci J.
Considered: Attorney‑General for British Columbia v. Esquimalt and Nanaimo Railway Co., [1950] A.C. 87, rev'g [1948] S.C.R. 403, rev'g B.C.C.A., sub nom. Reference re Esquimalt and Nanaimo Railway, June 10, 1947, published in B.C. Gazette, June 19, 1947, at 1885; Attorney‑General of British Columbia v. Attorney‑General of Canada (1889), 14 App. Cas. 295, rev'g (1887), 14 S.C.R. 345; disapproved: Melville (City of) v. Attorney General of Canada, [1983] 2 F.C. 123; referred to: The Queen in Right of Canada v. The Queen in Right of Prince Edward Island, [1978] 1 F.C. 533; Esquimalt and Nanaimo Railway Co. v. Treat (1919), 48 D.L.R. 139; Edwards v. Attorney‑General for Canada, [1930] A.C. 124; Attorney‑General of Ontario v. Mercer (1883), 8 App. Cas. 767; Prince Edward Island (Minister of Transportation and Public Works) v. Canadian National Railway Co., [1991] 1 F.C. 129; Reference re Authority of Parliament in relation to the Upper House, [1980] 1 S.C.R. 54; Reference re Resolution to amend the Constitution, [1981] 1 S.C.R. 753; McGregor v. Esquimalt and Nanaimo Railway Co., [1907] A.C. 462; Burrard Power Co. v. The King, [1911] A.C. 87; Ottawa Electric Railway Co. v. Corporation of the City of Ottawa, [1945] S.C.R. 105; Winnipeg v. Winnipeg Electric Railway Co., [1921] 2 W.W.R. 282; Cree Regional Authority v. Canada (Federal Administrator), [1991] 3 F.C. 533; R. v. Furtney, [1991] 3 S.C.R. 89; Kelner v. Baxter (1866), L.R. 2 C.P. 174; Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735; Jasper Park Chamber of Commerce v. Governor General in Council, [1983] 2 F.C. 98; Montreal Street Railway Co. v. Normandin, [1917] A.C. 170; Reference re Manitoba Language Rights, [1985] 1 S.C.R. 721; R. ex rel. Anderson v. Buchanan (1909), 44 N.S.R. 112; Karavos v. City of Toronto, [1948] O.W.N. 17; Williamson v. Fisher, [1934] O.W.N. 543; R. ex rel. Canadian Wirevision Ltd. v. New Westminster (City) (1964), 50 W.W.R. 465; Pacific Investments Ltd. v. Delano (1983), 57 N.S.R. (2d) 427 (S.C.T.D.), aff'd (1983), 62 N.S.R. (2d) 364 (S.C.A.D.).
By McLachlin J. (dissenting)
Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735; Montreal Street Railway Co. v. Normandin, [1917] A.C. 170; Melville (City of) v. Attorney General of Canada, [1982] 2 F.C. 3 (T.D.), rev'd [1983] 2 F.C. 123 (C.A.); Jasper Park Chamber of Commerce v. Governor General in Council, [1983] 2 F.C. 98.
By Lamer C.J. (dissenting)
Ottawa Electric Railway Co. v. Corporation of the City of Ottawa, [1945] S.C.R. 105; Caledonian Railway Co. v. Greenock and Wemyss Bay Railway Co. (1874), L.R. 2 Sc. & Div. 347; Sankey v. Whitlam (1978), 142 C.L.R. 1; Cree Regional Authority v. Canada (Federal Administrator), [1991] 3 F.C. 533; Manchester Ship Canal Co. v. Manchester Racecourse Co., [1900] 2 Ch. 352.
Statutes Cited
Act relating to the Island Railway, the Graving Dock, and Railway Lands of the Province, S.B.C. 1883, c. 14 [rep. S.B.C. 1884, c. 14], preamble, clause (e.).
Act relating to the Island Railway, the Graving Dock, and Railway Lands of the Province, S.B.C. 1884, c. 14, preamble, clauses (a.), (b.), (c.), (d.), (e.), (k.), ss. 1, 7, 8, 9, 17, 22, 27.
Act respecting the Esquimalt and Nanaimo Railway Company, S.C. 1905, c. 90, ss. 1, 4.
Act respecting the Railway from Esquimalt to Nanaimo, in British Columbia, S.C. 1886, c. 15, s. 1.
Act respecting the Vancouver Island Railway, the Esquimalt Graving Dock, and certain Railway Lands of the Province of British Columbia, granted to the Dominion, S.C. 1884, c. 6, preamble, clauses (a), (b), (c), (d), (e), (k), ss. 1, 2, 3, 4, 5, 6, 8, 9, 13, Schedule, clauses 3 and 9.
Act to repeal the "Esquimalt and Nanaimo Railway Act, 1875", S.B.C. 1882, c. 16.
British Columbia Terms of Union (reprinted in R.S.C., 1985, App. II, No. 10), Term 11.
British North America (No. 2) Act, 1949 (U.K.), 13 Geo. 6, c. 81 (reprinted in R.S.C., 1985, App. II, No. 33) [rep. Constitution Act, 1982, s. 53(1) ].
Canada Act 1982 (U.K.), 1982, c. 11, Schedule B.
Constitution Act, 1867, ss. 92(10) (a), 146 .
Constitution Act, 1930 (U.K.), 20 & 21 Geo. 5, c. 26 (reprinted in R.S.C., 1985, App. II, No. 26), s. 1, Schedule, Item (4).
Constitution Act, 1982, ss. 43 , 52(2) , 53(1) , Schedule, Items 4, 6, 22.
Esquimalt and Nanaimo Railway Company's Land Grant Tax Exemption Ratification Act, S.B.C. 1912, c. 33, s. 2, Schedule, clause 3.
National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), s. 64.
National Transportation Act, 1987, S.C. 1987, c. 34, s. 64.
Prince Edward Island Terms of Union (reprinted in R.S.C., 1985, App. II, No. 12).
Railway Act, R.S.C. 1970, c. R‑2.
Railway Act, R.S.C., 1985, c. R‑3, ss. 2(1) "Special Act", 3(1), 7, 265, 266, 267, 268, 269, 270(1) [am. c. 28 (3rd Supp.), s. 324], (2).
Railway Act, 1903, S.C. 1903, c. 58, s. 6.
Authors Cited
British Columbia. Legislative Assembly. Papers in connection with the construction of the Canadian Pacific Railway between the Dominion, Imperial and Provincial governments [Carnarvon Papers]. Victoria, B.C.: Legislative Assembly, 1880, 198.
Hogg, Peter W. Constitutional Law of Canada, 3rd ed. Scarborough, Ont.: Carswell, 1992.
La Forest, Gérard Vincent. Natural Resources and Public Property under the Canadian Constitution. Toronto: University of Toronto Press, 1969.
La Forest, Gérard Vincent. The Allocation of Taxing Power Under the Canadian Constitution, 2nd ed. Toronto: Canadian Tax Foundation, 1981.
Romaniuk, Bohdan S., and Hudson N. Janisch. "Competition in Telecommunications: Who Polices the Transition" (1986), 18 Ottawa L. Rev. 561.
Wade, William, Sir. Administrative Law, 6th ed. Oxford: Clarendon Press, 1988.
APPEAL from a judgment of the British Columbia Court of Appeal (1991), 59 B.C.L.R. (2d) 280, 84 D.L.R. (4th) 385, 2 B.C.A.C. 246, 5 W.A.C. 246, [1992] 1 W.W.R. 114, allowing in part an appeal from judgments of Esson C.J.S.C. declaring that Canada has a perpetual obligation to maintain rail service between Victoria and Nanaimo (1989), 42 B.C.L.R. (2d) 339, 65 D.L.R. (4th) 494, [1990] 3 W.W.R. 61, and declaring that the order in council directing that passenger service be discontinued on the E & N Railway between Nanaimo and Courtenay was ultra vires the Governor in Council (1990), 59 B.C.L.R. (2d) 273, 69 D.L.R. (4th) 217. Appeal allowed, Lamer C.J. and McLachlin J. dissenting.
Eric A. Bowie, Q.C., Lewis E. Levy, Q.C., and John R. Haig, Q.C., for the appellant.
George H. Copley and Patrick O'Rourke, for the respondent.
The following are the reasons delivered by
Lamer C.J. (dissenting) -- I have read the reasons of my colleagues, Mr. Justice Iacobucci and Madam Justice McLachlin. I am in agreement with the reasons of Iacobucci J. as to the constitutional law issue. However, on the administrative law issue, I respectfully disagree with him and would adopt the reasons of McLachlin J. In addition, and with respect, I cannot agree with either of them on the statutory interpretation issue. For the reasons that follow, I believe that the provisions of the Dunsmuir Agreement were given statutory force by the Act respecting the Vancouver Island Railway, the Esquimalt Graving Dock, and certain Railway Lands of the Province of British Columbia, granted to the Dominion, S.C. 1884, c. 6 ("Dominion Act"). Therefore, they prevail over the inconsistent provisions of the present Railway Act, R.S.C., 1985, c. R-3. I come to this conclusion not by a strict analysis of the words of the Dominion Act, but by examining the general context which led to the Dunsmuir Agreement and the nature of the duties contained therein.
Legislative Approval of Contracts
A government may enter into a contract and be bound by its terms, unless the contract is inconsistent with the terms of a statute or vitiated by the principles of contract law. To remove these constraints on the Crown's ability to contract, a legislature may give "legislative approval" to the terms of a particular contract. In the present case, it is not necessary to decide whether such legislative approval was required, because it was in fact given by s. 2 of the Dominion Act. As a result, we need only be concerned with the effects of the legislative approval given to the Dunsmuir Agreement.
There is no fixed formula for legislative approval of contracts. Sometimes, words such as "ratified", "confirmed", "validated", "given effect to" are used. In some cases, the statute states that the parties shall have the rights mentioned in the contract, or that they shall perform the duties set out in it. In other cases, there is specific language such as "the contract shall have the force of law". When faced with such "ratifying Acts", courts have distinguished between agreements which were given statutory force (i.e., were incorporated into a statute), and those which were not given such force. The validity of contracts which are simply approved (i.e., which are not given statutory force) cannot be challenged for lack of authority, lack of privity, and other reasons which might render the contracts void. "Incorporated" contracts have the additional feature of being assimilated to statutes. For instance, they may create duties for third parties that possibly cannot be created by contracts which are simply validated by a legislature, even though I need not decide this issue now. This distinction is generally accepted in the Canadian, English and Australian jurisprudence: Ottawa Electric Railway Co. v. Corporation of the City of Ottawa, [1945] S.C.R. 105; Caledonian Railway Co. v. Greenock and Wemyss Bay Railway Co. (1874), L.R. 2 Sc. & Div. 347 (H.L.); and Sankey v. Whitlam (1978), 142 C.L.R. 1, at p. 77.
Although this distinction between simple validation and incorporation into a statute may be useful to help determine what the effects of any given statutory approval scheme are, it may give rise to confusion if it is used as a device by which to bypass an analysis of Parliament's intent in approving a particular contract. Differentiating between "mere validation" and "incorporation into the statute" should not be done by simply looking at the words of the legislative provision which refers to the contract. The overall context and the aims pursued by Parliament may, and indeed must, be taken into account when one seeks to ascertain the meaning of a particular ratifying provision. This was the approach of the Federal Court of Appeal in Cree Regional Authority v. Canada (Federal Administrator), [1991] 3 F.C. 533. Indeed, the narrow issue of whether the Dunsmuir Agreement was actually incorporated or not in the statute must not be allowed to obscure the real question, i.e., whether Parliament intended to make the 1883-1884 constitutional settlement subject to unilateral modification by the federal executive acting alone. In my opinion, Parliament had no such intention. I have come to this conclusion upon examining the historical context of the Dominion Act.
The Context of the 1884 Dominion Act
Two elements strike me as being most important in deciding whether Parliament intended to give statutory force to the Dunsmuir Agreement in the Dominion Act.
Firstly, the duty to operate continuously which was imposed upon the Esquimalt & Nanaimo Railway Company in the Dunsmuir Agreement was not a duty owed simply to the federal government with which there was privity of contract. It was more in the nature of a public duty, benefitting all British Columbians and other potential users of the railway. Generally speaking, contracts create duties between the parties to them, while legislation creates duties for categories of persons who have not consented to its enactment. When a statutorily approved contract contains duties of such a public nature, in the sense that they are owed to the public in general and not only to the other party to the contract, it may be inferred that Parliament intended to give statutory force to these promises by incorporating the agreement into the statute, and not that it intended merely to validate the contract. For instance, in Manchester Ship Canal Co. v. Manchester Racecourse Co., [1900] 2 Ch. 352, Farwell J., in concluding that a certain agreement appended to a statute had been given statutory force, noted, at p. 362:
The parties might waive the agreement between themselves for their own benefit. They could not waive the statutory duty imposed upon them, if it were a duty imposed for the benefit of the public at large.
Similarly, the James Bay Agreement, which was held to have been incorporated in federal and provincial statutes in Cree Regional Authority, supra, contains many public duties which are not necessarily owed to the signatories of the Agreement, but rather are owed to members of the aboriginal communities or to the public at large. The public nature of the duties is surely an indication of an intent to incorporate the Agreement into the Act and thus, to give it statutory force.
Secondly, it must be remembered that the Dominion Act was part of the settlement of a constitutional dispute between British Columbia and the federal government. The different constituent parts of the settlement may not themselves have constitutional force. Indeed, the two governments chose not to request a modification to the British Columbia Terms of Union (reprinted in R.S.C., 1985, App. II, No. 10) from the Imperial Parliament. Nevertheless, constitutional settlements should be construed as being as certain and fixed as possible. In cases where statutes were enacted to give effect to a constitutional settlement, courts should not give them a narrow interpretation allowing one party to unilaterally modify the terms of the settlement. To do so would foster distrust between governments.
In my view, it is clear that the Dunsmuir Agreement was part of the 1883-1884 constitutional settlement between British Columbia and the federal government. While it is a document distinct from the federal-provincial agreement, its provisions are so intertwined with the provisions of the latter that we should not consider it as some sort of accessory agreement between the federal government and a private company.
I also draw comfort from the fact that when the Dunsmuir Agreement was modified to allow the contractor to build curves sharper than expected in the railway line, an Act of Parliament was passed to effect the change: An Act respecting the Railway from Esquimalt to Nanaimo, in British Columbia, S.C. 1886, c. 15 ("Curve Act"). If the Agreement had not been given statutory authority, it could have been modified simply by agreement between the parties. The fact that Parliament chose to enact the Curve Act is a strong indication that it felt that such an enactment was required because the Dunsmuir Agreement had been incorporated into the Dominion Act. Also, I would note that the Curve Act refers to the initial curve requirements as "the requirements of the said Act forty-seventh Victoria, chapter six", even though these requirements were found in the Dunsmuir Agreement and not in the Act itself. This further demonstrates that Parliament was of the view that the Dunsmuir Agreement had been incorporated into the Dominion Act.
While of the view that the Dunsmuir Agreement had statutory force, the Court of Appeal did not find the Curve Act helpful in coming to that conclusion. The court accepted the proposition put forward by the Attorney General of Canada that the Curve Act was only intended to continue the "supervisory authority" of the federal government over the construction of the railway, such authority being valid only with respect to the original agreement, and not with respect to the amended agreement. I cannot accept this explanation. If the Dunsmuir Agreement had not been incorporated in the Dominion Act, it remained a contract which could have been modified by the consent of the parties. The "supervisory authority" of the federal government would have flowed from the terms of the Agreement and not from the Act. Thus, it would have been unnecessary to ask Parliament to extend this "authority". In fact, the reasoning of the Court of Appeal pre-supposes that the "supervisory authority" comes from the Act and not only from the Agreement. This, in turn, can only be true if the Agreement is incorporated in the Act, because the Act itself does not expressly mention such authority. In the end, this line of reasoning is contradictory. In my view, we cannot avoid the conclusion that the framers of the Curve Act believed that the Dunsmuir Agreement had statutory force.
The appellant urged that a contrary intent be inferred from the fact that some, but not all, provisions of the Dunsmuir Agreement are repeated in the Dominion Act. Only those provisions which are repeated, it argued, may have received statutory force. With respect, I do not find this argument convincing. One can speculate as to other reasons why the drafters may have included these provisions. For instance, Parliament may have wanted to make it completely clear that it approved the transfer of the funds mentioned in the Agreement (ss. 3 and 13). Also, it may have been felt that a specific provision was necessary to give effect to the customs duties exemption (s. 8). I note that a similar argument to the one advanced by the appellant here was put forward by the provincial government in Cree Regional Authority, supra, and was rejected by the Federal Court of Appeal in that case.
In the result, I find that the Dunsmuir Agreement has statutory force and that it prevails over s. 268 of the Railway Act.
For the foregoing reasons, I would dismiss the appeal.
The judgment of La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, Iacobucci and Major JJ. was delivered by
Iacobucci J. -- There are two basic questions to be answered in this appeal. Can the federal government, acting alone, constitutionally compel the termination of passenger rail services on Vancouver Island? If termination can be so achieved, how must it be achieved?
I. Facts
The history which forms the broader context of the present dispute has been impressively surveyed in several judgments. These include the per curiam decision of the British Columbia Court of Appeal in this case: British Columbia (Attorney General) v. Canada (Attorney General) (1991), 59 B.C.L.R. (2d) 280. Additionally, there is the decision of this Court per Locke J., and of the British Columbia Court of Appeal per O'Halloran J.A., in the E & N Reference case: Attorney General for British Columbia v. Esquimalt and Nanaimo Railway Co., [1950] A.C. 87 (P.C.), rev'g [1948] S.C.R. 403, rev'g B.C.C.A., sub nom. Reference re Esquimalt and Nanaimo Railway, June 10, 1947, published in B.C. Gazette, June 19, 1947, at p. 1885. I will not attempt a similarly extensive survey in these reasons. What follows is simply an overview of the historical facts necessary to my analysis inasmuch as a more complete history can be obtained through reference to the decisions I have cited.
British Columbia joined Confederation in 1871. This was formally achieved by the British Columbia Terms of Union (reprinted in R.S.C., 1985, App. II, No. 10). Pursuant to Term 11 of the Terms of Union, Canada agreed, in part, to commence within two years construction of a railway connecting the "seaboard of British Columbia with the railway system of Canada", and to "secure the completion" of that railway within ten years.
Between 1871 and 1883, Canada and British Columbia negotiated with one another in an attempt to resolve the railway obligation established by Term 11. In 1873, a route was selected which contemplated a fixed rail link between mainland British Columbia and northern Vancouver Island that was intended to traverse the Strait of Georgia. On the Island, the proposed route was to lead along the Island's east coast, through Nanaimo, to a proposed western terminus at Esquimalt, near Victoria.
In 1875, British Columbia granted to Canada a corridor of land along the 1873 route. This railway belt measured 20 miles on either side of the proposed line. Under Term 11, British Columbia had agreed "to convey to the Dominion Government . . . a similar extent of public lands along the line of railway throughout its entire length in British Columbia, not to exceed, however, twenty (20) miles on each side of said line". Thus, large tracts of land, both on Vancouver Island and on the mainland, were conveyed to secure the development of the railway as contemplated by Term 11.
Construction of the railway was delayed. These delays were particularly harmful to British Columbia, since no settlement or development of the granted land corridor could occur prior to the railway's completion. As a result, on Vancouver Island roughly one quarter of the Island's area, including most of its arable land, stood in developmental limbo.
A major cause of the construction delay was the emerging view that the 1873 route was neither technically nor financially feasible. Another route was selected and it was this route on which the railway was ultimately constructed. The new route led down the Fraser River Valley to a western terminus at Burrard Inlet, present-day Vancouver. British Columbia accepted the route change with resignation, and abandoned the idea of a f