Canadian National Railway Co. v. Moffatt

Canadian National Railway Co. v. Moffatt
Base de données – Cour (s)
Décisions de la Cour d'appel fédérale
Date
2001-10-31
Référence neutre
2001 CAF 327
Numéro de dossier
A-613-99
Notes
Décision rapportée
Contenu de la décision
Recueil des arrêts de la Cour fédérale Cie des chemins de fer nationaux du Canada c. Moffatt (C.A.) [2002] 2 C.F. 249
Date: 20011031
Docket: A-613-99
Neutral citation: 2001 FCA 327
CORAM: RICHARD C.J.
ROTHSTEIN J.A.
NOËL J.A.
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
Appellant
and
GORDON MOFFATT,
HER MAJESTY IN RIGHT OF THE
PROVINCE OF NEWFOUNDLAND AND LABRADOR,
CANADIAN TRANSPORTATION AGENCY
Respondents
and
CANADIAN PACIFIC RAILWAY,
THE ATLANTIC PROVINCES TRUCKING ASSOCIATION
Interveners
Heard at Halifax, Nova Scotia, on September 24 and 25, 2001.
Judgment delivered at Ottawa, Ontario, on October 31, 2001.
REASONS FOR JUDGMENT BY: ROTHSTEIN J.A.
CONCURRED IN BY: RICHARD C.J.
NOEL J.A.
Date: 20011031
Docket: A-613-99
Neutral citation: 2001 FCA 327
CORAM: RICHARD C.J.
ROTHSTEIN J.A.
NOËL J.A.
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
Appellant
and
GORDON MOFFATT,
HER MAJESTY IN RIGHT OF THE
PROVINCE OF NEWFOUNDLAND AND LABRADOR,
CANADIAN TRANSPORTATION AGENCY
Respondents
and
CANADIAN PACIFIC RAILWAY,
THE ATLANTIC PROVINCES TRUCKING ASSOCIATION
Interveners
REASONS FOR JUDGMENT
ROTHSTEIN J.A.
INTRODUCTION
[1] This is an appeal from Canadian Transportation Agency Decision 300-R-1999, dated June 2, 1999. Under Part IV of the Canada Transportation Act, S.C. 1996 c. 10 (CTA), where a shipper is dissatisfied with the rates proposed to be charged by a carrier for the movement of goods and the matter cannot be resolved between the shipper and the carrier, the shipper may submit the matter to the Canadian Transportation Agency (Agency) for final offer arbitration. On submission of a matter for final offer arbitration, the Agency is to refer the matter to the arbitrator chosen by the shipper and carrier or, if no arbitrator has been chosen by the parties, to an arbitrator chosen by the Agency. When this matter was submitted to the Agency for final offer arbitration, a constitutional question pertaining to the Terms of Union between Canada and Newfoundland was raised. It is the constitutional question that gives rise to this appeal.
FACTS
[2] Agency Decision 300-R-1999 arose out of an August 26, 1997 submission by Gordon Moffatt for final offer arbitration of a freight rate dispute between him and the Canadian National Railway Company (CN). Mr. Moffatt wished to engage in the business of transporting goods in containers between Central Canada and Newfoundland.
[3] In his submission for final offer arbitration, Mr. Moffatt stated what he thought were the highest rates CN could charge based upon the principles contained in Term 32(2) of the Terms of Union of Newfoundland with Canada (Schedule to the Newfoundland Act, (1949) (U.K.)). It appears these rates constituted Mr. Moffatt's final offer. (The actual rates are not before the Court and nothing turns on them.) Term 32(2) provides:
32(2) For the purpose of railway rate regulation the Island of Newfoundland will be included in the Maritime Region of Canada, and through-traffic moving between North Sydney and Port aux Basques will be treated as all-rail traffic.
I will return to Term 32(2) in the analysis portion of these reasons. At this point, it is sufficient to observe that, historically, Term 32(2) has been interpreted to require the extrapolation to points in Newfoundland, on a rail mileage basis, of rates applicable from Central Canada to the Maritime Provinces. Rates constructed on this basis were maximum rates; that is, CN could not charge rates to Newfoundland higher than those constructed according to Term 32(2).
[4] Upon being served with Mr. Moffatt's submission to the Agency for final offer arbitration, CN wrote to the Agency by letter dated September 15, 1997, arguing that Moffatt's submission was not validly constituted and that the Agency was, therefore, not in a position to refer the matter to arbitration.
[5] CN raised a number of objections, but the only ones dealt with in Agency Decision 300-R-1999 and that are the subject of this appeal, relate to Term 32(2) of the Terms of Union. CN objected to referral of the matter to arbitration on three grounds:
1. Term 32(2) had no further application after closure of the Newfoundland Railway in 1988;
2. There is no longer any relevant railway rate regulation to which Term 32(2) could apply;
3. CN is no longer a Crown corporation and there is no law binding on CN to implement Term 32(2) in its rate making with respect to movements to Newfoundland that include rail transportation.
[6] In Decision 300-R-1999, the Agency rejected these objections and concluded that, as CN had offered "through" rates to Mr. Moffatt from the mainland of Canada to points in Newfoundland, these rates fell within the purview of Term 32(2). Having come to that conclusion, the Agency then embarked upon a consideration of how rates should be developed to and from Newfoundland.
[7] The Agency noted that the development of a Maritime rate structure was critical, since the extension of Newfoundland rates have historically been based on a mileage prorated extrapolation of rates found within an existing Maritime rate structure. However, the Agency acknowledged that identification of a Maritime rate structure had been difficult in recent years, as the majority of railway traffic now moves under rates contained in confidential contracts. Nonetheless, in the view of the Agency, as the Constitution requires Terms of Union rates, they must be developed "even if it means resorting to developing a ‘best guess' figure" (at page 28 of Decision 300-R-1999).
[8] The Agency concluded that Term 32(2) continued to apply to Mr. Moffatt's traffic and that CN had obligations under Term 32(2). While acknowledging that the development of a Maritime rate structure may be a difficult task for an arbitrator and that the arbitrator may not have expertise in rate matters, the Agency concluded that the arbitrator could use his own resources or ask for assistance from the Agency. It, therefore, submitted the matter for arbitration, assigning the task of developing a Maritime rate structure and Terms of Union rates to the arbitrator, reminding the arbitrator that the Terms of Union are mandatory and a paramount consideration in the arbitration.
ANALYSIS
[9] The initial question to be addressed is whether, in the present circumstances, the Agency had the jurisdiction to conduct an inquiry into the application of Term 32(2) to the setting of freight rates to Newfoundland and to assign to the arbitrator the task of developing rates to Newfoundland according to Term 32(2). The Agency was of the view that it possessed such jurisdiction. The Agency referred to the test for jurisdiction set out in Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5, that for a tribunal to address a constitutional issue, it "must already have jurisdiction over the whole of the matter before it, namely, the parties, subject matter and remedy sought". The Agency found it met the Cuddy Chicks test. The Agency states, at page 16 of Decision 300-R-1999:
In this case, the Agency finds that it meets the tests for jurisdiction set out by the Supreme Court of Canada in the Cuddy Chicks case. That is, the Agency has before it an application for statutory arbitration under Part IV of the CTA. Parliament has specifically mandated the Agency to receive such applications pursuant to section 161 of the CTA and refer them to an arbitrator, subject to any interlocutory objections that may arise. Thus, in terms of the tests established in Cuddy Chicks the Agency has jurisdiction over the subject matter. Further, there is no debate here that Mr. Moffatt is a shipper and that CN is a federal railway company; thus, the Agency has jurisdiction over the parties. Finally, the requested remedy here is referral of the matter (or in the case of CN's objection, the refusal to refer the matter) to an arbitrator. The remedy is, therefore, also in the Agency's specific mandate.
In my respectful opinion, the Agency erred in concluding that it had such jurisdiction.
[10] I commence my analysis with the basic proposition that the Agency is a creature of statute and the powers it exercises must be found in statutory law, either expressly or by necessary implication: see Duthie v. Grand Trunk Railway Company (1905), 4 C.R.C. 304. This principle is expressed by La Forest J. in Cuddy Chicks, supra, with reference to subsection 52(1) of the Constitution Act not functioning as an independent source of an administrative tribunal's jurisdiction to address constitutional issues. At page 14, he stated:
Rather, jurisdiction must have expressly or impliedly been conferred on the tribunal by its enabling statute or otherwise. This fundamental principle holds true regardless of the nature of the issue before the administrative body. Thus, a tribunal prepared to address a Charter issue must already have jurisdiction over the whole of the matter before it, namely, the parties, subject matter and remedy sought.
It is, therefore, necessary to consider whether jurisdiction has been conferred on the Agency by statute to conduct the inquiry into the application of Term 32(2), and to instruct the arbitrator to develop a Maritime rate structure and Terms of Union rates. There are three possible sources for such jurisdiction:
1. Part IV of the CTA under which the matter came before the Agency;
2. Other powers of the Agency under the CTA; and
3. Term 32(2) itself.
Part IV of the CTA
[11] The matter came before the Agency under Part IV of the CTA, which is entitled "Final Offer Arbitration". The role of the Agency under Part IV is limited.
[12] Under subsection 162(1), on the submission of a matter to the Agency for final offer arbitration, the Agency shall refer the matter for arbitration. (Section 161 and relevant statutory provisions not reproduced in the body of these reasons are set forth in Appendix A.) Under subsection 161(2), the submission shall contain the shipper's final offer and the railway company's last offer, an undertaking by the shipper to ship the goods in accordance with the decision of the arbitrator, an undertaking by the shipper to pay the shipper's portion of the arbitrator's fee, and the name of the arbitrator agreed upon between the shipper and carrier. Once the Agency determines that there has been compliance with subsection 161(2), the requirement to refer for arbitration is mandatory. The only exception appears to be in subsection 161(3), that the matter is not to be referred to arbitration if the shipper has not, at least five days before submission to the Agency, served on the carrier a written notice indicating the shipper's intention to submit the matter to the Agency for final offer arbitration.
[13] The only other duty assigned to the Agency is to choose the arbitrator if the parties have not already done so, or if the arbitrator selected by the parties is unavailable. Other than these three procedural functions, i.e. checking the contents of the submission, determining whether timely notice has been given to the railway company and, when necessary, choosing the arbitrator, Part IV does not provide for any other duties or functions by the Agency prior to referring the matter to the arbitrator.
[14] The statutory history of final offer arbitration makes it quite clear that Parliament intended to restrict the Agency from involving itself in substantive matters preliminary to an arbitration. Final offer arbitration was introduced in the National Transportation Act, 1987 S.C. 1987, c. 34 (NTA, 1987) in sections 47 to 57. Sections 47 to 57 are the predecessors to Part IV of the CTA. Part IV is similar in many respects to sections 47 to 57 but there are some significant changes indicating Parliament's intention in the CTA to restrict the Agency's role prior to referring a matter to arbitration.
[15] One change is that unless the parties otherwise agree, the arbitrator's decision is to be rendered within 60 days after the date on which the submission for final offer arbitration is filed with the Agency by the shipper (CTA paragraph 165(2)(b)). This compares to ninety days under the NTA, 1987 (NTA, 1987 paragraph 52(2)(b)).
[16] This is a strong indicator that Parliament intended that the Agency refer the matter to the arbitrator without becoming involved in a preliminary regulatory proceeding. There is virtually no time for the Agency to deal with substantive matters if the parties are to exchange information, request and answer interrogatories, make submissions to the arbitrator and if the arbitrator is to be given a reasonable amount of time to consider the submissions and evidence and to make a decision.
[17] Most significantly, under paragraph 48(3)(b) of the NTA, 1987, the Agency (under that legislation, the National Transportation Agency) was not to cause any matter submitted to it by a shipper to be arbitrated if the Agency was of the view that the matter raised issues of general public interest, that interests other than those of the shipper and carrier may be materially prejudiced by the matter submitted, and that the matter should be investigated under section 59 of that Act. Paragraph 48(3)(b) provided:
48(3) The Agency shall not cause any matter submitted to it by a shipper under subsection (1) to be arbitrated if
(a) [...]
(b) the Agency has, within 10 days after receipt of the submission, advised the shipper in writing that the Agency is of the opinion that
(i) the matter raises issues of general public interest and that interests other than those of the shipper and carrier concerned may be materially prejudiced by the matter submitted, and
(ii) the matter should be investigated by the Agency pursuant to section 59.
48(3) L'arbitrage prévu au paragraphe (1) est exclu dans les cas suivants:
a) [...]
b) l'Office a, dans les dix jours suivant réception de la demande, avisé par écrit l'expéditeur qu'il estime que la question soulevée est d'intérêt public général et que la tenue de l'arbitrage serait notablement préjudiciable aux intérêts autres que ceux du transporteur et de l'expéditeur en cause, et qu'il est d'avis qu'il y aurait lieu de procéder par voie d'enquête en application de l'article 59.
[18] Section 59 of the NTA, 1987 was a provision under which the Agency could conduct an investigation into whether rates charged by a carrier were prejudicial to the public interest. Under the CTA, there is no provision similar to paragraph 48(3)(b) of the NTA, 1987. Nor is there a public interest rate investigation provision similar to section 59 of the NTA, 1987.
[19] Clearly, the role of the Agency, when a matter was submitted to it for final offer arbitration, was broader under the NTA, 1987 than it currently is under the CTA. Under the NTA, 1987, the Agency was obliged to consider whether a final offer arbitration raised public interest issues and issues that affected others than the shipper and carrier involved. There is no such role for the Agency under the CTA.
[20] Nevertheless, the Agency found that "Parliament has specifically mandated the Agency to receive such applications pursuant to section 161 of the CTA and refer them to an arbitrator, subject to any interlocutory objections that may arise" (at page 16 of Decision 300-R-1999). I see nothing in section 161 or elsewhere in Part IV that mandates the Agency to deal with "interlocutory objections that may arise". With respect, I think the Agency has read words into section 161 that do not appear, in order to justify its assumption of jurisdiction in this case. It goes without saying that the Agency must take the statute as it finds it.
[21] Further, it was incorrect for the Agency to have found, at page 16 of Decision 300-R-1999, that it had jurisdiction over the subject matter and remedy in this case. As in Cuddy Chicks, supra, where La Forest J. held that the subject matter in that case could not be characterized simply as an application for certification, in this case, the subject matter cannot be characterized simply as an application for final offer arbitration. The issue raised before the Agency by CN was whether the submission for final offer arbitration was properly before it and the remedy sought was not to refer the matter for arbitration. There is nothing in Part IV of the CTA that confers on the Agency jurisdiction to decide, on any substantive basis, whether a submission for final offer arbitration is properly before it. Nor is there authority for the Agency not to refer the matter for arbitration if it meets the procedural requirements of Part IV. Thus, insofar as Part IV is concerned, the subject matter and remedy were not within the jurisdiction of the Agency.
[22] Finally, the Agency argued that it has the expertise in such a matter and that it was necessary for it to have dealt with CN's objection relative to the Terms of Union as a preliminary matter. I acknowledge that the Agency does have expertise dealing with subsection 32(2) of the Terms of Union, that the matter was raised by Mr. Moffatt and that CN requested the Agency to deal with it as a preliminary matter (even though, before this Court, CN's position was that the Agency did not have such jurisdiction). However, jurisdiction cannot be conferred by agreement and expertise, on its own, is not a basis for a tribunal assuming a jurisdiction not conferred upon it by statute.
[23] On the facts of this case, nothing in Part IV of the CTA authorizes the Agency to have conducted the inquiry it undertook regarding the Terms of Union and to have issued instructions to the arbitrator to develop a Maritime rate structure and Terms of Union rates. For these reasons, the test for jurisdiction in Cuddy Chicks, supra, in respect of Part IV was not met.
Other Provisions of the CTA
[24] Are there provisions of the CTA outside Part IV that confer jurisdiction on the Agency to conduct a Term 32(2) inquiry and issue instructions to the arbitrator? This Court has had the occasion to address the extent of the Agency's jurisdiction in the wider context of the CTA as a whole, in Canadian National Railway Company v. Brocklehurst, [2001] 2 F.C. 141. In that case, as in this, the Agency relied on sections 26 and 37 of the CTA. They provide:
26. The Agency may require a person to do or refrain from doing any thing that the person is or may be required to do or is prohibited from doing under any Act of Parliament that is administered in whole or in part by the Agency.
26. L'Office peut ordonner à quiconque d'accomplir un acte ou de s'en abstenir lorsque l'accomplissement ou l'abstention sont prévus par une loi fédérale qu'il est chargé d'appliquer en tout ou en partie.
37. The Agency may inquire into, hear and determine a complaint concerning any act, matter or thing prohibited, sanctioned or required to be done under any Act of Parliament that is administered in whole or in part by the Agency.
37. L'Office peut enquêter sur une plainte, l'entendre et en décider lorsqu'elle porte sur une question relevant d'une loi fédérale qu'il est chargé d'appliquer en tout ou en partie.
The analysis undertaken by Décary J.A. in paragraphs 6 to 9 and 13 to 17 of Brocklehurst, supra, is applicable to this case. Specifically, at paragraphs 13 and 14, Décary J.A. stated:
[13] The Agency interprets sections 26 and 37 to mean that once the Agency administers part of an Act of Parliament, it is deemed to be administering the whole of the Act and is therefore the appropriate authority unless the Act expressly says otherwise. I do not agree with that interpretation. The two sections, in my view, give jurisdiction to the Agency either with respect to the whole of a statute should the Agency be generally mandated by the statute to administer it, or with respect to parts of a statute should the Agency be specifically mandated by the statute to administer parts only of the statute.
[14] The 1996 Act contains no provision conferring upon the Agency the power, duty or function of administering the whole Act. It is indeed noteworthy that neither section 26 nor section 37 refer expressly to the very statute in which they are found. The statute, however, contains numerous provisions that confer upon the Agency jurisdiction with respect to the administration of specific parts of the Act. Unless section 95 is one such provision, the Agency has no jurisdiction with respect to that section.
[25] As Décary J.A. found, there is no provision in the CTA conferring upon the Agency the power, duty or function of administering the whole CTA. Unless there is specific jurisdiction in the CTA to conduct a Term 32(2) inquiry upon submission of an application for final offer arbitration, there is no such jurisdiction. As I have already determined, Part IV does not confer such jurisdiction on the Agency. Nor does any other provision of the CTA confer a general jurisdiction on the Agency to deal with Term 32(2).
[26] The only other provision referred to by the Agency was section 5 of the CTA, the declaration of the National Transportation Policy. Section 5 declares that as part of the National Transportation Policy, the objective of carriers being able to compete must have "due regard [...] to legal and constitutional requirements". The Agency submitted that section 5 confers on it jurisdiction to deal with Term 32(2) as a constitutional requirement.
[27] However, section 5 is not a jurisdiction conferring provision. While not minimizing its importance, I believe that section 5 is a declaratory provision which states the objectives of Canada's National Transportation Policy. Those objectives are implemented by the regulatory provisions of the CTA and, in the currently largely deregulated environment, by the absence of regulatory provisions. Section 5 does not, itself, confer on the Agency the jurisdiction it assumed in this case. If it were construed to do so, then presumably any legal question could also be brought before the Agency for determination. Obviously section 5 was not intended to confer on the Agency jurisdiction over all disputes of any sort affecting carriers, simply because they involve legal or constitutional questions. Of course, the Constitution must be respected. But section 5 does not give the Agency plenary power to address any constitutional question that is raised before it where there is no specific statutory authority for it to conduct such an inquiry. This is the point made by La Forest J. in Cuddy Chicks, supra, in relation to subsection 52(1) of the Constitution Act and it is equally applicable to section 5 of the CTA. Indeed, unlike prior legislation, the CTA does not mention Term 32(2) and there is no general jurisdiction in the Agency to regulate freight rates as there was in such prior legislation.
[28] In Cuddy Chicks, supra, the Ontario Labour Relations Act stipulated that the Labour Board had exclusive jurisdiction "to determine all questions of fact or law that arise in any matter before it [...]". The Act conferred on the Board the power to determine questions of law and fact relating to its own jurisdiction and specifically to decide if a matter is arbitrable. Such provisions are noticeably absent in the CTA and that is not surprising, given the highly regulated nature of labour relations and the relatively deregulated nature of transportation. The CTA does not, expressly or by necessary implication, confer jurisdiction on the Agency to regulate freight rates to Newfoundland or to deal with Term 32(2).
Term 32(2)
[29] The only other possible source of Agency jurisdiction is Term 32(2) itself. Term 32(2) does not mention the Agency or its predecessor tribunals. It does not, therefore, expressly confer jurisdiction on the Agency to regulate railway rates generally or rates to and from Newfoundland specifically.
[30] Could it be construed, however, that railway rate regulation by the Agency is necessarily implied? In other words, could it be said that Term 32(2) requires rate regulation, that such rate regulation necessarily implies that there be a regulator and that the regulator be the Agency? I think not. In my opinion, Term 32(2) does not, of itself, require rate regulation. The words "For the purpose of railway rate regulation" presume the existence of rate regulation that is relevant to the balance of the Term, but they do not mandate that Parliament enact or maintain such regulation. The railway rate regulation to which the words "For the purpose of railway rate regulation" refer, was always found in the Railway Act, the National Transportation Act or the National Transportation Act, 1987. For Term 32(2) to apply, there must exist some relevant railway rate regulation in legislation administered by the Agency.
[31] Relevant rate regulation is railway rate regulation that has some relevance to the regulation of railway rates to Newfoundland. Specifically, it must be regulation that gives some meaning to Newfoundland being included in the Maritime Region of Canada and "through-traffic" between North Sydney and Port Aux Basques being treated as "all-rail traffic".
[32] The nature of railway rate regulation contemplated by Term 32(2) was a power in an administrative tribunal, the Board of Transport Commissioners at the time, to identify a rate structure applicable to the Maritime Region of Canada so that rates could then be extrapolated on a rail mileage basis to points in Newfoundland, treating the water movement from North Sydney to Port Aux Basques as a rail movement and ignoring dissimilar circumstances between Newfoundland and the Maritime Provinces. The history of railway rate regulation and statutory provisions relating to Term 32(2) since its enactment in 1949 supports this view and demonstrates that such railway rate regulation no longer exists in the current deregulated environment.
[33] This history, up to 1987, has been well documented in the jurisprudence of the Board of Transport Commissioners and the Canadian Transport Commission, particularly in Newfoundland (AG) and Atlantic Container Express (Re), [1987] C.T.C.R. 28 (ACE, 1987).
The Railway Actin effect in 1949
[34] When Newfoundland became a province in 1949, railway rate regulation was pervasive. Railway rates had to be published in tariffs that were public. Railway rates for traffic under substantially similar circumstances and conditions had to be charged equally to all shippers (Railway Act, R.S.C. 1927, s. 314).
[35] Unjust discrimination and undue preference were the terms applied when the principle of equal treatment of shippers in substantially similar circumstances was departed from by a railway company.
[36] Under the Railway Act at the time, the Board of Transport Commissioners had the power to disallow tariffs of rates that were unjust or unreasonable and to require the railway company to substitute a tariff satisfactory to the Board (section 325).
[37] Railway rates setting, therefore, had to take into account the necessity to treat shippers equally in each region of Canada, the Maritimes being one such region. And indeed, there was a rate structure applicable to the Maritime Region from Central Canada and within the Maritime Region itself (see ACE, 1987 at pages 60-61).
[38] The concern of Newfoundland at the time of Confederation was that its circumstances were not similar to those of the Maritime Provinces. The movement from North Sydney to Port Aux Basques was a water movement. The railway on the island of Newfoundland was narrow gauge and traversed rough terrain. Under railway rate regulation at the time, it could not be said that a higher level of rates to Newfoundland than pertained to the Maritime Provinces would be unjustly discriminatory. Indeed, CN had imposed a surcharge for extra handling involved in transferring traffic at Port Aux Basques and also additional charges because the capacity of freight cars used in Newfoundland were smaller than the capacity of freight cars used on standard gauge railway lines.
[39] The Province of Newfoundland brought an application to the Board of Transport Commissioners asking the Board to order CN to cancel the tariffs it had in effect and to substitute tariffs of rates based on the rate structure in effect into and within the Maritime Provinces. In Attorney General of Newfoundland v. C.N.R. (1950), 64 C.R.T.C. 352, the Board of Transport Commissioners held that railway companies had the right to discriminate in rates because of dissimilarity in circumstances and that Term 32(2) did not lay down a different rule for Newfoundland (at page 353).
[40] Newfoundland then asked the Board to reconsider its decision. In Attorney General of Newfoundland v. C.N.R. (1951), 67 C.R.T.C. 353, Wardrope A.C.C., in reversing the Board's prior decision, interpreted the opening words of subsection 32(2) in the following manner, at page 357:
In my opinion they must mean then that notwithstanding certain dissimilar, disadvantageous circumstances and conditions pertaining to Newfoundland, this province is to be included ratewise in the Maritime region on a general level of rates similar to the other Maritime Provinces [...]
I further believe that in the absence of car ferries, the treating of traffic between North Sydney and Port aux Basques as rail traffic, apart from other purposes, is to provide an extension of a reasonable and comparable mainland rate from North Sydney to Port aux Basques.
[41] Term 32(2) then, as a constitutional provision or "Special Act" as it was termed at the time in the Railway Act, took precedence over railway rate regulation under the Railway Act. It was intended to give to Newfoundland something to which it was not otherwise entitled under railway rate regulation pursuant to the Railway Act. It required the setting of freight rates to Newfoundland on a non-discriminatory basis, notwithstanding dissimilar circumstances between the Maritimes and Newfoundland. This required the extrapolation of rates to Newfoundland on a rail mileage basis, based upon the structure of rates applicable from Central Canada to the Maritimes and within the Maritimes. By reason of the pervasive nature of railway rate regulation and the extensive power of the Board as regulator under the Railway Act, there is no question the Board had the authority to require CN, in accordance with Term 32(2), to treat Newfoundland as a rail extension of the Maritime Provinces and to require CN to charge rates based on rates applicable to and within the Maritime Provinces, extrapolated on a rail mileage basis to points in Newfoundland.
NTA of 1967
[42] That pervasive rail rate regulation remained until the National Transportation Act (NTA) was enacted in 1967 by S.C. 1966-67, c. 69. The NTA of 1967 reduced the regulation of railways and railway rates under the Railway Act significantly. The pervasive regulatory powers of the Board of Transport Commissioners over railway rates were replaced by amendments to the Railway Act which granted to the railway companies the power, subject to specific and limited exceptions to be administered by the Canadian Transport Commission (which replaced the Board), to fix rates unencumbered by legislative or regulatory restrictions.
[43] One exception was Term 32 of the Terms of Union. Subsection 326(6) of the Railway Act, enacted by S.C. 1966-67, c. 69, s. 49, and renumbered subsection 269(6) pursuant to R.S.C. 1970, c. R-2, provided:
269(6) Notwithstanding section 3, the power given by this Act to the company to fix, prepare and issue tariffs, tolls and rates, and to change and alter the same, is not limited or in any manner affected by any Act of the Parliament of Canada or by any agreement made or entered into pursuant thereto, whether general in application or special and relating only to any specific railway or railways, except the Maritime Freight Rates Act, Term 32 of the Terms of Union of Newfoundland with Canada, and Part IV of the Transport Act.
269(6) Nonobstant les dispositions de l'article 3, le pouvoir que la présente loi attribue à la compagnie de fixer, préparer et émettre des tarifs, taxes et taux, et de les changer et les modifier, n'est pas limité ni d'aucune façon atteint par une loi quelconque du Parlement du Canada, ni par un traité conclu ou passé en conformité d'une telle loi, qu'elle soit générale ou spéciale dans son application et qu'elle ait trait à un seul ou à plusieurs chemins de fer particuliers, à l'exception de la Loi sur les taux de transport des marchandises dans les Provinces maritimes, de la clause 32 des Conditions de l'Union de Terre-Neuve au Canada, et de la Partie IV de la Loi sur les transports.
In ACE, 1987, at page 57, referring to subsection 269(6), the Review Committee of the Canadian Transport Commission concluded:
We therefore conclude that subsection 269(6) of the Railway Act limits the powers of the railway in constructing rates to, from and within Newfoundland by making these powers subject to the rights guaranteed to Newfoundland in the Terms of Union. Hence, in constructing these rates, the railway must ensure that Newfoundland is accorded rates in compliance with the Terms of Union. [...]
[44] Under the NTA, railway rates were public and had to be filed with the Commission. It appears there still existed a Maritime rate structure. Accordingly, the Review Committee ordered CN to review its rates and file new rates in compliance with the Terms of Union. At page 68, it concluded:
To this end, we are directing CN to begin an immediate review of all its rates to, from and within Newfoundland to satisfy itself that each and every rate meets the criteria outlined in this decision and to inform the Committee when this review has been completed. Where rates are found to be too high and thereby out of line with similar mainland maritime rates adjusted for distance, or too low and thereby lower than similar mainland maritime rates adjusted for distance and lower than the compensatory level, CN is directed to file new rates no later than 90 days from the date of this decision.
It then provided that parties dissatisfied with the rates filed by CN could make application to the Commission under section 45 of the NTA:
Should any of the parties or any other person be of the opinion that any rates in effect after that date do not comply with the Railway Act, they are free to refer the matter to the Commission pursuant to section 45 of the National Transportation Act.
[45] Section 45 of the NTA gave the Canadian Transport Commission broad power to determine any application complaining that a railway company had failed to do anything required by the Railway Act, i.e. subsection 269(6), or the Special Act (Term 32(2)) and to order a railway company to do forthwith anything that it was required to do under the Railway Act or Special Act. Section 45 provided in relevant part:
45(1) The Commission has full jurisdiction to inquire into, hear and determine any application by or on behalf of any party interested,
(a) complaining that any company, or person, has failed to do any act, matter or thing required to be done by the Railway Act, or the Special Act [...] or that any company or person has done or is doing any act, matter or thing contrary to or in violation of the Railway Act, or the Special Act [...]
(2) The Commission may order and require any company or person to do forthwith, or at any specified time, and in any manner prescribed by the Commission, so far as it is not inconsistent with the Railway Act, any act, matter or thing that such company or person is or may be required to do under the Railway Act, or the Special Act [...]; and for the purposes of the Railway Act has full jurisdiction to hear and determine all matters whether of law or of fact.
45(1) La Commission a pleine juridiction pour instruire, entrendre et juger toute requête présentée par une partie intéressée ou en son nom,
a) se plaignant qu'une compagnie ou qu'une personne a omis de faire une action ou une chose qu'elle était tenue de faire par la Loi sur les chemins de fer, par la loi spéciale [...] ou qu'une compagnie ou une personne a fait ou fait une action ou une chose contrairement ou en contravention à la Loi sur les chemins de fer ou à la loi spéciale [...]
(2) La Commission peut ordonner et prescrire à toute compagnie ou personne de faire immédiatement, ou dans tel délai ou à telle époque qu'elle fixe, et de telle manière qu'elle prescrit, en tant qu'il n'y a rien d'incompatible avec la Loi sur les chemins de fer, toute action ou chose que cette compagnie ou personne est, ou peut être, tenue de faire sous le régime de la Loi sur les chemins de fer ou de la loi spéciale; [...] et elle a, aux fins de la Loi sur les chemins de fer, plein juridiction pour entendre et juger toute question tant de droit que de fait.
Of significance is the breadth of the Commission's power to regulate railway companies under section 45 of the NTA, as contrasted with the currently limited powers of the Agency under sections 26 and 37 of the CTA. There is no question that, by reason of subsection 269(6) of the Railway Act and section 45 of the NTA, the Commission had the jurisdiction to order CN to file and charge rates in accordance with Term 32(2).
NTA, 1987
[46] The next major legislative change affecting the regulation of railways in Canada came with the NTA, 1987. Subsection 269(6), under which the railway companies were free to fix rates subject to limited exceptions, was continued as section 111 of the NTA, 1987. Section 111 provided:
111. The powers given by this Division to a railway company with respect to tariffs, confidential contracts and agreed charges are not limited or in any manner
111. Les pouvoirs, conférés par la présente section à une compagnie de chemin de fer, à l'égard des tarifs, des contrats confidentiels et des prix convenus ne sont pas
affected by any Act of Parliament, other than this Act, or by any agreement made or entered into pursuant to any Act of Parliament other than this Act, whether general in application or special and relating only to any specific railway, except the Atlantic Region Trade Assistance Act, the Maritime Freight Rates Act, the Western Grain Transportation Act, Term 32 of the Terms of Union of Newfoundland with Canada set out in the schedule to the Newfoundland Act and section 272 of the Railway Act.
limités ni touchés par une loi du Parlement, autre que la présente loi, ou par un accord conclu en application d'une loi du Parlement, autre que la présente loi,d'application générale ou particulière à un chemin de fer, sauf la Loi sur le taux de transport des marchandises dans les provinces Maritimes, la Loi sur le transport des marchandises dans la Région Atlantique, la Loi sur le transport du grain de l'Ouest, la clause 32 des Conditions de l'union de Terre-Neuve au Canada, énoncée à l'annexe de la Loi sur Terre-Neuve et l'article 272 de la Loi sur les chemins de fer.
[47] Under the NTA, 1987, railway rates continued to be published, although there was no requirement that they be filed with the National Transportation Agency. One exception to publication was the introduction of confidential contracts, in which the rate agreed between the railway company and shipper would not be public. However, such contracts had to be filed with the Agency. Thus, the Agency had access to information upon which it could determine rates in confidential contracts applicable from Central Canada to the Maritimes and within the Maritime Provinces as a basis for the extrapolation of rates to Newfoundland pursuant to Term 32(2). In Decision 266-R-1991, May 22, 1991 (ACE, 1991), the Agency found at page 17 that as a basis for constructing Term 32(2) rates, CN was required to determine a Maritime rate structure by including rates in confidential contra