Canadian National Railway Company v. Northgate Terminals Ltd.

Canadian National Railway Company v. Northgate Terminals Ltd.
Court (s) Database
Federal Court of Appeal Decisions
Date
2010-06-02
Neutral citation
2010 FCA 147
File numbers
A-361-09
Notes
Reported Decision
Decision Content
Federal Court of Appeal
CANADA
Cour d'appel fédérale
Date: 20100602
Docket: A-361-09
Citation: 2010 FCA 147
CORAM: NADON J.A.
SHARLOW J.A.
LAYDEN-STEVENSON J.A.
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
Appellant
and
NORTHGATE TERMINALS LTD.,
WESTRAN PORTSIDE TERMINAL LIMITED and
CANADIAN TRANSPORTATION AGENCY
Respondents
Heard at Ottawa, Ontario, on April 14, 2010.
Judgment delivered at Ottawa, Ontario, on June 2, 2010.
REASONS FOR JUDGMENT BY: SHARLOW J.A.
CONCURRED IN BY: LAYDEN-STEVENSON J.A.
DISSENTING REASONS BY: NADON J.A.
Federal Court of Appeal
CANADA
Cour d'appel fédérale
Date: 20100602
Docket: A-361-09
Citation: 2010 FCA 147
CORAM: NADON J.A.
SHARLOW J.A.
LAYDEN-STEVENSON J.A.
BETWEEN:
CANADIAN NATIONAL RAILWAY COMPANY
Appellant
and
NORTHGATE TERMINALS LTD.,
WESTRAN PORTSIDE TERMINAL LIMITED and
CANADIAN TRANSPORTATION AGENCY
Respondents
REASONS FOR JUDGMENT
SHARLOW J.A.
[1] Northgate Terminals Ltd. (“Northgate”) operates an export terminal in North Vancouver, British Columbia. The terminal is serviced by Canadian National Railway Company (“CN”). In 2008, Northgate complained to the Canadian Transportation Agency (the “Agency”) pursuant to subsection 116(1) of the Canada Transportation Act, S.C. 1996, c. 10 (the “CTA”), that CN was in breach of its service obligations. In Decision No. 166-R-2009, the Agency concluded that Northgate’s complaint was well founded and ordered a remedy. CN sought and obtained leave to appeal that decision. For the reasons that follow, I would dismiss the appeal with costs.
Facts
[2] Northgate's customers are producers of forest products in northern British Columbia. They contract with CN for the transportation of pulp, paper, lumber, and panel to Northgate’s terminal, and they are responsible for the payment of applicable rail freight tariffs and demurrage charges. CN delivers the products to the unloading track at the Northgate terminal, where they are transloaded to trucks for delivery to various export docks in the Vancouver area. Under normal conditions, Northgate is capable of receiving 12 rail cars at its unloading track at any one time. During exceptionally good weather conditions, Northgate may receive 14 rail cars at one time because an uncovered ramp accommodates two additional rail cars.
[3] Northgate normally operates only on weekdays, unloading approximately 20 rail cars per weekday, based on a delivery of 12 to 14 cars in the morning, and 6 to 10 rail cars in the afternoon. Using traffic data produced by CN, the Agency verified the consistency of these traffic distribution patterns and determined that during the period 2004-2008, 49 percent of the first daily deliveries account for 12 or more rail cars while 83 percent of the second daily deliveries are composed of six rail cars or more.
[4] CN is the only provider of rail service to the Northgate terminal. Northgate competes with a number of other terminals in the Vancouver area, including a terminal operated by CN.
[5] In 2008, CN reduced its level of service to terminal operators in the Greater Vancouver area, including Northgate, from two deliveries (switches) per day Monday through Friday to one delivery per day, but indicated that it would provide additional service upon payment of the tariff under Item 13200 of CN Tariff 9000, Optional Special Switch and Special Train Services. That service reduction is the subject of Northgate’s complaint to the Agency. The complaint was supported by an intervener, Westran Portside Terminal Limited, which operates another terminal that it said was captive to CN.
[6] CN submitted to the Agency that some terminal operators affected by the service reduction expanded their in-plant trackage or increased their operations from 5 to 7 days per week to accommodate the change. Northgate provided evidence that: (1) it had examined the possibility of expanding trackage at its facility but concluded that it would not be physically possible or economically feasible; (2) if it increased its operations from 5 to 7 days per week, its labour costs would increase significantly but Northgate would realize no benefit because the docks and trucking companies with which it dealt did not operate on weekends; and (3) if CN’s level of service as reduced in 2009 were to remain in place and Northgate were required to pay the amount required by Item 13200 of Tariff 9000 for the additional services that Northgate would require, the increased cost to Northgate would exceed $450,000 per year.
[7] The Agency concluded that CN was in breach of its service obligations and ordered CN to continue to provide Northgate with a second switch each weekday (Monday through Friday) when requested. The Agency also ordered that the second switch performed in a day resulting from an order placed by Northgate for no fewer than 6 cars would be exempt from the application of Item 13200 of Tariff 9000. CN and Northgate were ordered to work together to determine an appropriate time schedule for the delivery of the cars.
Relevant provisions of the Canada Transportation Act
[8] Section 5 of the CTA states its objectives. It reads as follows:
5. It is declared that a competitive, economic and efficient national transportation system that meets the highest practicable safety and security standards and contributes to a sustainable environment and makes the best use of all modes of transportation at the lowest total cost is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada. Those objectives are most likely to be achieved when
(a) competition and market forces, both within and among the various modes of transportation, are the prime agents in providing viable and effective transportation services;
(b) regulation and strategic public intervention are used to achieve economic, safety, security, environmental or social outcomes that cannot be achieved satisfactorily by competition and market forces and do not unduly favour, or reduce the inherent advantages of, any particular mode of transportation;
(c) rates and conditions do not constitute an undue obstacle to the movement of traffic within Canada or to the export of goods from Canada;
(d) the transportation system is accessible without undue obstacle to the mobility of persons, including persons with disabilities; and
(e) governments and the private sector work together for an integrated transportation system.
5. Il est déclaré qu’un système de transport national compétitif et rentable qui respecte les plus hautes normes possibles de sûreté et de sécurité, qui favorise un environnement durable et qui utilise tous les modes de transport au mieux et au coût le plus bas possible est essentiel à la satisfaction des besoins de ses usagers et au bien-être des Canadiens et favorise la compétitivité et la croissance économique dans les régions rurales et urbaines partout au Canada. Ces objectifs sont plus susceptibles d’être atteints si :
a) la concurrence et les forces du marché, au sein des divers modes de transport et entre eux, sont les principaux facteurs en jeu dans la prestation de services de transport viables et efficaces;
b) la réglementation et les mesures publiques stratégiques sont utilisées pour l’obtention de résultats de nature économique, environnementale ou sociale ou de résultats dans le domaine de la sûreté et de la sécurité que la concurrence et les forces du marché ne permettent pas d’atteindre de manière satisfaisante, sans pour autant favoriser indûment un mode de transport donné ou en réduire les avantages inhérents;
c) les prix et modalités ne constituent pas un obstacle abusif au trafic à l’intérieur du Canada ou à l’exportation des marchandises du Canada;
d) le système de transport est accessible sans obstacle abusif à la circulation des personnes, y compris les personnes ayant une déficience;
e) les secteurs public et privé travaillent ensemble pour le maintien d’un système de transport intégré.
[9] Sections 113 to 115 of the CTA set out the service obligations of a railway company. Only section 113 is relevant to this appeal. It reads as follows:
113. (1) A railway company shall, according to its powers, in respect of a railway owned or operated by it,
(a) furnish, at the point of origin, at the point of junction of the railway with another railway, and at all points of stopping established for that purpose, adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage on the railway;
(b) furnish adequate and suitable accommodation for the carriage, unloading and delivering of the traffic;
(c) without delay, and with due care and diligence, receive, carry and deliver the traffic;
(d) furnish and use all proper appliances, accommodation and means necessary for receiving, loading, carrying, unloading and delivering the traffic; and
(e) furnish any other service incidental to transportation that is customary or usual in connection with the business of a railway company.
(2) Traffic must be taken, carried to and from, and delivered at the points referred to in paragraph (1)(a) on the payment of the lawfully payable rate.
(3) Where a shipper provides rolling stock for the carriage by the railway company of the shipper’s traffic, the company shall, at the request of the shipper, establish specific reasonable compensation to the shipper in a tariff for the provision of the rolling stock.
(4) A shipper and a railway company may, by means of a confidential contract or other written agreement, agree on the manner in which the obligations under this section are to be fulfilled by the company.
113. (1) Chaque compagnie de chemin de fer, dans le cadre de ses attributions, relativement au chemin de fer qui lui appartient ou qu’elle exploite :
a) fournit, au point d’origine de son chemin de fer et au point de raccordement avec d’autres, et à tous les points d’arrêt établis à cette fin, des installations convenables pour la réception et le chargement des marchandises à transporter par chemin de fer;
b) fournit les installations convenables pour le transport, le déchargement et la livraison des marchandises;
c) reçoit, transporte et livre ces marchandises sans délai et avec le soin et la diligence voulus;
d) fournit et utilise tous les appareils, toutes les installations et tous les moyens nécessaires à la réception, au chargement, au transport, au déchargement et à la livraison de ces marchandises;
e) fournit les autres services normalement liés à l’exploitation d’un service de transport par une compagnie de chemin de fer.
(2) Les marchandises sont reçues, transportées et livrées aux points visés à l’alinéa (1)a) sur paiement du prix licitement exigible pour ces services.
(3) Dans les cas où l’expéditeur fournit du matériel roulant pour le transport des marchandises par la compagnie, celle-ci prévoit dans un tarif, sur demande de l’expéditeur, une compensation spécifique raisonnable en faveur de celui-ci pour la fourniture de ce matériel.
(4) Un expéditeur et une compagnie peuvent s’entendre, par contrat confidentiel ou autre accord écrit, sur les moyens à prendre par la compagnie pour s’acquitter de ses obligations.
[10] Section 116 of the CTA sets out two separate consequences of a railway company’s failure to meet its service obligations. First, a complaint may be made to the Agency under subsection 116(1). If the Agency’s investigation of the complaint discloses that the complaint is warranted, the Agency may make a remedial order pursuant to subsection 116(4). Second, subsection 116(5) creates a cause of action for “every person aggrieved” by a railway company’s neglect or refusal to meet its service obligations. Subsections 116(1), (4) and (5) read as follows:
116. (1) On receipt of a complaint made by any person that a railway company is not fulfilling any of its service obligations, the Agency shall
(a) conduct, as expeditiously as possible, an investigation of the complaint that, in its opinion, is warranted; and
(b) within one hundred and twenty days after receipt of the complaint, determine whether the company is fulfilling that obligation.
…
(4) If the Agency determines that a company is not fulfilling any of its service obligations, the Agency may
(a) order that
(i) specific works be constructed or carried out,
(ii) property be acquired,
(iii) cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency, or
(iv) any specified steps, systems or methods be taken or followed by the company;
(b) specify in the order the maximum charges that may be made by the company in respect of the matter so ordered;
(c) order the company to fulfil that obligation in any manner and within any time or during any period that the Agency deems expedient, having regard to all proper interests, and specify the particulars of the obligation to be fulfilled;
(d) if the service obligation is in respect of a grain-dependent branch line listed in Schedule I, order the company to add to the plan it is required to prepare under subsection 141(1) an indication that it intends to take steps to discontinue operating the line; or
(e) if the service obligation is in respect of a grain-dependent branch line listed in Schedule I, order the company, on the terms and conditions that the Agency considers appropriate, to grant to another railway company the right
(i) to run and operate its trains over and on any portion of the line, and
(ii) in so far as necessary to provide service to the line, to run and operate its trains over and on any portion of any other portion of the railway of the company against which the order is made but not to solicit traffic on that railway, to take possession of, use or occupy any land belonging to that company and to use the whole or any portion of that company’s right-of-way, tracks, terminals, stations or station grounds.
(5) Every person aggrieved by any neglect or refusal of a company to fulfil its service obligations has, subject to this Act, an action for the neglect or refusal against the company.
116. (1) Sur réception d’une plainte selon laquelle une compagnie de chemin de fer ne s’acquitte pas de ses obligations prévues par les articles 113 ou 114, l’Office mène, aussi rapidement que possible, l’enquête qu’il estime indiquée et décide, dans les cent vingt jours suivant la réception de la plainte, si la compagnie s’acquitte de ses obligations.
[…]
(4) L’Office, ayant décidé qu’une compagnie ne s’acquitte pas de ses obligations prévues par les articles 113 ou 114, peut :
a) ordonner la prise de l’une ou l’autre des mesures suivantes :
(i) la construction ou l’exécution d’ouvrages spécifiques,
(ii) l’acquisition de biens,
(iii) l’attribution, la distribution, l’usage ou le déplacement de wagons, de moteurs ou d’autre matériel selon ses instructions,
(iv) la prise de mesures ou l’application de systèmes ou de méthodes par la compagnie;
b) préciser le prix maximal que la compagnie peut exiger pour mettre en oeuvre les mesures qu’il impose;
c) ordonner à la compagnie de remplir ses obligations selon les modalités de forme et de temps qu’il estime indiquées, eu égard aux intérêts légitimes, et préciser les détails de l’obligation à respecter;
d) en cas de manquement à une obligation de service relative à un embranchement tributaire du transport du grain mentionné à l’annexe I, ordonner à la compagnie d’ajouter l’embranchement au plan visé au paragraphe 141(1) à titre de ligne dont elle entend cesser l’exploitation;
e) en cas de manquement à une obligation de service relative à un embranchement tributaire du transport du grain mentionné à l’annexe I, ordonner à la compagnie, selon les modalités qu’il estime indiquées, d’autoriser une autre compagnie :
(i) à faire circuler et à exploiter ses trains sur toute partie de l’embranchement,
(ii) dans la mesure nécessaire pour assurer le service sur l’embranchement, à faire circuler et à exploiter ses trains sur toute autre partie du chemin de fer de la compagnie, sans toutefois lui permettre d’offrir des services de transport sur cette partie du chemin de fer, de même qu’à utiliser ou à occuper des terres lui appartenant, ou à prendre possession de telles terres, ou à utiliser tout ou partie de l’emprise, des rails, des têtes de lignes, des gares ou des terrains lui appartenant.
(5) Quiconque souffre préjudice de la négligence ou du refus d’une compagnie de s’acquitter de ses obligations prévues par les articles 113 ou 114 possède, sous réserve de la présente loi, un droit d’action contre la compagnie.
Standard of review
[11] CN has raised five grounds of appeal. It is convenient to deal with the applicable standard of review for each ground of appeal separately. At this stage it is sufficient to refer to recent jurisprudence on the issue of the standard of review in an appeal from a decision of the Agency.
[12] Generally, the standard of review on an appeal from a decision of the Agency is reasonableness, even on a question of the interpretation of the Agency’s home statute, the CTA: see Council of Canadians with Disabilities v. VIA Rail Canada, [2007] 1 S.C.R. 650, 2007 SCC 15 (“VIA Rail”). A decision is reasonable if it falls within a range of possible, acceptable outcomes that are defensible in respect of the facts and law: see Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9, at paragraph 47 (“Dunsmuir”).
[13] Following VIA Rail, this Court has applied the reasonableness standard in a number of appeals involving the interpretation of the CTA. See, for example, Canadian Pacific Railway Co. v. Canada (Canadian Transportation Agency), [2009] 2 F.C.R. 253, 2008 FCA 42 (F.C.A.) (interpretation of “railway line”); Canadian National Railway Co. v. Canada (Canadian Transportation Agency), 2008 FCA 363 (implementation of new statutory provisions relating to western grain freight rates); Canadian National Railway Co. v. Canada (Canadian Transportation Agency), 2010 FCA 65 (determination of revenue cap).
[14] However, the standard of correctness was applied in Canadian National Railway Co. v. Canada (Canadian Transportation Agency), [2009] 1 F.C.R. 287, 2008 FCA 199, in which the appellant challenged the decision of the Agency that it has the implied authority to extend a certain statutory limitation period. That was held to be a “true question of jurisdiction or vires” as explained in paragraph 59 of Dunsmuir, which reads as follows:
¶59 …"Jurisdiction" is intended in the narrow sense of whether or not the tribunal had the authority to make the inquiry. In other words, true jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter. The tribunal must interpret the grant of authority correctly or its action will be found to be ultra vires or to constitute a wrongful decline of jurisdiction ….
[15] The standard of correctness was also applied in Canadian National Railway Co. v. Canada (Canadian Transportation Agency), 2008 FCA 123. In that case the issue was whether the Agency had properly understood and applied a point of statutory interpretation that had been settled in a prior case, Canadian Pacific Railway Co. v. Canada (Canadian Transportation Agency), [2003] 4 F.C. 558, 2003 FCA 271 (F.C.A.).
First issue: Was Northgate entitled to complain?
[16] The first ground of appeal challenges the Agency’s conclusion that subsection 116(1) of the CTA, properly interpreted, gives the Agency the statutory authority to investigate a complaint made by the operator of a terminal that is directly affected by the decision of a railway company to reduce the level of service to the terminal. That seems to me to be a question of vires as explained in paragraph 59 of Dunsmuir, quoted above, reviewable on the standard of correctness.
[17] CN argued before the Agency, and in this Court, that the Agency had no legal authority under subsection 116(1) to investigate Northgate’s complaint because Northgate was not the shipper of the traffic in issue or a party to the contract of carriage. The Agency rejected that argument because Northgate, as the operator of a terminal designated by the shipper to receive the goods in issue, was directly impacted by the decision of CN to reduce the level of service to the terminal. The Agency explained this conclusion as follows in paragraphs 44 to 51 of its decision:
¶44. CN questions Northgate's standing to file the present complaint on the ground that in the vast majority of cases, Northgate is neither the shipper nor the consignee of the traffic at issue. It is with the shipper that CN contracts for the provision of transportation services and it is from the shipper that CN receives the shipping instructions.
¶45. CN argues that in accordance with the Agency's decision in the Scotia Terminals Ltd. v. CN case (Decision No. 715-R-2000), the complaint of Northgate is not well founded and, on this basis alone, should be dismissed as the facts of that case are similar and equally applicable to the Northgate situation. According to CN, its service obligations pursuant to the CTA do not extend to Northgate, a terminal operator which exercises no control over the movement of the traffic and with whom CN has no service contract.
¶46. Although the Agency acknowledges that the facts of Scotia Terminals case are very similar to those of the present complaint, namely that both applicants are terminal operators, have no contractual arrangements with CN and exercise no control over the subject traffic, there is a major distinction between the two cases that is of primary importance. In the Scotia Terminals case, the terminal operator complained in respect of traffic moved by CN and routed through competitor terminals in the Port of Halifax. Scotia Terminals was in no way part of the logistics chain of the subject traffic. There was no traffic being shipped to Scotia Terminals. In the present complaint, although Northgate has no contractual arrangement with CN for the transportation of the traffic, it does receive the traffic moved on behalf of the shippers and, as a receiver of traffic, is directly impacted by the level of service provided by CN.
¶47. The Agency notes that the Supreme Court of British Columbia has considered the level of service obligations of a railway company in the context of a dispute in respect of the appropriateness of charging demurrage to a party that is not a shipper in Canadian National Railway Company v. Neptune Bulk Terminals (Canada) Ltd. 2006 BCSC 1073 (Neptune Terminals decision). In her Reasons for Judgment, Madam Justice Wedge asserts that the level of service obligations of railway companies, as set out in section 113 of the CTA, are only owed to parties with whom the railway company has a contract for the carriage of goods. The Agency is of the opinion that her reasoning is restricted to consideration of obligations related to the transit of traffic, or the movement of goods, such that, under subsection 113(2), a railway company is required to accept traffic and move goods once the lawfully payable rate has been paid.
¶48. However, the obligations set out in subsection 113(1) are broader and include the general obligation to provide "adequate and suitable accommodation" for, among other things, the delivery of traffic. The fact that the traffic is being delivered to a facility owned by a person who is not a party to the contract for the carriage of traffic does not relieve the railway company of its various obligations under subsection 113(1) to provide accommodation for traffic. Furthermore, the legislation specifically provides a statutory right of complaint to "any person" and is not limited to "shippers", or parties with whom the railway company has a contract for the carriage of goods. This permits another party in the logistics chain, such as a transloader, to complain that the railway company is not fulfilling its level of service obligations with respect to the rail transportation of the traffic of a shipper that is ultimately delivered to that transloader.
¶49. Subsection 113(1) may be usefully contrasted with subsections 113(3) and (4) which explicitly provide for specific level of service obligations owed by the railway company to shippers. Furthermore, section 116 of the CTA provides for a complaint made by any person regarding a railway company that is not fulfilling any of its service obligations. Contrary to the broad language of subsection 116(1), other rail provisions in the CTA are limited by their terms to provide relief to particular categories of persons. For example, subsection 120.1 specifically provides for complaints to be filed by shippers. Similarly, subsection 152.1(1) specifically provides for applications by public passenger service providers.
¶50. Clearly, Northgate falls within the category of "any person" and, as such, has standing under section 116 of the CTA to file a level of service complaint against CN. Further, the use of "any person" in subsection 116(1) can be contrasted with subsections 116(2) and (3), which specifically acknowledge the possible existence of contracts between a shipper and the railway company that may affect the outcome of an investigation into such a complaint.
¶51. Accordingly, the Agency concludes that it has jurisdiction to consider Northgate's complaint under section 116 of the CTA and will therefore determine whether CN has failed to fulfill its common carrier obligations.
[18] In my view, the Agency’s interpretation is consistent with the language and statutory context of subsection 116(1). CN does not argue that there is any provision of the CTA that compels a different interpretation. Rather, CN argues that there is jurisprudence binding on the Agency compelling it to adopt the narrower interpretation of subsection 116(1) advocated by CN. That jurisprudence consists of three cases: Scotia Terminals Ltd. v. CN (Decision No. 715-R-2000, Canadian Transportation Agency) (“Scotia Terminals”), Canadian National Railway Company v. Neptune Bulk Terminals (Canada) Ltd., 2006 BCSC 1073 (“Neptune Bulk Terminals”), and Kiist v. Canadian Pacific Railway Co., [1982] 1 F.C. 361 (F.C.A.) (“Kiist”)
[19] Only Scotia Terminals and Neptune Bulk Terminals were cited to the Agency. The Agency did not consider either case to compel the conclusion that the right to make a complaint under subsection 116(1) is limited to a shipper or a party to a contract of carriage. I agree, essentially for the reasons given by the Agency as quoted above.
[20] It remains only to consider Kiist, a case that CN did not cite to the Agency or in its memorandum of fact and law in this appeal. CN referred to this case for the first time in oral argument. I note however that the Agency was aware of Kiist because that case is cited in the Agency’s memorandum of fact and law, albeit on a different point.
[21] Kiist was an appeal of a judgment of the Federal Court (then the Trial Division of the Federal Court of Canada) striking out a statement of claim and dismissing an action in damages against CN and Canadian Pacific Railway Company (“CP”). The Federal Court had concluded that the statement of claim did not disclose a reasonable cause of action and that in any event the Federal Court was without jurisdiction to entertain the claim ([1980] 2 FC. 650).
[22] The appellants were grain producers who had commenced an action on their own behalf and on behalf of all grain producers who, like themselves, sold their grain to Canadian Wheat Board (the “CWB”) and had a statutory right to receive a share of the surplus realized by CWB on the resale of the grain, net of expenses. They alleged that for two specified crop years CN and CP had breached their service obligations to the CWB in a number of respects, thereby causing financial loss to the CWB and reducing the surplus entitlements of the appellants, for which they sought compensation. The appellants also alleged that the failure of CN and CP to fulfil their service obligations resulted in lost future sales and goodwill, for which they sought additional compensation. They claimed damages totalling almost $700 million.
[23] The appellants’ claim was based primarily on subsection 262(7) of the Railway Act, R.S.C. 1970, c. R-2, the predecessor to subsection 116(5) of the CTA. The two provisions read as follows (my emphasis):
Canada Transportation Act
Loi sur les transports au Canada
116. (5) Every person aggrieved by any neglect or refusal of a company to fulfil its service obligations has, subject to this Act, an action for the neglect or refusal against the company.
116. (5) Quiconque souffre préjudice de la négligence ou du refus d’une compagnie de s’acquitter de ses obligations prévues par les articles 113 ou 114 possède, sous réserve de la présente loi, un droit d’action contre la compagnie.
Railway Act
Loi sur les chemins de fer
262. (7) Every person aggrieved by any neglect or refusal of the company to comply with the requirements of this section has, subject to this Act, an action therefor against the company, from which action the company is not relieved by any notice, condition or declaration, if the damage arises from any negligence or omission of the company or its servant.
262. (7) Quiconque a été lésé par le négligence ou le refus da la compagnie de se conformer aux exigences du présent article, a, sous réserve de la présente loi, le droit d’intenter une poursuite contre la compagnie ; et la compagnie ne peut se mettre à l’abri de cette poursuite en invoquant un avis, une condition ou une déclaration, si le tort résulte d’une négligence ou d’une omission de la compagnie ou de ses employés.
(The portion of subsection 262(7) of the Railway Act that precludes a railway company from relying on a notice, condition or declaration to relieve it of liability for negligence or an omission is the statutory predecessor of subsection 116(6) of the CTA, which is not relevant to this appeal.)
[24] The service obligations of a railway company under the Railway Act are set out in subsection 262(1), the statutory predecessor to subsection 113(1) of the CTA. Paragraph 262(1)(b) of the Railway Act is similar to paragraph 113(1)(b) of the CTA. Those two provisions read as follows:
Canada Transportation Act
Loi sur les transports au Canada
113. (1) A railway company shall, according to its powers, in respect of a railway owned or operated by it,
…
(b) furnish adequate and suitable accommodation for the carriage, unloading and delivering of the traffic
….
113. (1) Chaque compagnie de chemin de fer, dans le cadre de ses attributions, relativement au chemin de fer qui lui appartient ou qu’elle exploite :
[…]
b) fournit les installations convenables pour le transport, le déchargement et la livraison des marchandises […].
Railway Act
Loi sur les chemins de fer
262. (1) The company shall, according to its powers,
…
(b) furnish adequate and suitable accommodation for the carrying, unloading and delivering of all such traffic ….
262. (1) La companie doit, selon ses pouvoirs,
[…]
b) fournir des installations suffisantes et convenables pour le transport, le déchargement et la livraison de ces marchandises et effets […].
[25] Justice Le Dain, writing for the Court, concluded that the Federal Court was the appropriate forum for a claim for damages under subsection 262(7) of the Railway Act, rejecting the argument of CN and CP that the Canadian Transport Commission (the predecessor of the Agency) had the exclusive jurisdiction to entertain such a claim. However, he also concluded that the Commission had the sole jurisdiction to determine whether CN and CP had failed to fulfil their service obligations, and that in the absence of such a determination by the Commission, the Federal Court was without jurisdiction to entertain the claim for damages.
[26] In case that conclusion was wrong, Justice Le Dain went on to say that the statement of claim did not disclose a reasonable cause of action because the appellants were not “persons aggrieved” within the meaning of that phrase in subsection 262(7) of the Railway Act. Justice Le Dain explained the scope of that duty as follows (at page 383):
It has been said on several occasions that the liability of a railway under the provisions of the Railway Act is essentially that of a common carrier: Canadian National Railway Co. v. Harris, [1946] S.C.R. 352 at page 376. While the specific duty that is found in section 262 to furnish adequate and suitable accommodation may be said to be the creation of statute, it could not have been contemplated that it should be owed to persons outside the scope of a common carrier's liability because they do not have contractual relations with the carrier and are not the owners of the goods offered for carriage.
The grain producers were not the owners of the wheat because they had sold it to the CWB, and they were not parties to the contract of carriage. Therefore, they were not “persons aggrieved” within the meaning of subsection 262(7) of the Railway Act.
[27] Kiist may well be authority for the proposition that the phrase “every person aggrieved” (or the French phrase « quiconque souffre préjudice ») in subsection 262(7) of the Railway Act (and therefore presumably subsection 116(5) of the CTA) includes only the owner or shipper of the traffic in issue or a person who has a contractual relationship with the railway company in relation to that traffic. However, it does not necessarily follow that a similar limitation must apply in determining the class of persons who are entitled to have the Agency investigate a complaint under subsection 116(1) that a railway company is not fulfilling its service obligations.
[28] The Railway Act does not contain a predecessor to subsection 116(1) of the CTA, but it does contain a statutory predecessor to subsection 116(4) of the CTA, the provision that authorizes a remedial order for a breach of a service obligation. That statutory predecessor is subsection 262(3) of the Railway Act, which reads as follows:
262. (3) If in any case such accommodation is not, in the opinion of the Commission, furnished by the company, the Commission may order the company to furnish the same within such time or during such period as the Commission deems expedient, having regard to all proper interests; or may prohibit or limit the use, either generally or upon any specified railway or part thereof, of any engines, locomotives, cars, rolling stock, apparatus, machinery, or devices, or any class or kind thereof, not equipped as required by this Act, or by any orders or regulations of the Commission made within its jurisdiction under the provisions of this Act.
262. (3) S’il arrive que, de l’avis de la Commission, la compagnie ne fournit pas les installations et les commodités nécessaires, la Commission peut ordonner à la compagnie de les fournir dans un délai ou durant une période qu’elle juge convenable en tenant compte de tous les intérêts légitimes; ou elle peut interdire ou restreindre l’emploi, sur tous les chemins de fer généralement, sur un chemin de fer déterminé ou sur un tronçon de ce chemin de fer, de machines, locomotives, wagons, matériel roulant, appareils, machineries ou dispositifs, ou d’une espèce ou catégorie quelconque, non équipés selon les prescriptions de la présente loi ou des ordonnances rendues ou des règlements établis par la Commission dans les limites de ses attributions en vertu des dispositions de la présente loi.
The phrase “such accommodation” in subsection 262(3) of the Railway Act refers to the accommodation that a railway company is required to provide pursuant to subsection 262(1), including paragraph 262(1)(b), the statutory predecessor to paragraph 113(1)(b) of the CTA (both provisions are quoted above).
[29] The Railway Act did not require a complaint to be made as a precondition to the Commission’s authority to make a remedial order under subsection 262(3) of the Railway Act. Therefore, it seems that the Commission’s remedial powers were exercisable on the Commission’s own motion, which necessarily implies that the Commission could act in response to information received from anyone. Further, the Commission was required, in exercising the authority to make a remedial order under subsection 262(3), to have regard to “all proper interests” (in French « tous les intérêts légitimes »), suggesting that the class of persons whose interests the Commission was required to consider in relation to a controversy about a railway company’s level of service was broader than the class of persons (“persons aggrieved”) who were entitled to make a claim for damages under subsection 262(7) (as interpreted by this Court in Kiist).
[30] The apparent breadth of subsection 262(3) of the Railway Act, compared to subsection 262(7), is consistent with the position of the Agency that subsection 116(1) of the CTA creates a class of potential complainants that is broader than the class of “persons aggrieved” referred to in subsection 116(5). In that regard, the Agency correctly noted that the English version of subsection 116(1) permits a complaint to be made by “any person”, a phrase that is more general than “persons aggrieved” and necessarily includes a larger class of persons. The French version does not expressly limit the class of complainants at all, but simply states that the Agency must act « sur réception d’une plainte ».
[31] For these reasons, I agree with the conclusion of the Agency that it had the authority under subsection 116(1) of the CTA to investigate Northgate’s complaint, and I would reject CN’s first ground of appeal.
Second issue: Did the Agency apply the proper principles in finding a breach?
[32] CN argues that the Agency failed to apply properly, or at all, the principles stated in A.L. Patchett & Sons Ltd. v. Pacific Great Eastern Railway Company, [1959] S.C.R. 271 (“Patchett”). This ground of appeal goes to the merits of the Agency’s decision, which must be reviewed on the standard of reasonableness.
[33] This argument is based largely on CN’s characterization of the Agency’s decision, which Northgate disputes. CN says that the Agency ordered CN to provide an increased level of service to Northgate free of charge. However, Northgate says that the Agency required CN to restore a long standing level of service to Northgate, a level of service that CN had reduced and offered to restore only upon receiving payment of a tariff. Northgate’s description is more accurate.
[34] Patchett is generally recognized as the leading case on the determination of the adequacy of the service provided by a railway company. CN argues that Patchett established three principles of law that were not applied properly, or at all, by the Agency. CN asserts that the three principles are: (1) a railway company is not bound to furnish cars at all times sufficient to meet all demands, (2) the obligation to give transportation is subject to reasonable charges, and (3) on the duty of a railway company to furnish services there is a correlative obligation on the customer to furnish reasonable means of access.
[35] Patchett stands for the general proposition that the duty of a railway company to fulfil its service obligations is “permeated with reasonableness in all aspects of what is undertaken” (except in relation to its special responsibility as an insurer of goods, which is not in issue in this case). As I read Patchett, the three propositions to which CN refers in its argument are not free-standing principles of law. They are guidelines that must inform any determination by the Agency of a service complaint, but they do not nec