[2002] 2 F.C. 249
A-613-99
2001 FCA 327
Canadian National Railway Company (Appellant)
v.
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)
Indexed as: Canadian National Railway Co. v. Moffatt (C.A.)
Court of Appeal, Richard C.J., Rothstein and Noël J.A. —Halifax, September 24 and 25; Ottawa, October 31, 2001.
Transportation — Appeal from Canadian Transportation Agency’s decision referring matter of freight rates for shipping goods from Central Canada to Island of Newfoundland to final offer arbitration — Under Canada Transportation Act (CTA), Part IV shipper may submit matter to Agency for final offer arbitration if unable to agree with carrier as to rates for movement of goods — Terms of Union of Newfoundland with Canada, Term 32(2) providing that, for purpose of railway rate regulation, Island of Newfoundland included in Maritime Region of Canada, and through-traffic between North Sydney, Port aux Basques to be treated as all-rail traffic — Agency erred in concluding had jurisdiction to conduct inquiry into application of Term 32(2) to setting of freight rates to Newfoundland, and to assign to arbitrator task of developing rates according to Term 32(2) — As creature of statute, powers must be granted by statute, in statutory law, either expressly or impliedly — Nothing in CTA, Part IV conferring jurisdiction on Agency — Part IV only requiring Agency to check contents of submission, determine whether timely notice given and choose arbitrator — Statutory history of final offer arbitration indicating Parliament intending to restrict Agency from involving itself in substantive matters preliminary to arbitration — Agency holding specifically mandated to receive applications pursuant to s. 161, refer them to arbitrator, subject to any interlocutory objections that may arise — Nothing in s. 161 or elsewhere in Part IV mandating Agency to deal with interlocutory objections that may arise — Furthermore, subject-matter, remedy not within Agency’s jurisdiction — Test for jurisdiction in Cuddy Chicks Ltd. not met — No other provision in CTA conferring upon Agency power, duty, function of administering whole CTA — Term 32(2) neither expressly nor impliedly conferring jurisdiction on Agency — For Term 32(2) to apply, some relevant railway rate regulation in legislation administered by Agency must exist — Such railway rate regulation no longer exists in current deregulated environment — No regulation engaging Term 32(2), no basis for assumption of jurisdiction.
Railways — Terms of Union of Newfoundland with Canada, Term 32(2) providing that for purpose of railway rate regulation, Island of Newfoundland included in Maritime Region of Canada, and through-traffic between North Sydney and Port aux Basques treated as all-rail traffic — Historically interpreted as requiring extrapolation to points in Newfoundland on rail mileage basis of rates applicable from Central Canada to Maritime Provinces — Such rates maximum rates — Shipper relying on Term 32(2) as basis for maximum rates carrier could charge to move freight from Central Canada to Island of Newfoundland — “For the purpose of railway rate regulation” presuming existence of relevant rate regulation i.e. contemplating rate structure applicable to Maritime Region of Canada from which rates could be extrapolated to points in Newfoundland — Such railway rate regulation no longer exists — Term 32(2) not engaged.
Constitutional Law — Terms of Union of Newfoundland with Canada, Term 32(2) providing that, for purpose of railway rate regulation, Island of Newfoundland will be included in Maritime Region of Canada, and through-traffic moving between North Sydney and Port aux Basques will be treated as all-rail traffic—Shipper, dissatisfied with rates proposed by carrier to move goods from Central Canada to Island of Newfoundland, submitting matter to Canadian Transportation Agency for final offer arbitration — Agency holding Term 32(2) applied, referred matter to arbitration — Although finding railway rate regulations exist, examples cited not limiting power of railway company to set rates to Newfoundland, not implying requirement Maritime rate structure exists from which Newfoundland rates could be extrapolated — Agency acknowledging difficulty when concluded development of Terms of Union rates might involve developing “best guess” figure — Not reasonable to conclude Constitution of Canada would require regulation of freight rates based on “best guess” figures — In absence of relevant rate regulation, Term 32(2) not engaged—”Living tree” approach to interpretation of Term 32(2) misplaced — Cannot be used to animate anachronistic constitutional provision — Application of Term 32(2) suspended until Parliament enacting relevant railway rate regulation.
Construction of Statutes — Terms of Union of Newfoundland with Canada, Term 32(2) providing that for purpose of railway rate regulation, Island of Newfoundland will be included in Maritime Region of Canada, and through-traffic moving between North Sydney and Port aux Basques will be treated as all-rail traffic — Canadian Transportation Agency holding because Constitution supreme law of Canada, and because Constitution to be interpreted flexibly, consistent with “living tree” doctrine of constitutional interpretation, Term 32(2) must be made to apply to current state of railway rate regulation — Living tree approach misplaced — Constitution supreme law of Canada but in appropriate circumstances, must be adapted to conditions not existing when provisions enacted — Constitutional provisions in question must be carefully considered to determine whether “living tree” approach appropriate or whether constitutional provision no longer applicable — Living tree doctrine cannot be stretched to animate anachronistic provision — Term 32(2) subsists, and will guarantee Newfoundland protection should Parliament in future enact railway rate regulation relevant to Term 32(2) — When no relevant railway regulation provided, application of Term 32(2) suspended — Living tree doctrine not requiring Term 32(2) to apply in circumstances where no relevant railway regulation.
This was an appeal from a Canadian Transportation Agency decision submitting the matter of freight rates for transporting goods in containers between Central Canada and Newfoundland to final offer arbitration. Under Canada Transportation Act, Part IV, a shipper who is dissatisfied with the rates proposed to be charged by a carrier for the movement of goods may submit the matter to the Agency for final offer arbitration. The Agency then refers the matter to an arbitrator. Shipper Moffatt’s final offer was based upon the principles contained in Term 32(2) of the Terms of Union of Newfoundland with Canada. Term 32(2) provides that “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”. 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. Such rates were maximum rates. CN objected to the referral of the matter to arbitration on the following grounds: Term 32(2) had no further application after closure of the Newfoundland Railway in 1988; there is no longer any relevant railway rate regulation to which Term 32(2) could apply; and CN is no longer a Crown corporation and there is no law binding on CN to implement Term 32(2) in its rate making. The Agency concluded that, as CN had offered “through” rates from mainland Canada to points in Newfoundland, these rates fell within the purview of Term 32(2). It acknowledged that identification of a Maritime rate structure was difficult as most rates are contained in confidential contracts, but as the Constitution requires Terms of Union rates, they must be developed even if it meant resorting to developing a “best guess” figure. The Agency concluded that Term 32(2) applied herein and submitted the matter for arbitration, assigning the task of developing a Maritime rate structure and Terms of Union rates to the arbitrator. The Agency held that it had jurisdiction over the subject-matter, parties and remedy and met the test for jurisdiction set out in Cuddy Chicks Ltd. v. Ontario (Labour Relations Board). The issue was whether the Agency had 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).
Held, the appeal should be allowed.
The Agency erred in concluding that it had such jurisdiction. It is a creature of statute and the powers it exercises must be granted by statute, either expressly or by necessary implication. 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.
Nothing in Part IV of the CTA authorized the Agency to conduct the inquiry regarding the Terms of Union and to issue instructions to the arbitrator to develop a Maritime rate structure and Terms of Union rates. Part IV of the CTA only requires the Agency to check the contents of the submission, determine whether timely notice has been given to the railway company and, when necessary, choose the arbitrator. Final offer arbitration was introduced in the National Transportation Act, 1987 (NTA, 1987). Some significant changes in the CTA indicate that Parliament intended to restrict the Agency from involving itself in substantive matters preliminary to an arbitration.
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”. Nothing in section 161 or elsewhere in Part IV mandates the Agency to deal with “interlocutory objections that may arise”. The Agency read words into section 161 that do not appear, in order to justify its assumption of jurisdiction. The Agency must take the statute as it finds it.
Further, the Agency did not have jurisdiction over the subject-matter and remedy. The issue before the Agency was whether the submission for final offer arbitration was properly before it and the remedy sought was not to refer the matter for arbitration. Nothing in Part IV of the CTA 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. Finally, 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. The test for jurisdiction in Cuddy Chicks Ltd. v. Ontario (Labour Relations Board) was not met.
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. Part IV does not confer such jurisdiction. Nor does any other provision of the CTA confer a general jurisdiction on the Agency to deal with Term 32(2).
The only other possible source of Agency jurisdiction is Term 32(2), which does not mention the Agency or its predecessor tribunals, and therefore does not expressly confer jurisdiction on the Agency to regulate railway rates generally or rates to and from Newfoundland. Nor does it necessarily imply railway rate regulation by the Agency. 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. Relevant railway rate regulation means 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”. The nature of railway rate regulation contemplated by Term 32(2) was a power in an administrative tribunal 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) supports this view and demonstrates that such railway rate regulation no longer exists in the current deregulated environment.
The Agency found that railway rate regulation currently exists under the CTA. However, the examples cited do not limit the power of a railway company to set rates to Newfoundland and do not imply a requirement that a Maritime rate structure exists, from which Newfoundland rates could be extrapolated. The Agency acknowledged this difficulty when it concluded that the development of Terms of Union rates might involve developing a “best guess” figure. It is not reasonable to conclude that the Constitution of Canada would require that regulation of freight rates would be based on “best guess” figures. In the absence of rate regulation that has some relevance to the setting of rates to Newfoundland by a railway company, there is no regulation that engages Term 32(2) and no basis for the Agency to have assumed the jurisdiction it did in this case. Although final offer arbitration is a form of rate regulation that can be invoked by shippers relative to railway rates to Newfoundland, it is not a regulatory basis for the Agency to have conducted the inquiry it did in this case or to have instructed the arbitrator to develop Terms of Union rates.
Although the Constitution is the supreme law of Canada, it must, in appropriate circumstances, be adapted to conditions that did not exist when its various provisions were enacted. The constitutional provisions in question must be carefully considered to determine whether the “living tree” approach is appropriate or whether the constitutional provision is no longer applicable. The living tree doctrine cannot be stretched to animate a provision that is a practical anachronism. Term 32(2) subsists and will guarantee Newfoundland the protection it affords should Parliament, in the future, enact railway rate regulation which is relevant to Term 32(2). However, at the present time, when Parliament has not provided for any relevant railway rate regulation, the application of Term 32(2) is suspended. The living tree doctrine does not require that Term 32(2) be made to apply in circumstances where there is no relevant railway regulation. Term 32(2) neither expressly nor by necessary implication, confers jurisdiction on the Agency to have conducted the inquiry it did into Term 32(2) nor to issue instructions to the arbitrator to develop Terms of Union rates.
As the period during which the rate selected by the arbitrator was to have effect has long since expired, no useful purpose would be served by remitting the matter to the Agency for referral for final offer arbitration.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Budget Implementation Act, 1995, S.C. 1995, c. 17, s. 25.
Canada Transportation Act, S.C. 1996, c. 10, ss. 5, 26, 37, 161 (as am. by S.C. 2000, c. 16, s. 11), 162, 165 (as am. idem, s. 16).
Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], s. 52(1).
Labour Relations Act, R.S.O. 1980, c. 228, s. 106(1).
Maritime Freight Rates Act, R.S.C., 1985, c. M-1 (repealed by S.C. 1995, c. 15, s. 25).
National Transportation Act, R.S.C. 1970, c. N-17, s. 45.
National Transportation Act, S.C. 1966-67, c. 69.
National Transportation Act, 1987, S.C. 1987, c. 34, ss. 35, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 59, 111.
Newfoundland Act, 12-13 Geo. VI, c. 22 (U.K.) (as am. by Canada Act, 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 21) [R.S.C., 1985, Appendix II, No. 32], Schedule, Term 32(2),(3).
Railway Act, R.S.C. 1927, c. 170, ss. 314, 325, 326(6) (as am. by S.C. 1966-67, c. 69, s. 49).
Railway Act, R.S.C. 1970, c. R-2, s. 269(6).
CASES JUDICIALLY CONSIDERED
Applied:
Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5; (1991), 81 D.L.R. (4th) 121; 91 CLLC 14,024; 122 N.R. 361; [1991] OLRB Rep 790; Canadian National Railway Co. v. Brocklehurst, [2001] 2 F.C. 141 (2000), 195 D.L.R. (4th) 589; 30 Admin. L.R. (3d) 153; 36 C.E.L.R. (N.S.) 177; 265 N.R. 97 (C.A.).
Considered:
A.-G. Nfld. v. C.N.R. (1950), 64 C.R.T.C. 352 (T. Bd.); A.-G. Nfld. v. C.N.R. (1951), 67 C.R.T.C. 353 (T. Bd.); Re Section 24 of B.N.A. Act, [1930] A.C. 124 (P.C.); In the matter of a complaint made by Atlantic Container Express Inc. pursuant to subsection 35(1) of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), dated July 6, 1989, that Canadian National Railway Company is charging rates to Newfoundland destinations not consistent with the Terms of Union, Decision No. 266-R-1991, May 22, 1991.
Referred to :
Duthie v. Grand Trunk R.W. Co. (1905), 4 C.R.C. 304 (Bd. of Ry Commissioners); Newfoundland (AG) and Atlantic Container Express (Re), [1987] C.T.C.R. 28 (Cdn. Transport Comm.); Attorney General of British Columbia v. Canada Trust Co. et al., [1980] 2 S.C.R. 466; (1980), 112 D.L.R. (3d) 592; [1980] 5 W.W.R. 591; 23 B.C.L.R. 86; [1980] C.T.C. 338; 7 E.T.R. 93; 32 N.R. 326; Re Section 24 of B.N.A. Act, [1930] A.C. 124 (P.C.).
APPEAL from a Canadian Transportation Agency decision (In the matter of an objection by the Canadian National Railway Company to a submission for a final offer arbitration filed by Mr. Gordon Moffatt pursuant to Part IV of the Canada Transportation Act, S.C. 1996, c. 10, Decision No. 300-R-1999, June 2, 1999) submitting a matter of freight rates to transport goods between central Canada and the Island of Newfoundland to final offer arbitration. Appeal allowed on ground of lack of jurisdiction in Canadian Transportation Agency to conduct inquiry into application of Term 32(2) of Terms of Union of Newfoundland with Canada or to instruct an arbitrator to develop Terms of Union rates.
APPEARANCES:
Brian A. Crane, Q.C., Ronald D. Lunau and L. Michel Huart for appellant.
Gary J. Corsano for respondent Gordon Moffatt.
Donald H. Burrage for respondent Her Majesty in Right of the Province of Newfoundland and Labrador.
Ronald Ashley for respondent Canadian Transportation Agency.
SOLICITORS OF RECORD:
Gowling Lafleur Henderson LLP, Ottawa, for appellant.
Sampson McDougall, Sydney, Nova Scotia for respondent Gordon Moffatt.
Attorney General of Newfoundland and Labrador for Her Majesty in Right of the Province of Newfoundland and Labrador.
Canadian Transportation Agency for respondent Canadian Transportation Agency.
The following are the reasons for judgment rendered in English by
Rothstein J.A.:
INTRODUCTION
[1] This is an appeal from Canadian Transportation Agency Decision 300-R-1999, dated June 2, 1999 [In the matter of an objection by the Canadian National Railway Company to a submission for a final offer arbitration filed by Mr. Gordon Moffatt pursuant to Part IV of the Canada Tansportation Act, S.C. 1996, c. 10]. 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 novement 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, [12-13 Geo. VI, c. 22 (U.K.) (as am. by Canada Act, 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 21) [R.S.C., 1985, Appendix II, No. 32]]. 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 R.W. Co. (1905), 4 C.R.C. 304 (Bd. of Ry Commissioners). This principle is expressed by La Forest J. in Cuddy Chicks, supra, with reference to subsection 52(1) of the Constitution Act, 1982 [Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] 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 90 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
…
(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.
[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” [underlining added] (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, in so far 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 Term 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 Co. v. Brocklehurst, [2001] 2 F.C. 141 (C.A.). 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 anything 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.
…
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.
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:
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.
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, 1982 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 [R.S.O. 1980, c. 228, s. 106(1)] 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 Act in 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, c. 170, 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 A.-G. Nlfd. v. C.N.R. (1950), 64 C.R.T.C. 352 (T. Bd.), 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 A.-G. Nfld. v. C.N.R. (1951), 67 C.R.T.C. 353 (T. Bd.), Wardrope A.C.C., in reversing the Board’s prior decision, interpreted the opening words of Term 32(2) in the following manner, at page 357:
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.
In my opinion they must then mean that notwithstanding certain dissimilar, disadvantageous circumstances and conditions pertaining to Newfoundland, this Province is to be included rate-wise in the Maritime region on a general level of rates similar to the other Maritime Provinces.
[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 (as am. 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.
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 [R.S.C. 1970, c. N-17] 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 within or at any specified time, and in any manner prescribed by the Commission, so far as is not inconsistent with the Railway Act, any act, matter or within 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.
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 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 Freight 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.
[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 [In the matter of a complaint made by Atlantic Container Express Inc. pursuant to subsection 35(1) of the National Transportation Act, 1987, R.S.C., 1985 (3rd Supp.), dated July 6, 1989, that Canadian National Railway Company is charging rates to Newfoundland destinations not consistent with the Terms of Union], (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 contracts with similar terms and conditions as those applicable to Newfoundland shippers.
[48] However, the broad power of the prior Canadian Transport Commission under section 45 of the NTA to hear and determine complaints and make orders resulting from such determinations was vastly curtailed. The Agency’s power under the NTA, 1987 was identical to its power under the CTA today. Sections 26 and 37 of the CTA are identical to subsections 35(4) and 35(1) of the NTA, 1987.
[49] In ACE, 1991, the Agency’s role with respect to section 111 was explained by the majority of the panel at page 13:
Section 111 allows CN to set its rates as it sees fit subject only to various legal requirements including the Terms of Union. In the competitive environment established by the NTA, 1987, it is the responsibility of CN to establish rates and it is not within the mandate of the Agency, except on a properly filed complaint within its jurisdiction, to interfere with that responsibility. The Agency, therefore, has no ongoing monitoring function to ensure that the Terms of Union rates are properly established.
[50] Section 111 of the NTA, 1987 appeared in Part III, “Railway Transportation, Division I, Rail Freight”. That Part of the Act was regulatory in nature and placed regulatory obligations on railway companies. The Agency is referred to throughout the Part. Accordingly, the Agency had the jurisdiction, at that time, to inquire into and determine the complaint made, namely that CN was not charging rates in accordance with the Terms of Union and require CN to charge rates in accordance with the Terms of Union.
CTA
[51] Finally, we come to the CTA enacted in 1996. As indicated, the power of the Agency under sections 26 and 37 of the CTA remains the same as under subsections 35(4) and 35(1) of the NTA, 1987. However, section 111 of the NTA, 1987 has been repealed. In other words, there is no Term 32(2) limitation in the CTA on the power of a railway company to set freight rates.
[52] Further, under the CTA, there is no longer a requirement for railway companies to file confidential contracts with the Agency. While freight rates in tariffs continue to be public, the evidence before the Agency in this case was that 75 to 80 percent of CN’s domestic intermodal business to and from the Maritimes moves under confidential contracts and not rates in public tariffs (page 23 of Decision 300-R-1999). The Agency does not have access to such rates as there is no power in the Agency to call for such confidential contracts or information contained in such contracts. In repealing section 111 of the NTA, 1987, I think Parliament recognized the fact that the vast majority of rates are negotiated individually between shippers and railway companies, and there is no longer a requirement to charges rates equally to shippers under substantially similar conditions. The notion of a Maritime rate structure had become an anachronism and there was no basis upon which to establish a realistic Maritime rate structure from which could be extrapolated rates to Newfoundland.
[53] In summary, initially it was the broad power of the Board of Transport Commissioners to enforce and require just and reasonable rates that was the rate regulation to which Term 32(2) referred. Subsequently, by the National Transportation Act of 1967, it was the combination of the Canadian Transport Commission’s broad power to inquire into matters under its statutory administration and the Term 32(2) limitation on the power of railway companies to fix freight rates under subsection 269(6) of the Railway Act, that was the source of the Commission’s jurisdiction to order CN to file freight rates that complied with the Terms of Union. Under the NTA, 1987, it was the existence of section 111 of that Act combined with the Commission’s power under subsections 35(1) and 35(4) that was the source of the Agency’s jurisdiction.
[54] Under the CTA, there is no provision for the Agency to have access to the vast majority of rates governing railway freight traffic. Nor is there any regulatory basis for the Agency to require a railway company to maintain a Maritime rate structure. There is no Term 32(2) limitation on a railway company’s power to fix freight rates. In the absence of such provisions, there is no railway rate regulation that engages Term 32(2).
[55] In Decision 300-R-1999, the Agency, correctly in my view, found that there must be railway rate regulation in existence for Term 32(2) to be applied. The Agency stated at page 14:
Contrary to the arguments of the Government of Newfoundland and Labrador and Mr. Moffatt, the Agency cannot ignore these words and conclude that no rate regulation is needed at all for this Term to apply. While no legislation is mentioned in Term 32(2), not even in a general sense as is the case with Term 32(3), it does contemplate that there be at least some sort of railway rate regulation in existence for the Term to be applied.
The Agency then went on to find that railway rate regulation currently exists under the CTA:
Having so concluded, the Agency finds that ‘railway rate regulation’ currently exists. Such regulation exists today, albeit in a diminished and different form than that which existed even as recently as 1996. Today’s rate regulation is far less pervasive and much narrower in focus or limited than that which existed in earlier legislation.
The Agency then provided examples of current railway rate regulation: inter switching rates, competitive line rates, joint rates, maximum grain rates, level of service obligations and final offer arbitrations. On this basis, the Agency concluded at page 15:
… there is still some rate regulation today and this is enough to conclude that Term 32(2) continues to apply.
However, these regulations do not limit the power of a railway company to set rates to Newfoundland and do not imply a requirement that a Maritime rate structure exists, from which Newfoundland rates could be extrapolated.
[56] The Agency seems to have acknowledged this difficulty when it concluded that the development of Terms of Union rates might involve “developing a `best guess’ figure”. At page 28 of Decision 300-R-1999, the Agency stated:
A rate must be identified or developed because the Constitution requires it, and it is the task of the Agency or the arbitrator, or some other party, to determine an appropriate rate in the circumstances of any particular case. The fact that such a task is daunting is unfortunate, but no matter how difficult, it is necessary, even if it means resorting to developing a “best guess” figure. The Agency or the arbitrator, when so called upon, is charged by the Constitution to develop a rate—if there is no clearly identical or comparable rate in terms of the type and quantity of traffic, then the best estimate based upon all the available information, must suffice.
With respect, I do not think it is reasonable to conclude that the Constitution of Canada would require that regulation of freight rates would be based on “best guess” figures.
[57] The Agency does not explain how any of the examples of railway rate regulation that are cited in its reasons have any relevance to railway rates to Newfoundland. Indeed, the type of railway rate regulation to which the Agency referred has never been cited by the Agency, or its predecessor tribunals, as the basis for regulating railway rates to Newfoundland. In the absence of rate regulation that has some relevance to the setting of rates to Newfoundland by a railway company, there is no regulation that engages Term 32(2) and no basis for the Agency to have assumed the jurisdiction it did in this case.
[58] Although final offer arbitration is a form of rate regulation that can be invoked by shippers relative to railway rates to Newfoundland, for the reasons that I found Part IV did not confer jurisdiction on the Agency to do so, final offer arbitration is not a regulatory basis for the Agency to have conducted the inquiry it did in this case or to have instructed the arbitrator to develop Terms of Union rates.
Living Tree Doctrine of Constitutional Interpretation
[59] The Agency seemed to feel that, because the Constitution is the supreme law of Canada and because, in its view, the Constitution is to be interpreted flexibly, consistent with the “living tree” doctrine of constitutional interpretation (see, for example, R e Section 24 of B.N.A. Act, [1930] A.C. 124 (P.C.), at page 136 per Lord Sankey L.C.; and Attorney General of British Columbia v. Canada Trust Co. et al., [1980] 2 S.C.R. 466, at page 478), Term 32(2) must be made to apply to the current state of railway rate regulation in Canada. With respect, I think this approach is misplaced. Certainly the Constitution is the supreme law of Canada and, in appropriate circumstances, it must be adapted to conditions that did not exist when its various provisions were enacted. However, the constitutional provisions in question in any given circumstances must be carefully considered to determine whether the living tree approach is appropriate or whether, as I believe is the case here, the constitutional provision is simply no longer applicable. The living tree doctrine cannot be stretched to animate a provision that is a practical anachronism.
[60] A clear example of a constitutional provision that is no longer applicable is Term 32(3) of the Terms of Union. It provides:
32….
(3) All legislation of the Parliament of Canada providing for special rates on traffic moving within, into, or out of, the Maritime region will, as far as appropriate, be made applicable to the Island of Newfoundland.
For many years, the Maritime Freight Rates Act, R.S.C., 1985, c. M-1, provided for reduced rates on traffic moving within or westbound out of the Maritime Region. In 1996, this legislation was repealed. (See Budget Implementation Act, 1995, S.C. 1995, c. 17, section 25, repeal effective May 31, 1996 (P.C. 1996-804.) It could not be seriously suggested that Term 32(3) still applies in such a manner as to require the continuation of legislation providing for special rates within or from the Maritime Region. In other words, Term 32(3) will only guarantee Newfoundland access to special rates provided to the Maritime Region in legislation, should Parliament choose, in the future, to enact such legislation. However, Term 32(3) currently has no application. Term 32(3) is part of the supreme law of Canada, but the living tree doctrine does not make it effective at this time.
[61] Similarly, Term 32(2) subsists and will guarantee Newfoundland the protection it affords should Parliament, in the future, enact railway rate regulation which is relevant to Term 32(2) . However, at the present time, when Parliament has not provided for any relevant railway rate regulation, the application of Term 32(2) is suspended. As with Term 32(3), the living tree doctrine does not require that Term 32(2) be made to apply in circumstances where there is no relevant railway rate regulation.
[62] For these reasons, I do not think that Term 32(2) itself, either expressly or by necessary implication, confers jurisdiction on the Agency to have conducted the inquiry it did into Term 32(2), nor to issue instructions to the arbitrator to develop Terms of Union rates. In answering the jurisdictional question, it will be apparent that I have also had to address the substantive question raised by CN (in paragraph 5 above) of whether there currently exists rate regulation that engages Term 32(2) and I have concluded that there is not.
CONCLUSION
[63] The appeal will be allowed and the decision of the Agency quashed. At the conclusion of the hearing, the question arose as to whether the matter should be remitted to the Agency for referral to an arbitrator to decide the dispute between Mr. Moffatt and CN. However, the period during which the rate selected by the arbitrator was to have effect has long since expired. The Court was told that Mr. Moffatt did not ship any rail traffic with CN during the relevant period. Accordingly, no useful purpose would be served by remitting the matter to the Agency for referral for final offer arbitration.
[64] As to costs, it was Mr. Moffatt who first raised the matter of Terms of Union rates in his submission to the Agency for final offer arbitration. However, it was CN who raised the inapplicability of the Terms of Union to the rate dispute, objecting to the matter being referred to arbitration. CN now agrees that the Agency did not have jurisdiction to deal with its preliminary objection. For these reasons, there will be no award of costs.
Richard C.J.: I agree.
Noël J.A.: I agree.
Appendix A
Statutory provisions referred to but
not reproduced in the reasons
Canada Transportation Act, S.C. 1996, c.10.
5. It is hereby declared that a safe, economic, efficient and adequate network of viable and effective transportation services accessible to persons with disabilities and that makes the best use of all available modes of transportation at the lowest total cost is essential to serve the transportation needs of shippers and travellers, including persons with disabilities, and to maintain the economic well-being and growth of Canada and its regions and that those objectives are most likely to be achieved when all carriers are able to compete, both within and among the various modes of transportation, under conditions ensuring that, having due regard to national policy, to the advantages of harmonized federal and provincial regulatory approaches and to legal and constitutional requirements,
(a) the national transportation system meets the highest practicable safety standards,
(b) competition and market forces are, whenever possible, the prime agents in providing viable and effective transportation services,
(c) economic regulation of carriers and modes of transportation occurs only in respect of those services and regions where regulation is necessary to serve the transportation needs of shippers and travellers and that such regulation will not unfairly limit the ability of any carrier or mode of transportation to compete freely with any other carrier or mode of transportation,
(d) transportation is recognized as a key to regional economic development and that commercial viability of transportation links is balanced with regional economic development objectives so that the potential economic strengths of each region may be realized,
(e) each carrier or mode of transportation, as far as is practicable, bears a fair proportion of the real costs of the resources, facilities and services provided to that carrier or mode of transportation at public expense,
(f) each carrier or mode of transportation, as far as is practicable, receives fair and reasonable compensation for the resources, facilities and services that it is required to provide as an imposed public duty,
(g) each carrier or mode of transportation, as far as is practicable, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute
(i) an unfair disadvantage in respect of any such traffic beyond the disadvantage inherent in the location or volume of the traffic, the scale of operation connected with the traffic or the type of traffic or service involved,
(ii) an undue obstacle to the mobility of persons, including persons with disabilities,
(iii) an undue obstacle to the interchange of commodities between points in Canada, or
(iv) an unreasonable discouragement to the development of primary or secondary industries, to export trade in or from any region of Canada or to the movement of commodities through Canadian ports, and
(h) each mode of transportation is economically viable,
and this Act is enacted in accordance with and for the attainment of those objectives to the extent that they fall within the purview of subject-matters under the legislative authority of Parliament relating to transportation.
…
161. (1) A shipper who is dissatisfied with the rate or rates charged or proposed to be charged by a carrier for the movement of goods, or with any of the conditions associated with the movement of goods, may, if the matter cannot be resolved between the shipper and the carrier, submit the matter in writing to the Agency for a final offer arbitration to be conducted by one arbitrator or, if the shipper and the carrier agree, by a panel of three arbitrators.
(2) A copy of a submission under subsection (1) shall be served on the carrier by the shipper and the submission shall contain
(a) the final offer of the shipper to the carrier in the matter, excluding any dollar amounts;
(b) the last offer received by the shipper from the carrier in the matter;
(c) an undertaking by the shipper to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator;
(d) an undertaking by the shipper to the Agency whereby the shipper agrees to pay to the arbitrator the fee for which the shipper is liable under section 166 as a party to the arbitration; and
(e) the name of the arbitrator, if any, that the shipper and the carrier agreed should conduct the arbitration or, if they agreed that the arbitration should be conducted by a panel of three arbitrators, the name of an arbitrator chosen by the shipper and the name of an arbitrator chosen by the carrier.
(3) The Agency shall not have any matter submitted to it by a shipper under subsection (1) arbitrated if the shipper has not, at least five days before making the submission, served on the carrier a written notice indicating that the shipper intends to submit the matter to the Agency for a final offer arbitration.
(4) A final offer arbitration is not a proceeding before the Agency.
162. (1) On the submission of a matter to the Agency for a final offer arbitration, the Agency shall refer the matter for the arbitration
(a) to the chosen arbitrator, if any, referred to in paragraph 161(2)(e), if that arbitrator is available to conduct the arbitration; or
(b) where no arbitrator is chosen as contemplated by paragraph (a) or the arbitrator chosen is, in the opinion of the Agency, unavailable to conduct the arbitration, to any other arbitrator, chosen by the Agency from the list of arbitrators referred to in section 169, that the Agency determines is appropriate and available to conduct the arbitration
(2) The Agency may, at the request of the arbitrator, provide administrative, technical and legal assistance to the arbitrator on a cost recovery basis.
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165. (1) The decision of the arbitrator in conducting a final offer arbitration shall be the selection by the arbitrator of the final offer of either the shipper or the carrier.
(a) the final offer of the shipper shall be the shipper’s final offer set out in the submission to the Agency under subsection 161(1); and
(b) the final offer of the carrier shall be the last offer received by the shipper from the carrier as set out in the submission to the Agency under subsection 161(1) or any other offer that the carrier, within ten days after the service referred to in subsection 161(2), specifies in writing to the shipper and to the Agency as the carrier’s final offer.
(2) The decision of the arbitrator shall
(a) be in writing;
(b) unless the parties agree otherwise, be rendered within 60 days or, in the case of an arbitration conducted in accordance with section 164.1, 30 days after the date on which the submission for the final offer arbitration was received by the Agency; and
(c) unless the parties agree otherwise, be rendered so as to apply to the parties for a period of one year or any lesser period that may be appropriate, having regard to the negotiations between the parties that preceded the arbitration.
(3) The carrier shall, without delay after the arbitrator’s decision, set out the rate or rates or the conditions associated with the movement of goods that have been selected by the arbitrator in a tariff of the carrier, unless, where the carrier is entitled to keep the rate or rates or conditions confidential, the parties to the arbitration agree to include the rate or rates or conditions in a contract that the parties agree to keep confidential.
(4) No reasons shall be set out in the decision of the arbitrator.
(5) The arbitrator shall, if requested by all of the parties to the arbitration within 30 days or, in the case of an arbitration conducted in accordance with section 164.1, seven days after the decision of the arbitrator, give written reasons for the decision.
(6) Except where both parties agree otherwise,
(a) the decision of the arbitrator on a final offer arbitration shall be final and binding and be applicable to the parties as of the date on which the submission for the arbitration was received by the Agency from the shipper, and is enforceable as if it were an order of the Agency; and
(b) the arbitrator shall direct in the decision that interest at a reasonable rate specified by the arbitrator shall be paid to one of the parties by the other on moneys that, as a result of the application of paragraph (a), are owed by a party for the period between the date referred to in that paragraph and the date of the payment.
(7) Moneys and interest referred to in paragraph (6)(b) that are owed by a party pursuant to a decision of the arbitrator shall be paid without delay to the other party.
National Transportation Act, 1987, S.C. 1987, c. 34.
52. (1) The decision of the arbitrator in conducting a final offer arbitration shall be the selection by the arbitrator of the final offer of either the shipper or the carrier and, for the purpose of this section, the final offer of
(a) the shipper shall be the shipper’s final offer set out in the submission to the Agency under subsection 48(1); and
(b) the carrier shall be the last offer received by the shipper from the carrier as set out in the submission to the Agency under subsection 48(1) or such other offer as the carrier, within ten days after the service referred to in subsection 48(2), specifies in writing to the shipper and the Agency as the carrier’s final offer
(2) the decision of the arbitrator shall
(a) be in writing;
(b) unless the parties otherwise agree, be rendered within ninety days after the date on which the submission for the final offer arbitration was received by the Agency from the shipper; and
(c) unless the parties otherwise agree, be rendered so as to be applicable in respect of the parties to the arbitration for a period of one year or such lesser period as may be appropriate, having regard to the negotiations between the parties that preceded the arbitration.
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59. (1) The public interest referred to in this section and in section 61 shall include the relevant matters required to be considered under section 60.
(2) Where a person or organization has reason to believe
(a) that the effect of any rate established by a carrier or carriers, or
(b) that any act or omission of a carrier, or of any two or more carriers,
may prejudicially affect the public interest in respect of rates for, or conditions of, the carriage of goods within, into or from Canada, the person may request the Agency to investigate the rate, act or omission and the Agency shall make such investigation of the rate, act or omission and the effect thereof as in its opinion is warranted.
(3) Where the Agency has, pursuant to section 48, received a submission for a final offer arbitration in respect of any matter and acted in accordance with paragraph 48(3)(b), the Agency shall be deemed to have received a request to investigate the matter under subsection (2).
(4) Where, at any time after a person has requested an investigation, the person by notice to the Agency withdraws the request, the Agency shall forthwith discontinue the investigation.
Railway Act, R.S.C. 1927, c. 170.
314. All tolls shall always under substantially similar circumstances and conditions, in respect of all traffic of the same description, and carried in or upon the like kind of cars or conveyances, passing over the same line or route, be charged equally to all persons and at the same rate, whether by weight, mileage or otherwise.
2. No reduction or advance in any such tolls shall be made, either directly or indirectly, in favour of or against any particular person or company travelling upon or using the railway.
3. The tolls for carload quantities or longer distances, may be proportionately less that the tolls for less than carload quantities, or shorter distances, if such tolls are, under substantially similar circumstances, charged equally to all persons.
4. No toll shall be charged which unjustly discriminates between different localities.
5. The Board shall not approve or allow any toll, which for the like description of goods, or for passengers carried under substantially similar circumstances and conditions in the same direction over the same line or route is greater for a shorter than for a longer distance, within which such shorter distance is included, unless the Board is satisfied that, owing to competition, it is expedient to allow such toll.
6. The Board may declare that any places are competitive points within the meaning of this Act.
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325. The Board may disallow any tariff or any portion thereof which it considers to be unjust or unreasonable, or contrary to any of the provisions of this Act, and may require the company, within a prescribed time, to substitute a tariff satisfactory to the Board in lieu thereof, or may prescribe other tolls in lieu of the tolls so disallowed.
2. The Board may designate the date at which any tariff shall come into force, and either on application or of its own motion may, pending investigation or for any reason, postpone the effective date of, or either before or after it comes into effect, suspend any tariff or any portion thereof.
3. Except as otherwise provided, any tariff in force, except standard tariffs hereinafter mentioned, may, subject to disallowance or change by the Board, be amended or supplemented by the company by new tariffs, in accordance with the provisions of this Act.
4. When any tariff has been amended or supplemented, or is proposed to be amended or supplemented, the Board may order that a consolidation and reissue of such tariff be made by the company.
5. Notwithstanding the provisions of section three of this Act the powers given to the Board under this Act to fix, determine and enforce just and reasonable rates, and to change and alter rates as changing conditions or cost of transportation may from time to time require, shall not be limited or in any manner affected by the provision of 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, and the Board shall not excuse any charge of unjust discrimination, whether practised against shippers, consignees, or localities, or of undue or unreasonable preference, on the ground that such discrimination or preference is justified or required by any agreement made or entered into by the company: Provided that, notwithstanding anything in this subsection contained, rates on grain and flour shall, on and from the twenty-seventh day of June, one thousand nine hundred and twenty-five, be governed by the provisions of the agreement made pursuant to chapter five of the Statutes of Canada 1897, but such rates shall apply to all such traffic moving from all points on all lines of railway west of Fort William to Fort William or Port Arthur over all lines now or hereafter constructed by any company subject to the jurisdiction of Parliament.
6. The Board shall not excuse any charge of unjust discrimination, whether practised against shippers, consignees, or localities or of undue or unreasonable preference, respecting rates on grain and flour, governed by the provisions of chapter five of the Statutes of Canada 1897, and by the agreement made or entered into pursuant thereto within the territory in the immediately preceding subsection referred to, on the ground that such discrimination or preference is justified or required by the said Act or by the agreement made or entered into pursuant thereto.