Northern and Central Gas Corporation Limited,
Union Gas Company of Canada Limited and
Consumers' Gas Company (Plaintiffs)
v.
National Energy Board and Trans-Canada Pipe
Lines Limited (Defendants)
and
Attorney General of Canada (Intervenant)
Trial Division, Gibson J.—Ottawa, May 25, 26,
27, 28, June 11, 1971.
National Energy Board—Constitutional Law—Inter-pro
vincial pipe line—Distributor selling gas in one Province—
Power of National Energy Board to fix pipe line transmis
sion tolls—Whether interference with property and civil
rights in Province—Whether regulatory power retrospec-
tive—B.N.A. Act, s. 91(2), (29), 92(10)(a)—National Energy
Board Act, 1959 (Can.), c. 46, secs. 50, 51.
Plaintiffs purchased natural gas from a pipe line company
under contracts made in 1956 and subsequently. The gas
was transmitted by the pipe line company through its pipe
lines from Alberta and delivered to plaintiffs in Ontario, and
was sold and delivered by plaintiffs to their customers in
Ontario. The price paid by plaintiffs to the pipe line compa
ny for the gas was not broken down between a transmission
charge and a price for the gas. In August 1969 the pipe line
company applied to the National Energy Board under s.
97(1) of the National Energy Board Act to make Part IV of
the Act (secs. 50 to 61) apply to the pipe line company, and,
under secs. 50 and 53, to fix tolls for gas sold by it in
Canada. On October 30, 1969, the Board by order made the
Act applicable to all persons operating pipe lines when the
Act came into force (Nov. 2, 1959). On Nov. 5, 1970, the
pipe line company applied to the Board for an order fixing
interim tolls.
Held: (1) Although the power to regulate a pipe line
operator's transmission charges affected plaintiffs' property
and civil rights, the federal legislation was intra vires as
being a valid exercise of Parliament's legislative jurisdiction
with respect to trade and commerce (s. 91(2) B.N.A. Act)
and with respect to inter-provincial works and undertakings
(s. 91(29) and 92(10)(a)).
(2) The Board's power under s. 50 of the National Energy
Board Act to set the selling price of gas was not limited to
contracts executed after October 30, 1969, the date on
which the Act became applicable to the pipe line company,
but extended to contracts executed before that date.
ACTION for declaration.
C. L. Drouin, Q. C., for Union Gas Co. of
Canada Ltd. and Northern and Central Gas
Corp., plaintiffs.
H. Soloway, Q.C., F. Lamar and M. J.
O'Grady for National Energy Board, defendant.
G. D. Finlayson, Q.C. and J. H. Francis for
Trans-Canada Pipe Lines Ltd., defendant.
B. J. MacKinnon, Q.C., and J. E. Sexton for
Consumers' Gas Co., plaintiff.
C. R. O. Munro, Q.C., for Attorney General
of Canada, intervenant.
GIBSON J.—These six actions were tried
together. In three of the actions the defendant is
the Attorney General of Canada and in the
other three actions the defendants are the
National Energy Board and Trans-Canada Pipe
Lines Limited and the Attorney General of
Canada is a party as intervenor.
The plaintiffs in the actions in which the
Attorney General of Canada is the defendant
alone, seek a declaration that:
... Sections 50, 51, 52, 53, 54, 61 and 97(1) of the National
Energy Board Act are ultra vires the Federal Parliament
insofar as they purport to regulate or grant the power to
regulate the price of natural gas sold and delivered exclu
sively within a province.
The plaintiffs in the other three actions claim:
A declaration that the National Energy Board has no
jurisdiction to interfere in any respect with the prices and
rates presently in force in the contracts between the plain
tiff and the defendant, Trans-Canada Pipe Lines, and that
there is no tariff affecting the plaintiff within the meaning
of the Act, and that it cannot establish such prices under its
governing Act for the future; (and)
A declaration that sections 50, 51, 52, 53, 54, 61 and
97(1) of the National Energy Board Act and Order MO-62-
69 of the Board, dated the 30th day of October, 1969, do
not have retrospective effect and do not affect the prices
fixed by the contracts aforesaid;
The plaintiffs in these latter actions also
claimed other relief which was not asked for at
this trial.
The parties agreed as to certain facts for the
purpose of this trial.
In summary, this agreement was as follows:
1. The plaintiff, Northern and Central Gas
Corp. Ltd., is a company incorporated under
the laws of the Dominion of Canada with its
head office at Toronto, Ontario, and the plain
tiff, the Consumers' Gas Co. and the plaintiff,
Union Gas Co. of Canada Ltd., are Ontario
companies having their respective head offices
at Toronto and Chatham, Ontario.
2. The defendant Trans-Canada Pipe Lines
Ltd. was incorporated by special Act of the
Parliament of Canada 15 Geo VI, c. 92, as
amended by special Act 2-3 Eliz. II, c. 80, and
special Act 16-17 Eliz. II, c. 46.
3. The defendant National Energy Board was
established by Part I of the National Energy
Board Act, S. of C. 1959, c. 46, as amended.
4. In or about the year 1956 the Consumers'
Gas Co., in or about the year 1957 Northern
and Central Gas Corp. Ltd., and in or about the
year 1959 Union Gas Co. of Canada Ltd.
respectively commenced purchasing from
Trans-Canada Pipe Lines Ltd. large quantities
of natural gas owned by Trans-Canada Pipe
Lines Ltd. under several contracts.
5. All of the plaintiffs take delivery of their
natural gas purchases from the defendant
Trans-Canada Pipe Lines Ltd. in various places
in Ontario and they sell and deliver the natural
gas to their respective customers in Ontario.
(There is one exception, in the case of the
Consumers' Gas Co. which sells some gas to an
associated company of it in Hull, Quebec.) (It is
specifically provided in these several contracts
that title to the gas does not pass from Trans-
Canada Pipe Lines Ltd. until it is delivered to
the plaintiffs; and all of such places of delivery
are solely within the Province of Ontario.)
6. On August 14, 1969, the defendant Trans-
Canada Pipe Lines Ltd. made an application for
an order under s. 97(1) of the National Energy
Board Act (hereinafter called the Act) to have
Part IV of the Act apply to it. In addition, it
sought orders from the Board to fix "the just
and reasonable rates or tolls" which it could
charge with respect to gas sold by it in Canada,
and "disallow any existing tariff or tolls or
portion thereof which were inconsistent with
the just and reasonable rates or tolls so fixed".
The application was brought under secs. 50 and
53 of the Act.
7. On October 30, 1969, the National Energy
Board by Board Order No. MO-62-69 declared
Part IV of the Act applied to "every person
who on the day the Act came into force was
operating a pipe line". Trans-Canada Pipe Lines
Ltd. was so operating on November 2, 1959,
the date the Act came into force.
8. On November 5, 1970, the defendant
Trans-Canada Pipe Lines Ltd. applied to the
Board for an order fixing interim tolls.
9. The plaintiffs have delivered and filed sub
missions and interventions to both of the said
applications by the said defendant.
10. Section 61 of the Act was repealed and a
new s. 61 substituted therefor by chapter 52, S.
of C. 1960-61 which received Royal Assent and
came into force July 13, 1961.
11. Section 51 of the Act was amended and a
new subsec. (2) added thereto by chapter 65, S.
of C. 1969-70 which received Royal Assent and
came into force June 26, 1970.
12. The hearings on both applications com
menced on February 9, 1971, and are still
proceeding.
13. The defendant Trans-Canada Pipe Lines
Ltd. filed with the defendant Board copies of
the several contracts as between it and the
several plaintiffs referred to above on or about
the following dates'.
In the Province of Alberta, there is and was
at all material times a Board called the Alberta
Gas and Oil Conservation Board. Among other
things, it issues permits for the export of gas
from Alberta after a determination that such gas
is surplus to Alberta's present and future needs.
Since 1964, there has been established also in
the Province of Ontario a Board called the
Ontario Energy Board. At s. 19 of the Act
establishing that Board, namely, the Ontario
Energy Board Act, 1964, (Ont.), c. 74 as
amended, that Board is given power "Subject to
the regulations, ... (to) make orders approving
or fixing just and reasonable rates and other
charges for the sale of gas by transmitters,
distributors and storage companies, and for the
transmission, distribution and storage of gas".
The following sections of the National
Energy Board Act are relevant in this case,
namely:
2. In this Act
(a) "Board" means the National Energy Board;
(c) "company" means a person having authority under a
Special Act to construct or operate pipe lines;
(g) "import" means, with reference to gas or oil, to bring
into Canada through pipe lines, by railway tank car, by
tank truck or by tanker;
(m) "pipe line" means a line for the transmission of gas or
oil connecting a province with any other or others of the
provinces, or extending beyond the limits of a province,
and includes all branches, extensions, tanks, reservoirs,
storage facilities, pumps, racks, compressors, loading
facilities, interstation systems of communication by tele
phone, telegraph or radio, and real and personal property
and works connected therewith;
(q) "Special Act" means
(i) an Act of the Parliament of Canada that authorizes a
person named in the Act to construct or operate a pipe
line or that is enacted with special reference to a pipe
line that a person is by such an Act authorized to
construct or operate, and
(ii) letters patent issued under section 5A or 50 of the
Canada Corporations Act, except for the purpose of
paragraph (b) of section 80;
(r) "toll" includes any toll, rate, charge or allowance
charged or made for the shipment, transportation, trans
mission, care, handling or delivery of hydrocarbons, or
for storage or demurrage or the like.
97. (1) Part IV of this Act does not apply to any person
who, on the day this Act comes into force, is operating a
pipe line, until the Board so orders.
(As appears in the agreement as to facts, the
Board ordered that Part IV applied to Trans-
Canada Pipe Lines Ltd. on October 30, 1969.)
91. The Board shall within three months after the 31st
day of December in each year submit to the Minister a
report on the activities of the Board under this Act for that
year, and the Minister shall cause the report to be laid
before Parliament within fifteen days after the receipt there
of or, if Parliament is not then sitting, on any of the first
fifteen days next thereafter that Parliament is sitting.
(This Act came into force on November 2,
1959.)
(Part IV of the Act which is entitled "Traffic,
Tolls and Tariffs" contains secs. 50 to 61.)
50. The Board may make orders with respect to all mat
ters relating to traffic, tolls or tariffs.
51. (1) A company shall not charge any tolls except tolls
specified in a tariff that has been filed with the Board and is
in effect.
(2) Where the gas transmitted by a company through its
pipe line is the property of the company, the company shall
file with the Board, upon the making thereof, true copies of
all the contracts it may make for the sale of gas and
amendments from time to time made thereto, and the true
copies so filed shall be deemed, for the purposes of this
Part, to constitute a tariff pursuant to subsection (1).
(Section 51(2) of the Act came into force on
June 26, 1970.)
52. All tolls shall be just and reasonable, and shall
always, under substantially similar circumstances and con
ditions with respect to all traffic of the same description
carried over the same route, be charged equally to all
persons at the same rate.
53. The Board may disallow any tariff or any portion
thereof that it considers to be contrary to any of the
provisions of this Act or to any order of the Board, and may
require a company, within a prescribed time, to substitute a
tariff satisfactory to the Board in lieu thereof, or may
prescribe other tariffs in lieu of the tariff or portion thereof
so disallowed.
55. A company shall not make any unjust discrimination
in tolls, service or facilities against any person or locality.
60. Where the Board finds such action necessary or
desirable in the public interest, it may direct a company
operating a pipe line for the transmission of gas to extend or
improve its transmission facilities to provide facilities for
the junction of its pipe line with anÿ facilities of, and sell
gas to, any person or municipality engaged or legally author
ized to engage in the local distribution of gas to the public,
and for such purposes to construct branch lines to com
munities immediately adjacent to its pipe line, if the Board
finds that no undue burden will be placed upon the compa
ny thereby, but the Board has no power to compel a
company to sell gas to additional customers if to do so
would impair its ability to render adequate service to its
existing customers.
61. Where the gas transmitted by a company through its
pipe line is the property of the company, the differential
between the cost to the company of the gas at the point
where it enters its pipe line and the amount for which the
gas is sold by the company shall, for the purposes of this
Part, be deemed to be a toll charged by the company to the
purchaser for the transmission thereof.
(Section 61 came into force in its present
form on July 13, 1961.)
(In connection with this latter section, none
of the several contracts above referred to and
filed at this trial show the cost of the transmis
sion of the gas, that is the differential between
the cost to Trans-Canada Pipe Lines Ltd. of the
gas at the point where it enters its pipe line and
the amount for which the gas is sold by it to the
several plaintiffs.)
62. (1) A company may, for the purposes of its undertak
ing, subject to the provisions of this Act and its Special Act,
(h) transmit hydrocarbons by pipe line and regulate the
time and manner in which hydrocarbons shall be transmit
ted, and the tolls to be charged therefor; and
In addition, and relevant in this case, Part I of
the Schedule to the National Energy Board
Rules of Practice and Procedure, which pre
scribes the information required to be filed by
an applicant for a certificate in respect of a gas
pipe line, at paragraph 11 (ii) requires the appli
cant to file a proforma statement of estimated
revenues and expenses for the applicant's pipe
line system for the first, third and fifth years
following the issuance of the proposed certifi
cate indicating among other things the "pur-
chase cost of the gas".
Also, s. 2(2) of the Gas Pipe Line Uniform
Accounting Regulations established by
P.C. 1969-1792 under the authority of the
National Energy Board Act requires "every gas
pipe line company that is subject to the jurisdic
tion of the Board ... unless otherwise author
ized, (to) follow the accounting instructions set
out in these Regulations". These regulations are
very detailed.
The plaintiffs' witnesses at this trial were
George W. Carpenter, executive vice-president
and general manager of the Consumers' Gas
Co.; Robert Glenn Caughey, Director of Gas
Supply Union Gas Supply Co. of Canada; and
Mr. R. Johnson, rate supervisor of Northern
and Central Gas Corp. Ltd.
The Attorney General of Canada adduced no
evidence.
The National Energy Board filed as Ex. 10
the transcript of the first day of evidence before
the National Energy Board on February 9,
1971, as Ex. 11 a copy of an order of the
National Energy Board dated June 18, 1970,
and as Ex. 12 a copy of an order of the Nation
al Energy Board dated December 17, 1970.
Trans-Canada Pipe Lines Ltd.'s only witness
was Mr. Vernon Hortie, president of that
company.
The evidence established that Trans-Canada
Pipe Lines Ltd. owns the pipe lines as shown on
Ex. 5. There are pipe lines for the transmission
of gas from Alberta through Saskatchewan,
Manitoba, Ontario and Quebec and into the
State of Vermont, U.S.A. Through their pipe
lines also, at Emerson, Manitoba, Trans-Canada
Pipe Lines Ltd. delivers gas to a pipe line
company associated with it by the name of
Great Lakes Transmission Gas Co. That compa
ny transmits the gas through its pipe lines
through the States of Minnesota, Wisconsin and
Michigan and into Ontario, connecting at the
town of Dawn in Ontario with the pipe line
owned by the plaintiff the Union Gas Co. of
Canada Ltd.
The evidence also established that Trans-
Canada Pipe Lines Ltd. buys its gas in the
Province of Alberta, the purchase of which is as
yet not subject to any order of any board, either
provincial or federal; that it takes delivery of
such gas into its pipe line at a point on the
Alberta-Saskatchewan border; that it delivers
all its gas through its own pipe line system; that
it sells the gas it so delivers at various points in
the Provinces of Saskatchewan, Manitoba and
Ontario and in the State of Vermont, U.S.A.;
that the plaintiff purchasers by the said several
contracts which have been filed at this trial and
with the Board, pay Trans-Canada Pipe Lines
Ltd. for the transmission of the gas as a carrier
and for the gas in one sum, and that there is no
breakdown in such sum as between the charge
for transmission of the gas and the charge for
the gas itself.
As stated, Trans-Canada Pipe Lines Ltd. in
its said application to the National Energy
Board seeks orders from that Board to fix "the
just and reasonable rates or tolls" which it can
charge with respect to gas sold by it in Canada,
and also to "disallow any existing tariff or tolls
or portion thereof which were inconsistent with
the just and reasonable rates or tolls so fixed".
The National Energy Board by s. 50 of the
National Energy Board Act is empowered to
"make orders with respect to all matters relat
ing to traffic, tolls or tariffs". Presumably, a
tariff for the purpose of that section is a list of
tolls.
A toll is defined, as referred to above, in s.
2(r) of the Act and includes "any toll, rate,
charge or allowance charged or made for the
... transmission, care, handling or delivery of
hydrocarbons, or for storage or demurrage or
the like"; and an extended definition of toll is
contained in s. 61 where it is provided that "the
differential between the cost to the company of
the gas at the point where it enters its pipe line
and the amount for which the gas is sold by the
company shall, for the purposes of this Part,
(i.e. Part IV) be deemed to be a toll charged by
the company to the purchaser for the transmis
sion thereof".
By reason of s. 51(1), every company subject
to the Act, as is Trans-Canada Pipe Lines Ltd.,
is prohibited from charging "any tolls except
tolls specified in a tariff that has been filed with
the Board and is in effect".
Then by reason of s. 51(2) of the Act which
came into force June 26, 1970, there is this
provision which applies to all companies like
Trans-Canada Pipe Lines Ltd. who in addition
to providing transmission or carrier services,
also own the gas and sell the gas which they
transmit through their own pipe lines to wit,
51. (1)...
(2) Where the gas transmitted by a company through its
pipe line is the property of the company, the company shall
file with the Board, upon the making thereof, true copies of
all the contracts it may make for the sale of gas and
amendments from time to time made thereto, and the true
copies so filed shall be deemed, for the purposes of this
Part, to constitute a tariff pursuant to subsection (1).
Most of the contracts the plaintiffs have
entered into with Trans-Canada Pipe Lines as
above noted, were entered into prior to June 26,
1970. These contracts may or may not be con
tracts within the meaning of s. 51(2) of the Act.
Then at s. 52, it is provided that toll charges
must be just and reasonable without discrimina
tion to any consumer; and then it is provided in
s. 53 of the Act that the Board "may disallow
any tariff or any portion thereof that it consid
ers to be contrary to any of the provisions of
this Act or to any order of the Board" and in
addition, it may after disallowance "require a
company, within a prescribed time, to substitute
a tariff satisfactory to the Board in lieu thereof,
or may prescribe other tariffs in lieu of the
tariff or portion thereof so disallowed".
The Court had the benefit of exhaustive sub
missions by all parties.
The plaintiffs' positions in brief were as
follows:
1. The sale of gas in Ontario made pursuant
to contracts entered into by them with Trans-
Canada Pipe Lines in Ontario was a matter of
property and civil rights within the Province
and a matter of local or private nature in the
Province and that as a consequence, in their
view, "the attempted application of the legisla
tion and/or its terms to the (plaintiffs) ... and
Trans-Canada Pipe Lines Ltd., present and
future, is an interference with property and civil
rights within the Province and matters local and
provincial". (Section 92(13) and (16) of the
B.N.A. Act.)
A
(i) Caloil Inc. v. A.G. Can. (1971) 15 D.L.R. (3d) 164,
Jackett P. at pp. 172-73, 175-76; (ii) Caloil Inc. v. A.G.
Can. (May 10, 1971) S.C.R.; (iii) A.G. B.C. v. A.G.
Can. [1937] A.C. 377 Lord Atkin at pp. 386-87; (iv)
The King v. Eastern Terminal Elevator Co. [1925]
S.C.R. 434, Duff J. at pp. 446-48; (v) Re: Farm Prod
ucts Marketing Act [1957] S.C.R. 198; Kerwin C.J. at
p. 204; Rand J. at pp. 203, 212-13; Fauteux J. (as he
then was) at p. 256; (vi) Carnation Co. v. Que. Agricul
tural Marketing Bd. [1968] S.C.R. 238 Martland J. (for
the Court) at pp. 253-54; (vii) Home Oil Distributors
Ltd. v. A.G. B.C. [1940] S.C.R. 444 Crocket J. at p.
448, Davis J. at p. 451, Hudson J. at p. 455.
B
(i) Campbell-Bennett Ltd. v. Comstock [1954] S.C.R.
207 (see now s. 79 of the National Energy Board Act);
(ii) Montreal v. Montreal Street Rly. [1912] A.C. 333 at
p. 346; (iii) Re: Radio Communications [1932] A.C.
304, Lord Dunedin at p. 315.
2. In any event, the National Energy Board
Act should not be given retrospective effect so
as to permit interference with contractual or
other existing rights.
(i) Maxwell on the Interpretation of Statutes 11th ed.,
pp. 204-06; 12th ed., pp. 215-16; (ii) Craies on Statute
Law, 5th ed., pp. 357-58, 360-61, 369; (iii) Schmidt v.
Ritz (1901) 31 S.C.R. 602, Strong J. at pp. 605-06; (iv)
Spooner Oils Ltd. v. Turner Valley Gas Conservation
Bd. [1933] S.C.R. 629, Duff C.J. at p. 638; (v) In Re
Athlumney [1898] 2 Q.B. 547, Wright J. at p. 551; (vi)
Pitcher v. Shoebottom [1971] 1 O.R. 106, Lieff J. at p.
113; (vii) Queen v. Walker (1970) 11 D.L.R. (3d) 173,
Martland J. at p. 186; (viii) Gloucester v. Ottawa [1940]
O.W.N. 524 (C.A.) at p. 529; (ix) West v. Gwynne
[1911] 2 Ch. 1 at 10.
3. A proper interpretation of secs. 50, 51, 60,
61 and 97 of the National Energy Board Act
will establish that these sections, and in fact all
of the sections of the whole Act, by their very
terms, do not deal with the sale of gas, but
instead deal with the transmission of gas and
other hydrocarbons and therefore the National
Energy Board, among other things, is empow
ered only to deal with carrier charges for such
transmission for this inter-provincial company
Trans-Canada Pipe Lines Ltd., and nowhere in
any of the sections of the Act is it empowered
to deal with the price to be paid for the sale of
gas.
Counsel for the Attorney General of Canada
did not rely, for the validity of the National
Energy Board Act, on the federal commerce
power. (Section 91(2) of the B.N.A. Act.)
Instead, he relied on the subject-matter of the
legislation being in relation to a federal work or
undertaking. (Section 91(29) and s. 92(10) of
the B.N.A. Act.)
The submission was that this legislation was
directed solely to charges for the transmission
of gas and other hydrocarbons through inter-
provincial pipe lines; that these transmission
charges are imposed in two ways, namely, first
ly in the situation where the gas carried in the
pipe line is owned by the pipe line owner and
secondly in the situation where the gas in the
pipe line is owned by some other person than
the pipe line owner; that because Trans-Canada
Pipe Lines Ltd. was in the former category, the
Board in setting a charge for the transmission of
gas must include in any such charge the selling
price of the gas and the only person that this
charge can be imposed upon in the subject case
is the purchaser of the gas; or in other words,
the power of the Board to fix tolls or charges in
this situation affects the price of gas but that
the fact that it affects it does not make the
enabling legislation ultra vires the federal gov
ernment so long as the legislation is within a
matter of valid federal jurisdiction.
In sum, the submission was that the Board's
jurisdiction in respect to the matter of the said
application before it by Trans-Canada Pipe
Lines Ltd. was a matter in relation to an inter-
provincial undertaking within the meaning of
head (10)(a) of s. 92 and s. 91(29) of the British
North America Act and not a matter of proper
ty and civil rights in the Province or of a merely
private or local matter in the Province within
the meaning of heads (13) and (16) of s. 92 of
the British North America Act.
1. Caloil Inc. v. A.G. Can. Supreme Court of Canada
(unreported); 2. The Queen v. Board of Transport
Com'rs. [1968] S.C.R. 118; 3. Campbell-Bennett v.
Trans Mountain Oil Pipe Line Co. [1954] S.C.R. 207; 4.
Gold Seal Ltd. v. A.G. Alta, 62 S.C.R. 424; 5. Toronto
v. Bell Telephone Co. [1905] A.C. 52; 6. Winner v.
S.M.T. (Eastern) Ltd. [1954] A.C. 541.
Counsel for the National Energy Board,
among other things, submitted that there were
tariffs and tolls in existence as of October 30,
1969, within the meaning of Part IV of the
National Energy Board Act, and in particular s.
53 thereof, but even if there were none, the
National Energy Board still had power to exer
cise jurisdiction in respect to the same under s.
51(2) of the Act; that the Act does not purport
to give the Board power to regulate the sale of
gas but only power to make orders with respect
to all matters "relating to traffic, tolls or
tariffs"; that the fact that the exercise of such
regulatory powers may affect certain contracts
between the plaintiffs and Trans-Canada Pipe
Lines Ltd. which have been entered into before
Part IV of the Act was declared in force by the
Board (pursuant to its enabling powers in s.
97(1) of the Act), is not material to the issue;
that s. 51(2) of the Act is purely administrative
and gives sanction to the practice of the Board
up to the time of the passing of that subsection;
and that "rate fixing contracts between private
parties, even when entered into prior to the
enactment of public utility legislation, cannot
prevail against the legislation when it comes
into force";
Ottawa Electric Rly. v. Ottawa and Canada Atlantic
Rly. [1906] S.C.R. 354; Grand Trunk Rly. and C.P.R. v.
Toronto [1909] S.C.R. 613; Maritime Electric Co. v.
General Dairies Ltd. [1937] A.C. 610, 1 All E.R. 748;
Union Dry Goods Co. v. Georgia Public Service Corp.
(1919) 248 U.S. 372; Washington v. Public Service
Com'n (1921) 129 N.E. 459; Producers Transportation
Co. v. Rr. Com'n of Cal. (1919) 251 U.S. 228; Re:
Highland Telephone Corp. (1921) PUR 162; Market
Street Rly. v. Pacific Gas and Electric Co. [1926] A.
509;
that on a proper interpretation of the National
Energy Board Act it is remedial legislation
establishing a comprehensive regulatory
scheme, and Parliament must have intended to
bring existing contractual arrangements within
its scope.
Sections 97(2); 58(1); 52; 53; 54; 55; 56; 61; and most
importantly s. 51(1); Maxwell on Statutes, 12th ed.
1959, pp. 215 ff, middle p. 216; Interpretation Act,
1967-68, c. 7, s. 11; West v. Gwynne [1911] 2 Ch. 1; 80
L.J. Ch. 578; Acme Village v. Steele-Smith [1933]
S.C.R. 47; Tomashaysky v. Nichols (1955) 16 W.W.R.
598; A.G. Can. v. Compagnie de Publication La Presse
Ltée. (1966) 63 D.L.R. (2d) 396; Grand Trunk Rly. v.
Hepworth Silica Pressed Brick Co. (1919) 51 S.C.R. 81,
per Davies J. at p. 85; B.C. Elec. Rly. v. Public Utilities
Com'n of B.C. [1960] S.C.R. 837; Edmonton v. North
western Utilities Ltd. [1961] S.C.R. 392; Spooner Oils
Ltd. v. Turner Valley Gas Conservation Bd. [1933]
S.C.R. 629.
Counsel for Trans-Canada Pipe Lines Ltd. as
to the submission in respect to the constitution
al issues relating to the validity of the National
Energy Board Act, submitted that the Act could
be upheld under the federal commerce power
(s. 91(2) of the B.N.A. Act) and also as the
exercise of the power over an inter-provincial
work or undertaking (s. 91(29) and s. 92(10)(a)
of the B.N.A. Act).
Re: the exercise of power over an inter-pro
vincial work or undertaking: (Section 91(29) as
read with s. 92(10)(a) of the B.N.A. Act.)
Campbell-Bennett Ltd. v. Comstock Mid-western Ltd.
[1954] S.C.R. 297 and particularly Kerwin J. speaking
for himself and Fauteux J. (as he then was) at p. 211;
also Rand J. speaking for himself, Kellock, Locke and
Cartwright J.J. at p. 214; Grand Trunk Rly. v. A.G.
Can. [1907] A.C. 65; Toronto v. Bell Telephone Co.
[1905] A.C. 52 and particularly at p. 59; Re: Regulation
of Radio [1932] A.C. 304 and particularly at p. 315;
A.G. Ont. v. Winner [1954] A.C. 541 and particularly at
pp. 580-83; MacDonald v. Riordon (1899) 8 Que. Q.B.
555 affirmed (1899) 30 S.C.R. 619 and particularly the
decision of Mr. Justice Wurtele of the Quebec Court of
Queen's Bench at pp. 573-74; Re: Industrial Relations
and Disputes Investigation Act [1955] 3 D.L.R. 721 and
particularly Kellock J. at p. 749; The Queen v. Bd. of
Transport Com'rs (1968) 65 D.L.R. (2nd) at p. 425, a
decision of the Supreme Court of Canada and particu
larly at pp. 432-34.
Re: Federal Commerce power: (Section 91(2)
of the B.N.A. Act.)
Citizens Ins. Co. v. Parsons (1881) 7 App. Cas. 96, and
particularly Sir Montague Smith at pp. 112-13; Re:
Natural Products Marketing Act [1936] S.C.R. 398 as
affirmed by the Privy Council in [1937] A.C. 327; Re:
Section 5(a) Dairy Industry Act [1949] S.C.R. 1; P.E.I.
Potato Marketing Bd. v. H.B. Willis Inc. [1952] 2
S.C.R. 392; Murphy v. C.P.R. [1958] S.C.R. 626; Re:
Farm Products Marketing Act [1957] S.C.R. 198; 7
D.L.R. (2d) 257 particularly with reference to Rand J.
at pp. 271-72, Kerwin C.J. at p. 264 and again at pp.
264-65 and 266; A.G. Can. v. C.P.R. [1958] S.C.R.
285; G.W. Saddlery Co. v. The King [1921] 2 A.C. 91;
The Queen v. Klassen (1959) 20 D.L.R. (2d) 406;
Krickard v. A.G. B.C. (1958) 14 D.L.R. (2d) 58; Public
Utilities Com'n v. Victoria Cablevision Ltd. (1965) 51
D.L.R. (2d) 716; Re: Radio Communication [1932]
A.C. 304; Carnation Co. Ltd. v. Que. Agricultural
Marketing Bd. [1968] S.C.R. 238.
As to the sufficiency of the National Energy
Board Act to confer jurisdiction upon the
National Energy Board, counsel for Trans-
Canada Pipe Lines Ltd. submitted the following
authorities :
Maxwell on Interpretation of Statutes 11th ed. at p.
206; West v. Gwynne [1911] 2 Ch. p. 1 and particularly
Buckley Li. at p. 11; G.T.R. and C.P.R. v. Toronto
[1910] 42 S.C.R. 613 and particularly Davies J. at p.
627; Montreal Street Rly. v. Montreal Terminal Rly.
(1905) 36 S.C.R. 369; Ottawa Elec. Rly. v. Ottawa
(1906) 37 S.C.R. 354 and particularly Davies J. at p.
359; B.C. Elec. Rly. v. Public Utilities Com'n of B.C.
[1960] S.C.R. 837; Munn v. Illinois (1877) 94 U.S. 113;
Railroad Com'n v. Permian Basin Pipeline 302 S.W.
(2d) 238-54 also cited in H.R. Williams' edition Oil and
Gas at Vol. 4, 1962, p. 802; Re: Northwestern Utilities
Ltd. v. Northwestern Utilities Ltd. (1960) 25 D.L.R.
(2d) 262 as affirmed in the Supreme Court of Canada
[1961] S.C.R. 392; B.C. Elec. Rly. v. Public Utilities
Com'n of B.C. [1960] S.C.R. 837 and particularly Mart-
land J. at p. 853 and Locke J. at p. 843; Bluefield Water
Works Co. v. West Virginia Public Service Com'n
(1923) 262 U.S. 679 at p. 690; Bd. of Public Utility
Com'rs v. New York Tel. Co. (1925) 271 U.S. p. 23 at
31; Re: Northwestern Utilities Ltd. v. Northwestern
Utilities Ltd. (1961) 25 D.L.R. (2d) 262 as affirmed
(1961) S.C.R. 392 and particularly Locke J. at p. 402;
Edmonton v. Northern Alberta Natural Gas Develop
ment Co. (1920) 50 D.L.R. 506 which proceeded to the
Supreme Court of Canada and is reported as Northern
Alberta Natural Gas Development Co. v. A.G. Alta., 61
S.C.R. at p. 213; Gloucester v. Ottawa [1941] 1 D.L.R.
483 and as reported in the Supreme Court of Canada
under the name Ottawa v. Eastview [ 1941] S.C.R. 448
at p. 459, Rinfret J. at p. 465.
As to the effect of the various clauses in the
several contracts which state in various ways
that the prices set out in the contracts are
subject to regulation:
Oil and Gas Law, Vol. 4 p. 802 "The significance of
these clauses etc.", edited by H.R. Williams and C.J.
Meyers; United States District Court—Brooklyn deci
sion, Public Utilities Reports ( 1927) A. 200.
The regulation of rates is within the police power of
the State and such a power cannot be limited or
impaired by contract.
Alabama Supreme Court—Salter v. Georgia—Alabama
Utilities decision, Public Utilities Reports ( 1932) E.
333.
Rates prescribed by contract prior to the enactment
of the Public Utility Act are nevertheless subject to
the reasonable exercise of the police power of the
State.
Florida Supreme Court—Southern Division, Public
Utilities Reports ( 1924) C. 428.
Contracts must be understood as made in reference
to the possible exercise of the rightful authority of
the government, and no obligation of the contract can
extend to defeat the legitimate governmental
authority.
Indiana Supreme Court—Washington v. Public Service
Commission, Public Utilities Reports (1921) C. 459.
The mere fact that the legislature has not made
regulations which prevent a rate contract from being
valid at the time it is made will not enable the parties,
by their private contract, to curtail or limit the future
exercise of such power of the legislature, the con
tract will be deemed to have been made subject to
whatever future regulations might be imposed by
law.
Indiana Supreme Court—Public Service Commission v.
Girton, Public Utilities Reports (1921) P. 16.
Parties entering into contracts, prior to the exercise
of the regulatory power of the State, are charged
with knowledge of the fact that at some future time
the State may, if it sees fit to exercise the right,
affect the contract by its regulation.
Michigan Supreme Court—Highland Telephone Compa
ny, Public Utilities Reports, (1921) C. 162.
No two or more individuals, associations, or corpora
tion, or any combination of them can make a valid
contract fixing rates and thus oust the state of its
jurisdiction to control rates.
United States District Court—Market Street Railway
Co. v. Pacific G and E, Public Utilities Reports, (1926)
A. 509.
The State has power to annul and supersede rates
previously established by contracts between utilities
and their customers.
Keremos Land Co. v. MacTavish [1925] 1 D.L.R. 897
and particularly Morrison J. at p. 900; Maritime Elec
tric Co. v. General Dairies Ltd. [1937] A.C. 610 and
particularly Lord Maugham at p. 620.
As to the right of a Canadian court to look at
American decisions, specific reference was
made to:
The King v. Rideout [1949] 4 D.L.R. 612 and particu
larly at p. 618; B.C. Elec. Rly. v. Public Utilities Com'n
of B.C. [1960] S.C.R. 837 particularly the judgment of
Locke J. at p. 844.
So much for the submission of counsel for
the parties.
In reaching the conclusion that I do in this
matter, I have accepted the following premises:
(1) that the making of the several contracts
between the plaintiffs and the defendant Trans-
Canada Pipe Lines Ltd. which were filed in
evidence, is a matter which, generally speaking,
comes within the classes of subjects assigned to
the legislatures of the provinces under s. 92(13)
and (16) of the B.N.A. Act; (2) that the majority
of the said several contracts were entered into
prior to the coming into force of Part IV of the
National Energy Board Act, i.e., October 30,
1969; and (3) that title to the gas referred to in
the said several contracts passes from Trans-
Canada Pipe Lines Ltd. to the plaintiffs at
delivery points which are all within the Prov
ince of Ontario.
The full title of the Act under consideration
in this case is An Act to provide for the estab
lishment of a National Energy Board. On a
reading of the whole of the Act and especially
the provisions which have been quoted at the
beginning of these reasons, it is probable that
the matter in relation to which this Act was
enacted was to regulate pipe line charges for the
transmission and associated services of gas and
all hydrocarbons.
It is a new type of legislation made necessary
because of economic change in Canada which
came about after the finding of enormous quan
tities of gas in the Provinces of Alberta and
Saskatchewan, the existence of which had not
been heretofore known.
The subject-matter of this legislation in the
sense which I have stated does not come within
any classes of subject which by s. 92 of the
B.N.A Act were assigned exclusively to the
legislatures of the Provinces.
Instead, the subject-matter of the National
Energy Board Act is a subject-matter within
both the federal commerce power (see s. 91(2)
of the B.N.A Act) and also within the federal
power to legislate in relation to inter-provincial
works or undertakings (see s. 91(29) and s.
92(10)(a) of the B.N.A Act).
In relation to it being a matter within the
federal commerce power, the National Energy
Board Act gives to the National Energy Board,
among other things, the power to regulate the
charges to be levied by a pipe line common
carrier for the transmission of gas connecting a
province with any other or others of the prov
inces or existing beyond the limits of a prov
ince. In addition, in the situation where such a
pipe line common carrier as part of its business
and inextricably connected with it also sells gas,
power is also thereby given to the Board, in
regulating such transmission charges, and in so
far as the selling price of gas is a necessary part
of such transmission charges, to regulate the
price at which gas may be sold in Ontario. In
other words, in so far as the incidental setting
of the price at which gas may be sold in Ontario
is part of its whole regulatory scheme of setting
transmission charges, the Board in relation
thereto is validly exercising ' the power con
ferred upon it by s. 50 of the Act to "make
orders with respect to all matters relating to
traffic, tolls or tariffs".
As to this subject-matter being within the
federal power to legislate in relation to an inter-
provincial work or undertaking, the evidence
established that the defendant Trans-Canada
Pipe Lines Ltd., in so far as the subject-matter
of this action is concerned, in carrying on its
business as a pipe line common carrier which
also owns and sells the gas it carries in its pipe
line, carries on one single undertaking and not
two separate and distinct businesses to wit,
selling gas generally to the public and selling its
services as a pipe line common carrier. In carry
ing on such single undertaking, Trans-Canada
Pipe Lines Ltd. conducts its business solely
with members of the public who buy at the
same time both its services as a pipe line
common carrier and its gas.
The National Energy Board in exercising its
regulatory powers, under the National Energy
Board Act, over the charges to be levied by a
pipe line common carrier such as Trans-Canada
Pipe Lines Ltd. will undoubtedly affect the
property and civil rights of the plaintiffs in the
said several contracts which have been filed at
this trial and which had been filed with the
National Energy Board. But, notwithstanding,
having determined that the matter in relation to
which the National Energy Board Act was
passed is one which falls within the said powers
of Parliament, the fact that implementing the
powers given in such Act to the National
Energy Board will affect- such property and
civil rights is no objection to the validity of the
Act. 2
In addition, in respect to the submissions
about retrospectivity of the statute in relation to
such of the said several contracts which were
entered into prior to the coming into force of
Part IV of the National Energy Board Act, I am
of the view that the retrospective rule of statu
tory interpretation is not relevant.
Instead what is relevant is the separate and
distinct vested rights rule.'
The question here is whether the incidental
power to set the selling price of gas given by s.
50 in Part IV of the National Energy Board Act
to the National Energy Board relates to all
contracts for the sale of gas or only some,
namely, those executed after the coming into
force of Part IV of the Act, that is, October 30,
1969. It is clear it relates to the former only. In
other words, the question is as to the ambit and
scope of s. 50, and not as to the date as from
which Part IV of the Act is to be taken to have
been the law.
As a result, if the National Energy Board, in
exercising its powers under s. 50 of the Act,
should as a result establish a higher selling price
for gas than that originally stipulated between
the parties in the said several contracts filed, it
is not affecting the said contracts retrospective
ly but instead only prospectively.
In the result, therefore, in respect to the
application made by the defendant Trans-
Canada Pipe Lines Ltd. on August 14, 1969, to
the National Energy Board for orders to fix
"the just and reasonable rates or tolls" which it
could charge with respect to gas sold by it in
Canada and to "disallow any existing tariff or
tolls or portion thereof which were inconsistent
with the just and reasonable rates or tolls so
fixed", I am of the view, that the Board has
power to do so under Part IV of the National
Energy Board Act and that in so far as the
Board, if it should make such orders, may by
such orders affect the selling price of gas pres
ently obtaining between the plaintiffs and the
defendant Trans-Canada Pipe Lines Ltd. pursu
ant to the said several contracts filed at this trial
and with the Board, it will not be acting beyond
its jurisdiction and that the said jurisdiction in
the National Energy Board Act it will invoke in
so doing will be jurisdiction conferred on it
intra vires the Government of Canada.
The actions are therefore dismissed with
costs.
I The contracts numbering 29 in all between Trans-
Canada Pipe Lines Limited and the various plaintiffs, were
executed at different dates between January 18, 1955 and
October 15, 1970. Copies of the contracts were filed with
the Board at various dates between November 13, 1959 and
January 7, 1971.—Ed.
2 See A.G. Sask. v. A.G. Can. [1949] A.C. 110 at 123
Rand J. "It is the true nature and character of the legisla
tion, not its ultimate economic results—that matters"; see
also Gold Seal Ltd. v. Dom. Express Co. v. A.G. Alta.
(1921) 62 S.C.R. 424 at 460.
9 While it is recognized that it is a rule of interpretation
that a statute ought if possible, to be interpreted so as to
respect vested rights, that rule is distinct from the rule that
no statute should be construed to have a retrospective
effect. While a retrospective statute can destroy vested
rights, it does not follow that a statute is retrospective
merely because it does destroy vested rights. Vested rights
may be destroyed even though Parliament has not expressly
declared its intention to do so but has left such intention to
be manifested by inference. (cf. West v. Gwynne [1911] 2
Ch. 1 at 15; and Spooner Oils Ltd. v. Turner Valley Gas
Conservation Bd. [1933] S.C.R. 629 at 638.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.