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T-5725-81
496482 Ontario Inc. (Plaintiff) v.
Attorney General of Canada, Minister of Trans port for Canada, VIA Rail Canada Inc., Canadian Pacific Limited and Canadian National Railways (Defendants)
Trial Division, Walsh J.—Ottawa, April 26 and May 5, 1982.
Practice — Motion for leave to further amend statement of claim, to argue that interlocutory injunctions should issue against certain defendants and to extend time to file memo randa — Previous order striking out part of amended state ment of claim and setting down for determination under Rule 474 question of law, under appeal — New information una vailable when motion to strike argued — Information to effect that commuter service to be discontinued ineligible for federal subsidies under Railway Act, that discontinuation matter of policy and that commuter services provincial and/or municipal responsibility — According to plaintiff, decision of Governor in Council made in excess of jurisdiction because based on policy rather than law — Issue to be decided as if amendments already incorporated in amended statement of claim and according to rules applicable to striking of pleadings — Renewed argument for interlocutory injunction not considered as question of law not yet determined — Memoranda re question of law now filed — No obligation under s. 261 of Railway Act to subsidize commuter services — Possibility of subsidizing loss certified by Canadian Transport Commission not eliminated — Governor in Council may, pursuant • to s. 261(9) of Railway Act, take any action deemed desirable — Such action question of policy within Governor in Council's jurisdiction — Courts should not inquire into motivation of Governor in Council for adopting any Order in Council, save evident abuse of power — Motion to amend amended state ment of claim dismissed — Federal Court Rule 474 — Railway Act, R.S.C. 1970, c. R-2, ss. 261(4),(8),(9), 262.
Plaintiff moves for leave to amend its amended statement of claim, to argue that interlocutory injunctions sought in a previous notice of motion should issue against VIA Rail Canada Inc. and Canadian Pacific Limited and to extend time to file written memoranda. By previous order of this Court, part of the amended statement of claim was struck and the question as to the power of the Governor in Council to order the discontinuation of all passenger-train services on the Toron- to—Havelock line to take effect more than one year after the Order in Council was made, was set down for determination
under Rule 474. That order is now under appeal. Plaintiff's new information on which it relies in seeking the amendment con sists of a letter written by the Minister of Transport's Parlia mentary Secretary. The letter states that a commuter-type service is ineligible for federal subsidies under the Railway Act, that discontinuation is a matter of policy, and that commuter rail services are a provincial and/or municipal responsibility. Plaintiff argues that the decision of the Governor in Council was made in excess of jurisdiction, being based on policy rather than law. Defendants agree that the issue is to be decided as if the amendments were already incorporated in the amended statement of claim and according to the rules applicable to the striking of pleadings.
Held, the motion to further amend the statement of claim is dismissed, and the question of law is to be heard as soon as possible, all the parties having filed the memoranda. There is no obligation to provide subsidies for commuter services, but merely provision, under subsection 261(9) of the Railway Act, that this may be done if the Governor in Council deems it desirable. That is a question of policy, the Governor in Council evidently taking the position, as shown in the letter, that commuter-type services should be subsidized, if necessary, by the provinces or municipalities. The Governor in Council was not acting contrary to the law when he took policy matters into consideration. Courts should not inquire into the motivation of the Governor in Council for adopting any given Order in Council unless there is an evident abuse of power. If it were concluded that the service in question is a commuter service, the railroad could cease operating it proprio motu; the Order in Council would thus become unnecessary. The issue of law is to be set down for hearing as soon as convenient. No application was made to the Court seeking its stay, and it has been settled by the courts that an appeal does not of itself stay proceedings.
Attorney General of Canada v. Inuit Tapirisat of Canada [1980] 2 S.C.R. 735, applied. Re Doctors Hospital and Minister of Health (1976) 68 D.L.R. (3d) 220, distin guished. Roncarelli v. Duplessis [1959] S.C.R. 121, distinguished.
MOTION. COUNSEL:
D. Outerbridge for plaintiff.
E. Bowie, Q.0 for defendants Attorney Gen eral of Canada and Minister of Transport for Canada.
M. Huart for defendant VIA Rail Canada Inc.
C. Wendlandt for defendant Canadian Pacific Limited.
L. Band, Q.C. for defendant Canadian Na tional Railways.
SOLICITORS:
Outerbridge, Toronto, for plaintiff.
Deputy Attorney General of Canada for defendants Attorney General of Canada and Minister of Transport for Canada.
Legal Department, VIA Rail Canada Inc., Montreal, for defendant VIA Rail Canada Inc.
Legal Department, Canadian Pacific Limited, Montreal, for defendant Canadian Pacific Limited.
Legal Department, Canadian National Rail ways, Toronto, for defendant Canadian Na tional Railways.
The following are the reasons for order ren dered in English by
WALSH J.: Upon application on behalf of the plaintiff for:
(a) an order granting the plaintiff leave to amend the amended statement of claim by adding the following two subparagraphs to paragraph 19:
(k) the order in council and the recommendation of the Minister, on which the order in council was made, were based on the consideration that passenger-train services accomodating [sic] principally persons who commute be tween points on the railway of the company providing such service (or "commuter-type services" as described by the Minister) are not the responsibility of the federal govern ment and are not governed by the Railway Act, including section 262 thereof—this consideration was an error of law made by the Governor General in Council and applied as a fixed rule without reviewing its application to the individu al passenger-train services to which it was applied.
(1) the order in council and the recommendation of the Minister, on which the order in council was made, were based on the consideration that passenger-train services accomodating [sic] principally persons who commute be tween points on the railway of the company providing such service (or "commuter-type services" as described by the Minister) are ineligible for federal subsidies under the Railway Act—this consideration was an error of law made by the Governor General in Council.
(b) an order permitting the plaintiff to argue that the interlocutory injunctions sought by it in its notice of motion dated November 9, 1981, ought to be granted against Via Rail Canada Inc. and Canadian Pacific Limited, and permit ting the defendants, if so advised, to argue that an order pursuant to rule 419(1)(a) ought to be granted, striking out these subparagraphs, as well as the subparagraphs previously struck out in the orders pronounced by the Honourable Mr. Justice Allison A.M. Walsh on the 2nd day of March, 1982,
(c) an order extending the time within which to serve and file the written memoranda required pursuant to the orders pronounced by the Honourable Mr. Justice Allison A.M. Walsh on the 2nd day of March, 1982,
(d) such further and other order as may seem just;
This is a most unusual motion in view of the fact that the judgment rendered herein on March 2, 1982 [[1982] 2 F.C. 629] striking paragraph 18 and subparagraphs (a), (b), (c), (d), (e), (f), (g), (h) and (j) as well as subparagraph (i)(ii) of paragraph 19 of the plaintiff's amended statement of claim and setting down for determination as a question of law pursuant to Rule 474 the allega tion in subparagraph (i)(i), is now under appeal, so that it might properly be held that the Court is functus with respect to any amendments to the said amended statement of claim. The question of law has not yet been heard, but at the time it was understood that if the plaintiff were not successful in it the result would be equivalent to the striking of the plaintiff's entire amended statement of claim, since, although the substantive allegations of the amended statement of claim were not struck, the said paragraph 19 contained all the allegations in which the plaintiff's claim for relief was based, so that none of the relief sought could be granted. At the same time the plaintiff sought an interlocutory injunction which was dismissed with permission to bring it on again on one week's notice following the determination of the question of law. During the hearing serious arguments were raised as to whether an interlocutory injunction can be used to stop the application of an adminis trative or legislative order which is binding until set aside by hearing on the merits. The Court did not have to deal with this argument in view of the finding that no interlocutory injunction application should be considered in any event until after the final determination of the question of law. At page 646 the reasons for judgment stated:
Until this question of law is settled it would be inappropriate to grant plaintiffs motion for interlocutory injunction, even if there were not other objections to granting of same which need not be decided at this time. Serious arguments were raised as to whether an interlocutory injunction can be used to stop the application of a legislative or administrative order, which is binding until set aside by a tribunal having authority to do so, before final judgment on the merits. Another argument made which need not be dealt with at this stage of the proceedings is whether section 23 of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, would exclude the jurisdiction of this Court with respect to the injunctive relief sought because jurisdiction is given in wide terms under Part IV of the National Transporta tion Act to the Commission to make mandatory orders against the railroads.
The renewed argument for interlocutory injunc tion sought by the plaintiff in paragraph (b) of its present motion will therefore not be considered at this time.
The information on which the plaintiff now seeks to amend paragraph 19 by adding subpara- graphs (k) and (1) was allegedly not available to the plaintiff at the time the motion leading to the judgment of March 2, 1982 was argued although some reference was made to the distinction be tween a commuter-type service and a passenger- train service (although the latter may carry primarily commuters). At page 640 the reasons for judgment reads, referring to Order R-32317 of the Railway Transport Committee:
It expresses the view that the Toronto—Havelock service "may be essentially commuter in nature and therefore of a type for which subsidies may not be forthcoming" and that it intends to review the case to decide whether or not the service should continue to be designated as a passenger-train service for the purpose of sections 260 and 261 of the Railway Act. Section 261 is the section that provides that when an uneconomic service is being operated the Commission "shall certify the amount of the actual loss" and 80% thereof may then be paid to the company out of the Consolidated Revenue Fund. Subsec tion (8) provides that this does not apply "in respect of a passenger-train service accommodating principally persons who commute between points on the railway of the company provid ing the service". It is not necessary for the purpose of the present proceedings to determine whether in fact the said passenger-train service is a commuter service or not, which eventual issue would only arise if VIA Rail were ordered to continue the operation of it in cooperation with Canadian Pacific Limited as a result of the setting aside of P.C. 1981- 2171 as plaintiff seeks.
The new information on which the plaintiff now relies in seeking the amendment consists of a letter from the Parliamentary Secretary of the Minister of Transport to the Toronto—Peterborough— Havelock Line Passenger Association date- stamped February 26, 1982 stating that it is writ ten at the request of the Honourable Jean-Luc Pépin, the Minister, replying belatedly to a letter of September 30, 1981 which states, inter alia, that "The inclusion of this service in the recent announcement on the restructuring of railway pas senger services was not because of its revenue to cost ratio but because its nature as a commuter- type service made it ineligible for federal subsidies under the Railway Act". The letter points out that
55% of the passengers board and leave the train at the last two stops before the Union Station and within the area served by both GO-Transit services and the Toronto Transit Commission. It discusses the definition of commuter service and points out that a report by the Toronto Commissioner of Planning and Development so considers it and that the subsidy for passengers would be reduced if the traffic was shifted to GO-Transit and T.T.C. ser vices. Government policy is then discussed and it is pointed out that: "If we are to revitalize the pas senger train services in Canada then it is essential to have VIA concentrate on the high-density, inter-city service, and to allow provinces and mu nicipalities to develop commuter services to fit their special needs". This letter was annexed to an affidavit in support of the present motion.
The plaintiff attempted to introduce at the hear ing another letter dated March 18, 1982 by another Parliamentary Assistant to the Minister of Transport addressed to one Robert L. Sillcox, whom counsel identifies as being a member of a Barrie rate-payers association. It was not annexed to any affidavit, does not state that it is written at the request of the Minister of Transport and in any event a perusal of same indicates that it does not add much to the statements in the previous letter save perhaps to corroborate that the abandonment of commuter-type services is a matter of policy which is that commuter services are a provincial responsibility. I do not believe this letter should be formally accepted in evidence.
As indicated at the commencement I do not believe that amendments should be permitted to a proceeding under appeal. However, since the matter is of considerable urgency as the abandon ment is to take place on September 7, 1982 I will deal with the present motion on its merits. While the normal procedure is to the effect that for purposes of a motion to strike it must be assumed
that the allegations sought to be struck are true and, then decide whether they could give rise to an arguable case as to the right claimed, it would merely cause additional delay to admit the amend ments on this basis which order would be immedi ately followed by a motion to strike, at which time the question of whether the amendments can give rise to the right claimed would be determined. The defendants agree that the Court may consider the matter as if these paragraphs had already been in the amended statement of claim at the time the motion to strike was heard, and that in deciding whether to permit the amendments or not it can decide the matter on the basis of whether if they had been in the amended statement of claim at that time they would have been struck along with the other subparagraphs of paragraph 19 which were so struck.
The plaintiff's argument is that the decision of the Governor in Council to order the cessation of the service in question was based on policy rather than on the law and that it therefore exceeded its jurisdiction in doing so. Reference was made to the Inuit Tapirisat case [1980] 2 S.C.R. 735 at page 748 in which it is stated:
Let it be said at the outset that the mere fact that a statutory power is vested in the Governor in Council does not mean that it is beyond review. If that body has failed to observe a condition precedent to the exercise of that power, the court can declare that such purported exercise is a nullity.
At page 750 reference is made to a statement in the case of Border Cities Press Club v. Attorney- General of Ontario [1955] 1 D.L.R. 404 in which it was stated [at page 412]:
In exercising the power referred to, the Lieutenant-Governor in Council is not, in my opinion, exercising a prerogative of the Crown, but a power conferred by statute, and such a statutory power can be validly exercised only by complying with statu tory provisions which are, by law, conditions precedent to the exercise of such power.
Subsections (8) and (9) of section 261 of the Railway Act, R.S.C. 1970, c. R-2, read as follows:
261... .
(8) Subsections (2) to (7) do not apply in respect of a passenger-train service accommodating principally persons who commute between points on the railway of the company provid ing the service.
(9) Where, by virtue of subsection (8), a claim cannot be made under this section in respect of an uneconomic service,
the Commission shall after an investigation certify the actual loss, if any, that in its opinion is attributable to the service and report thereon to the Governor in Council for such action as he deems necessary or desirable to provide assistance in respect of such loss.
It was probably erroneous therefore for the Par liamentary Secretary who wrote the letter of Feb- ruary 26, 1982 to state, as he did, that a commut- er-type service is ineligible for federal subsidies under the Railway Act. Even if it were conceded that this is a commuter service, and that has not been determined, this would only make it ineligible for the 80% subsidy of its losses as a passenger- train service provided for in subsection (4) and not eliminate the possibility of subsidizing a loss certi fied by the Commission (which has not yet been done in this case) by taking "such action as he deems necessary or desirable to provide assistance in respect of such loss", provided for in subsection (9).
In other words there is no obligation to provide subsidies for commuter services, but merely provi sion that this may be done if deemed desirable, which is merely a question of policy, the Governor in Council evidently taking the position that such services should be subsidized if necessary by the provinces or municipalities. It does not appear to me that by taking such policy matters into con sideration the Governor in Council was acting contrary to the law. Moreover it is not desirable that the courts should inquire into the motivation of the Governor in Council for adopting any given Order in Council, unless there is an evident abuse of power. Reference was made in this connection to the case of Roncarelli v. Duplessis [1959] S.C.R. 121 but that is clearly distinguishable as a flagrant example of abuse of power. The same applies to the case of Re Doctors Hospital and Minister of Health (1976) 68 D.L.R. (3d) 220 where the Order in Council set aside was clearly adopted in contravention of the objects and policy of the statute.
In the Inuit Tapirisat case (supra) Estey J. in commenting on the wide powers given the Gover nor in Council in subsection 64(1) of the National Transportation Act, R.S.C. 1970, c. N-17, stated at page 753:
The executive branch cannot be deprived of the right to resort to its staff, to departmental personnel concerned with the subject matter, and above all to the comments and advice of
ministerial members of the Council who are by virtue of their office concerned with the policy issues arising by reason of the petition whether those policies be economic, political, commer cial or of some other nature.
and again at page 755:
It is my view that the supervisory power of s. 64, like the power in Davisville, supra, is vested in members of the Cabinet in order to enable them to respond to the political, economic and social concerns of the moment.
and at page 756:
On the other hand, it is apparently the judgment of Parliament that this is an area inordinately sensitive to changing public policies and hence it has been reserved for the final application of such a policy by the executive branch of government.
I do not conclude therefore that the Governor in Council was not entitled to take policy matters into consideration in ordering cessation of passen ger service on the said line.
I might add that if it were concluded that this was a commuter service, then it is my view that the railroad would not have to apply to the Commis sion for the right to cease operating it and hence the Order in Council was not even necessary if the railroad could cease operating this service proprio motu.
Since I have concluded that the amendments if permitted would properly be struck I refuse per mission to make the said amendments.
With respect to the hearing of the issue of law under Rule 474, this was an interlocutory matter and there is no application before the Court for the stay of it. Jurisprudence has held that an appeal does not of itself stay proceedings resulting from the judgment appealed from, and in fact that appeals from interlocutory judgments are not desirable (see for example Cercast Inc. v. Shell- cast Foundries Inc. [1973] F.C. 28 at pages 34, 35 and [1973] F.C. 674).
In the present case I believe that the question of law to be determined under Rule 474 should be heard as soon as possible, all of the parties having now filed memoranda in connection therewith.
If this judgment is appealed or there is an appeal from the decision on the question of law as is likely, it is desirable that all appeals should be joined for hearing if the Court of Appeal so orders,
so that all issues may be dealt with by it at the same time and without delay.
ORDER
The plaintiff's motion to amend its amended statement of claim is dismissed with costs. The issue of law directed to be set down pursuant to Rule 474 by judgment herein of March 2, 1982 should be set down for hearing as soon as conven ient to the parties on a regular motion day in Toronto or such special date as may be set by the Associate Chief Justice.
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