Date: 20120919
Docket: A-476-11
Citation: 2012 FCA 240
CORAM: NOËL
J.A.
PELLETIER
J.A.
GAUTHIER
J.A.
BETWEEN:
CANADIAN NATIONAL
RAILWAY COMPANY
Appellant
and
CANADIAN
TRANSPORTATION AGENCY and
CANADIAN
PACIFIC RAILWAY COMPANY
Respondents
Heard at Montréal, Quebec, on September 18, 2012.
Judgment delivered at Montréal, Quebec, on September 19, 2012.
REASONS FOR JUDGMENT BY: PELLETIER
J.A.
CONCURRED
IN BY: NOËL
J.A.
GAUTHIER
J.A.
Date: 20120919
Docket: A-476-11
Citation: 2012 FCA 240
CORAM: NOËL
J.A.
PELLETIER J.A.
GAUTHIER
J.A.
BETWEEN:
CANADIAN NATIONAL
RAILWAY COMPANY
Appellant
and
CANADIAN
TRANSPORTATION AGENCY and
CANADIAN
PACIFIC RAILWAY COMPANY
Respondents
REASONS FOR JUDGMENT
PELLETIER J.A.
[1]
The
appellant, Canadian National Railways (CN) appeals from a decision of the
Canadian Transportation Agency (the Agency) pursuant to s. 41 of Canada
Transportation Act, S.C. 1996 c. 10 (the Act) which provides for
appeals from decisions of the Agency on questions of law and jurisdiction with
leave of the Court. The issues raised in this appeal are matters of procedural
fairness which are reviewed on a standard of correctness.
[2]
Over
the course of a number of years and many decisions, the Agency has developed a
process for administering the revenue cap scheme set out at s. 150 of the Act.
In the course of doing so, it has adopted certain criteria for determining the
allocation of revenue, tonnage and mileage between prescribed railways in a
number of contexts, including interswitching and exchange switching
(collectively “interswitching”), both of which have to do with the movement of
one railway’s cars by the other for a fee. In response to the Agency’s request
for submissions, CN proposed that the latter reconsider its treatment of interswitching
revenues, tonnage and mileage on the basis that, contrary to the Agency’s
expectations at the time it adopted these procedures in its Decision
No.114-R-2001 (the 2001 decision), the revenue from interswitching is not
evenly balanced between the railways, thus disadvantaging CN in the determination
of its revenue entitlement. CN submitted an accounting (in the form of a table)
of the volume of interswitching revenue between itself and the Canadian Pacific
Railway Company (CP) from the inception of the program to the date of the last
revenue cap determination by the Agency. On its face, this table shows that CN
consistently derives more revenue from interswitching than does CP: see Appeal
Book, p. 105. CN made two proposals by which the apparent imbalance which it
identified might be corrected.
[3]
The
Agency responded to CN’s submissions without directly addressing the issue of
the apparent imbalance in the amount of interswitching revenue. Instead, it
responded to the CN’s two proposals and explained why it was not prepared to
pursue either of them further. With respect to CN’s first proposal, that there
be no allocation of interswitching revenue as between the switching carrier and
the linehaul carrier, the Agency noted that it had not been provided with any
new reasons that justified reviewing the Agency’s 2001 decision to the effect
that interswitching revenue be included in the switching carrier’s revenue and
deducted from the linehaul carrier’s revenue.
[4]
CN’s
second proposal was that the mileage and tonnage for interswitched traffic be
included in the calculation of tonnage and average length of haul in the
formula set out at s. 151 of the Act on the basis that these operations
constitute a free standing movement of grain according to the Agency’s own 2001
decision. The Agency dealt with this proposal by pointing out that it had not
in fact decided that each individual segment within a movement of grain from
shipper to port constituted a grain movement but rather that a grain movement
consisted of the sum of the eligible segments that make up the grain movement.
The 2001 decision decided that the movement of grain during interswitching was
an eligible segment of a grain movement, and not a free standing grain
movement. Thus the premise underlying CN’s proposal was inaccurate.
[5]
CN
alleges that the Agency’s response to its submissions breached its right to
procedural fairness on two grounds. First, it says, the Agency’s reasons are
inadequate because they do not address the substance of CN’s submission, that
is, the apparent imbalance between CN and CP’s interswitching revenue.
Secondly, CN argues that the Agency declined to pursue further consultation on
the basis of an argument not previously raised and not disclosed to it prior to
the decision, namely the definition of a grain movement.
[6]
While
CN’s notice of appeal does refer to the Agency having committed an error of
law, its Memorandum of Fact and Law makes it clear that this error is alleged
in support of its procedural fairness argument. Indeed, no relief was sought in
that respect, except for the request that “directives be given to the Agency in
the event that the matter is returned to it on grounds of procedural fairness”:
see CN’s Memorandum of Fact and Law, at paragraph 83.
[7]
As
for the issue of procedural fairness, the decision under review arises in the
course of an ongoing consultation process. It is not an adjudicative decision
which affects the rights of the parties. Had the Agency found merit in CN’s
proposals, it would then have initiated a broader consultation process
involving other stakeholders at the conclusion of which it would have made a policy
decision which would not necessarily have incorporated CN’s proposals. The
nature of this process is such that the duty of procedural fairness is relatively
limited. Having solicited proposals for further consultation, the Agency was
required to consider those proposals. It is clear from the Agency’s decision
that it did so.
[8]
The
reasons which the Agency gave for not pursuing CN’s proposals are rational and
intelligible, and allow CN to understand why its proposals were not pursued
further. While the Agency did not specifically address the apparent imbalance
in interswitching revenue between carriers, it is apparent that it concluded
that the statistics which CN provided were not a sufficient reason to review
the determination of this issue which it made in its 2001 decision. That said,
the determination of the revenue cap and of each railway’s revenue from the
movement of western grain is an annual affair. As circumstances evolve, any
such decision may give rise to a remedy. Furthermore, now that the Agency has
adopted materiality guidelines, CN is free to raise the issue again if it can
show that the current method of allocation raises a material issue for further
consultation.
[9]
As
for the issue of the definition of a grain movement, it was first raised by CN
when it referred to the Agency’s 2001 decision to support its contention that
interswitching movements are grain movements for the purposes of the revenue
cap formula. The Agency’s response simply made the point that the determination
that a particular segment of grain movement comes within the statutory
definition does not amount to saying that the segment taken alone constitutes a
grain movement, a term which is defined at s. 147 of the Act. There is no basis
for saying that the Agency decided against further consultation on a basis not
previously raised by the parties.
[10]
There
has been no breach of procedural fairness and as a result there is no reason
for this court to intervene. Having regard to CN’s failure to fully canvas the
Agency’s alleged error of law in its Memorandum of Fact and Law, I would leave
that question to be decided in proceedings in which it is fully argued in the
presence of all interested parties.
[11]
As
a result, the appeal will be dismissed but without costs.
"J.D. Denis
Pelletier"
“I
agree.
Marc
Noël J.A.”
“I
agree.
Johanne
Gauthier J.A.”
FEDERAL COURT OF
APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-476-11
STYLE OF CAUSE: Canadian
National Railway Company v. Canadian Transportation Agency et al
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: September
18, 2012
REASONS FOR JUDGMENT
BY: PELLETIER
J.A.
CONCURRED IN BY: NOËL
J.A.
GAUTHIER J.A.
DATED: September
19, 2012
APPEARANCES:
|
Eric
Harvey
Nadia
Effendi
|
FOR
THE APPELLANT
|
|
John
Dodsworth
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
CN
Law Department
Montréal, QC
Borden
Ladner Gervais LLP
Ottawa, ON
|
FOR
THE APPELLANT
|
|
Canadian
Transportation Agency
Legal
Services Branch
Gatineau, QC
|
FOR
THE RESPONDENT
|
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