Canadian Pacific Railway Co. v. Canadian Transportation Agency, 2004 FCA 347

Date: 20041015

Docket: A-546-04

Citation: 2004 FCA 347

Present:           PELLETIER J.A.

BETWEEN:

                                       CANADIAN PACIFIC RAILWAY COMPANY

                                                                                                                                            Applicant

                                                                           and

                                       CANADIAN TRANSPORTATION AGENCY,

                                         and ELK VALLEY COAL CORPORATION

                                                                                                                                      Respondents

"Heard by teleconference between Ottawa, Ontario, Calgary, Alberta, and Vancouver, British Columbia, on October 14, 2004."

                        Reasons for Order delivered at Ottawa, Ontario, on October 15, 2004.

REASONS FOR ORDER BY:                                                                                   PELLETIER J.A.

Date: 20041015

Docket: A-546-04

Citation: 2004 FCA 347

Present:           PELLETIER J.A.

BETWEEN:

                                       CANADIAN PACIFIC RAILWAY COMPANY

                                                                                                                                            Applicant

                                                                           and

                                       CANADIAN TRANSPORTATION AGENCY,

                                         and ELK VALLEY COAL CORPORATION

                                                                                                                                      Respondents

                                                        REASONS FOR ORDER

PELLETIER J.A.

[1]         Elk Valley Coal Corporation (Elk Valley) ships metallurgical coal from its Elkview mine in the interior of British Columbia to the coal terminals at Roberts Bank and Vancouver, British Columbia. It is a "captive shipper" in the sense that the only railway serving its operations is the Canadian Pacific Railway Company (CPR). The terms on which Elkview coal was transported to the coal terminals were set out in a confidential contract between CPR and Elkview. That contract expired but CPR argues that Elk Valley is bound by the terms of another confidential contract as a result of massive restructuring in the course of which a number of mines were transferred into one set of hands, represented by Elk Valley. Elk Valley denies that it is bound by any confidential contract. When negotiations for a specific agreement with respect to Elkview coal failed, Elk Valley gave CPR written notice pursuant to subsection 161(3) of the Canada Transportation Act, S.C. 1996, c. 10 (the Act) that it intended to submit the matter to the Canadian Transport Agency (CTA) for final offer arbitration.

[2]                Before Elk Valley made its submission to the CTA, CPR applied to that agency for a determination that Elk Valley was not entitled to take advantage of the final offer arbitration process because it was bound by a confidential contract. CPR characterizes this as a question going to the CTA's jurisdiction to refer the matter to arbitration. The CTA eventually ruled that it could not decide CPR's application since there was no submission before it. When Elk Valley subsequently made its submission, CPR re-filed its application with the CTA. Elk Valley's filing triggered a series of statutory time-lines with respect to the arbitration process. CTA advised CPR that it would deal with its application in due course which for all intents and purposes means that the arbitration may well be concluded before CPR's objection to the jurisdiction of the CTA is decided.

[3]                CPR then filed an application for judicial review in which it sought an order of prohibition against the CTA prohibiting it from referring the matter to arbitration. In the same document, CPR claims a stay of proceedings before the CTA with respect to the Elk Valley submission, or an injunction enjoining CTA from referring the submission to arbitration. The notice of application was supported by the affidavit of Greg Anderson and written submissions in support of the request for a stay or an injunction. No notice of motion seeking a stay or interlocutory relief was filed. At the request of counsel for CPR, the matter was set down for a hearing. With the consent of counsel for all parties, it was agreed that the first paragraph of CPR's notice of application would be treated as a notice of motion seeking the following relief:

... an immediate stay of proceedings before the Canadian Transportation Agency ("the Agency") instituted by Elk Valley Coal Corporation ("EVC")'s submission for a final offer arbitration of rates to be charged by CPR for movement of coal by rail ("FOA submission"), or alternatively an injunction enjoining the Agency from referring to arbitration and EVC from proceeding with arbitration, and CPR respectfully requests the granting of such relief on or before Thursday, October 14, 2004.

[4]                As a result, CPR's application for judicial review is as follows:

CPR further applies for judicial review, seeking relief in the nature of a writ of prohibition prohibiting the Agency form referring the FOA Submission to arbitration.

[5]                The criteria for the granting of a stay or an interlocutory injunction are well known. The applicant must show that there is a serious question to be tried, that it will suffer irreparable harm if the stay is not granted and that the balance of convenience favours the granting of the stay. RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (RJR-MacDonald Inc.). All of these elements must be present before a stay will be granted.

[6]                CPR's position is that the serious question to be tried is whether Elk Valley is bound by a confidential contract so as to be precluded from seeking final offer arbitration by subsection 126(2) of the Act:

[7]                The respondents agree that there is a serious question as to whether there is a confidential contract in place but that it is a question which is before the CTA and not before the Court. The serious question must be one which arises out of the application for judicial review. The issue before the Court is the availability of prohibition. The respondents point to cases such as Novopharm Ltd. v. Eli Lilly and Co., [1999] 1 F.C. 515, which say that prohibition is not available to prevent a tribunal from acting within its jurisdiction:

[26] In my opinion, the Applicants are attempting a similar approach. This Court does not have jurisdiction to prohibit the Registrar from performing the task she is statutorily obligated to perform, where there is no evidence that she is acting outside of her jurisdiction.

See also Rothmans, Benson & Hegdes Inc. v. Imperial Tobacco Ltd. (1997), 74 C.P.R. (3d) 494.

[8]                CPR counters this argument by pointing out that it is precisely the issue of jurisdiction which is raised by the objection which it has made to CTA. If Elkview is bound by a confidential contract, then CTA has no jurisdiction to refer the matter to final offer arbitration. If the CTA refers such a matter to arbitration, it will exceed its jurisdiction and is therefore subject to an order of prohibition. CPR also relies upon the decision of this court in Canadian National Railway Co. v. Moffat (C.A.), [2002] 2 F.C. 249 in which this Court held that:

[21] ... 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.

[9]                According to CPR, this is authority for the proposition that the CTA either has no jurisdiction to decide preliminary questions or has no exclusive jurisdiction to decide such questions and certainly does not have the right to decide them wrongly.

[10]            There are a number of difficulties with CPR's position. It assumes that subsection 126(2) raises a jurisdictional issue for the CTA, but a plain reading of the disposition suggests that it simply imposes a disability on a shipper as opposed to a limitation on the CTA's power to refer a matter to arbitration. CPR assumes that because it characterizes the issue as a jurisdictional issue, it will be reviewed on a standard of correctness. It is now well established that the standard of review of a decision is dictated by the pragmatic and functional analysis and not by an a priori designation of the question as a jurisdictional question. Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982. Since no pragmatic and functional analysis was conducted, it is premature to conclude that the CTA is bound to correctly decide whether a confidential contract is in effect.

[11]            That said, the judge hearing the application for a stay or an interlocutory injunction is not called upon to decide the underlying judicial review. He should not inquire into the merits more than is necessary to decide that there is a question to be decided which is not frivolous or vexatious. RJR-MacDonald Inc. at para. 50. Given that low threshold, I am prepared to find that there is a serious question to be tried.

[12]            The party moving for a stay must also show that it will suffer irreparable harm if the stay is not granted. In this case, CPR identifies various types of harm it will suffer if the stay is not granted, all of them predicated on the success of its contention that a confidential contract is in force. It says that it will be forced to commit monetary and management resources to take part in an arbitration process that will ultimately be found to be inappropriate. It will be required to disclose confidential information to Elk Valley which will compromise its position in subsequent negotiations. It may also be required to post the rates awarded in the arbitration in a tariff which will adversely affect its position in negotiations with third parties. None of these prejudices will be compensable in the event that it is successful in establishing the existence of a confidential contract.

[13]            Elk Valley says that the cost of litigation is not irreparable harm. Canadian National Railways v. Leger, [2000] F.C.J. No. 243 at para. 15 and the cases cited therein. As for the release of confidential information, Elk Valley says that by the terms of the reference to

arbitration, it will be bound to keep that information confidential. This does not address CPR's concern in that it is Elk Valley's possession of the confidential information which concerns it. As for the publication of a tariff, Elk Valley has undertaken not to require CPR to publish the tariff until its application has been decided by the CTA.

[14]            I agree that the cost of preparing for and taking part in the arbitration process does not constitute irreparable harm, even though the cost may be burdensome. If that position were to prevail, very few applicants would be unable to satisfy the requirement of irreparable harm. I also agree that the publication of the tariff is not irreparable harm given Elk Valley's undertaking. That leaves CPR's claim that it will be irreparably harmed by being required to disclose confidential commercial information to Elk Valley who may then be in a position to use that material to its advantage in subsequent negotiations.

[15]            CPR relies upon the case of O'Connor v. Nova Scotia (2001), 198 D.L.R. (4^th) 102 (N.S.C.A.) in support of its claim that the forced disclosure of confidential information constitutes irreparable harm. That case involved an application under the Nova Scotia access to information legislation. The government appealed a decision ordering it to disclose documents relating to 86 government programs. It sought a stay of execution of that order pending the hearing of the appeal. The Nova Scotia Court of Appeal considered that "the forced disclosure of information, if subsequently proved to have been wrongful, itself constitutes irreparable harm." (para. 20). This statement makes sense in the context of access to information litigation where the sole issue is disclosure but, with the greatest respect, I do not believe that it can be taken at face value in commercial litigation where disclosure of information is an incidental issue. This is not to say that forced disclosure can never amount to irreparable harm in commercial litigation; it simply means that it is not necessarily irreparable harm.

[16]            The question of disclosure in a commercial context arose in Fraser Health Authority v. H.E.U. (2003), 226 D.L.R. (4^th) 563 (B.C.S.C.) (Fraser Health Authority).    In that case, the defendant union managed to acquire a confidential document prepared by the plaintiff health authority which contained an assessment of tenders received for the contracting out of security services in the plaintiff's premises. The union represented the security staff who would be displaced by the contracting out. It placed the document on its website. The plaintiff commenced an action in copyright infringement and obtained an ex parte order requiring the defendant to remove the material from its website and to return all copies. The union applied to dissolve the ex parte injunction.    In the course of revisiting the grounds for granting the injunction, the trial judge disposed of the issue of irreparable harm in one sentence: "With respect to irreparable harm, the publication of the documents would cause harm to the plaintiff and to the integrity of the tender process, which could not be measured or quantified in damages." The only issue of publication in this case is in relation to the tariff.    Since Elk Valley has undertaken not to require the publication of such a tariff until CPR's application is determined by CTA, the harm found in Fraser Health Authority is not present in this case.

[17]            Business Depot Ltd. (c.o.b. Staples) v. 2502731 Nova Scotia Ltd. (c.o.b. Mailboxes Etc.) 2004 NSSC 77, which is also relied upon by CPR, deals with disclosure in the context of discovery of documents. It does not address the question of irreparable harm.

[18]            The authorities upon which CPR relies do not establish that, in the context of commercial litigation, the forced disclosure of information is necessarily irreparable harm, at least in the context of commercial litigation. The question must be decided on the basis of the facts of each case.

[19]            If CPR is correct and a confidential contract is in force, that contract will run until March 2007. Negotiations for a renewal of that contract would therefore not commence until the spring of that year. The affidavit filed in support of the motion does not disclose the nature of the confidential information whose disclosure would prejudice CPR. As a result, I have no evidence upon which I could conclude that the information would continue to be sufficiently relevant in the spring of 2007 to be an embarrassment to CPR in negotiations with Elk Valley at that time. For those reasons, I conclude that CPR has not succeeded in demonstrating that it will suffer irreparable harm if a stay is not granted.

[20]            Since a stay will only be granted if each of the three elements is present, the absence of irreparable harm is fatal to the motion. It is therefore unnecessary for me to address the issue of balance of convenience.

[21]            The motion for a stay of proceedings and an interlocutory injunction will be dismissed with costs to each of the respondents.

                                                                            "J.D. Denis Pelletier"            

                                                                                                    J.A.

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                           A-546-04

STYLE OF CAUSE:

Canadian Pacific Railway Company v. Canadian Transportation Agency, and Elk Valley Coal Corporation

PLACE OF HEARING:                     Ottawa, Ontario, via teleconference with Calgary, Alta, and Vancouver, B.C.

DATE OF HEARING:                       October 14, 2004

REASONS FOR ORDER :               Pelletier J.A.

DATED:                                              October 15, 2004

APPEARANCES:

Mr. Louis J. Zivot                                                                  FOR THE RESPONDENT

Mr. Forrest C. Hume                                                (Elk Valley Coal Corporation)

SOLICITORS OF RECORD:

Lang Michener LLP                                                                FOR THE RESPONDENT

Vancouver, B.C.                                                                    (Elk Valley Coal Corporation)

Forrest C. Hume

Vancouver, B.C.