Reference re Maritime Freight Rates Act, [1933] SCR 423

Supreme Court of Canada

Reference re Maritime Freight Rates Act, [1933] S.C.R. 423

Date: 1933-06-08.

In the matter of the Maritime Freight Rates Act, 1927 (17 Geo. V, Ch. 44); and

In the matter of the Maritime Freight Rates Act (R.S.C., 1927, Ch. 79).

Reference by The Board of Railway Commissioners for Canada

1933: February 13; 1933: June 8.

Present: Duff C.J. and Rinfret, Smith, Cannon and Crocket JJ.

Railways—Board of Railway Commissioners for Canada—Jurisdiction— Maritime Freight Rates Act, R.S.C, 1927, c. 79 (original Act, 17 Geo. V, c. 44), ss. 3, 7, 8, 9—Approval by Board from time to time of tariffs filed by “other companies” (s. 9) specifying tolls lower than those specified in tariffs originally filed and approved under s. 9—Board certifying from time to time normal tolls differing from those originally certified at time of approving of tariffs originally filed and approved under s. 9—Reimbursement to company of difference between lower tolls and modified normal tolls.

It is within the jurisdiction of the Board of Railway Commissioners for Canada (a) to approve from time to time, under s. 9 of the Maritime Freight Rates Act (R.S.C., 1927, c. 79), tariffs filed by “other companies” therein referred to (companies other than the Canadian National Railways), specifying tolls lower than those specified in the tariffs originally filed and approved (which provided for reductions in rates of approximately 20%) under s. 9; (Cannon J., dissenting, held that any special or competitive tariffs filed by “other companies” of their own motion, specifying tolls lower than those specified in the tariffs originally filed and approved under s. 9, are not to be taken as filed under said Act, but under the Railway Act, and there can be no approval thereof under said s. 9); (b) to certify from time to time (as distinct from the provision in s. 9 (4) for certifying in every third year, etc., as to revision of the normal tolls and subsequent use of revised normal tolls) normal tolls in respect of particular freight movements differing from those originally certified at the time of approving the tariffs originally filed and approved under said s. 9; (Cannon J., dissenting, contra); and (c) to certify as the amount of reimbursement to the company the difference between the lower tolls referred to in (a) supra and the modified normal tolls referred to in (b) supra; (Cannon J., dissenting, contra).

The Board’s ruling of September 23, 1932, to the effect that, where a railway company, under said s. 9, has made an approximate 20% reduction in its rates, and subsequently publishes a tariff making a further reduction in rates, to meet water or truck competition, or for other reasons, such tariff containing the further reduced rates should be published under the general provisions of the Railway Act, and the company is not entitled to any reimbursement under said s. 9 with respect to such rates, and there should be no reference on such tariff to the Maritime Freight Rates Act, was not a correct one. (Cannon J., dissenting, contra).

Subs. 2 of s. 3 of the Maritime Freight Rates Act, as contained in R.S.C., 1927, c. 79, applies to “other companies” referred to in s. 9 of said Act (notwithstanding the rearrangement in R.S.C., c. 79, of the subsees

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 of sec. 3 as contained in the original Act, and s. 9 (2) in each Act making applicable “the provisions of subs. 2 of s. 3 * * * of this Act”).

Having regard to the general scope and terms of the Maritime Freight Rates Act, tariffs filed by “other companies” referred to in s. 9 are lawful tariffs until disallowed, notwithstanding that subs. 3 of s. 3 (being the same as subs. 2 of s. 3 of the original Act) is not now expressly referred to in s. 9. (Cannon J. held that “competitive tariffs filed by other companies are lawful tariffs until disallowed under the express terms of sees. 331 and 332 of the Railway Act; and to reach this conclusion, it is not necessary to have regard to the general scope and terms of the Maritime Freight Rates Act or to subs. 3 of s. 3 thereof”).

The intent and scheme of the Maritime Freight Rates Act as to above matters, discussed, with particular regard to ss. 3, 7, 8 and 9 thereof.

REFERENCE by the Board of Railway Commissioners for Canada, upon a case stated, under s. 43 of the Railway Act (R.S.C., 1927, c. 170), for the opinion of the Supreme Court of Canada on certain questions of law arising under the Maritime Freight Rates Act (R.S.C., 1927, c. 79; and the original Act, 17 Geo. V, c. 44).

The stated case and the questions for decision are set out in the judgment of Duff, C.J., now reported.

A. G. Blair, K.C., for the Board of Railway Commissioners for Canada.

W. N. Tilley, K.C., and E. P. Flintoft, K.C., for the Canadian Pacific Ry. Co. and the Dominion Atlantic Ry. Co.

C. B. Smith, K.C., for the Provinces of Nova Scotia, New Brunswick and Prince Edward Island.

H. P. Duchemin, K.C., for the Sydney & Louisburg Ry. Co. Ltd. and others.

J. L. Ilsley, K.C., for the Nova Scotia Shippers’ Association and others.

The judgment of the majority of the court (Duff C.J., and Rinfret, Smith and Crocket JJ.) was delivered by

Duff C.J.—This appeal concerns the interpretation of the Maritime Freight Rates Act, which, as originally enacted, contained a recital to the effect (inter alia) that it was expedient to put into practical operation the recommendations of the Royal Commission on Maritime Claims respecting Transportation and Freight Rates, for the purpose of removing the burden imposed upon the trade and

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commerce of the Maritime Provinces since 1912, in so far as it might be reasonably possible to do so, without disturbing unduly the rate structure in Canada. The statute required the Canadian National Railways, and permitted other companies, to lower their tolls in the Maritime Provinces by approximately 20%, and the deficits in respect of the Maritime section of the C.N.R. were to be paid by the Government, and other companies adopting the lower standard were to be reimbursed the difference between normal tolls and the lower tolls.

For a complete understanding of the bearing and significance of the questions with which we have to deal, it is convenient to transcribe the statement of facts and the questions now put before us by the Order of the Board of Railway Commissioners in the case stated for the opinion of this Court under the authority of section 43 of the Railway Act.

“1. The Maritime Freight Rates Act, 17 Geo. V, chapter 44 (Appendix A hereto), assented to on 14th April, 1927, entitled ‘An Act Respecting The Canadian National Railways and the Tariffs of Tolls to be charged on certain Eastern Lines,’ directed that from and after 1st July, 1927, a reduction of approximately 20% be made in the tariffs of tolls to be charged in respect of movements called ‘Preferred Movements’ of freight traffic upon or over the ‘Eastern Lines,’ as defined, of the Canadian National Railways. Revenues and expenses of the Eastern Lines were to be kept separate from other accounts in connection with the Canadian National Railways and the deficits of the Eastern Lines were to be included in the estimates annually submitted to Parliament.

“2. The Act also provided by section 9 that with respect to freight movements similar to the ‘Preferred Movements,’ other companies operating in the ‘Select Territory’ as defined might file tariffs of tolls ‘meeting the statutory rates’. The Board of Railway Commissioners was by the Act to approve these tariffs and certify the normal tolls which but for the Act would have been effective and ascertain and certify to the Minister of Railways and Canals the amount of the difference between the tariff tolls and the ‘normal tolls’ on traffic moved by the company each year under the tariffs so approved.

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“3. The Act is now chapter 79 of the Revised Statutes of 1927 (Appendix B). As originally passed it contained a preamble reciting that the Act was passed to carry out the recommendations contained in the Report of a Royal Commission on Maritime claims.

“4. The Board of Railway Commissioners by section 11 of the Act was authorized to hear and determine all questions arising under the Act, subject, however, to appeal as provided in the Railway Act. The Board, acting under this section and in response to application of other companies referred to in section 9, made rulings set out in its Circular No. 213, dated 18th June, 1927 (Appendix C), as to the interpretation to be given the following expressions found in section 9 of the Act: (a) ‘Select Territory’; (b) ‘Freight movements similar to the preferred movements’; and (c) ‘meeting the statutory rates.’ Subsequently certain companies, including the Canadian Pacific Railway, the Dominion Atlantic Railway and others, elected to meet the statutory rates, and then filed tariffs pursuant to section 9 of the Act.

“5. Prior to 1st July, 1927, it was the practice in the territory covered by the Act, as in other parts of Canada, for railway companies to make adjustments in rates from time to time to meet changing industrial or traffic conditions, including competition with other transportation agencies, and since the Act came into effect, the Canadian National Railways and also the companies referred to in section 9 of the Act have found it necessary to adjust and vary the tolls originally filed under the Act, from time to time, as new industrial and traffic conditions arose.

“6. In the autumn of 1927, the question was raised as to whether the companies referred to in section 9 were entitled to reduce the rates that had been published in compliance with the Act and still continue to be reimbursed for the difference between the normal rate and the rate originally published in compliance with the Act. There are attached (Appendix D) copies of letters dated 25th November, 1927, and 10th January, 1928, from E. P. Flintoft, Assistant General Solicitor, Canadian Pacific Railway, to the Secretary of the Board and letters dated 16th January, and 1st February, 1928, from the Secretary of the Board to Mr. Flintoft, containing the decision made by the Board with respect to the questions raised.

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“7. In continuance of the practice referred to in section 5 hereof and under authority of the decision of the Board as set out in section 6 hereof the companies referred to in section 9 of the Act have from time to time filed with and had approved by the Board tariffs containing reductions in various tolls below those originally filed and approved under the said section 9.

“8. (a) All tariffs subsequently filed were approved by Orders in the form set out in Appendix E (1) in which the Board also certified what purported to be the normal rates which, but for the Act, would have been effective.

“(b) In some cases the normal rates specified in the Order were arrived at strictly in conformity with the decision referred to in section 6 hereof by adding to the new reduced rates specified in the tariff the same differentials as existed between the original normal rates and the reduced rates originally filed under the Act.

“Example: Board’s Order No. 47304, dated 2nd September, 1931, as amended by Order No. 47339, dated 10th September, 1931, re rates on apples from Dominion Atlantic stations to Halifax for export. (Appendix E (2)).

“(c) In a large proportion of the cases, however, the Board adopted the practice of certifying in such order as normal such rates as it considered would have been adopted by the companies to meet the new industrial and traffic conditions, had the Act not been passed.

“Example: Board’s Order No. 40130, dated 7th January, 1928, re rates on fruits and vegetables, canned, and apples, evaporated, from Port Williams and Sheffield Mills, N.S., via Dominion Atlantic and connecting lines to destinations in the Canadian Northwest. (Appendix E (3)).

“9. At a meeting of the Board on 23rd September, 1932, its ruling of 30th January, 1928, as contained in the Secretary’s letter of 1st February, 1928, to Mr. Flintoft, was rescinded and the decision embodied in the letter from the Secretary of the Board, dated 12th October, 1932, was adopted. (Appendix F.)

“10. Rate adjustments of the character referred to in sections 5 and 7 hereof may be illustrated under the following four general headings under each of which are set out examples of particular conditions met and reference to the tariffs filed and the Board’s Orders approving the same:—

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“(1) Rates published on a basis lower than the rates originally approved under the Act to meet the needs of an industry established at a point where no similar industry previously existed, or to place it in proper relationship with similar industries at other points on the same railway which enjoyed the benefits of commodity rates as reduced under the Act:—

“(a) Effective 12th December, 1927, rates on fruits and vegetables, canned, and apples, evaporated, from Port Williams and Sheffield Mills, N.S., via Dominion Atlantic and connecting lines to points in the Canadian Northwest, were reduced under the Act to the same basis as applied from other canning points on the Dominion Atlantic in Nova Scotia, such as Aylesford, Berwick, Bridgetown, Kingston, Lakeville and Waterville, to place the two canneries at Port Williams and Sheffield Mills on a competitive basis with those other canning plants. The rates previously in effect were the class rates as reduced under the Act. The tariff giving effect to the further reductions was Supplement No. 3 to C.P. Tariff No. E-4530, C.R.C. No. E-4318, Item No. 80-A, approved under the Act by the Board’s Order No. 40130, dated 7th January, 1928.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix G (1).

“(6) Effective 19th April, 1929, rates on potatoes, carloads, for manufacturing into starch, from points on the Canadian Pacific Railway in New Brunswick to Hartland, N.B., were reduced below the basis originally approved under the Act, in order to enable the new industry at Hart-land to obtain the raw material it required for manufacture. The tariff giving effect to these further reductions was Supplement No. 14 to C.P. Tariff No. E-4524, C.R.C No. E-4312, Item No. 532, approved under the Act by the Board’s Order No. 42665, dated 20th May, 1929.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix G (2).

“(2) Rates published on a basis lower than the rates originally approved under the Act to place an industry on the originating line on a competitive basis with similar industries located on the Canadian National Railways:—

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“(a) Effective 3rd February, 1931, rates on pit props and pit timber, Glennie to Minto, N.B., via Fredericton and Grand Lake Coal and Railway, were reduced to the same basis as in effect between certain points on the Canadian National. The rates previously in effect were on the mileage scale as originally reduced under the Act. The Tariff providing for the further reductions was Supplement No. 26 to F. & G.L. Tariff No. 108, C.R.C. No. 157, Item No. 205, approved under the Act by the Board’s Order No. 46267, dated 12th February, 1931.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix H (1).

“(b) Effective 15th December, 1931, rates on potato starch and potato flour, carloads, from Hartland, N.B., via Canadian Pacific to destinations in the Provinces of Ontario and Quebec, were reduced under the Act to the same level as the rates on the same commodities via the Canadian National from Charlottetown and Hunter River, P.E.I., to Ontario and Quebec destinations. The only rates in effect previously from Hartland were the class rates as reduced under the Act, and the further reductions were made to enable the mill at that point to compete with the mills established at the points on the Canadian National. The tariff giving effect to such further reductions was Supplement No. 43, to C.P. Tariff No. E-1360, C.R.C. No. E-4312, Item No. 534, approved under the Act by the Board’s Order No. 47896, dated 22nd December, 1931.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix H (2).

“(3) Rates published on a basis lower than the rates originally approved under the Act to enable industries to reach additional markets or to compete at destination with products from other sources of supply:—

“(a) Effective 9th November, 1927, rates on wood-pulp, carloads, from Saint John, West Saint John, Saint George, Fairville and Edmundston, N.B., to Gatineau, Quebec, via Canadian Pacific, were reduced under the Act to the same basis as in effect from the same shipping points to Ottawa, in order to enable shipments to be made to the new paper mill established at Gatineau. The rate previously applicable

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to this movement was the class rate as reduced under the Act. The tariff giving effect to such further reductions was Supplement No. 1, to C.P.R. Tariff No. E-4516, C.R.C. No. E-4304, approved under the Act by the Board’s Order No. 40134, dated 7th January, 1928.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix I (1).

“(b) Effective 29th August, 1931, rate on peat moss, carloads, from Saint Stephen, N.B., via Canadian Pacific to Montreal, was reduced to enable the shippers at Saint Stephen to compete in the Montreal market with imported moss. The only rate previously in effect was the class rate as reduced under the Act. The tariff giving effect to the further reduction was Supplement No. 40 to C.P. Tariff No. E-1360, C.R.C No. E-4312, Item No. 482, approved under the Act by the Board’s Orders No. 47491, dated 7th October, 1931, and No. 47638, dated 10th November, 1931.

“Copies of the Board’s Orders and of the relevant portions of the said Supplement are attached hereto as Appendix I (2).

“(4) Reductions forced upon the railway company in order to hold the traffic against some other competitive transportation agency, either water or highway, such reductions being in some cases seasonal, that is, effective only during the season of navigation or during that part of the year when the highway competition is more acute:—

“(a) Effective 3rd August, 1931, the rate on lumber from Falmouth, N.S., via Dominion Atlantic to Halifax, was reduced under the Act to meet motor truck competition. This was lower than the basis originally approved under the Act and expired 31st December, 1931. The tariff giving effect to the further reduction was Supplement No. 33, Item No. 60, to D.A.R. Tariff No. CT-388, C.R.C. No. 817, section 3, approved under the Act by the Board’s Order No. 47406, dated 24th September, 1931.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix J (1).

“(b) Effective 28th August, 1931, rates on apples, carloads, from Berwick, N.S., and other points, via Dominion Atlantic to Halifax for export, were reduced below the

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level originally approved under the Act, to meet competition by motor truck and water via Kingsport and Port Williams. The tariff giving effect to the further reduction was D.A.R. Tariff No. CT-418, C.R.C. No. 863, approved under the Act by the Board’s Orders, No. 47304, dated 2nd September, 1931, and No. 47339, dated 10th September, 1931.

“Copies of the Board’s Orders and of the relevant portions of the said tariff are attached hereto as Appendix J (2).

“(c) Effective 15th April, 1932, rates on pulpwood from Annapolis Royal, N.S., via Dominion Atlantic, to Middle-town, N.S., for furtherance, were reduced below the basis originally approved under the Act to meet water competition. The tariff giving effect to such further reductions was Supplement No. 44 to D.A.R. Tariff No. CT-388, C.R.C. No. 817, Item No. 156, approved under the Act by the Board’s Order, No. 48423, dated 13th April, 1932.

“Copies of the Board’s Order and of the relevant portions of the said Supplement are attached hereto as Appendix J (3).

“The foregoing examples are typical of many similar reductions of the several classes referred to that have been made since the coming into force of the Act.

“The questions for decision are:—

“1. Whether, having regard to the facts above set out and to the relevant provisions of the Maritime Freight Rates Act and of the Railway Act, it is within the Board’s jurisdiction:—

“(a) To approve, from time to time, under section 9 of the Maritime Freight Rates Act, tariffs filed by other companies referred to in the said section specifying tolls lower than those specified in the tariffs originally filed and approved under the said section, the tariffs last referred to having provided for reductions in rates of approximately 20%.

“(b) To certify, from time to time, as distinct from every third year as provided in subsection 4 of the said section, normal tolls in respect of particular freight movements differing from those originally certified at the time of approving the tariffs originally filed and approved under the said section;

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“(c) To certify to the Minister of Railways and Canals as the amount of reimbursement to the company, the difference between the lower tolls, referred to in clause (a), and the modified normal tolls referred to in clause (b).

“2. Whether the Board’s ruling dated 23rd September, 1932, set out in Appendix “F” is correct.

“3. Whether subsection (2) of section 3 of the Maritime Freight Rates Act, as contained in the Revised Statutes of Canada, 1927, applies to “other companies”, referred to in section 9 of the said Act.

“4. Whether, having regard to the general scope and terms of the said Act, tariffs filed by other companies referred to in section 9 are lawful tariffs until disallowed, notwithstanding that subsection (3) of section 3 is not now expressly referred to in section 9.”

The Maritime Act, by the general declaration of policy in its preamble, left little room for doubt as to the governing purpose of it. There is, besides, a specific declaration in section 8 that the purpose of the Act is to give certain statutory advantages in rates in the “Select Territory”, and that these “statutory rates” are not based upon a principle of fair return to the railways for the carriage service.

The general reduction of 20% primarily affects rates for what are called “preferred movements”, which are, broadly speaking, movements upon the “Eastern Lines” of the Canadian National Railways, that is to say, lines in the Maritime Provinces and in a limited area in Eastern Quebec. Since the declared policy of the statute is to give certain advantages to persons and industries in the region described as the “Select Territory”, it was not within the purview of that policy to confine such advantages to shippers on the Canadian National Railways. Accordingly, by section 9, provision is made enabling other companies operating within the areas affected, to frame and file tariffs “meeting” the “statutory” tariffs. It is not disputed that both before and since the passing of the Act adjustments of freight rates have constantly been necessary in the Select Territory, as in other parts of Canada, to meet changing industrial and traffic conditions. With the establishment of a new industry at a point where no similar industry existed, it is often expedient, to encourage its

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development, to reduce the rates applicable to the movement inwards of its raw material and outwards of its finished product; again, in order to insure continuance of traffic on its line, a railway company finds it desirable to establish a basis of rates for industries thereon comparable to that enjoyed by competing industries on another line; furthermore, in order to enable shippers, particularly of low priced commodities, to reach more distant markets or to compete with shippers at other sources of supply, it often becomes necessary to accord special rates for such shippers. Another example of adjustments that must take place is furnished by those necessitated by the competition of other transportation agencies, particularly by highway and water.

The general rules governing the practice in fixing freight rates are laid down in the Railway Act (R.S.C., c. 170), under the heading “Traffic, Tolls and Tariffs”—sections 312 to 359 (inclusive). By ss. 328 to 332 (inclusive), tariffs may be issued under three heads, viz., standard, special and competitive. Sections 336 to 341 (inclusive) provide for the issue of joint tariffs where traffic is to pass over two or more lines of railway.

These enactments are so designed as to enable railway companies to adjust and vary their tolls to meet the exigencies arising from alterations in industrial and traffic conditions, and to enable them to compete with other agencies of transport.

It must, of course, be assumed that the Maritime Freight Rates Act was passed in contemplation of the practice founded upon this state of the law which was well known. The C.P.R. Co. and the Dominion Atlantic Co. elected to act under section 9 of the Act, which is in these terms:

9. (1) Other companies owning or operating lines of railway in or extending into the select territory may file with the Board tariffs of tolls respecting freight movements similar to the preferred movements, meeting the statutory rates referred to in section seven of this Act. The Board, subject to all the provisions of the Railway Act respecting tariff of tolls, not inconsistent with this Act, shall approve the tariffs of tolls filed under this section.

(2) The provisions of subsection two of section three and of sections seven and eight of this Act shall apply to the tariffs of tolls filed under this section.

(3) The Board on approving any tariff under this section shall certify the normal tolls which but for this Act would have been effective and shall, in the case of each company, at the end of each calendar year promptly ascertain and certify to the Minister of Railways and Canals the amount of the difference between the tariff tolls and the normal

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tolls above referred to on all traffic moved by the company during such year under the tariff so approved. The company shall be entitled to payment of the amount of the difference so certified, and the Minister of Railways and Canals shall submit such amount to Parliament if then in session, (or if not, then at the first session following the end of such calendar year) as an item of the estimates of the Department of Railways and Canals.

Subsection 2 of section 3, designated in section 9 (2), is as follows:

2. The Board of Railway Commissioners, hereinafter called the Board, is authorized and directed to

(a) approve such cancellations, and, subject to the provisions of the Railway Act, respecting tariffs of tolls for the carriage of freight, where not inconsistent with this Act, to approve all tariffs of tolls so substituted;

(b) maintain or cause to be maintained such substituted tariffs, subject to all provisions of the Railway Act respecting tariffs of tolls not inconsistent with this Act, on the general rate of level approximately twenty per cent. below the tolls or rates existing on the first day of July, one thousand nine hundred and twenty-seven, while the cost of railway operation in Canada remains approximately the same as at the said date, but the Board may allow the increase or reduction of such tolls or tariffs from time to time to meet increases or reductions, as the case may be, in such cost of operations;

(c) adjust or vary such substituted tolls or rates from time to time as new industrial or traffic conditions arise, but always in conformity with the intent of this Act as expressed in sections seven and eight and other relative sections hereof.

The form of order which the Board adopted and has employed in approving tolls under section 9 is this:

1. The Board Orders that the tolls published in (particulars of tariff), filed by the Company under Section 9 of the Maritime Freight Rates Act be and they are hereby approved subject to the provisions of subsection 2 of section 3 of the said Act.

2. And the Board Hereby Certifies that the normal tolls which but for the said Act would have been effective in lieu of tolls published in the said (same particulars of tariff) approved herein, are as follows:—

(Sgd.) Chief Commissioner, B.R.C.

There is not the least dispute that, in practice, during a period of years, it was considered that both the C.N.R. and the other railways must vary their tariffs from time to time and that the Maritime Act was applicable to the tariffs so varied; and upon this view the Board acted in ascertaining and certifying “normal rates”.

In response to an application of the companies affected for a ruling as to the interpretation to be put upon certain expressions in s. 9, the Board made certain rulings or decisions, set out in its Circular No. 213 (Appendix C), interpreting section 9 of the Act. The general effect of

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these rulings was to authorize the application, in respect of rate reduction, of the same principles to the Canadian National Railways and to other companies within the “Select Territory”.

Relying on this ruling, it is stated that the Canadian Pacific Railway Company and the Dominion Atlantic Railway Company, as well as other companies, and as to this there is, in point of fact, not the slightest controversy, elected to bring their rates into conformity, in principle, with the “statutory rates” and framed their tariffs accordingly. Later, a question was raised whether the companies to which section 9 is applicable were entitled to reduce rates that had been published under that section, and still retain their right to reimbursement under the terms of its provisions. The Board decided this question in the affirmative.

Relying, again, it is said, on the decision of the Board (and, again, there is no dispute about the fact), these companies, from time to time, filed with the Board, in supposed compliance with section 9, new tariffs effecting reductions in various tolls, as originally filed and approved, and these reduced tolls were approved by the Board.

The Board’s power under section 9 (1) to approve the reduced tolls was not exhausted, it is contended, upon approval of the tariffs setting forth the reductions first made upon the Act becoming effective. The practical working of the scheme of the Act required, in view of considerations already explained, an interpretation of the Board’s powers, under that section, as being continuing powers exercisable from time to time, whenever changed industrial or traffic conditions, in its judgment, might demand or render expedient further adjustments or variations of tolls. Otherwise, it is said, the Act, instead of endowing the shippers of the Maritime Provinces with the benefits it was designed to bestow, must prove an actual hindrance to the industrial and commercial development of the areas within the “Select Territory”. This appears to have been the view accepted by the Board in approving the reductions already alluded to.

It should, perhaps, be observed that apart from the standard rates, which constitute the maxima of rates that may in any case be charged, the only rates available be-

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tween many points are the so-called class rates payable in respect of the various classes of commodities specified in the Canadian Freight Classification. Now, when a new industry is established at a point where no such industry previously existed, and there are flourishing similar industries at other places, with which the new establishment has to compete and which are in the enjoyment of lower rates than the class rates, the rates for the new establishment must, as a condition of its existence, be put upon a basis below the class rates, comparable to that of the rates enjoyed by the competing establishments. This is but one example of the numerous types of cases in which rate reductions become necessary and are constantly taking place.

In June, 1927, when the initial reduction of 20% went into operation, the only rates (other than standard rates) then in effect in a large proportion of cases were these so-called class rates, while in other cases “commodity rates” were in effect, calculated, for various reasons, upon a lower basis. These rates were reduced approximately 20%. Almost immediately new conditions arose which called for further reductions, and the Board had to then deal with the question above indicated, which was decided, as already observed, in the manner contended for by the railways.

A brief commentary upon the examples given in paragraph ten of the case will be useful:

Heading 1 (a). This is the case of a new plant brought into competition with plants at other points. Successful operation would have been, it appears, commercially impossible if the “class” rates, even as originally reduced under the Act, had been payable; a further reduction was sanctioned as necessary.

(b) The starch manufacturer, it is explained, could not afford to pay on his raw material the ordinary rates paid on potatoes for domestic consumption, even as reduced under the Maritime Act, and a further reduction was required.

Heading 2. These are cases of what, it appears, is sometimes called “market competition.” That is to say, the railway finds it necessary to reduce its rates in order to put shippers on its line in a position to compete with shippers on another line (in this case the Canadian National Railways) in common markets. This expansion of business

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would not have been possible if the further reductions had not been made.

Heading 3 (a). In this case a prospective purchaser developed after the first reduction had been put into effect. The commodity was of a low grade, and the traffic could not, it is explained, bear the class rate, even as reduced under the Act, so a further reduction was necessary to enable the shippers to reach this additional market.

(b) This is another case of market competition, though the rival shipper was overseas. It also illustrates the necessity of a further reduction to enable the shipper of this relatively low grade commodity to reach an additional market.

Heading 4. These examples are said to illustrate one of the commonest conditions with which the railway companies are faced to-day, viz., the necessity of reducing their rates to preserve their traffic against other competitive agencies of transportation. In the examples given are the cases of highway competition, water competition and combined water and highway competition. These competitive conditions change almost from day to day and demand frequent readjustments of rates.

From these illustrations it is argued that any construction of the Act which would prevent the railway companies affected by section 9 from moulding their tariffs to meet these constantly changing conditions, and while leaving the Canadian National Railways free to reduce its tariffs, would constitute discrimination between persons and industries served by the different systems; a result obviously not within the scheme of the Act as designed. The intent of the statute which aims at relief for shippers in the whole of the “Select Territory” would be largely frustrated by permitting such discrimination.

The Board has until recent months given full operation to this interpretation of the section. Cases in which further reductions were made were approved by orders of the Board specially issued in the individual case, and in each of these orders the Board certified the normal rates that would be applicable to such case.

We have come to the conclusion that the practice followed by these companies with the approval of the Board, as indicated in the examples given, is in accord with the

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proper construction of section 9. In view of the conditions with which the Act deals, the better construction of the section would appear to be that the Board’s power to certify normal tolls was not exhausted with the first certification. (Boon v. Howard[1]; Reg. v. Clarence[2]; The Duke of Buccleugh[3].)

The practice which has been followed is not, we think, inconsistent with the provisions of subsection 4 of section 9, which contemplates a general revision of rates, brought about by changes in wages or other costs of operation in the territory at large. The practice now under review deals with individual rates which, as already stated, must be subject from time to time to adjustment to enable individual shippers served by the railways concerned to hold their own as against shippers served by other lines or other transport agencies. We are satisfied that regional discrimination could not have been contemplated.

It will be convenient now to summarize the grounds we have indicated in this rather lengthy discussion, upon which we think the interpretation of the Maritime Act advanced by the appellants ought to be accepted.

The key to that interpretation seems to be given by sections 7 and 8. By force of section 7, the tariffs of tolls “provided for” in the Act are “to be deemed statutory rates” and are “to be deemed” to be rates not “based on any principle of fair return to the railway for services rendered in the carriage of traffic Accordingly, these rates must not be taken into account in determining the “reasonableness” of “other rates” By section 8, the “purpose of this Act” is explicitly declared to be the purpose of “giving certain statutory advantages” in respect of charges for railway transport to the “persons and industries” in the select territory; and the Board is expressly prohibited from approving or allowing any tariffs which may “destroy or prejudicially affect” such advantages “in favour of persons or industries located elsewhere than in such select territory”.

Shippers, in Nova Scotia, of apples, for example, destined for Montreal, are to enjoy the reduced rates which are to go into effect immediately on the passing of the statute

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(rates 20% below the existing rates) ; and to the extent of this reduction the Board is required to maintain a “discrimination between” (Railway Act, s. 314) the select territory and other localities where apples are produced and shipped—the apple districts of Ontario, for example, and British Columbia.

There can, we conceive, be no question as to the scope of sections 7 and 8. They apply to all rates “specified in the tariffs of tolls in this Act provided for”. They apply to the substituted tariffs which are to be “prepared and submitted to the Board” immediately upon the passing of the Act. They apply also, and this it is important to emphasize, to these tariffs, as varied and adjusted (under subs. 2 (c) of s. 3) “as new industrial or traffic conditions arise”. By the explicit terms of s. 9 (2) they apply to the tariff tolls to be approved under that section. In performing the duty of the effecting or sanctioning of such variations and adjustments, the Board is required to act “always in conformity with the intent of the Act as expressed in sections 7 and 8”. The “intent of the Act as expressed” in these sections, which is to govern the Board in effecting or sanctioning such variations and adjustments, is that persons and industries in the select territory, as to the “preferred movements” are to enjoy a statutory preference of 20% in respect of railway rates over persons and industries “located” elsewhere. As already observed, we think the phrase “the rates specified in the tariffs of tolls in this Act provided for” must be read as including the variations and adjustments brought into force under section 3 (2c); and that the effect of the words of this last mentioned enactment “always in conformity with the intent of this Act as expressed in sections 7 and 8 and other relative sections hereof” (“other relative sections hereof” would appear to contemplate the principal enactment of section 3 requiring the reduction of existing rates by 20%) is to provide for the maintenance in the tariffs, as adjusted and varied, of the difference of 20% between the rate brought into force when “new industrial or traffic conditions arise” and the rate which would have prevailed if the Act had not been passed.

This seems to be the necessary deduction from the declaration (in s. 7) that “fair return to the railway for

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services rendered” is not to be the principle determining the variations or adjustments under section 3 (2c) and the declaration in section 8 that the favoured persons and industries are always to enjoy the advantage of the discrimination established in their favour as against other localities.

Broadly speaking, the principles have been observed in the execution by the Board of its general powers in relation to tolls, that “the object of the legislation is plainly declared”, viz.,

the fixing of just and reasonable freight and passenger rates, having proper regard, not only to the question of the reasonableness and fairness of the rate itself, but also to the principle of equality as between different districts and shippers,

that this principle would be infringed by

giving special rights to any particular district of the country, or creating rates, which by change of circumstances and conditions could not be described as just or reasonable;

and that

an unremunerated rate applicable in one district involves a discrimination as against other districts where traffic and operating conditions are similar, and directly infringes on the provisions of the Act requiring uniformity of rates.

These passages from the judgment of the Chief Commissioner (Sir Henry Drayton) delivered in December, 1917, in the case known as the Increase in Rate Case[4], sufficiently explain the broad principles by which the Board has been governed in applying the enactments of the Railway Act.

The Board’s duty in applying the enactments of section 3 (as well as of section 9) is to give form and substance to the intent of the Act, as expressed in sections 7 and 8, which, we repeat, exclude in explicit language the two principles expounded by the Chief Commissioner, that of the reasonableness of the rate in itself, and that of “uniformity” of rates as affecting different localities.

Since the Board, in proceeding under section 3 (2c), is not to follow the fundamental principles of rate making governing tariffs compiled under the general Railway Act expounded by the Chief Commissioner, it follows that, unless we adopt the view above set forth that the rule of the Maritime Act, the maintenance of a difference of 20% between the rate in force and the rate that would have

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been in force if the Act had not been passed, is a condition governing the Board in effecting or sanctioning variations under section 3 (2c), we are driven to the conclusion that, in proceeding under this last named enactment, the Board is left without the guidance of any canon of any description. We cannot accept that conclusion.

Moreover, it seems a reasonable view that the procedure indicated, and the rule laid down in subsection 3 of section 3 were intended to apply to proceedings under subsection 2c of that section. We have already said that in our view the phrase “rates specified in the tariffs of tolls in this Act provided for” includes the variations and adjustments of such rates under section 3 (2c). We likewise think that “substituted tariffs” in subsection 3 embraces “substituted tariffs” as varied and adjusted under subsection 2c.

We do not doubt that the Act does not contemplate that the Board, in proceeding under subsection 2c, is to act exclusively ex mero motu suo. An application from some quarter is contemplated as the normal mode of initiating the proceeding. Where the Board proceeds without an application the variation or adjustment does or may take effect at once. But the Board may proceed upon an application by the Company or by a third party,—a shipper, for example. If the variation or adjustment proposed is one required by “new industrial or traffic conditions,” then, under s. 3 (2c) it is the duty of the Board to bring it into operation as soon as the change in circumstances arises, or as soon as it becomes aware of them. The Company or the other applicant having established the facts, in other words, having shewn that circumstances have arisen requiring action of the Board under s. 3 (2c), it would not be an unreasonable recognition of the spirit of the statute, as manifested by sections 7 and 8, to treat the new rate as in force from the moment the facts had been put before the Board, that is to say, from the moment of application.

Again, where the application is made by the Company it would seem to be a convenient procedure to treat the “submission” of the altered tariff by the Company as the initiation of the application. As already indicated, this appears to be the procedure contemplated by s. 3 (3).

That this is the procedure which in fact has been followed by the Board is shewn by the various orders, copies

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of which are appended to the case, approving of variations proposed by the companies. It is said in the factum filed by the Board that no application has been made by the companies for variation or adjustment of rates under s. 3 (2c) or s. 9 (2). But the orders referred to are obviously not made under the Railway Act. They sanction in express terms rates 20% below the rates that, under the conditions prevailing at the time, upon the principles of rate making which prevail under the Railway Act, and under the practice of the Board, could not properly have been, and would not have been sanctioned by the Board, if the Act had not passed. The practice of the Board in respect of these orders is set forth in paragraph 8 of the Case in these words:

8. (a) All tariffs subsequently filed were approved by Orders in the form set out in Appendix E (1) in which the Board also certified what purported to be the normal rates which, but for the Act, would have been effective.

(b) In some cases the normal rates specified in the Order were arrived at strictly in conformity with the decision referred to in Section 6 hereof by adding to the new reduced rates specified in the tariff the same differentials as existed between the original normal rates and the reduced rates originally filed under the Act.

Example: Board’s Order No. 47304 dated 2nd September, 1931, as amended by Order No. 47339 dated 10th September, 1931, re rates on apples from Dominion Atlantic stations to Halifax for export. (Appendix E (2).)

(c) In a large proportion of the cases, however, the Board adopted the practice of certifying in such order as normal such rates as it considered would have been adopted by the companies to meet the new industrial and traffic conditions, had the Act not been passed.

Example: Board’s Order No. 40130 dated 7th January, 1928, re rates on fruits and vegetables, canned, and apples, evaporated, from Port Williams and Sheffield Mills, N.S., via Dominion Atlantic and connecting lines to destinations in the Canadian Northwest. (Appendix E (3).)

Obviously, the Board, in all these cases, was professing to exercise its powers under the Maritime Act. Down to the time when the statute as it appears in the Revised Statutes came into force (1st February, 1928), the Board probably assumed that a grant of the same power as that expressly conferred by s. 3 (1e), (as s. 3 (2c) then was), in relation to the rates of the C.N.R., was necessarily implied, as respects the companies affected by s. 9, in the authority given to these last mentioned companies to file tariffs “meeting” the “statutory rates referred to in s. 7” which literally (and it would seem also by necessary intendment) would include the rates as varied or adjusted under s. 3

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(1e). The Board may also have taken the view that a construction by which the authority to “vary and adjust” should embrace only the rates of the C.N.R. would reduce the statute to obvious absurdity, as imposing upon it the duty to discriminate, in the matter of tolls, against “persons and industries” located on the lines affected by s. 9, in favour of those “located” on the C.N.R.

We think the form in which the proposed changes were submitted to the Board is of no importance. We have no doubt that the Board had jurisdiction to approve the rates submitted, and to certify the normal tolls which would have prevailed if the Act had not passed, under s. 9 and s. 3 (1e) or under s. 9 (2) and s. 3 (2c).

At this point, it is convenient to comment upon Question 2, which is in this form:

Whether the Board’s ruling dated 23rd September, 1932, set out in Appendix F, is correct?

The ruling is in these words:

Whereas the following ruling was made by the Board at a meeting held on the 30th January, 1928, in Connection with question submitted by Mr. Flintoft of the Canadian Pacific Railway Company, is hereby rescinded:—

“Is a carrier which is subject to Section 9 of the Act entitled to reduce a rate that has been published in compliance with the Act and still continue to be reimbursed for the difference between the normal rate and the rate originally published in compliance with the Act?

Ans.: The answer to this question is in the affirmative, but that such further reduction of the rate will be subject to all the limitations contained in the Railway Act.”

That upon reconsideration of the above ruling, the decision of the Board is that where a railway company, under the authority of Section 9 of the said Act, has made an approximate 20% reduction in its rates, and subsequently publishes a tariff schedule making a further reduction in rates published under the authority of the Act, to meet water or truck competition, or for other reasons, such tariff schedule containing the further reduced rates should be published under the general provisions of the Railway Act and the railway company is not entitled to any reimbursement under Section 9 of the Maritime Freight Rates Act with respect to such rates and there should be no reference to the Act last named shown on such tariff schedules. In other words, where normal tolls, which would not have been reduced but for the provisions of the Maritime Freight Rates Act, were, under the authority of that Act, reduced approximately 20%, the railway company was entitled to reimbursement under the terms of Section 9, but where a railway company makes a further voluntary reduction in such rates it is not doing so under the provisions of the Maritime Freight Rates Act, but under the general provisions of the Railway Act, and the Maritime Freight Rates Act has no application with respect to such tariffs.

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The last sentence seems to give the ratio of the ruling; and, apparently, this ratio would apply to the Canadian National Railways as well as the railways affected by section 9. We cannot think that the powers or the duties of the Railway Commission are not the same under section 3 (2c) or section 9 (2) whether these powers are exercised by it ex mero motu suo or after having been invoked by a railway company or by a shipper. In all cases where the “new industrial or traffic conditions” bringing those enactments into play have arisen, it is not only within the power, but it is the duty, of the Board to act. If a given variation or adjustment ought to be directed on the application of a shipper, then it ought to be approved on the application of the railway company. The fact that the railway company assents to the change or requests the change is immaterial. Such changes, if made, are made under the Maritime Freight Rates Act and not under the Railway Act.

We now turn to section 9. There is, we think, no admissible reason for disregarding subsection 2 of that section as it appears in the Revised Statutes of 1927. It must be assumed, we think, that the change was made deliberately, and in order more clearly to express the purpose of the statute; to give, perhaps, more explicit sanction to the rulings of the Board. The clue to the construction of section 9 is given by subsection 3 which requires the Board “on approving any tariff under this section” to certify “the normal tolls which, but for this Act, would have been effective”. The difference between the “normal tolls” in this sense and the “tariff tolls” is to be the measure of the reimbursement. The “tariff tolls” are to be framed for the purpose of “meeting” the “statutory tolls” under section 7. “Tariff tolls” are statutory tolls in the sense that they are tolls which for the reasons already outlined could not take effect, as indeed subsection 3 of section 9 impliedly declares, otherwise than by force of the Maritime Act.

Variations and adjustments pursuant to subsection 2 are plainly “tariff tolls” within the meaning of subsection 3; for the obvious reason that they are “rates specified in tariffs of tolls in this Act provided for” within the meaning of section 7, which is made applicable to them by the

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express terms of section 3 (2c). Moreover, we see no reason to think that what we have said as to section 3 (2c) and section 3 (3) does not equally apply to variations and adjustments under section 9 (2) which makes section 3 (2c) applicable to tariffs of tolls filed under section 9.

The answers to the questions submitted are, in principle, dictated by what has been said. The answers to the subquestions of Question 1 are in the affirmative; the answer to Question 2 in the negative; to Question 3 in the affirmative, and to Question 4 in the affirmative.

Cannon, J. (dissenting in part).—In Canadian National Railway Company v. Province of Nova Scotia[5], the present Chief Justice of Canada, speaking for this Court concerning the Maritime Freight Rates Act now under consideration, said:

In explaining the provisions of the Act, the phrase “Eastern lines” will frequently be used, and it is convenient at this place to quote textually section 2 of the Act which gives the meaning of that expression:

“For the purposes of this Act the lines of railway now operated* as a part of the Canadian National Railways and situated within the provinces of New Brunswick, Nova Scotia and Prince Edward Island, and the lines of railway, similarly operated, in the province of Quebec extending from the southern provincial boundary near Matapedia and near Courchesne to Diamond Junction and Levis are collectively designated as the ‘Eastern Lines.’”

For a similar reason, section 8 should also be mentioned, which defines the phrase “select territory,” as including Nova Scotia, New Brunswick and Prince Edward Island in addition to the localities on “the lines in the province of Quebec mentioned in section 2.”

The Act, by section 3, requires the cancellation of tolls in force at its date (which we shall speak of as normal tolls), in respect of the “movements of freight traffic” described as “preferred movements,” and the substitution therefor of tariffs of reduced tolls (which we shall refer to as the statutory tolls). The “preferred movements” comprise three classes, first, of local traffic between points on the “Eastern lines,” second, of export traffic destined overseas between points on the “Eastern Lines” and ocean ports on the “Eastern Lines,” and third, of westbound traffic originating on the “Eastern Lines,” and extending westward beyond those lines.

As respects the first and second of these classes of “preferred movements,” the statutory tolls are ascertained by making a deduction from the normal tolls of approximately twenty per cent. As respects the third class of such movements, the statutory rate is ascertained by making a deduction, also of twenty per cent, but, in this case, the deduction takes effect only upon that part of the “through rate” which the statute in section 4 describes as the “Eastern Lines proportion of” that rate. The statute also provides for the non-compulsory reduction of

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rates by companies, other than those concerned with the “Eastern Lines,” which own or operate railways “in or extending into the select territory.” Such companies, by section 9, are permitted, in order to “meet” the compulsory statutory rates, to file tariffs of reduced rates “respecting freight movements similar to the preferred movements.”

It is part of the scheme of the Act that these non-compulsory reductions, sanctioned by section 9, shall not be ultimately borne by the companies whose tolls are affected by them; and by that section provision is made for the transfer of that burden to the Dominion Government, the Minister of Railways and Canals being required, at the end of each year, to pay to the companies availing themselves of the privileges of the section the difference, as certified by the Board of Railway Commissioners, between the amount which would have been payable in normal tolls, but for the tariffs filed under it, and the sums actually “received under those tariffs.”

* * *

As appears from recitals and declarations in the preamble and in the body of the Act, the statutory rates, whether compulsory under sections 3 and 4, or non-compulsory under section 9, are envisaged by the statute not as providing a fair return for railway services, but as arbitrary rates, established with the design of affording special “statutory advantages to persons and industries” in the “select territory”; it was therefore considered just to transfer from the railway companies to the Dominion Treasury the burden of reductions authorized by section 9, which in the legal sense are non-compulsory, but, which it was recognized, might be exacted from the companies concerned, by the force of competition. It should also be observed, that the only enactment of the Act which confers a right of compensation upon railway companies (other than those concerned in the operation of the “Eastern Lines”) in respect of reductions sanctioned by the Act is the provision in section 9 already mentioned and that provision relates only to non-compulsory reductions authorized by the section.* Indemnity to companies in respect of loss of revenue arising from a compulsory reduction is not provided for and not contemplated by the Act.

* * *

* * * The function of this court is to give effect to the intention of the legislature, as disclosed by the language selected for the expression of that intention. Whatever views may have inspired the policy of a statute, it is no part of the function of a court of law to enlarge, by reference to such views, even if they could be known with certainty, the scope of the operative parts of the enactment in which the legislature has set forth the particular means by which its policy is to be carried into effect*. If the language employed is fairly open to a given construction, then the policy of the Act, as disclosed by the statute itself, read in the light of the known circumstances, in which it was passed, may legitimately be called in aid. * * *

The preamble professes to be for the most part a summary of the relevant portions of the report of a Royal Commission of September, 1926, through which, as it recites, Parliament has been advised that the Intercolonial Railway was designed, inter alia, to afford to Maritime merchants, traders and manufacturers the larger market of the whole Canadian

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people; but that in “determining” the construction of the railway, commercial considerations were subordinated to considerations of a national, Imperial, and strategic character, which dictated a longer route than would otherwise have been necessary, and that, to this extent,

“the cost of the railway should be borne by the Dominion and not by the traffic which might pass over the line.”

The preamble proceeds:—

“And whereas the Commission has, in such report, made certain recommendations respecting transportation and freight rates, for the purpose of removing a burden imposed upon the trade and commerce of such provinces since 1912, which, the Commission finds, in view of the pronouncements and obligations undertaken at Confederation, it was never intended such commerce should bear; and whereas it is expedient that effect should be given to such recommendations, in so far as it is reasonably possible so to do without disturbing unduly the general rate structure in Canada.”

To the recitals in the preamble there should be added the declaration contained in s. 8:—

“The purpose of this Act is to give certain statutory advantages in rates to persons and industries in the Maritime provinces.”

It will be observed that the recitals in so far as they are pertinent, may be summed up in the proposition that, by reason of the circumstances attending the institution of the Intercolonial Railway system, “the cost of the Railway” should be borne by the Dominion, and not by the traffic on the line, in so far as that cost is due to national, Imperial and strategic considerations, as contradistinguished from commercial considerations,* and that certain recommendations founded upon this view in the report of the Royal Commission ought to receive effect.

* * *

* * * The purpose of the Act is declared to be to give “certain statutory advantages in rates.”

Now, then, are the tariffs of rates under discussion in this case, “statutory rates given by the Special Act” or are they special rates that might have been given by the companies, for purely commercial considerations, prior to 1927, under the provisions of the Railway Act?

Under sections 331 and 332 of the Railway Act, railway companies were authorized to issue special freight and competitive tariffs for the carriage of goods and were only required to file these tariffs with the Board of Railway Commissioners and specify the date of the issue thereof and the date on which it was intended to take effect. If the provisions of subsection 2 of section 3 of the Maritime Freight Rates Act, as they are found in chapter 79 of the Revised Statutes of Canada of 1927, are to be read into section 9 thereof, “other companies owning or operating lines of railway in or extending into the select territory may file with the Board tariffs of tolls respecting freight

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movements similar to the preferred movements, meeting the statutory rates referred to in section seven of this Act.” These statutory rates are not based upon any principle of fair return to the railway for services rendered in the carriage of freight. This applies only to tolls filed under section 3 (1) (b) as statutory substitutes to the tariffs cancelled and showing a reduction of approximately 20% to meet the increased cost due to national, strategic or Imperial considerations.

Again, even assuming that subsection 2 (c) of section 3 applies to the other companies, the Board is only authorized and directed to adjust and vary such substituted tolls or rates from time to time as new industrial or traffic conditions arise, also in conformity with the intent of the Act which is to give compulsorily certain statutory advantages and rates to persons and industries in the “select territory.” The Board has never been called upon by either the C.N.R. or the “other companies” to adjust or vary substituted tariffs. From time to time tariffs have been filed by both companies of their own motion, varying the substituted tariffs, and the Board has approved of these tariffs. This approval was not necessary, as no order or direction of the Board is required to enable a company to file a tariff lower than the substituted tariff for the purpose of meeting competition. The filing of such tariffs and the approving same in no way involve the exercise by the Board of its power to adjust or vary tariffs.

Does this clause add anything to the right which the companies already had of filing special and competitive freight rates to meet special and industrial or traffic conditions?

I do not think so. They could and always had under the Railway Act the faculty of reducing their rates by simply filing the new rates with the Board. The latter’s approval was not required and I see nothing in the Acts which calls upon the Board to approve these special tariffs. The adjustment and variation of tolls from time to time by the Board contemplated in the Special Act is not the approval of competitive rates such as those submitted and filed by the companies. The rights of other companies to file tariffs and obtain reimbursement from the government in respect of reduced rates must be found in section 9,

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which, according to me, shows clearly that reimbursement is provided for only in the case of original substituted tariffs.

The Board is given power to “approve the tariffs of tolls filed under this section” The only tariffs of tolls authorized to be filed under section 9 are “tariffs of tolls respecting freight movements similar to the preferred movements, meeting the statutory rates referred to in section seven of this Act.”

Section 7 says that “the rates specified in the tariffs of tolls, in this Act provided for, in respect of preferred movements, shall be deemed to be statutory rates.”

The tariffs of tolls referred to in section 7 are the tariffs filed by the C.N.R. under section 3 (1) (b), namely: tariffs “showing a reduction * * * of approximately twenty per cent.” from those in force before July 1, 1927.

Hence it follows that the only tariffs of tolls which can be filed and approved by the Board under section 9 are tariffs meeting the tariffs filed by the C.N.R. under section 3 (1) (b).

By section 9 (3) the Board “on approving any tariff under this section shall certify the normal tolls which but for this Act would have been effective.”

The Board must then certify and the company is entitled to receive “the difference between the tariff tolls and the normal tolls above referred to,” not on all traffic, but “on all traffic moved by the company * * * under the tariff so approved.”

It is also to be noted that the Board has no authority to change the “normal” tolls except under the provisions of subsection 4.

Nowhere in the Act is authority given to “other companies” to file tariffs in substitution for those filed to meet “the statutory rates,” and nowhere in the Act is authority given to the Board to approve any other tariffs.

The language of section 9 is only appropriate and can only be applied in the case of reimbursement under the original substituted tariffs.

To illustrate this: The rate before the Act came into force for a certain commodity was $1. A tariff is filed under section 9 reducing the toll to 80 cents. The Board certifies $1 as the normal toll, and the difference between the normal

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toll, $1, and the tariff toll, 80 cents, is the amount the carrier is entitled to receive from the Government. Later on, owing to competition, it becomes necessary for the company to reduce the toll to 60 cents. The company files a new tariff purporting to be under the Maritime Freight Rates Act and claims reimbursement. If entitled to reimbursement, how is the amount of such reimbursement to be ascertained?

Section 9 (3) says: “The Board on approving any tariff under this section shall certify the normal tolls which but for this Act would have been effective.”

Now the normal toll in this case has not been changed. It still remains $1. The Board, if it assumes to approve the tariff, must certify $1 as the normal toll, and under the terms of the Act the carrier would be entitled to receive the difference between the tariff toll, 60 cents, and the normal toll, $1, namely, 40 cents.

This, of course, leads to an absurdity, and the railways themselves do not make this claim. What they say is that they are still entitled to the 20 cents, and this no matter how many tariffs are filed nor how great the reduction in the tariff toll may be.

To give an actual case: There was a rate of 28 cents on apples on June 30, 1927. A new tariff was filed under the provisions of section 9 in which the toll was reduced by 20% to 22½ cents, making the reimbursement to the company 5½ cents. To meet competition the rate was reduced to 10 cents. The company claims that it is entitled to receive the same reimbursement from the Government, namely, 5½ cents.

The difficulty is that “the normal toll which but for this Act would have been effective” is still 28 cents. If the company is entitled to reimbursement at all, it must be for the difference between 28 cents, the normal toll, and 10 cents, the tariff toll under which the apples move.

How can it be said that 15½ cents, or any other figure lower than 28 cents is “the normal toll which but for this Act would have been effective”? The railway was confronted with competition by other transportation agencies which compelled the establishment of a ten-cent rate, and, Act or no Act, this is the competitive rate it had to establish to secure the traffic.

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The actual words of section 9, together with the impossibility of making its language applicable for the purpose of reimbursement in the case of the filing of tariffs other than those authorized by section 9 (1), show clearly that it was only in respect of the original substituted tariffs “meeting the statutory rates” that reimbursement was intended.

With hesitation, in view of my great respect for the opinion of the majority of my brethren, who seem to hold the contrary view, I believe that Parliament intended to reimburse the Canadian National Railways and the other companies for the losses which the 20% reduction in the rates existing in 1927 would occasion. The Dominion at large was to pay in order to give lower statutory rates to the “select territory”, i.e., the three maritime provinces and part of Eastern Quebec, so as to bring them back to the position enjoyed along the I.C.R. prior to 1912. This has been done and presumably the 1927 cut in rates was sufficient to achieve that object of the Act; further action under this special legislation is expressly limited in scope. The reimbursement was provided to recoup the railways for the reduction of their legitimate earnings but nowhere does this legislation add to the already existing power of the railways to grant voluntarily special competitive rates. No indemnity was ever necessary to reach that result; railways are not supposed to do of their own free will what is not economically profitable to themselves. The very fact that no compulsion was required before or since the passing of the 1927 Maritime Freight Rate legislation would, to my mind, indicate that Parliament could not think it necessary to provide for compensation to the railways for such voluntary reductions. The fact that a different and illegal practice has crept in is not a good reason to continue it after the Board decide that such an unwarranted drain on the public purse must be stopped and refuse to lend themselves any further to a wrong application of the Act.

My answers to the questions would be as follows:

1. (a) After the Board of Railway Commissioners have approved the cancellation of the existing freight rates and approved the substituted tariffs and tolls, they may adjust or vary such substituted tolls or rates from time to time as new industrial or traffic conditions arise; they may also

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allow the increase or reduction of such tolls and tariffs from time to time to meet increases or reductions, as the case may be, in the cost of operations of the railways; but they are not called upon to approve these special competitive rates, which could, before and since the passing of the special Act, be filed without leave and freely by the railway companies under the general provisions of the Railway Act.

(b) Answering 1 (b). My answer is in the negative.

As a consequence, my answer to paragraph (c) of the first question is in the negative.

My answer to Question 2 is that, in my opinion, the Board’s ruling of the 23rd September, 1932, is correct.

My answer to Question 3 is in the affirmative.

In answer to Question 4, I say:

Competitive tariffs filed by other companies are lawful tariffs until disallowed, under the express terms of sections 331 and 332 of the Railway Act; and to reach this conclusion, it is not necessary to have regard to the general scope and terms of the Maritime Freight Rates Act or to subsection (3) of section 3 thereof.

The sub-questions of Question 1 answered in the affirmative; Question 2 answered in the negative; Questions 3 and 4 answered in the affirmative.