Canadian National Railway Co. v. Board of Commissioners of Public Utilities, [1976] 2 SCR 112

Supreme Court of Canada

Canadian National Railway Co. v. Board of Commissioners of Public Utilities, [1976] 2 S.C.R. 112

Date: 1975-06-26

Canadian National Railway Co. Appellant;

and

Board of Commissioners of Public Utilities Respondent;

and

The Government of Newfoundland and the City of St. John’s Interveners.

1975: October 8; 1975: June 26.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE SUPREME COURT OF NEWFOUNDLAND IN BANCO

Constitutional law—Legislative authority—Terms of Union between Canada and Newfoundland concerning Newfoundland Railway—Jurisdiction of provincial Board of Public Utilities—Rates for substituted bus service—British North America Act, ss. 91(29), 92(10)(a)—Motor Vehicle Transport Act, R.S.C 1970, c. M-14, ss. 2, 3, 4—Motor Carrier Act, 1961 (Nfld.), c. 54.

The Board of Commissioners of Public Utilities of Newfoundland had dismissed an application of C.N.R. to increase fares on its Roadcruiser bus service operated over the Trans-Canada Highway and certain feeder routes in Newfoundland. This decision was appealed in term of the provincial statutes to the Supreme Court of Newfoundland. C.N.R. raised the question of the jurisdiction of the Board to deal with the operation of the Roadcruiser Service and the Chief Justice of Newfoundland ordered that the question of whether the Board had jurisdiction to fix and determine rates charged by C.N.R. on the Roadcruiser Service operated by it be settled as a preliminary point of law. Distinguishing Beauport v. Quebec R. Light and Power Co. et al., [1945] S.C.R. 16, the Supreme Court of Newfoundland held unanimously that the Board had such jurisdiction under provincial law basing its decision mainly on s. 18 of the Canadian National Railways Act, R.S.C. 1970, c. C‑10 which in its view had the effect of placing the Roadcruiser Service under the legislative authority of the Province as being a purely local undertaking.

Held. The appeal should be dismissed.

[Page 113]

The approach of the Supreme Court of Newfoundland was fraught with difficulties as would have been any solution of the problem on the basis of s. 18 of the Canadian National Railways Act which was not really relevant in that, if there was a declaration that a work was “for the general advantage of Canada” and if part of this work was expected from the declaration, then this exception could have had no constitutional effect where what was covered by it came under federal jurisdiction in any event.

The unified character of the Newfoundland Railway (before the Union) and the fact of its connecting feature, linking Newfoundland, in particular its capital, St. John’s, with the continent, were confirmed by the Terms of Union which inter alia provided that Canada take over various public services in particular those operated by the Newfoundland Railway, that the property of the Newfoundland Railway be given to Canada, that those works, property and services be subject to the legislative authority of the Parliament of Canada and that for the purposes of rate regulation, transportation between North Sydney and Port-aux-Basques was to be treated as rail transportation. The legislative authority over the Newfoundland Railway therefore is with the Parliament of Canada under the Terms of Union as well as under ss. 91(29) and 92(10)(a) of the B.N.A. Act.

As a result of the operation of the Canadian National Railways Act, and of the National Transportation Act and of the exercise of the powers which they confered on The Canadian Transport Commission and by virtue of which the Roadcruiser Service was established, that bus service could not be considered as an independent or separate and autonomous service, given the special nature of the Newfoundland Railway as confirmed by the Terms of Union. Whether a bus service substituted for or operated in coordination with a passenger rail service under s. 27 of the Canadian National Railways Act becomes part of the railway undertaking may vary depending upon the particular circumstances; however the conditions attached to the Order of the Canadian Transport Committee establishing the Roadcruiser Service manifested the close integration in this case and together with other circumstances indicated that the Roadcruiser Service formed an integrated part of the Newfoundland Railway which is subject to Federal jurisdiction. The Board had therefore no jurisdiction under Provincial legislation to fix and determine the rates charged by C.N.R.

[Page 114]

The provisions of the Motor Vehicle Transport Act, R.S.C. 197.0, c. M-14, by virtue, of the definition of “extra provincial undertaking” in s. 2 and the resulting application of ss. 3 and 4 of that Act did however give jurisdiction to the Board which had therefore, by virtue of Federal legislation, the right to fix and determine the rates in question.

Coughlin v. Ontario Highway Transport Board et al:, [1968] S.C.R. 569; R. v. Smith, [1972] S.C.R. 359; Quebec Railway Light & Power Co. v. Town of Beauport, [1945] S.C.R. 16; A.-G. Ont. et al v. Winner et al., [1954] AC. 541; London County Council v. The Attorney General, [1902] A.C. 165; Murray Hill Limousine Service Ltd. v. Batson et al, [1965] Que. Q.B. 778; Three Rivers Boatman Ltd. v. Canada Labour Relations Board, [1969] S.C.R. 607 referred to.

APPEAL from a judgment of the Supreme Court of Newfoundland[1] in banco answering a preliminary question of law in an appeal from a decision of the Board of Commissioners of Public Utilities of Newfoundland: Appeal dismissed,

P.J. Lewis, Q.C., and J. Lawrence Brean, for the appellant.

Donald W.K. Dawe, Q.C., for the respondent.

John J. O’Neill Q.C., for the Government of Newfoundland.

Gerald F. Lang, Q.C., for the City of St. John’s.

The judgment of the Court was delivered by

BEETZ J.—This is an appeal by leave of the Supreme Court of Newfoundland en banc from a judgment of the same dated August 13, 1973. This judgment was rendered in the course of an appeal from a decision of the Board of Commissioners of Public Utilities of Newfoundland—hereinafter referred to as the Board—which had dismissed an application of the Canadian National Railway Company—hereinafter referred to as the C.N.R.—to increase fares on its Roadcruiser Service operated over the Trans-Canada Highway and certain feeder roads in Newfoundland. Under s. 35 of the Motor Carrier Act, R.S. Nfld. 1970, c.242, and under s. 96 of the Public Utilities Act, R.S.

[Page 115]

Nfld. 1970, c. 322,—formerly s. 84 of the Public Utilities Act, 1964, Statutes of Newfoundland, 1964, No. 39,—such a decision of the Board is appealable to the Supreme Court of Newfoundland by leave of a judge thereof. The case does not disclose that leave was granted. I assume that it was. It would appear that the jurisdiction of the Board to deal with the operation of the Roadcruiser Service was questioned in the factum filed by the C.N.R. in the Supreme Court of Newfoundland. In any event, before the merits of the appeal were heard, it was ordered by the Chief Justice of the Supreme Court of Newfoundland that the following question of law be settled as a preliminary point:

Does the Board of Commissioners of Public Utilities, as constituted by the Public Utilities Act, 1964, Statutes of Newfoundland, 1964, No. 39, have jurisdiction to fix and determine rates charged by Canadian National Railway Company on the Roadcruiser Service operated by it in Newfoundland?

The Supreme Court of Newfoundland answered the question in the affirmative. The only issue for determination by this Court is whether the Supreme Court of Newfoundland was right in its answer to the said question.

The circumstances leading to this appeal go back to 1949 when Newfoundland entered into Confederation. The agreement containing Terms of Union between Canada and Newfoundland was confirmed and given the force of law notwithstanding anything in the British North America Acts, 1867 to 1946, by the British North America Act, 1949 (U.K.), c. 22, an Act of the Parliament of the United Kingdom which now appears as No. 30 of the Appendices to the Revised Statutes of Canada, 1970.

Terms 31, 32, 33 and 36 of the Terms of Union read in part as follows:

31. At the date of Union, or as soon thereafter as practicable, Canada will take over the following services and will as from the date of Union relieve the Province of Newfoundland of the public costs incurred in respect of each service taken over, namely,

(a) the Newfoundland Railway, including steamship and other marine services; …

[Page 116]

32. (1) Canada will maintain in accordance with the traffic offering a freight and passenger steamship service between North Sydney and Port aux Basques, which, on completion of a motor highway between Corner Brook and Port aux Basques, will include suitable provision for the carriage of motor vehicles.

(2) For the purpose of railway rate regulation the Island of Newfoundland will be included in the Maritime region of Canada, and through-traffic moving between North Sydney and Port aux Basques will be treated as all-rail traffic.

(3) All legislation of the Parliament of Canada providing for special rates on traffic moving within, into, or out of, the Maritime region will, as far as appropriate, be made applicable to the Island of Newfoundland.

33. The following public works and property of Newfoundland shall become the property of Canada when the service concerned is taken over by Canada, subject to any trusts existing in respect thereof, and to any interest other than that of Newfoundland in the same, namely,

(a) the Newfoundland Railway, including rights of way, wharves, drydocks, and other real property, rolling stock, equipment, ships and other personal property;…

36. Without prejudice to the legislative authority of the Parliament of Canada under the British North America Acts, 1867 to 1946, any works, property, or services taken over by Canada pursuant to these Terms shall thereupon be subject to the legislative authority of the Parliament of Canada.

On April 1, 1949, by Order in Council made under s. 19 of the Canadian National Railways Act, R.S.C. 1927, c. 172, it was ordered that

the Newfoundland Railway, including rights of way, wharves, dry docks, and other real property, rolling stock, equipment, ships and other personal property, the telecommunication properties of the Newfoundland Department of Posts and Telegraphs, including rights of way, land lines, cables, telephones, radio stations (excepting the radio stations listed on the Schedule hereto annexed), and other real and personal property, the title to which is vested in His Majesty, be and they are hereby entrusted in respect of management and operation thereof to the Company on the terms in the Canadian National Railways Act expressly specified, namely, that such management and operation shall continue during the pleasure of the Governor in Council and shall be subject to termination or variation from

[Page 117]

time to time in whole or in part by the Governor in Council.

At the time, the Newfoundland Railway provided for the transportation of freight and of passengers between St. John’s, Port-aux-Basques and intermediate points located on the railway, as well as for the transportation by ship from Port-aux-Basques to North Sydney, Nova Scotia, across the Cabot Strait. The railway,—a narrow gauge railway with many steep grades and severe curves,—had a main line of some 547 miles between St. John’s and Port‑aux-Basques and, until the completion of the Trans-Canada Highway in 1965, was the only reliable means of overland transportation.

Passenger carryings by train began to fall off in 1960 and then dropped substantially after 1965 when the Trans-Canada Highway was completed. The cost of converting the railway line to standard gauge or otherwise to improve it was found prohibitive and it was apparently unpractical also to renew or modernize coaches, sleepers, dining cars and crew cars which had to be built on a smaller scale than the equipment used on the mainland.

On the other hand, the C.N.R. had been empowered in 1955 to operate motor vehicles of all kinds for the carriage of traffic “in conjunction with or substitution for the rail services under “its’ management or control”: 1955 (Can.), c. 29, s. 27, now R.S.C. 1970, c. C-10, s.27.

In an attempt to regain the passenger business, the C.N.R., on September 29, 1967, applied to the Canadian Transport Commission, hereinafter referred to as the Commission, under section 314-B (2), added to the Railway Act, R.S.C. 1952, c. 234, by 1966-67 (Can.), c. 69, s. 42, for leave to discontinue passenger train service between St. John’s and Port‑aux‑Basques, and to substitute therefor a bus service between the same points over the Trans-Canada Highway. Following a public hearing, the application was granted and the Railway Transport Committee of the Commission ordered discontinuance of the passenger train

[Page 118]

service subject to certain conditions, one of which was that the bus service “be inaugurated and continued as long as a requirement for passenger service continues” (Order No. R-2673, dated July 3, 1968, Case pp. 44-47).

In the interim, the Motor Carrier Act, 1961 (Nfld.), No. 54—hereinafter referred to as the Provincial Act—had come into force by proclamation (June 1, 1968; 1968 Nfld. S. Schedule B, p. 84) and the federal Motor Vehicle Transport Act, 1953-54 (Can.), c. 59—now R.S.C. 1970, c. M-14,—hereinafter referred to as the Federal Act—had also been proclaimed in force in Newfoundland effective June 1, 1968 (SOR 68-237).—The Federal Act is the one the constitutional validity of which has been upheld in Coughlin v. Ontario Highway Transport Board et al.[2] and the construction of which has been further considered in R. v. Smith[3].

On August 19, 1968, the C.N.R. applied to the Board for a certificate to operate buses in the island of Newfoundland. The application was made pursuant to the Federal and the Provincial Acts. Following a public hearing the Board, by order dated November 18, 1968, granted a certificate of public convenience and necessity pursuant to the Provincial Act as amended by 1968 (Nfld.), No. 14, and dismissed the application under the Federal Act, holding that the Roadcruiser Service inaugurated in 1968 was a purely local undertaking and therefore subject only to the Provincial Act. Certificate No. 453 was issued authorizing the operation of the buses and approving the schedule of rates as filed with the Board on September 27, 1968. Actually it was the same fare structure which the C.N.R. had for its passenger rail service. From then on, the C.N.R. operated its buses in Newfoundland pursuant to that certificate.

On March 28, 1971, the C.N.R. applied to the Board under the Provincial Act requesting an amendment to its Motor Carrier Certificate No. 453 to increase its fares. After public hearings, in

[Page 119]

April 1972, the Board dismissed the application in its decision dated May 3, 1972.

The Board’s decision was appealed to the Supreme Court of Newfoundland which decided to settle, as a preliminary point, the question of law enunciated above. The Chief Justice of the Supreme Court of Newfoundland ruled that the Government of the Province and the City of St. John’s had the right to appear and be heard in this matter. The reasons for judgment of the Supreme Court of Newfoundland were written by Puddester J. and concurred in by Furlong C.J. and Mifflin J. Thus a unanimous Court held that the Board has jurisdiction to fix and determine rates charged by the C.N.R. on the Roadcruiser Service operated by it in Newfoundland.

The main reasons of the Supreme Court of Newfoundland, as I understand them, are based upon its interpretation of s. 18 of the Canadian National Railways Act, R.S.C. 1970, c. C-10:

18. (1) The railway or other transportation works in Canada of the National Company and of every company mentioned or referred to in Part I or in Part II of the First Schedule and of every company formed by any consolidation or amalgamation of any two or more such companies are hereby declared to be works for the general advantage of Canada.

(2) [Not relevant].

(3) For the purposes of this section, the expression “railway or other transportation works” does not include any works operated under the authority of section 27.

Section 27 of the Canadian National Railways Act, it will be recalled, is that provision which empowers the C.N.R. and every other railway company comprised in the National Railways to operate motor vehicles of all kinds for the carriage of traffic “in conjunction with or substitution for the rail services under their management or control”.

The Supreme Court of Newfoundland expressed the view that, if s. 27

“is taken to be valid legislation to authorize Canadian National to inaugurate a Roadcruiser

[Page 120]

Service in substitution for the Rail Passenger Service on the Newfoundland Railway, then… it is inconsistent to argue that paragraph (3) of section 18 of the same chapter… is not valid legislation to make the Roadcruiser Service not a work for the general advantage of Canada.

In the opinion of the Court, there was no conflict between para. (3) of s. 18 and Term 36 of the Terms of Union; the latter removed any doubt that, after the Union, the Parliament of Canada and not the Legislature of Newfoundland would have jurisdiction to legislate in relation to the Newfoundland Railway. Section 18 of the Canadian National Railways Act had been enacted by Parliament and this enactment had the effect of placing the Roadcruiser Service under the legislative authority of the Province as being a purely local undertaking rather than a part of a Railway managed or controlled by the C.N.R.

The Supreme Court of Newfoundland distinguished the case of Quebec Railway Light and Power Company v. The Town of Beauport[4], where a declaration that a railway undertaking was a work for the general advantage of Canada had been held to extend to autobuses acquired and operated after that declaration; the situation was the opposite in the present case, according to the Supreme Court of Newfoundland, since a bus service inaugurated under s. 27 of the Canadian National Railways Act was not to be a work for the general advantage of Canada.

The approach taken by the Supreme Court of Newfoundland is fraught with difficulties as would be any solution of the problems raised by this case on the basis of s. 18 of the Canadian National Railways Act.

One difficulty results from the fact that the railway or other transportation works which are declared to be works for the general advantage of Canada under s. 18(1) are the railway or other transportation works in Canada of the National

[Page 121]

Company, i.e. the C.N.R., and every company mentioned or referred to in Part I or Part II of the schedule. The Newfoundland Railway belongs neither to the C.N.R. nor to any company mentioned or referred to in Part I or Part II of the schedule; it belongs to the Crown in right of the Government of Canada and only its management and operation have been entrusted to the C.N.R. in 1949 under s. 19 of the Canadian National Railways Act. It follows that if s. 18(1) is to be construed as relating only to such railway and other transportation works as are the property of the C.N.R., no part of s. 18, including s. 18(3), (which has no effect except for the purposes of the section), would govern the circumstances of this case, unless it could be said that the autobuses which replaced the passenger trains are transportation works which are the property of the C.N.R. and not that of the Crown. This point came up in the course of argument and Counsel for the C.N.R. thought the autobuses to be the property of the Crown entrusted to the C.N.R. If this was the case, then an even broader question would be raised since one would have to consider the application of s. 91.(1A) of the British North America Act, 1867,—exclusive federal jurisdiction over the public debt and property—. However, the parties chose not to raise this point in their factums; counsel’s views were given not in the form of submissions but merely in reply to questions asked by members of the Court and I do not find it necessary to express any opinion on this subject which was not really argued before us.

Possibly implied also in s. 18(1) and (3) of the Canadian National Railways Act is the proposition that a motor vehicle transportation undertaking may be considered to be a “work” which Parliament can declare to be for the general advantage of Canada under s. 92(10)(c) of the British North America Act, 1867. The Beauport case does not decisively support that proposition since the declaration considered in that case related to a railway and tramway system with which autobus services had been integrated; what was held by the majority was that the original declaration extended to the

[Page 122]

autobus services. (See Rand J. at pp. 33 and 34). Furthermore, there were other pronouncements on s. 92(10) in cases such as Attorney General for Ontario v. Israel Winner[5], at pp. 572 and 573, which would indicate that the proposition cannot be regarded as settled. If a service such as the Roadcruiser Service operated by the C.N.R. in Newfoundland otherwise comes under provincial authority and if Parliament cannot declare such a service to be a “work” for the general advantage of Canada, the consequence would be that, short of constitutional amendment, Parliament would have nothing to say on the extent to which, if any, a service substituted for another which Canada has agreed to take over and from the cost of which the Province was to be relieved, ought to be operated at a loss or somehow subsidized.

But the decisive reason why s. 18 of the Canadian National Railways Act is not really relevant for the purpose of this case is that if there is a declaration that a work is for the general advantage of Canada and if part of this work is excepted from the declaration, then this exception has no constitutional effect where what is covered by the exception comes under federal jurisdiction in any event.

We have to decide first whether or not the Roadcruiser Service operated by the C.N.R. in Newfoundland comes under exclusive federal jurisdiction apart from any declaration made by Parliament and from any exception in such declaration. If it does, it cannot constitutionally be regulated by the Board under the Provincial Act.

One approach to the solution of this problem consists in determining whether the Roadcruiser Service constitutes an essential element of the Newfoundland Railway and whether the Newfoundland Railway comes under exclusive federal jurisdiction.

According to the C.N.R. the bus service operated by it in substitution for passenger rail service is a federal work or undertaking under the Terms

[Page 123]

of Union as well as under s. 92(10)(a) of the British North America Act, 1867.

This submission was rejected by the Board when, in 1968, it dismissed the C.N.R. application for a license under the Federal Act—although one was granted under the Provincial Act—. The Board had this to say:

The Board cannot accept the contention that the proposed CN bus operation per se is an Extra-Provincial Undertaking connecting this province with the mainland of Canada. The ferry service across Cabot Strait is the connecting link and not the buses which will connect with the ferry. The fact that CN also operates the ferry service is coincidental but not pertinent to the issue. Its buses will also carry passengers to and from Gander Airport and Stephenville Airport at which points Air Canada and Eastern Provincial Airways also provide connecting links with the mainland. In the case of both the CN and Air Canada operations, their facilities or services are owned by the Government of Canada which has vested in the respective agencies the right to operate a public transportation service.

The fact that connections are made with the ferries or with air lines does not mean that CN, by operating the buses, is carrying on an extra-provincial traffic. To argue that it is an Extra-Provincial Undertaking because it conveys people to or from the connecting services to the mainland, whether by water or air, also implies that every taxi or bus operator who carries passengers to or from an airport is also an Extra-Provincial carrier and therefore subject to the Motor Transport Act rather than the Motor Carrier Act. The Board feels that to admit this principle could result eventually in extending such operations to the point of absurdity.

It is a matter of judicial record that where a railway is operated wholly within a province it is subject only to the laws of that province even though there are means whereby passengers or freight from that railway can be transported across a provincial border for transfer to another railway provided there is no physical connection of rails between the two railways. There is no physical connection between the buses and the ferries or planes that operate between this and any or others of the provinces. Passengers have to walk and carry their luggage, or have it carried for them, between the bus

[Page 124]

terminal and the ferries or planes.

Of course, if one were to look at this bus service “per se”, as the Board put it, one would reach the conclusion that, prima facie, it constitutes a local undertaking. In theory, a bus service and a railway service are two separate and distinct undertakings. One is not incidental to the other. (London City Council v. The Attorney General[6], at p. 169). Similarly, that portion of the Newfoundland Railway which is a railway properly so called might at first be regarded as a local railway if it were considered out of context and leaving out of account the Terms of Union.

However, to ask whether the bus service can be looked at “per se” and independently of the Newfoundland Railway is begging the question.

I propose to deal first with the subject of legislative authority over the Newfoundland Railway and then with the integration of the Roadcruiser Service with the Newfoundland Railway.

The factum of the intervenor the Government of Newfoundland states that “the Newfoundland Railway ceased to exist” because of the repeal, on April 1, 1949, of the Newfoundland Railway Act, 1934 (Nfld.), No. 22. The latter act was indeed repealed by Proclamation (Canada Gazette, Part I, No. 15 (April 9, 1949) p. 1299) under Term 18 of the Terms of Union, but the Newfoundland Railway did not cease to exist. It continued to exist as was provided by Terms 31, 32, 33 and 36 of the Terms of Union and by the Order in Council above quoted in part and made on April 1, 1949, pursuant to s. 19 of the Canadian National Railways Act.

Before the Union, the Newfoundland Railway was a Crown property under the direction, control and management of the Commissioner for Public Utilities, Newfoundland Railway Act, 1934 (Nfld.), No. 22, ss. 2, 3. In spite of its name, the Newfoundland Railway was a comprehensive undertaking embracing considerably more than a

[Page 125]

railway. Section I of the last above mentioned Act provided that:

… “Railway” means the Newfoundland Railway, and includes:

(a) All lands, railway lines, buildings, structures, rolling stock, plant, machinery, equipment, stores, tools, implements and all other matters and things appertaining thereto.

(b) All the telegraph and telephone lines of the Railway, and all matters and things appertaining thereto.

(c) All ships with their tackle and appurtenances now the property of the Crown and operated as part of the enterprise of the Railway.

(d) The St. John’s Dry Dock together with all lands, buildings, structures, plant, machinery, equipment, stores, tools, implements and all other matters and things appertaining thereto.

(e) All subsidiary businesses carried on in connection with the Railway, including the expressage business.

(f) Generally, without prejudice to the generality of the foregoing, the whole of the present and future business and enterprise of the Railway directed and controlled by the Commissioner.

Section 6(1) empowered the Commissioner for Public Utilities to “fix rates or charges for use and employment of the Railway or any part thereof ‘.

The Newfoundland Railway Act, 1934 (Nfld.), No. 22, itself repealed and replaced an earlier statute, the Railway and Shipping Act, 1926 (Nfld.), c. 24, which contained similarly comprehensive provisions with respect to the definition of the Newfoundland Railway.

It seems to me that before the Union and under Newfoundland law the Newfoundland Railway was a single unified undertaking of transportation and communications which, considered as a whole, did connect Newfoundland, in particular its capital St. John’s, with the continent, given the particular location of the capital on the island, the distance which separates it from the mainland and the steamship and marine services of the Railway. It should also be recalled, in this respect, that the Newfoundland Railway was the only reliable means of transinsular transportation in 1949 for there was no completed motor highway between

[Page 126]

St. John’s and Port-aux-Basques as acknowledged in Term 32(1).

This unified character and this connecting feature of the Newfoundland Railway, far from being altered by the Union were confirmed by the Terms of Union.

By Term 31 Canada agreed to take over various public services, in particular those operated by the Newfoundland Railway; the latter is specifically described as “including steamship and other marine services”. The steamship service was granted a special treatment: by Term 32 Canada contracted the express obligation to maintain a freight and passenger steamship service between North Sydney and Port-aux-Basques.

Term 33 gave the property of the Newfoundland Railway to Canada, “including rights of way, wharves, dry docks, and other real property, rolling stocks, equipment, ships and other personal property”.

Term 36 declares those works, property and services to be thereupon subject to the legislative authority of the Parliament of Canada. It removes any doubt, if possible, that on the taking over Canada and not the Province of Newfoundland would be the body to legislate with respect to the Newfoundland Railway as described in Terms 31 and 33.

Finally, and even more tellingly, under Term 32(2), for the purposes of rate regulation, transportation between North Sydney and Port-aux-Basques is to be treated as rail transportation. And also, under Term 32(3), special rates on traffic moving within, into or out of the Maritime region are, as far as appropriate, to be made applicable to the Island of Newfoundland which, according to Term 32(2), and for the purpose of railway rate regulation, is included in the Maritime Region.

[Page 127]

It is therefore clear, in my opinion, that legislative authority over the Newfoundland Railway rests with the Parliament of Canada under the express words of the Terms of Union as well as under ss. 91(29) and 92(10)(a) of the British North America Act, 1867.

We must now come to the question whether, because of the substitution of a Roadcruiser Service for the rail passenger service previously operated within the framework of the Newfoundland Railway, that Roadcruiser Service has become an essential element of the Newfoundland Railway. If it has, it cannot be regulated by the Board under the Provincial Act.

The powers which the C.N.R. is given under s. 27 of the Canadian National Railways Act to substitute a motor vehicle service for a rail service under its management would appear, at first, to be exercisable as the C.N.R. deems advisable, but it is not so. The C.N.R. must have the authorization of the Board of Transport Commissioners to make use of its power of substitution. A substitution involves the abandonment of something else. By s. 16 of the Canadian National Railways Act the Railway Act is applicable to the C.N.R. namely s. 260(2) which is to the effect that a railway company which wants to abandon a passenger train service must obtain the approval of the Canadian Transport Commission. Section 260 came into force a few months before the C.N.R. application as s. 314-B which was added to the Railway Act, R.S.C. 1952, c. 234, by s. 42 of the National Transportation Act, 1966-67 (Can.), c. 69. In fact the C.N.R’s application was made and granted under s. 314-B of the Railway Act (as amended by the National Transportation Act, 1966-67 (Can.) c. 69, s. 42).

The Commission authorized discontinuance of the passenger rail service on the Newfoundland Railway provided that the C.N.R. would satisfy five enumerated conditions one of which was that “The bus service proposed by the Applicants

[Page 128]

(C.N.R.)… shall be inaugurated and continued as long as a requirement for passenger service continues”. The C.N.R. is authorized by s. 27 of the Canadian National Railways Act to substitute a bus service to its rail services. As it cannot substitute one service to another without abandoning the latter, it has to file with the Commission an application to substitute or at least an application to discontinue the service which will be replaced by a motor vehicle service. Among the matters that the Commission has to consider in determining whether an uneconomic passenger train service should be discontinued’ are, as stated in s. 260(6)(b):

(b) the alternative transportation services, including any highway or highway system serving the principal points served by the passenger-train service, that are available or are likely to be available in the area served by the service.

One might argue that those dispositions suggest that the Commission may grant an authorization to discontinue conditional upon the inauguration and maintenance of a bus service. In any event, this power of the Commission is made explicit by virtue of s. 5(1) and s. 57(1) of the National Transportation Act, R.S.C. 1970, c. N-17. Under s. 5(1), the provisions of Part IV of this Act relating to sittings of the Canadian Transport Commission and the disposal of business, practice and procedure, orders and decisions of the Commission apply in the case of every application or other proceeding under the Railway Act and the Commission shall exercise and enjoy the same jurisdiction and authority in matters under the Railway Act as are vested in the Commission under Part IV of the National Transportation Act. Section 57(1) which is included in Part IV of the National Transportation Act expressly authorizes the Commission to issue conditional orders:

57. (1) The Commission may direct in any order that such order or any portion or provision thereof, shall come into force at a future time or upon the happening of any contingency, event or condition in such order specified, or upon the performance to the satisfaction of

[Page 129]

the Commission, or a person named by it, of any terms which the Commission may impose upon any party interested, and the Commission may direct that the whole, or any portion of such order, shall have force for a limited time, or until the happening of a specified event.

Neither the constitutionality of the Canadian National Railways Act, of the Railway Act and of the National Transportation Act, nor the validity of any order issued or of anything done under their authority for the purposes of this case has been challenged by any of the parties.

As a result of the operation of these Acts and of the exercise of the powers which they confer upon the Commission and the C.N.R. and by virtue of which the Roadcruiser Service was established, it seems to me that the Roadcruiser Service cannot be considered as an independent or separate and autonomous service, given the special nature of the Newfoundland Railway as confirmed by the Terms of Union.

The Roadcruiser was inaugurated and is operated as a substitute for the passenger rail service formerly performed by the Newfoundland Railway managed and operated by the C.N.R. It was not inaugurated in substitution for all railway services performed on the line. The line is still there and the transportation of freight by rail continues. Only the passenger rail service is discontinued. Besides, the discontinuance of this service is not total: a daily coach service has to be maintained on a certain portion of the railway line over a distance of some 85 miles as the crow flies. Therefore there was no total substitution, only a partial substitution which amounts in the particular circumstances of the case to an even closer integration of the bus service with the railway services so that the bus service becomes a part of the railway.

Perhaps not every bus service substituted for or operated in coordination with a passenger rail service under s. 27 of the Canadian National Railways Act does become part of a railway undertaking by being operated with the remaining railway services. It will vary in each case depending upon the particular circumstances. Here a

[Page 130]

most important point is the nature of the Order No. R-2673 made by the Railway Committee of the Canadian Transport Committee on July 3, 1968. Discontinuance of passenger-train service was authorize subject to five conditions two of which I would like to reproduce:

1. Subject to the following conditions, the Applicants shall, on April 15, 1969, discontinue passenger train service between St. John’s and Port aux Basques, in the Province of Newfoundland, provided by Train Nos. 101 and 102 and coach service on Mixed Train Nos. 203 and 204:

(1) The bus service proposed by the Applicants and described in detail in the Judgment of Woodard, C, shall be inaugurated and continued as long as a requirement for passenger service continues, and the passenger facilities, including terminals and the shelters mentioned therein, with proper communication links, shall be provided and installed, all to the satisfaction of the Committee.

(4) The Applicants will, in accordance with their undertaking, operate a daily coach service in both directions on their express trains, between Bishop’s Falls and Corner Brook, to provide a rail link with the bus service for residents in the area between Badger and Deer Lake.

The integration of the bus service with the remaining railway services is clearly manifest from these conditions put by the Commission to the granting of authorization to discontinue the passenger train service. The first condition is actually twofold: not only must the bus service be inaugurated; it must also be continued as long as a requirement for passenger service continues. It would therefore seem that should the C.N.R. want to discontinue its bus service while a requirement for passenger service continues, it would then have to resume its passenger train service, although we do not have to answer this question here. The fourth condition was added because an area of the Island would not be served by the bus service which was to follow the Trans-Canada Highway, while it had been served by the passenger train service. The C.N.R. had therefore to operate a daily coach service in both directions on its express trains, between Bish-

[Page 131]

op’s Falls and Corner Brook to provide a rail link with the bus service for residents in that area. The integration could hardly be clearer than it is here: the bus service is substituted for a passenger rail service on the major portion of the railway line; and the substitution is authorized only as long as the C.N.R. maintains its passenger train service on the minor portion of the railway line. If the C.N.R. were to discontinue operation of that daily coach service on its express trains, it would seem that it would thereby lose its authorization to operate the bus service as a substitute for the passenger rail service on the major portion of the railway line with the overall result that it would presumably be obliged to resume the whole passenger rail service between St. John’s and Port-aux-Basques. This is undeniably a case of closely integrated operation of a bus service with railway services. Not only are they complementary in their operation but also one is partly substituted for the other and moreover the substitution seems to be reversible.

It may have been noted that the bus service to be inaugurated and continued as a condition of the discontinuance of the passenger train service was said to be, by the very terms of the order, the bus service as “proposed by the Applicants (C.N.R.) and described in detail in the Judgment of Woodard, C.” In Woodard, C’s reasons for Judgment we find a Description of Proposed Bus Service which runs from p. 25 to p. 29A of the case. Some elements of that description reinforce the integration aspect of the operation of both services. Thus main bus terminals were to be set up in the existing passenger terminals at St. John’s and Port‑aux‑Basques, and where possible, existing railway stations would be used as intermediate terminals: case p. 29. Generally the same communities were to be served by the bus service as it was to be operated on the Trans-Canada Highway which follows the railway line very closely throughout the whole route with the exception of a portion between the Villages of Badger and Deer Lake; this area would continue to be served by a passenger rail service which would provide a link

[Page 132]

with the bus operation: case pp. 29-29A. The proposed bus service was to be operated exclusively on the Trans-Canada Highway and consequently along the railway line since the C.N.R. did not intend to set up any type of feeder services to the proposed bus operation: case pp. 29-29A. (It would seem however that the service was later extended, in a limited degree, to routes 3 and 47: case pp. 49-50). The C.N.R. intended to apply the same Red, White and Blue fare system on its buses as was in effect on the railway services: case p. 29. Actually this was the initial schedule of rates that C.N.R. filed with the Board on September 27, 1968 and that the latter approved. Other employees and pensioners of the C.N.R. have pass privileges which are honoured on the Roadcruiser Service: case p. 67. Finally it should not be forgotten that both the Roadcruiser Service and the Railway are operated by the same corporation, the C.N.R.

Some of these circumstances may be coincidental and they are not all of equal importance. But together, they overwhelmingly demonstrate, in my view, that the Roadcruiser Service is an essential and closely integrated element of the Newfoundland Railway which was specifically declared to be subject to federal jurisdiction by the Terms of Union and which otherwise comes under the legislative authority of the Parliament of Canada as it connects the Province of Newfoundland with other provinces within the meaning of s. 92(10)(a) of the British North America Act, 1867.

As the Roadcruiser Service falls within the exclusive legislative authority of the Parliament of Canada, the Board has no jurisdiction under the Provincial Act to fix and determine the rates charged by the C.N.R. for that service any more than it could fix and determine the railway rates of the Newfoundland Railway.

This however is not the end of the matter. The question whether the Board, as constituted by the Provincial Act, has jurisdiction to fix and determine the rates of the Roadcruiser Service under the Federal Act claims our attention. It may not

[Page 133]

be evident that we have to answer the question in this form since the C.N.R. appears to have applied to the Board under the Provincial Act. The Supreme Court of Newfoundland dealt very briefly with this point. It held that the Roadcruiser Service operates entirely within the Province of Newfoundland and that the jurisdiction of the Board to set its rate structure in no way depends upon the Federal Act. The question of law which the Supreme Court of Newfoundland had ordered to be settled as a preliminary point is broad enough in wording to encompass this aspect of the matter which was specifically referred to in the factums of some of the parties and during the argument before us. The question ought therefore to be answered as I have re-formulated it.

The relevant provisions of the Federal Act are as follows:

2. In this Act

“extra-provincial transport” means the transport of passengers or goods by means of an extra-provincial undertaking;

“extra-provincial undertaking” means a work or undertaking for the transport of passengers or goods by motor vehicle, connecting a province with any other or others of the provinces, or extending beyond the limits of a province;

“federal carrier” means a person who operates an extra-provincial undertaking;

“law of the province” means a law of a province or municipality not repugnant to or inconsistent with this Act;

“local carrier” means a person who operates a work or undertaking, not being an extra‑provincial undertaking, for the transport of passengers or goods by motor vehicle;

“local transport” means the transport of passengers or goods by motor vehicle otherwise than by means of an extra-provincial undertaking;.

“local undertaking” means a work or undertaking for the transport of passengers or goods by motor vehicle, not being an extra-provincial undertaking;

“provincial transport board” means a board, commission or other body or person having under the law of a

[Page 134]

province authority to control or regulate the operation of a local undertaking. 1953-54, c. 59, s. 2.

3. (1) Where in any province a licence is by the law of the province required for the operation of a local undertaking, no person shall operate an extra-provincial undertaking in that province unless he holds a licence issued under the authority of this Act.

(2) The provincial transport board in each province may in its discretion issue a licence to a person to operate an extra-provincial undertaking into or through the province upon the like terms and conditions and in the like manner as if the extra-provincial undertaking operated in the province were a local undertaking. 1953-54, c. 59, s. 3.

4. Where in any province tariffs and tolls to be charged by a local carrier for local transport are determined or regulated by the provincial transport board, the tariffs and tolls to be charged by a federal carrier for extra-provincial transport in that province may in the discretion of the provincial transport board be determined and regulated by the provincial transport board in the like manner and subject to the like terms and conditions as if the extra-provincial transport in that province were local transport. 1953-54, c. 59, s. 4.

If the Roadcruiser Service does not conform with the definition of an “extra-provincial undertaking” as provided by s. 2 of the Federal Act, then ss. 3 and 4 of this Act would not apply and the Road-cruiser Service would remain unregulated.

I would not readily come to this conclusion in the light of what is the clear legislative intent in the Federal Act. This Act was enacted a few months after the decision of the Judicial Committee in the Winner case. It seems to me that it was the intention of Parliament to regulate all undertakings for the transport of passengers or goods by motor vehicle unless they came under provincial legislative authority; this intent not to leave any gap is manifested by the use in s. 2 of all-embracing and mutually exclusive definitions which were meant to cover the whole ground.

The Federal Act must be construed in a way which is compatible with its purpose. What is required according to the definition of “extra provincial undertaking” in s. 2 is that there exist a

[Page 135]

“work or undertaking for the transport of passengers or goods by motor vehicle”—clearly the Roadcruiser Service meets that part of the definition—and that such work or undertaking be “connecting a province with any other or others of the provinces, or extending beyond the limits of a province”. While admittedly the Roadcruiser Service by itself does not extend beyond the limits of Newfoundland, still as an essential and integrated part of a greater undertaking the whole of which connects the province with the mainland, it does, in my view, conform with the definition of an “extra provincial undertaking” provided for in the Federal Act. Accordingly, ss. 3 and 4 of the Act apply to it.

That taxi and other transportation services related to extra-provincial undertakings need not necessarily be regarded themselves as extra-provincial undertakings is shown by two Quebec Court of Appeal decisions from which leave to appeal was refused by this Court: Murray Hill Limousine Service Limited v. Batson et al.[7], where it was held that porters employed by a taxi and bus company in an airport came under provincial jurisdiction for the purpose of minimum wages legislation, and Syndicat International des Marins Canadiens v. Three Rivers Boatman Limited and Canada Labour Relations Board, an unreported decision dated November 19, 1973, where an undertaking providing for the transportation of pilots to be put aboard or brought ashore from ships proceeding on the St. Lawrence River was held not to come within the jurisdiction of the Canada Labour Relations Board. (A preliminary jurisdictional issue as to the Quebec Superior Court power of review had previously been decided by this Court in Three Rivers Boatman Limited v. Canada Labour Relations Board. I refer to these cases simply to illustrate that a line can be drawn somewhere and I do not express any opinion as to whether it was properly drawn in these particular instances.

[Page 136]

In the result, I agree with the conclusions of the Supreme Court of Newfoundland that the Board of Commissioners of Public Utilities, as constituted by the Public Utilities Act, 1964, Statutes of Newfoundland, 1964, No. 39, have jurisdiction to fix and determine rates charged by Canadian National Railway Company on the Roadcruiser Service operated by it in Newfoundland. However, I reach this conclusion on the ground that the Board derives its jurisdiction from the Motor Vehicle Transport Act, 1970, R.S.C. c. M-14.

I would dismiss the appeal.

There should be no order as to costs.

Appeal dismissed, no order as to costs.

Solicitors for the appellant: Lewis & Sinnott, St. John’s and J.L. Brean, Moncton.

Solicitors for the respondent: Curtis, Dawe, Fagan, Mahoney, Russell, Bonnell & Althouse, St. John’s.

Solicitors for the Government of Newfoundland, intervener: O’Neill, Riche, O’Reilly & Nose‑worthy, St. John’s.

Solicitor for the City of St. John’s, intervener, G.F. Lang, St. John’s.