CNR v. Nor-Min Supplies, [1977] 1 SCR 322

Supreme Court of Canada

CNR v. Nor-Min Supplies, [1977] 1 S.C.R. 322

Date: 1976-01-30

Canadian National Railway Company (Plaintiff) Appellant;

and

Nor-Min Supplies Limited (Defendants) Respondents.

1975: December 17; 1976: January 30.

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

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Railways—National Railway Company—Quarry owned by railway company—Quarry producing crushed rock for railway ballast—Applicability of provincial mechanics’ lien legislation—Whether quarry an integral part of the railway system—Canadian National Railways Act, R.S.C 1970, c. C-10, s. 18(1)—Railways Act, R.S.C. 1970, c. R-2, s. 2(1).

Mechanic’s liens—Whether applicable to quarry owned by railway company—Quarry producing crushed rock for railway ballast—Whether quarry an integral part of the railway system—Canadian National Railways Act, R.S.C 1970, c. C-10, s. 18(1)—Railways Act, R.S.C. 1970, c. R-2, s. 2(1)—The Mechanics’ Lien Act, R.S.O. 1970, c. 267.

Subcontractors under a quarrying contract let by the C.N.R. to a general contractor, who became bankrupt, filed liens against the quarrying area in which the contract was to be carried out and against the adjacent C.N.R. right of way. The quarried rock was to be crushed and then stockpiled parallel to and about 25 feet from the railway line, and a siding had been built to facilitate loading the crushed rock on to railway cars. The trial judge amended the lien claims to exclude the railway right of way. A judgment maintaining the lien claims in their amended form was affirmed by the Ontario Court of Appeal.

On further appeal, it was contended that the Mechanics’ Lien Act, R.S.O. 1970, c. 267 was inapplicable because (1) the quarrying operation was within an area covered by a declaration of works for the general advantage of Canada pursuant to s. 18(1) of the Canadian National Railways Act, R.S.C. 1970, c. C-10; (2) the quarrying operation where carried out was within the

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definition of “railway” in s. 2(1) of the Railway Act, R.S.C. 1970, c. R-2 and was on that account or was, in any event, an integral part of the railway transportation system; and (3) in view of the foregoing, there would be an impermissible interference with the operation of a federally authorized transportation system if the C.N.R. land on which the quarrying was carried out was subject to provincial mechanics’ lien legislation.

Held: The appeal should be dismissed.

None of these contentions is maintainable, having regard to the trial Judge’s finding that the maintenance of the site for quarrying was a matter of convenience to the C.N.R. The quarry was neither within the phrase “other transportation works” in s. 18(1) of the Canadian National Railways Act, nor within the definition of “railway” in s. 2(1) of the Railway Act. The fact that the quarry was a source of supply for railway purposes did not, in the circumstances, make it an essential or integral part of the C.N.R.’s transportation system so as to exclude the application of provincial mechanics’ lien legislation, especially in the absence of preclusive federal legislation.

Further, the trial judge had power under the Mechanics’ Lien Act to amend the description of the land subjected to lien.

Canada Labour Relations Board et al. v. C.N.R. Co., [1975] 1 S.C.R. 786; C.P.R. v. A.‑G.B.C. et al., [1950] A.C. 122, followed; Wilson v. Esquimalt & Nanaimo Railway Co., [1922] 1 A.C. 202; Crawford v. Tilden et al. (1907), 14 O.L.R. 572; Johnson & Carey Co. v. Canadian Northern R. Co. (1918), 44 O.L.R. 533; Re Perini Ltd. v. Can-Met Explorations Ltd. and Guaranty Trust (1958), 15 D.L.R. (2d) 375, appeal quashed 17 D.L.R. (2d) 715; Campbell-Bennett Ltd. v. Comstock Midwestern Ltd. et al., [1954] S.C.R. 207; C.P.R. Co. v. Parish of Notre-Dame de Bonsecours, [1899] A.C. 367, referred to.

APPEAL from a judgment of the Ontario Court of Appeal affirming a judgment in favour of lien claimants who were subcontractors in respect of a quarrying contract let by Canadian National Railways to a general contractor who became bankrupt. Appeal dismissed.

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J.F. Laing, for the appellant.

R.E. Zelinski, Q.C, and D.E. Johnson, for the respondents, Nor-Min Supplies Ltd., Douglas Rentals Ltd, and Gilbert Cameron.

H. Michael Kelly, for the respondents, Angelo Guerrieri.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—This is an appeal in a mechanics’ lien action which was maintained against the appellant Canadian National Railway Company (hereinafter referred to as C.N.R.) in favour of lien claimants who were subcontractors in respect of a quarrying contract let by C.N.R. to a general contractor who became bankrupt. The quarrying was to be done on an island which had been owned by the C.N.R. since about 1910, was adjacent to a line of railway and was found in 1969 to contain a particular kind of rock suitable for ballast to enable the railway to carry out a capital rehabilitation programme and thereafter to meet maintenance requirements.

The contract out of which the lien claims ultimately arose was entered into at the end of December 1969 and provided for the quarrying, crushing and stockpiling of the crushed rock in designated areas on the island and for the loading of the crushed rock on railway cars. The stockpiling was parallel to and about twenty-five feet from the main line of the railway and a siding was built to facilitate the loading and to permit a larger stockpiling area while allowing the main line to be utilized for through traffic as necessary. The lien claimants had provided materials and services in connection with the performance of the contract, and their claims of lien had in some cases extended to C.N.R.’s right-of-way as well as to the quarrying area. The trial judge amended the lien claims so far as necessary to make it clear that the railway right-of-way was excluded from the land subject to lien. I take this to have been done to conform to the judgments in the Ontario cases of Crawford v. Tilden[1] and Johnson & Carey Co. v. Canadian Northern Railway Co.[2], both holding

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that the right-of-way of railways which are subject to the exclusive legislative authority of the Parliament of Canada cannot be subjected to provincial mechanics’ lien legislation. The judgment maintaining the lien claims was affirmed, without written reasons, by the Ontario Court of Appeal.

I am of the opinion that the trial judge could properly amend the description of the land alleged to be subjected to lien, power to that end residing in The Mechanics’ Lien Act, R.S.O. 1970, c. 267. No issue is taken with the validity of the lien claims if the land against which the claims were filed is subject to provincial mechanics’ lien legislation. The contention of the appellant C.N.R. on this question is a three-fold one; first, it alleges that the quarrying operation on the island is within the declaration of works for the general advantage of Canada under s. 18(1) of the Canadian National Railways Act, R.S.C. 1970, c. C-10; second, it submits that the quarrying operation on the island is within the definition of “railway” in s. 2(1) of the Railway Act, R.S.C. 1970, c. R-2 and is, by that reason or is in any event, an integral part of the railway as a transportation system; and, third, it submits that on either of the foregoing bases, the land on which the quarrying was carried out could not be subject to provincial mechanics’ lien legislation because that would involve an impermissible interference with the operation of a federally authorized transportation operation. In my opinion, neither of the first two submissions is made out and, consequently, the third does not call for decision. It is unnecessary therefore to determine whether the holding in Re Perini Ltd. v. Can-Met Explorations Ltd. and Guaranty Trust[3], (appeal quashed for want of jurisdiction) can have application here. That case decided that provincial mechanics’ lien legislation applied to a uranium mine, wholly situate in the Province, although the mine had been declared to be a work for the general advantage of Canada. The ground for this holding was that even if a sale of the mine took place to satisfy lien claimants, it would not result in the fragmentation or dismemberment of an

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operation or enterprise within exclusive federal regulatory control, as would be the result in the case of an interprovincial pipe-line or railway: see Campbell-Bennett Ltd. v. Comstock Midwestern Ltd.[4]

The trial judge made certain findings of fact and arrived at certain conclusions of law which are attacked by the appellant. These findings and conclusions are as follows:

The lands in question as amended are a quarry having been developed as such only recently by the Canadian National Railway. There are no buildings upon the said lands nor does the said Defendant’s railway cross any part of the said lands. The rock from the quarry has been used by the Canadian National Railway for improvements to its railway roadbed.

I am satisfied on the evidence that over the years the Canadian National Railway has sold parts of these lands to individuals for private purposes; further that they have sold rock from the said land to private individuals. Part of the land has been sold for highway purposes and recreational purposes.

Further that there are many other sites within the immediate area equally suitable for this purpose i.e. a quarry.

I am further satisfied that the maintenance of this site is a matter of convenience only to the Canadian National Railway and is not an integral part of its railway qua railway. The sale of these lands will not in any way affect the operation by the Canadian National Railway of its interprovincial railway and I am satisfied that the lands are not necessarily incidental to its operation as an interprovincial railway.

I am satisfied to proceed on the appellant’s contention that there is no evidence that the appellant sold off parts of the island to private persons or that they sold any amount of rock from the island to private persons. Again, I am prepared to qualify the trial judge’s finding that there were

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other sites in the immediate area suitable for quarrying rock required by the appellant; I shall take the evidence to indicate that it was not shown that there were no other nearby areas that could supply the required rock. This, however, still leaves unimpaired the trial judge’s conclusion that the maintenance of the site for quarrying was a matter of convenience to the C.N.R. Accepting then as the factual situation that C.N.R. owned land adjacent to its railway line and used that land as a quarry for the supply of rock ballast for its line, the first question that arises is whether the quarrying operation on the land comes within s. 18(1) of the Canadian National Railways Act, which reads as follows:

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 Part II of the schedule and of every company formed by any consolidation or amalgamation of any two or more of such companies are hereby declared to be works for the general advantage of Canada.

The appellant’s contention that the quarry comes within the phrase “other transportation works in Canada of the National Company” is untenable. Although there is no definition of the phrase “other transportation works” in the legislation, this Court considered the phrase in its judgment in Canada Labour Relations Board and Canadian Brotherhood of Railway Transport and General Workers v. Canadian National Railway Company[5], where it also drew on the history of s. 18(1) in determining the scope of the phrase. Whereas in the original 1919 constituent Act of the C.N.R., the declaratory provision embraced the “works” of any of the companies which became part of the C.N.R. system, the specification since 1955 has been “transportation works”. I am of the opinion that the rationale upon which this Court proceeded in holding that Jasper Park Lodge was not within the scope of the declaration in s. 18(1) is equally applicable to exclude the quarry in the present case. Neither ownership nor the power to acquire a quarry or land suitable for quarrying can support the claim made under s. 18(1). A related submission in s. 18(1) appeared to

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be founded on the definition of “railway” in s. 2(1) of the Railway Act and on the application of statements made in Wilson v. Esquimalt and Nanaimo Railway[6], by Duff J. (as he then was) who delivered the judgment of the Privy Council. Section 2(1), upon which the appellant relies also to support his second submission (to be considered hereafter), reads as follows:

“railway” means any railway that the company has authority to construct or operate, and includes all branches, extensions, sidings, stations, depots, wharfs, rolling stock, equipment, stores, property real or personal and works connected therewith, and also any railway bridge, tunnel or other structure that the company is authorized to construct; and, except where the context is inapplicable, includes street railway and tramway;

This definition is in the same terms as the definition of “railway” in s. 2(21) of the Railway Act, 1919 (Can.), c. 68, which was in force when the Wilson case was decided.

The Wilson case arose out of the following circumstances. The Esquimalt and Nanaimo Railway Co. was the grantee from the federal Crown of certain land as a subsidy in aid of the construction of a line of railway on Vancouver Island. The land was part of a tract (the railway belt) previously granted by the Province to the federal Crown. In 1904 the Province enacted settlers’ legislation, applicable to the railway belt, to enable an occupier or improver of land therein to obtain a grant thereof from the Province, if the grant was sought within twelve months of the effective date of the Act. In 1905, the railway of the Esquimalt and Nanaimo Railway Co. was declared to be a work for the general advantage of Canada and the definition of “railway” became accordingly of importance for the scope of the declaration. The Province in 1917 extended its settlers’ legislation to permit applications for grants to be made up to September 1 of that year and a grant was made

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accordingly to the appellants. In 1918, after the grant, the federal Government disallowed the 1917 provincial Act, and the question principally argued before the Privy Council was whether the effect of the disallowance was to nullify grants previously made.

The Privy Council answered this question in the negative and hence allowed the appeal (which had gone directly to it from a judgment of the British Columbia Court of Appeal), but in the course of its reasons statements were made which were relied upon by the C.N.R. in the present case. Duff J. said this (at pp. 207-208 of [1922] 1 A.C.):

Upon the passing of the Act of 1905, in virtue of the enactments of s. 91, head 29, and s. 92, head 10, of the British North America Act, 1867, the “railway” of the respondent company passed within the exclusive legislative jurisdiction of the Parliament of Canada and, accordingly, their Lordships think the Legislature of the Province ceased to possess the authority theretofore vested in it under head 10 of s. 92 and head 13 of the same section of that Act, to deprive the railway company of its legal title to any of the subjects actually forming part of the “railway” so declared to be “a work for the general advantage of Canada,” and to vest that title in another. It does not follow, however, that lands acquired by the railway company as a subsidy granted for the purpose of aiding in the construction of the railway and not held by the company as part of its “railway” or of its undertaking as a railway company were withdrawn from the legislative jurisdiction of the Province in relation to “property and civil rights”; and, in their Lordships’ opinion, that authority was, notwithstanding the enactment of the Dominion Act of 1905, still exercisable in relation to such subjects.

On the other hand, as their Lordships have already noticed, the railway company was, by virtue of the stipulations contained in the conveyance to Ganner, the owner of certain rights (to take timber for railway purposes, rights of way for the railway, to take land for stations and workshops), which rights, it cannot be denied, were held by the company as part of its railway undertaking. Whether or not they were actually part of the “work,” that is to say of the “railway” declared to

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be “a work for the general advantage of Canada,” these rights were so identified with the railway undertaking as to justify the most serious doubts whether they could legally be swept away or impaired by Provincial legislation. And it was with entire propriety that Mr. Taylor, as counsel for the appellants, agreed that all lands and all such rights as ought to be considered as part of the railway undertaking should be treated as excluded from the operation of the grant.

Indeed, the real controversy seems to concern the coal only, and as regards the coal it appears to have been so dealt with that it would be impossible to regard it as any longer a part of the railway undertaking, though in respect of the working of it, in so far as such working may affect the railway, all parties are of course under the control of the Board of Railway Commissioners.

The distinction which Duff J. set up between “rights” held by the company as part of its railway undertaking and “rights” which were part of the works declared to be for the general advantage of Canada (the reference to “rights” being to the taking of timber for railway purposes, railway rights-of-way and land for stations and workshops) does not appear to me to be founded on any constitutional principle but rather on what was the scope of the declaration made under s. 92(10)(c) of the British North America Act. The reliance of the appellant in the present case is on the words “property real or personal and works connected therewith” in the definition of “railway”, a definition which is not part of the Canadian National Railways Act but only of the Railway Act and can, at best, be only indirectly incorporated into the former Act. The reliance is asserted both for the purpose of seeking cover under s. 18(1) of the Canadian National Railways Act and for the purpose of supporting the submission that the quarry is an integral part of the railway qua railway.

The reliance on the definition of “railway” as including “property real or personal and works connected therewith” to bring the quarry under s. 18(1) is effectively answered, in my opinion, by the judgment of the Privy Council in C.P.R. v. Attor-

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ney-General of British Columbia[7], the well-known Empress Hotel case, where, at p. 147 the Privy Council said that “there is nothing in the definition [of railway] to indicate that it was intended to include anything which is not a part of or used in connexion with the operation of, a railway system”; and it added that “the words ‘connected therewith’ qualify the whole phrase and refer back to the preceding words, and therefore property which is not connected with the railway system is not included”. I shall come back to the Empress Hotel case and to the definition of “railway” in dealing with the appellant’s second submission.

Duff J. did not come to any conclusion in the Wilson case on whether land used by the railway as therein indicated came within the “works” declared to be for the general advantage of Canada, but whether or not he was doubtful on the question under the legislation then in force there can, in my opinion, be no doubt that under the present formulation of “other transportation works” the quarrying operation does not come within it.

I turn to the C.N.R.’s second submission. It invokes the definition of “railway” as an aid to its contention that the quarry was an integral part of the railway system and hence to be viewed qua the application of provincial legislation as in no different position from the railway line itself. Of course, there is no principle of absolute immunity from provincial legislation of railways that are under exclusive federal regulatory control. The principle is as old as C.P.R. v. Notre-Dame de Bonsecours[8], where it is expressed by Lord Watson at p. 372. Provincial legislation may, to some extent, apply to interprovincial and international railway systems even in respect of the railway lines themselves and a fortiori may apply in respect of operations which are not integral to the transportation facility. The matter came up again fifty years later, in a context more akin to that in the present case, in the

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Empress Hotel decision, already referred to. There the Privy Council decided, affirming this Court and the British Columbia Court of Appeal, that provincial hours of work legislation applied to employees of a hotel, owned and operated by the C.P.R., which was built in the interests of the company’s railway and steamship business but was open to the general public. In coming to its decision, the Privy Council, speaking through Lord Reid (at p. 143), posed the following question, which is adaptable to the issue in the present case:

The question for decision, therefore, is,…whether the Empress Hotel is a part of the appellant’s railway works and undertaking connecting the province of British Columbia with other provinces or is a separate undertaking. A company may be authorized to carry on, and may in fact carry on, more than one undertaking. Because a company is a railway company it does not follow that all its works must be railway works or that all its activities must relate to its railway undertaking…

If the intended supply of rock for ballast for a railway line makes that quarrying operation part of the railway undertaking, would not the same conclusion follow with respect to the supply of fuel and with respect to factories that produce railway cars or locomotives or that produce the rails that are laid on the right-of-way? On this view, proximity to the railway line would not matter, and counsel for the C.N.R. affirmed that this was his position. In short, although not saying that mere ownership of any enterprise or land by the C.N.R. is enough to immunize such holdings from provincial regulatory legislation, the contention of counsel is that because the output of the quarry is devoted to its use for the railway line the operation and the land on which it is carried on become part of the railway undertaking, part of the transportation system.

We are not concerned here with any competent federal legislation which purports to exclude the application of provincial legislation like The Mechanics’ Lien Act of Ontario. Nor, apart from

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such federal legislation, do we even reach any issue of immunity from provincial legislation unless the quarry is shown to be more than a convenience, more than a source of supply for railway purposes but, indeed, an essential part of the transportation operation in its day‑to‑day functioning. In the circumstances of the present case I cannot arrive at such a conclusion. The mere economic tie-up between the C.N.R.’s quarry and the use of the crushed rock for railway line ballast does not make the quarry a part of the transportation enterprise in the same sense as railway sheds or switching stations are part of that enterprise. The exclusive devotion of the output of the quarry to railway uses feeds the convenience of the C.N.R., as would any other economic relationship for supply of fuel or materials or rolling stock, but this does not make the fuel refineries or depots or the factories which produce the materials or the rolling stock parts of the transportation system.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Blackwell, Law, Threadgold & Co., Toronto.

Solicitors for Nor-Min Supplies Limited, respondent: Carrel, Pustina & Zelinski, Thunder Bay.

Solicitors for Douglas Rentals Limited, respondent: Bradley & Wolder, Fort Frances.

Solicitors for A. Guerrieri, respondent: H. Michael Kelly, Toronto.