Docket:
A-468-15
Citation: 2017 FCA 79
|
CORAM:
|
GAUTHIER J.A.
STRATAS J.A.
GLEASON J.A.
|
|
BETWEEN:
|
|
CANADIAN NATIONAL RAILWAY COMPANY
|
|
Appellant
|
|
and
|
|
EMERSON MILLING INC. and CANADIAN TRANSPORATION AGENCY
|
|
Respondents
|
REASONS FOR JUDGMENT
STRATAS J.A.
[1]
Crops are harvested and
delivered to the facilities of companies like Emerson Milling Inc. To handle
the arriving crops, Emerson orders railcars from the Canadian National Railway
Company. Where Emerson has “traffic
offered for carriage,” CN must
supply railcars and then “without
delay, and with due care and diligence, receive, carry and deliver the traffic”: subsection 113(1) of the Canada
Transportation Act, S.C. 1996, c. 10. Normally there is no controversy: the
railcars are ordered, the railcars arrive, the crops are loaded onto the
railcars and CN transports them away.
[2]
But there was controversy in
2013-2014. As usual, growers delivered crops to Emerson’s facility. As in
previous years, Emerson periodically ordered railcars from CN to transport the
crops. But CN delivered only some of the cars, not all. 2013-2014 was a bumper
crop year. Also the winter of 2014 was extremely cold, restricting some of CN’s
operations.
[3]
As it is entitled to do
under the Act, Emerson complained to the Canadian Transportation Agency. It
alleged that CN had failed to receive, carry and deliver “traffic offered for carriage” and, thus, violated subsection 113(1) of the
Act. CN alleged that Emerson’s orders for cars were unreasonable and that in
the circumstances CN acted as reasonably as it could under challenging
circumstances.
[4]
In a decision dated July 10,
2015 (case no. 14-06408), the Agency sided with Emerson. It ordered CN to
provide to Emerson the railway cars that Emerson asked for and still required
in order to satisfy its customers.
[5]
CN appeals, with leave of
this Court, from the Agency’s decision. For the reasons set out below, I would
dismiss the appeal with costs.
A.
Preliminary issue: the
requirement in subsection 41(1) of the Act that there be a “question of law” or
a “question of jurisdiction”
[6]
Emerson submits that
subsection 41(1) bars CN’s appeal in whole or in part because CN’s appeal does
not raise a question of law or a question of jurisdiction.
[7]
Under subsection 41(1) of
the Act, “[a]n appeal lies from
the Agency to the Federal Court of Appeal on a question of law or a question of
jurisdiction on leave to appeal being obtained from that Court.” Among other things, this means that this Court
must be satisfied that an appellant has raised a “question of law” or a “question of jurisdiction” before it can entertain the appeal.
[8]
We usually deal with this
sort of submission on a preliminary basis before delving into the merits of an
appeal: see, e.g., Canadian National Railway Company v. Dreyfus,
2016 FCA 232 at para. 18; Canadian National Railway Company v. BNSF
Railway Company, 2016 FCA 284. Often we follow this practice in other
contexts where our subject-matter jurisdiction is in issue, especially where to
decide the merits might invade the right to decide of another body that might
have jurisdiction: National Indian Brotherhood v. Juneau (No. 2), [1971]
F.C. 73 (C.A.); see also, e.g., Pfizer Canada Inc. v. Teva Canada
Limited, 2016 FCA 218, 141 C.P.R. (4th) 165. Often considerations of
legality and practicality favour proceeding in this way—a pronouncement on the
merits of the matter without jurisdiction is a nullity: P.E.I. (Provincial
Secretary) v. Egan, [1941] S.C.R. 396, 3 D.L.R. 305.
[9]
This practice is prudent: putting
aside narrow areas of inherent or plenary jurisdiction and the responsibility
to develop and apply the common law, it has been accepted for at least a
quarter of a millennium that courts can act
only within the limits of the law set by the legislator: see, e.g.,
Green v. Rutherford (1750), [1558-1774] All E.R. Rep. 153, 1 Ves. Sen.
462 at page 471; Penn v. Lord Baltimore (1750), [1558-1774] All E.R. Rep.
99, 1 Ves. Sen. 444 at page 446; A.G. v. Lord Hotham (1827), [1814-23]
All E.R. Rep. 448, 3 Russ. 415; Thompson v. Sheil (1840), 3 Ir. Eq. R.
135. And of even longer standing is the principle of legislative supremacy, one
corollary of which is that laws bind
courts, just like everyone else: Re Resolution to Amend the
Constitution, [1981] 1 S.C.R. 753 at pp. 805-806; Reference re Secession
of Quebec, [1998] 2 S.C.R. 217, 161 D.L.R. (4th) 385 at paras. 71-72; Reference
re Remuneration of Judges of the Provincial Court of Prince Edward Island,
[1997] 3 S.C.R. 3, 150 D.L.R. (4th) 577 at para. 10.
[10]
The only exceptions are
where a legislative limit is unconstitutional or the rule of law justifies court
intervention: Crevier v. A.G. (Québec) et al., [1981] 2 S.C.R. 220, 127
D.L.R. (3d) 1; Immeubles Port Louis Ltée. v. Lafontaine (Village), [1991]
1 S.C.R. 326 at p. 360. The latter, once described as “a fundamental postulate of our
constitutional structure”
that “lie[s] at the root of our
system of government,” is
now expressly set out as an operative principle in our Constitution: Roncarelli v. Duplessis, [1959] S.C.R. 121 at p. 142; British
Columbia (Attorney General) v. Christie, 2007 SCC 21, [2007] 1 S.C.R. 873
at para. 19; preamble to the Constitution Act, 1982, Schedule B to the Canada
Act 1982 (U.K.), 1982, c. 11. It is the constitutional authorization for
judicial review even in the face of legislative provisions restricting or
forbidding it (e.g., so-called privative clauses): Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 at paras.
27-28. Among other things, the rule of law provides that “the law is supreme over officials” and “thereby preclusive of the influence of arbitrary power”: Re Manitoba Language Rights, [1985] 1
S.C.R. 721 at p. 748; British Columbia v. Imperial Tobacco Canada Ltd.,
2005 SCC 49, [2005] 2 S.C.R. 473 at paras. 57-58. Those who wield public power cannot
be a law unto themselves, immunized from truly independent review and shielded
from meaningful scrutiny: semble, Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138 at p. 145; Canada (Attorney General) v. Downtown Eastside Sex Workers United
Against Violence Society, 2012 SCC 45, [2012] 2
S.C.R. 524 at paras. 31-33, citing Canadian Council of Churches v. Canada
(Minister of Employment and Immigration), [1992] 1 S.C.R. 236 at pp.
250-251; Paradis Honey Ltd. v. Canada, 2015 FCA 89, 382 D.L.R. (4th) 720
at para. 108 and Canada (Attorney General) v. Bri-Chem Supply Ltd., 2016
FCA 257 at para. 49, both citing Slansky v. Canada
(Attorney General), 2013 FCA 199, [2015] 1 F.C.R. 81 at paras. 313-314.
[11]
For the purposes of
subsection 41(1) of the Canada Transportation Act and sections worded
like it, what is a “question of
law” and what is a “question of jurisdiction”? To interpret these terms, we need to consider
their plain meaning, their context within the Act and the purpose of
subsection 41(1) and the Act itself: Re Rizzo & Rizzo Shoes Ltd.,
[1998] 1 S.C.R. 27, 154 D.L.R. (4th) 193 and Bell ExpressVu Limited
Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559.
[12]
Under the Canada
Transportation Act, the Agency is continued and empowered as a specialized
regulator in the transportation sector. Its decisions are informed by
understandings of how the sector operates and other specialized appreciations
and policy considerations, such as the National Transportation Policy set out
in section 5 of the Act. Indeed, under sections 24 and 43 of the Act, the
Governor in Council can issue policy directions concerning any matter that
comes within the jurisdiction of the Agency and the Agency must follow them. Appeals
are not available for pure questions of fact (see section 31 of the Act). But
appeals to the Governor in Council are available under section 40 of the Act;
this provides a way to appeal, among other things, factually suffused and
policy-imbued decisions of the Agency: Canadian National Railway Co. v.
Canada (Attorney General), 2014 SCC 40, [2014] 2 S.C.R. 135 (“CN 2014”).
[13]
From these provisions, one
can see Parliament’s intention behind subsection 41(1): factually suffused and
policy-imbued decisions are not to be appealed to this Court. Parliamentary
debates also support this: CN 2014 at para. 46. Such questions can be
appealed elsewhere. Instead, only matters turning on questions of law or
questions of jurisdiction may be appealed to this Court with leave granted on
the basis that there is an arguable issue: CKLN
Radio Incorporated v. Canada (Attorney General),
2011 FCA 135, 418 N.R. 198; Rogers Cable Communications Inc. v. New
Brunswick (Transportation), 2007 FCA 168, 367 N.R. 78. Given the terms of subsection 41(1), given the fact that a
denial of leave is merits based, and given the availability of review under
other sections of the Act for other questions, it would be hard to view subsection
41(1) as immunizing Agency decision-making in a problematic way.
[14]
What does a “question of jurisdiction” mean? We begin with a bit of a conundrum. Today
in administrative law we are often encouraged not to speak of jurisdiction. This
trend has been underway since 1979 when Dickson J. (as he then was) warned
against describing issues as jurisdictional when they are “doubtfully so”: C.U.P.E. v. N.B. Liquor Corporation,
[1979] 2 S.C.R. 227 at p. 233.
[15]
The reasoning goes like
this. To say that an administrative decision-maker has jurisdiction to do
something is to say that it has powers that have been granted to it expressly,
impliedly or necessarily by legislation in certain circumstances or over
certain subject-matters: Chrysler Canada Ltd. v. Canada (Competition
Tribunal), [1992] 2 S.C.R. 394, 92 D.L.R. (4th) 609; Tranchemontagne v.
Ontario (Director, Disability Support Program), [2006] 1 S.C.R. 513, 266
D.L.R. (4th) 287 at para. 16. For example, whether an agency can exercise a
power to compel a witness to give testimony turns on what its statute says and
how we interpret it—in reality a question of law. Thus, a “question of jurisdiction” for the purposes of judicial review is really
just a question of statutory interpretation, in other words a question of law: Halifax
(Regional Municipality) v. Nova Scotia (Human Rights Commission), 2012 SCC
10, [2012] 1 S.C.R. 364; and see the detailed discussion in Canada (Border
Services Agency) v. C.B. Powell Limited, 2010 FCA 61, [2011] 2 F.C.R. 332
at paras. 39-46.
[16]
On this reasoning, many
so-called questions of jurisdiction that are appealed under subsection 41(1)
could easily be said today to be questions of law. Subsection 41(1) speaks of
questions of law and questions of jurisdiction as if they are two different
things. But it would seem that the latter is often just a subset of the former.
[17]
But, on closer examination,
the phrase “question of
jurisdiction” in subsection
41(1) still adds something above and beyond the phrase “question of law.” A bit of legislative history shines a light on
this.
[18]
The Canada Transportation
Act is a successor to various Acts stretching back to the National
Transportation Act, S.C. 1966-67, c. 69, which was enacted in 1967. The
phrase “question of
jurisdiction” in subsection
41(1) of the current Canada Transportation Act first appeared in 1971 as
a requirement for appeals to this Court in subsection 64(2) of the National
Transportation Act after it was amended by R.S.C. 1970 (2nd Supp.),
c. 10. At that time, Parliament understood “jurisdiction” to
include failures of procedural fairness and other fundamental legal flaws: see,
e.g., In re Ontario Labour Relations Board, [1953] 2 S.C.R. 18,
[1953] 3 D.L.R. 561 (sometimes known as the Toronto Newspaper Guild
case). Ever after, Parliament has decided to maintain “question of jurisdiction” in the subsection even though, as mentioned,
today “question of
jurisdiction” essentially
means “question of law” and “question of law”
is already in the subsection. This must mean something, as Parliament is not in
the business of legislating redundancies: Nanaimo (City) v. Rascal Trucking
Ltd., 2000 SCC 13, [2000] 1 S.C.R. 342 at para. 23.
[19]
Based on this legislative
history, I conclude that “question
of jurisdiction” in
subsection 41(1) includes at least issues of procedural fairness, even if those
issues are factually suffused. Thus, under subsection 41(1) of the Act, a party
may appeal on the basis that a decision of the Agency is procedurally unfair.
[20]
Now to the meaning of a “question of law” under subsection 41(1) of the Act. Sometimes
the Agency will state a pure question of law or a legal standard in its
decision and then will resolve it. There is no doubt that such a question of
law or legal standard can be the proper subject-matter of appeal under
subsection 41(1) of the Act.
[21]
But sometimes the question
of law or legal standard is mixed up with questions of fact. For example, the
Agency might have a legal view of how a particular statutory provision works and
rather than stating that view explicitly instead might proceed directly to its
bottom-line conclusion. In reality, the Agency’s conclusion is an amalgam of
its view of the law/legal standards and its view of the evidence, and how the
former applies to the latter. In that context, where the law and the facts are
mussed together, is there a “question
of law” for the purposes of
subsection 41(1) of the Act?
[22]
These questions of mixed
fact and law are best seen on a spectrum. At one end are questions where the legal
content is low and the result is driven by findings of facts or the
adjudicator’s interpretation of the evidence as a whole. At the other end are
questions where the legal content is high and the result is driven mainly by
law/legal standards.
[23]
The Supreme Court discussed
this spectrum, albeit in a different context, in Housen v. Nikolaisen,
2002 SCC 33, [2002] 2 S.C.R. 235 at paras. 28 and 36. Housen concerns
appellate review of decisions outside of the administrative law context and is not
relevant to the administrative law context here. However, Housen is
useful here because the Supreme Court was trying to solve the same question facing
us here: given that questions of law/legal standards should be treated
differently from questions of fact, how do we deal with questions of mixed fact
and law that lie on a spectrum?
[24]
In Housen, for the
purposes of the appellate standard of review, the Supreme Court decided that
questions of law/legal standards were subject to correctness review and
questions of fact were subject to review for palpable and overriding error. But
it asked itself how questions of mixed fact and law should be handled given
that they sit on a spectrum ranging from very low legal content to very high
legal content.
[25]
The Supreme Court’s solution
was that where a question of law or an issue of legal principle is “extricable” from the question of mixed fact and law, there is indeed a
“question of law”:
To summarize, a
finding of negligence by a trial judge involves applying a legal standard to a
set of facts, and thus is a question of mixed fact and law. Matters of mixed
fact and law lie along a spectrum. Where, for instance, an error with respect
to a finding of negligence can be attributed to the application of an incorrect
standard, a failure to consider a required element of a legal test, or similar
error in principle, such an error can be characterized as an error of law,
subject to a standard of correctness. Appellate courts must be cautious,
however, in finding that a trial judge erred in law in his or her determination
of negligence, as it is often difficult to extricate the legal questions from
the factual. It is for this reason that these matters are referred to as
questions of “mixed law and fact”. Where the legal principle is not readily
extricable, then the matter is one of “mixed law and fact” and is subject to a
more stringent standard. The general rule, as stated in [Jaegli Enterprises
Ltd. v. Taylor, [1981] 2 S.C.R. 2], is that, where the issue on appeal
involves the trial judge’s interpretation of the evidence as a whole, it should
not be overturned absent palpable and overriding error.
(Housen at para. 36.)
[26]
This same approach should be
adopted here. Extricable questions of law/legal standards are best regarded as
questions of law of the sort intended by Parliament to be reviewed by this
Court under subsection 41(1). In a number of cases, this Court determined
appeals where extricable questions of law/legal standards (in addition to other
legal and jurisdictional questions) were present:
•
Canadian National Railway Company v. Canadian
Transportation Agency, 2010 FCA 65, [2011] 3 F.C.R.
264 (“CN 2010”) and Canadian National Railway Co. v. Canada (Canadian
Transportation Agency), 2008 FCA 363, 383 N.R. 349 (“CN 2008”). What
matters fall into certain defined terms in the Act, triggering the revenue cap
in the Act? The extricable legal question was the definition of the defined
terms in the Act.
•
Dreyfus, above at
para. 18. Two issues were raised that involve extricable questions of law, namely
statutory interpretation. Does the “evaluation approach,”
a methodology adopted by the Agency for deciding questions under sections
113-116, deviate from the proper interpretation of the sections? Did the Agency
fail to consider matters that the statute requires it to consider?
•
Canadian National Railway Company v.
Richardson International Limited, 2015 FCA 180, 476
N.R. 83. Do the facts of the case constitute a “line of
railway” and a “connection” for the
purposes of triggering the carrier’s interswitching obligations? The extricable
question of law was the meaning of these terms.
•
Canadian National Railway Company v. Viterra
Inc., 2017 FCA 6. On the facts, were the
obligations of the carrier under section 113 triggered? Was the carrier’s
rationing methodology a confidential contract under subsection 113(4) of the
Act?
[27]
On occasion, this Court has
defined the phrase “questions
of law” in subsection 41(1)
as including questions of mixed fact and law as long as there is “enough of a legal component” to the issue raised: Northwest Airlines Inc.
v. Canadian Transportation Agency, 2004 FCA 238 at para. 28, 325 N.R. 147; Canadian
National Railway Company v. Canada (Transportation Agency), 2016 FCA 266 at
para. 22 (“CN 2016”). The phrase “enough of a legal component” suffers from some ambiguity and lack of clarity: for
example, how much is “enough” and is the assessment of sufficiency a qualitative
one, a quantitative one or both? The “extricable questions of law or legal principle” standard is more concrete and clear, especially
since appellate courts considering the appellate standard of review under Housen
regularly have to grapple with the phrase and define it. In both Northwest
Airlines and CN 2016 there were extricable questions of law or legal
principle supporting the determination of the appeals under subsection 41(1) of
the Act.
[28]
Therefore, in future, this
Court should adopt the “extricable
questions of law or legal principle” standard for determining whether a question of mixed fact
and law should be regarded as a “question of law”
under subsection 41(1) of the Act.
[29]
Turning to the facts of this
case, does subsection 41(1) apply to restrict or eliminate CN’s appeal? To
answer that, we first must identify the subject-matter of the appeal. We do
this by construing the originating document, here the notice of appeal, to gain “a realistic appreciation” of the appeal’s “essential character.” The say-so of a party that a “legal test”
or “the Act” is involved is not enough: “skilful pleaders” who are “armed
with sophisticated wordsmithing tools and cunning minds” can express
grounds in such a way as to make them sound like legal questions “when they are nothing of the sort.” We must look at
the substance of what is being raised, not the form. See generally Canada (National Revenue) v. JP Morgan Asset Management
(Canada) Inc., 2013 FCA 250, [2014] 2
F.C.R. 557 at paras. 49-50.
[30]
Sometimes an appellant’s
memorandum of fact and law articulates the grounds set out in a notice of
appeal in a different way. The memorandum can be useful in gaining a realistic
appreciation of the appeal’s essential character, as presented in the notice of
appeal. As we shall see, CN’s memorandum does assist us in this case.
[31]
CN’s notice of appeal
alleges that the Agency erred in two ways:
1. The Agency applied the
wrong evidentiary threshold and onus such that it effectively and automatically
conflated a car order request placed by a shipper with “traffic offered for
carriage” under [subsection 113(1) of] the Act; and
2. The
Agency applied the wrong legal test in determining whether CN had breached its
level of service obligations by treating unfulfilled car order requests in a
given week as constituting cumulative “traffic offered for carriage” under
[subsection 113(1) of] the Act in subsequent weeks, months and years.
[32]
CN submits that these errors
are questions of law relating to the proper interpretation of the phrase “traffic offered for carriage” in subsection 113(1) of the Act.
[33]
The first ground in the
notice of appeal is phrased as a question of mixed fact and law—how the law
should be applied to the facts of this case—not as a pure question of law. The
second error alleges that the Agency applied a wrong legal test, but it could
also be construed as an objection to how the Agency characterized the unfulfilled
orders based on the facts of this case. In both cases, Emerson suggests that
these are factually suffused points that are, so-to-speak, insufficiently legal
and, thus, cannot be appealed under subsection 41(1) of the Act.
[34]
I disagree. In my view, the essential character of this ground of
appeal is that the Agency erred in law by taking a legally incorrect view of
subsection 113(1).
[35]
For the purposes of this
point, subsection 113(1) has two parts: an event that triggers the carrier’s
legal obligation to transport, namely that the shipper has “traffic offered for carriage,” and the shipper’s legal obligation “without delay, and with due care and
diligence, [to] receive, carry and deliver the traffic.” Both grounds concentrate on the triggering event:
what is “traffic offered for
carriage”? What, as a matter
of law, must a shipper like Emerson do in order to trigger the carrier’s legal
obligation to receive, handle and transport? In other words, in law, what is
the triggering event for the carrier’s legal obligation and in what
circumstances does it happen?
[36]
The first ground in the
notice of appeal suggests that the Agency “conflated” a “car order request” by a shipper, Emerson, with “traffic offered for carriage.” In other words, according to CN, the Agency
erred in holding that as soon as Emerson says it has traffic for carriage, the
triggering event has happened and CN’s onerous obligations under subsection
113(1) kick in. Put another way, under the Agency’s legally wrong view of the
matter, CN’s legal obligation arises when Emerson says simply that it has a
shipment that needs to be transported, without any other demonstration that
there is indeed a shipment that needs to be transported. By misinterpreting
subsection 113(1), the Agency allows the significant, sometimes onerous legal
obligation on CN to receive, carry and deliver traffic to arise too easily,
almost automatically. CN says that subsection 113(1), properly interpreted,
requires much more from Emerson.
[37]
In short, the question
raised by the first ground of appeal is a matter of statutory interpretation: what
is the meaning of “traffic
offered for carriage,” or,
put another way, what evidence must a shipper adduce to establish that there is
“traffic offered for carriage”? In the first ground of appeal, we have an issue
of statutory interpretation: an issue of law. The resolution of the first
ground of appeal is driven by the law/legal standards; this is not an issue
where the parties agree upon the law/legal standards and the outcome is driven
by the facts.
[38]
Several statements from CN’s
memorandum confirm that the first ground of appeal raises a question of law:
•
“The [Act] requires
actual goods subject to a genuine request for transportation by rail” and “a railway has no obligation [under the
Act] to carry putative, hypothetical or speculative traffic.” To hold
otherwise “is an error of law”: CN’s memorandum
of fact and law at para. 42;
•
“[Under subsection
113(1)] an applicant must prove that it has ‘traffic’ for carriage…and a [mere]
car order cannot be presumed to be ‘traffic’”:
CN’s memorandum of fact and law at para. 44;
•
Under the Act, “[a]
railway is not presumed to be in breach of its level of service obligations.”
Instead, an applicant must first “prove that it offered
traffic for carriage—a railway’s service level obligations [under subsection
113(1)] are not triggered otherwise”: CN’s memorandum of fact and law at
paras. 49 and 52. The “traffic offered for carriage”
under subsection 113(1) “must be actual goods offered
for transport” and not just “putative or
potential traffic”: CN’s memorandum of fact and law at para. 52.
•
Any other conclusion “fails
to accord with the words, context, object and intent of the [Canada
Transportation Act]”: CN’s memorandum of fact and law at para. 53.
•
Interpreting subsection 113(1) in this way
violates the Supreme Court’s holding in A.L. Patchett & Sons Ltd. v.
Pacific Great Eastern Railway Co., [1959] S.C.R. 271, 17 D.L.R. (2d) 449 “that a railway’s common carrier obligations are ‘permeated
with reasonableness”: CN’s memorandum of fact and law at para. 72.
•
A sub-point raised by CN and really the flipside
of the foregoing is that the Agency must have improperly taken “judicial notice of the fact that car orders invariably
reflect concomitant demand for the carriage of actual traffic”: CN’s
memorandum of fact and law at para. 65. Whether the Agency can do this is a
question of law.
[39]
CN’s memorandum of fact and
law also runs this statutory interpretation point in a different way. CN takes
particular issue with a methodology or test established by the Agency and
followed by in this case. It is known as the “evaluation approach.”
[40]
The first step of the
Agency’s evaluation approach is to assess whether the request for service is
reasonable. This entails looking at factors such as whether the request for
cars was properly communicated, whether the car request provided adequate
notice and whether the shipper has the capacity to receive, load and release
the cars requested: CN’s memorandum of fact and law at para. 54.
[41]
CN complains that “none of these criteria relate in any way to
the issue of whether the shipper has actual traffic for carriage,” which it says subsection 113(1) requires; instead
they “relate solely to matters
of the form and timing of communication, and capacity to receive and release a
car spot”: CN’s memorandum of
fact and law at para. 56. It also complains that the Agency found that the “sole requirement for a shipper to meet the
first step of the evaluation approach is to place an order,” again contrary to subsection 113(1): CN’s
memorandum at para. 64. Lest there be any doubt that the argument CN makes is
based on the proper interpretation of subsection 113(1), CN adds that the
Agency’s evaluation approach “obviates
[the] statutory requirement [of showing that there is “traffic offered for
carriage”]—a shipper need only make a car request in order to be conclusively
deemed to have ‘traffic’”: CN’s
memorandum of fact and law at para. 44.
[42]
All of these submissions in
CN’s memorandum relate to the gist of the first ground in the notice of appeal.
They confirm that we are dealing with an issue of statutory interpretation,
which is a question of law that this Court can entertain under subsection 41(1)
of the Act.
[43]
The issue of statutory
interpretation raised by the first ground of appeal is very much like the
question at issue before this Court in CN 2010, above and CN 2008,
above, namely what matters fall into certain defined terms in the Act,
triggering the revenue cap in the Act. In considering the evaluation approach
and in raising the question whether the approach is consistent with the Act,
this case is also very much like Dreyfus. All of these cases passed
muster under subsection 41(1) of the Act.
[44]
Overall, I find that the
first ground of appeal raises a question of law that can be appealed to this
Court under subsection 41(1) of the Act.
[45]
The second ground of appeal
complains that the Agency “applied
the wrong legal test” in
determining whether CN had breached its level of service obligations by “treating unfulfilled car order requests in
a given week as constituting cumulative ‘traffic offered for carriage’ under
[subsection 113(1) of] the Act in subsequent weeks, months and years.” Although this ground refers to “legal test” and “the
Act,” it is still incumbent
on us to construe the originating document, here the notice of appeal, to gain “a realistic appreciation” of the appeal’s “essential character”: see paragraph 29 above.
[46]
This ground of appeal is
best understood by viewing it in light of what CN argues in its memorandum of
fact and law and in light of what the Agency decided. When this is done, we see
that the second ground of appeal raises an issue of statutory interpretation. CN
and the Agency have contrasting views about how to go about analyzing cases
under subsection 113(1), views based on a different interpretation of
subsection 113(1):
•
CN’s view. Subsection
113(1) requires the Agency to assess on a week-by-week basis whether CN is
justified for that week in failing to provide enough cars. If non-delivery during
a particular week is justified by the circumstances, then any non-delivery of
cars in that week is excused and cannot be the basis for a later finding that
CN breached its obligations as a carrier under subsection 113(1) of the Act. In
the words of the second ground in the notice of appeal, “treating unfulfilled car order requests in a given week”
that are justified cannot be regarded “as constituting
cumulative ‘traffic offered for carriage’ under [subsection 113(1) of] the Act
in subsequent weeks, months and years.” See generally paras. 77-95 of
CN’s memorandum of fact and law.
•
Agency’s view. Subsection
113(1) allows the Agency to look at the matter more globally, as it did here,
and assess from the available data whether over the entire complaint period CN
met its subsection 113(1) obligations. It need not conduct a week-by-week
analysis. See generally paras. 65-68 of the Agency’s decision.
Which view of subsection
113(1) should prevail: the week-to-week approach or the global approach? Fundamentally,
this is a question of statutory interpretation, a question of law.
[47]
We can glean CN’s view of
subsection 113(1)—which varies from the Agency’s view—from its memorandum. CN
begins by arguing that the Agency recognized that in certain weeks CN was
justified in not delivering all of the cars that Emerson had ordered: CN’s
memorandum of fact and law at para. 77. According to CN, if it was justified in
failing to deliver a certain portion of car requests at the time the requests
were made, by definition it complied with its obligations under the Act: CN’s
memorandum of fact and law at para. 77.
[48]
CN puts this same point a
different way. It says that under the Act a railway’s obligation to move
traffic is triggered when presented with traffic for carriage: CN’s memorandum
of fact and law at para. 80. Then, once traffic for carriage is presented, the
railway either moves the traffic or does not. If the railway fails to deliver
the traffic, the Agency’s task is to determine whether the railway’s failure
was justified as of the time of the request: CN’s memorandum of fact and law at
para. 82. If it was justified, then under subsection 113(1) the railway has
offered the requisite level of service: CN’s memorandum of fact and law at
para. 86.
[49]
Given that there were
numerous crop weeks where CN was absolved of its obligation to deliver cars, “it was not open for the Agency to
perfunctorily declare that CN was in breach of its obligation to deliver cars”: CN’s memorandum of fact and law at para. 94. The
Agency reached this conclusion “improperly” and committed an “error of law” by “treating unfulfilled orders as though they continued to represent
traffic offered for carriage within the meaning of ss. 113(1)(a)”: CN’s memorandum of fact and law at para. 95.
[50]
As mentioned above, our task
is to gain “a realistic
appreciation” of the
appeal’s “essential character.” When the second ground in the notice of appeal
is read together with CN’s memorandum of fact and law, it becomes evident that
CN is taking issue with how the Agency read and applied the statute.
[51]
This is not a case where the
Agency and CN have a common view of how the statutory provision, subsection
113(1), should be read and CN merely takes issue with the way the Agency has
applied it to the facts of the case. That would be a question of mixed fact and
law where the facts drive the answer.
[52]
Rather, this is a case where
the Agency and CN have a different view on how subsection 113(1) is to be read.
In my view, the second ground set out in the notice of appeal raises an
extricable question of law sufficient for an appeal under subsection 41(1) of
the Act.
[53]
Before leaving this issue, I
wish to offer some further guidance for future cases concerning subsection
41(1) of the Act, guidance that may be useful for similarly worded sections.
[54]
This is a relatively close
case under subsection 41(1). As mentioned, in determining whether we have
jurisdiction in the face of a jurisdiction-limiting provision like subsection
41(1) we must examine the essential character of a notice of appeal with the
assistance of the appellant’s memorandum and, like all pleadings, construe it
generously with due allowance for infelicities in wording. But there are limits
to the Court’s examination and its generosity. In this case, those limits were
almost reached.
[55]
Drafters of notices of
appeal are now on notice. When the grounds of appeal are drafted in the form of
questions of mixed fact and law, the Court may well conclude that there is no
question of law or jurisdiction in the appeal and dismiss it. This is
especially so where the questions of mixed fact and law are presented in a heavily
fact-laden way. Instead, drafters should identify with clarity and precision
the questions of law or of jurisdiction, including any extricable questions of law
or legal principle, and explain how these emerge from the decision below. While
the Court may look to the appellant’s memorandum of fact and law to construe
the notice of appeal, the notice of appeal, as the originating document,
remains the primary focus of the Court and must be carefully drawn.
[56]
These observations have
ramifications for motions for leave to appeal under provisions like subsection
41(1). When the Court grants leave to appeal, it has not decided the subsection
41(1) issue; for one thing, in granting leave the Court may have considered the
issue of jurisdiction to be uncertain but fairly arguable: Canadian Pacific
Railway Co. v. Canada (Transportation Agency), 2003 FCA 271, [2003] 4
F.C.R. 558 at para. 17. Despite the granting of leave, the subsection 41(1)
issue remains live during the appeal and the Court must dismiss any appeal over
which it does not have jurisdiction.
[57]
This being said, those of
the view that this Court has no jurisdiction under subsection 41(1) should
forcefully argue the point at the leave stage and, where possible, this Court
should determine it. Increasingly, courts must conserve scarce judicial
resources and adopt a new, more efficient litigation culture: Hryniak v.
Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. Appeals or issues in appeals that
cannot be entertained by this Court should not be allowed to meander through to
a merits hearing. Instead, at the earliest opportunity, they should be stopped
in their tracks. The guidance given by these reasons to drafters of notices of
appeal applies equally to drafters of notices of motion for leave to appeal.
B.
Analysis of the merits of
the appeal
[58]
As mentioned above,
subsection 113(1) of the Canada Transportation Act imposes certain
obligations upon a railway company once there is “traffic offered [to the railway company]
for carriage” within the
meaning of the subsection. Subsection 113(1) provides as follows:
|
113. (1) A railway company shall, according to
its powers, in respect of a railway owned or operated by it,
|
113. (1) Chaque compagnie de chemin de fer,
dans le cadre de ses attributions, relativement au chemin de fer qui lui
appartient ou qu’elle exploite :
|
|
(a) furnish, at the point of origin, at the point of junction of the
railway with another railway, and at all points of stopping established for
that purpose, adequate and suitable accommodation for the receiving and
loading of all traffic offered for carriage on the railway;
|
a) fournit,
au point d’origine de son chemin de fer et au point de raccordement avec
d’autres, et à tous les points d’arrêt établis à cette fin, des installations
convenables pour la réception et le chargement des marchandises à transporter
par chemin de fer;
|
|
(b) furnish adequate and suitable accommodation for the carriage,
unloading and delivering of the traffic;
|
b) fournit les installations convenables pour le transport, le
déchargement et la livraison des marchandises;
|
|
(c) without delay, and with due care and diligence, receive, carry and
deliver the traffic;
|
c)
reçoit, transporte et livre ces marchandises sans délai et avec le soin et la
diligence voulus;
|
|
(d) furnish and use all proper appliances, accommodation and means
necessary for receiving, loading, carrying, unloading and delivering the
traffic; and
|
d) fournit et utilise tous les appareils, toutes les installations et
tous les moyens nécessaires à la réception, au chargement, au transport, au
déchargement et à la livraison de ces marchandises;
|
|
(e) furnish any other service incidental to transportation that is
customary or usual in connection with the business of a railway company.
|
e)
fournit les autres services normalement liés à l’exploitation d’un service de
transport par une compagnie de chemin de fer.
|
[59]
The parties agree that this
Court should review the Agency’s interpretation of subsection 113(1) of the Act
on the basis of the standard of reasonableness. The parties’ agreement does not
bind us: Monsanto Canada Inc. v. Ontario (Superintendent of Financial
Services), 2004 SCC 54, [2004] 3 S.C.R. 152. But on the current state of
the authorities I agree that the standard of review is reasonableness.
[60]
Reasonableness is presumed
to be the standard of review of administrative decision-makers’ interpretations
of provisions in “[their] own
[legislation] or [legislation] closely connected to [their] function, with
which [they have] particular familiarity,” i.e., their home statute: Alberta (Information
and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61,
[2011] 3 S.C.R. 654 at para. 34; Dunsmuir, above at
para. 54. This presumption applies even where Parliament has enacted
full, unrestricted rights of appeal: Edmonton (City) v. Edmonton East
(Capilano) Shopping Centres Ltd., 2016 SCC 47, [2016] 2 S.C.R. 293.
[61]
Subsection 113(1),
interpreted and applied by the Agency in this case, is in the Agency’s home
statute and so the presumption applies. It stands unrebutted. Therefore, the
Agency’s interpretation and application of subsection 113(1) will be reviewed on
the basis of reasonableness.
[62]
By way of confirmation, I
note that this Court has adopted the reasonableness standard in a number of
similar cases involving similar issues before the Agency: see the cases
mentioned in paragraph 26 above.
[63]
Now to reasonableness review
of the Agency’s decision. Some go about this by forming a view as to what the
administrative decision-maker should have decided on the merits, pasting paragraph
47 of Dunsmuir into their reasons—whether the outcome reached by the
Agency falls within the range of “acceptability”
and “defensibility” on the facts and the law and whether there is “justification,” “transparency”
and “intelligibility”—and then tossing these labels around to support
their conclusion. Some call this disguised correctness.
[64]
Others avoid the sin of
disguised correctness but still fall short. They understand that disguised
correctness is not genuine reasonableness review. But too often, even in
complicated cases that demand a more fulsome treatment, they do not go much beyond
asserting conclusions, rather than demonstrating in a substantive way how the administrative
decision does or does not accord with the concept of reasonableness.
[65]
If reasonableness review is
to be legitimate and if it is to appear to be legitimate, it must be conducted in
a neutral, substantively rigorous, intellectually honest way, drawing upon the
doctrine and sensitive to “the
qualities that make [an administrative decision] reasonable”: Dunsmuir, above at para. 47. To try to
do just that, our Court has developed and followed some approaches to
reasonableness: see, e.g., Delios v. Canada (Attorney General),
2015 FCA 117, 472 N.R. 171; Canada (Attorney General) v. Boogaard, 2015
FCA 150, 474 N.R. 121; and see Professor Paul Daly, “Struggling Towards Coherence in Canadian
Administrative Law? Recent Cases on Standard of Review and Reasonableness” (online: https://ssrn.com/abstract=2821099)
(forthcoming, McGill L.J.). And in doing this—far from freestyling on the
matter—this Court has followed the Supreme Court’s pronouncements, attentive to
the signals it gives.
[66]
What are the pronouncements
and signals? In some cases, the Supreme Court tells us that an administrative
decision-maker’s ambit for decision-making on a particular question is not “one specific, particular result” but rather is a “range of reasonable outcomes” or a “margin
of appreciation”, a
range or margin that can be quite broad or narrow depending on the
circumstances: Dunsmuir, above at para. 47; McLean v. British
Columbia (Securities Commission), 2013 SCC 67, [2013] 3 S.C.R. 895 at para.
38. In other cases, the Supreme Court tells us that reasonableness “takes its colour from the context” and must be “assessed in
the context of the particular type of decision making involved and all relevant
factors”: Catalyst Paper Corp. v. North
Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5 at para. 18; Canada
(Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339 at
para. 59; Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, [2016] 1
S.C.R. 770 at para. 22; and many, many others. In other words, certain circumstances,
considerations and factors in particular cases influence how we go about
assessing the acceptability and defensibility of administrative decisions: Catalyst
at para. 18; Doré v. Barreau du Québec, 2012 SCC 12, [2012] 1 S.C.R. 395
at para. 54; Halifax, above at para. 44; see also Canada
(Minister of Transport, Infrastructure and Communities) v. Farwaha, 2014
FCA 56, [2015] 2 F.C.R. 1006 at paras. 88-99.
[67]
Looking at this from the
perspective of reviewing courts, if the circumstances, considerations and
factors differ from case to case, how reviewing courts go about measuring acceptability
and defensibility will differ from case to case; in other words, reasonableness
will “take its colour from the
context” of the case. Looking
at this from the perspective of administrative decision-makers, as a practical
matter some in some contexts seem to be given more leeway or a broader “margin of appreciation” than others in other contexts.
[68]
In some of its cases, this
Court has tried to identify the circumstances, considerations and factors that can
affect the outcome of reasonableness review. Sometimes other appellate courts
have joined this effort: see, e.g., Mills v. Ontario
(Workplace Safety and Insurance Appeals Tribunal), 2008 ONCA 436, 237
O.A.C. 71 at para. 22.
[69]
In this case, what is the context
from which reasonableness takes its colour? What circumstances, considerations
or factors affect reasonableness review?
[70]
One important factor is the
existence of a binding judicial pronouncement concerning subsection 113(1) of
the Act. Unless the administrative decision-maker, here the Agency, can
distinguish the precedent in some reasonable way, it constrains the
interpretive options available to the Agency and affects our evaluation of
reasonableness: Canada (Attorney General) v. Canadian Human Rights
Commission, 2013 FCA 75; 444 N.R. 120 at paras. 13-14; Canada (Attorney General) v. Abraham, 2012 FCA 266, 440 N.R. 201 at paras. 37-50; Farwaha, above at para.
95.
[71]
In this case, the binding
judicial pronouncement is a decades-old decision of the Supreme Court. It
stands for the proposition that when interpreting and applying subsection
113(1), the Agency must assess the reasonableness of the parties’ conduct in
light of the facts disclosed by the evidentiary record:
Apart from statute, undertaking a
public carrier service as an economic enterprise by a private agency is done on
the assumption that, with no fault on the agency's part, normal means will be
available to the performance of its duty. That duty is permeated with
reasonableness in all aspects of what is undertaken…and it is that duty which
furnishes the background for the general language of the statute. The
qualification of reasonableness is exhibited in one aspect of the matter of the
present complaint, the furnishing of facilities: a railway, for example, is not
bound to furnish cars at all times sufficient to meet all demands; [all they
must do is provide] a reasonable service. Saving any express or special
statutory obligation, that characteristic extends to the carrier's entire
activity. Under that scope of duty a carrier subject to the Act is placed.
…The duty being one of reasonableness how each situation is to be
met depends upon its total circumstances. The carrier must, in all respects,
take reasonable steps to maintain its public function; [its obligation] must be
determined by what the railway, in the light of its knowledge of the facts, as,
in other words, they reasonably appear to it, has effectively done or can
effectively do to meet and resolve the situation.
(Patchett, above
at pp. 274-275.) In developing acceptable and defensible jurisprudence
concerning subsection 113(1) of the Act, the Agency must work within the
standards set by Patchett.
[72]
Another context colouring
reasonableness review in this case is the nature of the Agency’s decision and
the nature of the Act. The Agency’s decision lies at the very bullseye of its regulatory
know-how and mandate, the very reason why Parliament has vested the Agency with
jurisdiction over the merits of cases like this and has left us with just a
reviewing role.
[73]
When the Agency interprets
subsection 113(1), it legitimately draws upon its regulatory experience, its
knowledge of the industry and its expertise in the transportation sector, guided
by the standards set by Patchett, above. Provided the Agency adopts a
defensible interpretation of subsection 113(1) and a defensible methodology or
test for determining reasonable conduct, and provided it applies these things in
a manner that is alert and responsive to the evidence before it, this Court must
refrain from second-guessing. The reasonableness of the parties’ conduct based
on the particular facts disclosed by the evidentiary record—the factually suffused
merits of the case—is a matter very much within the ken of the Agency, not us. See,
by way of illustration and analogy, National Corn Growers Assn. v. Canada
(Import Tribunal), [1990] 2 S.C.R. 1324 at pp. 1347-48, 74 D.L.R.
(4th) 449 and Council of Canadians with Disabilities v. VIA Rail Canada Inc.,
2007 SCC 15, [2007] 1 S.C.R. 650 at para. 104.
[74]
What did the Agency do in
this case? First, it applied a test—which it calls an “evaluation approach” (at para. 10).
[75]
Under this evaluation approach,
the Agency asked itself three questions (at para. 10):
1. Is the shipper’s request
for service reasonable?
2. Did
the railway company fulfil this request?
3. If
not, are there reasons which could justify the service failure?
(a) If
there is a reasonable justification, then the Agency will find that the railway
company has met its service obligations;
(b) If there is no reasonable justification, then the Agency
will find that there has been a breach of the railway company’s service
obligations and will look to the question of remedy.
[76]
CN submits that the Agency’s
“evaluation approach” is unreasonable: see CN’s memorandum of fact
and law at paras. 22 and 25. I disagree.
[77]
The Agency’s evaluation
approach is reasonable. It is a practical, useable test that captures both the
essence of and much of the detail in subsection 113(1) of the Act. Far from
imposing impossible burdens upon carriers like CN, as CN suggests, it suitably
reflects the Supreme Court’s holding in Patchett that the carrier’s duty “is permeated with reasonableness in all aspects of what is
undertaken.” Take, for example,
the centrality of reasonableness in the first question—whether the shipper’s
request for service is reasonable. In my view, CN’s real concern is not so much
with the evaluation approach, but rather with the manner in which the Agency
has applied it to the evidence in this case.
[78]
In following the evaluation
approach, the Agency must be careful. The evaluation approach is just a
practical and general test or methodology for analyzing and applying the
standards set out in subsection 113(1) of the Act. It is not the wording of
subsection 113(1) itself. The meaning of the wording always governs, not the
tests or methodologies the Agency has fashioned in its jurisprudence.
Therefore, if a party wishes to submit before the Agency in a particular case that
subsection 113(1) requires that the evaluation approach needs to be tweaked, modified,
followed or applied differently, the Agency must consider the submission in an
open-minded way.
[79]
The first question under the
evaluation approach—whether the shipper’s request for service is reasonable—reflects
the Agency’s view that only bona fide, reasonable requests by shippers
for traffic on the railway can meet the requirement in subsection 113(1) of the
Act that there be “traffic
offered for carriage on the railway.” For example, the railway company’s obligations under
subsection 113(1) are not triggered by groundless, outlandish requests.
[80]
In this case, the focus of
CN’s attack on the Agency’s decision is on its handling of this first question.
As is shown by its notice of appeal, it says that the Agency was too trusting
of Emerson’s say-so that it needed railcars. Put another way, the Agency
assumed that a request by Emerson satisfied the statutory requirement under
subsection 113(1) that there be “traffic offered for carriage.”
[81]
There are statements in the
Agency’s reasons that, if plucked out of context and read in isolation, could
support CN’s attack. For example, at one point in its reasons, the Agency
states, without elaboration, that “by placing orders according to CN’s policy and ordering system,
[Emerson] properly triggered CN’s level of service obligations” (at para. 27). This bald statement was said in
the context of the Agency’s finding that Emerson did not have to anticipate and
notify CN about the increase in its demand for transportation services that
would result from the bumper crop (at para. 26).
[82]
The real question behind
CN’s submission is what amount and sort of evidence a shipper like Emerson must
bring forward in order to trigger the carrier’s obligation to “receive, carry and deliver the traffic.” In other words, using the words of the
evaluation approach and the Patchett standard, what amount and sort of
evidence must a shipper bring forward to demonstrate that its request for
service was reasonable? This called for an interpretation of subsection 113(1)
in light of its text, its context within the legislation, and the purpose of
the legislation—the methodology set out in cases such as Re Rizzo &
Rizzo Shoes, above and Bell ExpressVu, above.
[83]
The Agency did not
explicitly follow the text-context-purpose approach. From the standpoint of
clarity, it might have been better had it done so. But the Agency’s
observations concerning subsection 113(1) and its analysis of how it applies to
this case reflect these very matters. It did demonstrate an appreciation of the
text, context and purpose of subsection 113(1) and it viewed these things—as it
must do—through its particular regulatory lens. In examining whether Emerson
had demonstrated that its request for service was reasonable, it brought to
bear its regulatory experience, its knowledge of the industry, its
understanding of how transactions between shippers and their customers come
about and are documented, and its overall expertise in the transportation
sector. These things are largely beyond the ken of the Court and, thus, are
matters on which the Agency is given a wide margin of appreciation.
[84]
A specific instance of the
Agency drawing upon these things is seen in its ruling concerning the
significance that can be drawn merely from the fact that a shipper has
requested railcars. It observed that in the context of this industry and its
normal practice, a request for railcars by itself is some evidence of the need
for carriage or, in the words of the Agency, a request will “generally” (i.e., not always) show that cars are needed for
carriage, subject to the consideration of contrary evidence such as “bills for demurrage charges” (at para. 28).
[85]
The Agency’s reasons on this
point grappled with the evidence before it, though not necessarily in a way CN
likes, finding that Emerson had adduced enough evidence to prove that its
request for service was reasonable.
[86]
Thus, I disagree with CN’s
submission that the Agency in effect simply accepted Emerson’s say-so about its
need for railcars. Nor does the bald statement in paragraph 27 of its reasons—“by placing orders according to CN’s policy
and ordering system, [Emerson] properly triggered CN’s level of service
obligations”—stand alone.
[87]
This is all seen in
paragraphs 28-36 of the Agency’s reasons:
[28] With respect to CN’s
allegation that [Emerson] should have to provide evidence of actual delivery
commitments and arrangements, the Agency considers that demonstrating a
reasonable request for service does not require a shipper to strictly document
each and every transaction it makes in respect of the acquisition/production
and the subsequent sale/use of the goods that shipper intends to ship. In the
context of the transportation of grain, demand for rail cars is inextricably linked
to demand for grain. Grain shippers order cars because they have grain to move
and customers to purchase it. In the absence of any evidence showing that a
grain shipper has ordered cars that it was not in a position to load and
release to the railway company for carriage, for instance bills for demurrage
charges, the Agency will generally conclude that if a commercial grain company
orders cars, it is to move grain to market.
[29] As
noted above, transportation is a derived demand and the purpose of section 113
of the [Act] needs to be understood in its broadest context….
[30] In
the context of the grain industry, considering the manner in which that
commodity is traded, it would be unreasonable for the Agency to require a
shipper to produce, for each tonne of grain that the shipper intended to ship,
the contractual arrangements showing that the grain was purchased and
subsequently re-sold. This would render the availability of remedies for a
level of service breach contingent on the shipper being in a contractual breach
with its business partners.
[31] Evidence
of contracts between the grain shipper and its grain suppliers and customers
may constitute convincing evidence that the shipper had grain to move in the
cars it ordered from the railway company. However, the fact that contracts have
not been produced in respect of each car ordered from the railway company will
not necessarily mean that the shipper failed to prove a reasonable request. Other
elements of evidence may demonstrate to the satisfaction of the Agency that the
shipper had grain to move in the cars it ordered from the railway company.
[32] In
this case, [Emerson] filed letters from two of its customers complaining about
delayed deliveries. [Emerson] also provided copies of its forward sales
contracts with producers.
[33] Further
evidence on the file indicates that at the system level there was a bumper crop
in 2013 and that more grain had to be moved than cars supplied. This is
consistent with CN’s need to ration cars in the first place; the demand for
cars exceeded the supply of cars.
[34] The
agency is of the opinion that this shows that the supply of grain existed and
that there was a demand for [Emerson’s] grain to be delivered. Therefore,
[Emerson] had a legitimate demand for grain transportation services.
[35] CN
did not provide any evidence that rebutted [Emerson’s] evidence. While CN alleges
that [Emerson] engaged in “tactical ordering,” CN did not provide any evidence
to demonstrate that [Emerson] ordered more cars than it actually needed to move
the oats available to it for sale to its customers.
[36] The Agency notes that in more than one week during the
complaint period, [Emerson] ordered more cars than the capacity of its siding.
CN suggests that this indicates that [Emerson] ordered more cars than it
required. The Agency is of the opinion that the fact that [Emerson] ordered
more cars in a week than can be delivered in a single spot only proves that
[Emerson] placed orders that would require CN to serve [Emerson] more than once
in the same crop week; it does not prove that [Emerson] ordered more cars than
it required given the supply and the demand conditions in the market.
[88]
Based on the record before
it, including the bumper crop of 2013-2014 and the availability of grain, the
Agency concluded (at paras. 38-39) that “on the balance of probabilities” Emerson “had
a legitimate demand for service” or, in other words, it “would have had grain to ship had it received the cars it ordered.” Under subsection 113(1) this triggered CN’s
obligations. Again, based on the record before it, the Agency concluded that CN
did not fulfil its obligations (at paras. 40-46). Following the reasoning in
its October 3, 2014 Dreyfus decision—a decision mindful that, as the
Supreme Court said in Patchett, CN’s duty under subsection 113(1) of the
Act is “permeated with
reasonableness in all aspects of what is undertaken” and a decision that this Court upheld as reasonable in Dreyfus,
above—the Agency found that CN breached its level of service obligations to Emerson
during Emerson’s complaint period (at paras. 47-75).
[89]
I turn now to CN’s
submission that the Agency reached an unreasonable result by, as it put it in
the second ground of its notice of appeal, “treating unfulfilled car order requests in a given week as
constituting cumulative ‘traffic offered for carriage’ under [subsection 113(1)
of] the Act in subsequent weeks, months and years.”
[90]
At paragraphs 65-68 of its reasons,
the Agency found that CN was justified in some delay in delivering cars to
Emerson during the complaint period but that CN was not completely relieved of
its service obligations concerning the traffic Emerson had offered for carriage.
After all, subsection 113(1) of the Act requires a carrier to receive, carry
and deliver “all traffic” offered for carriage “without delay.”
[91]
The Agency studied CN’s
service over the entire complaint period and found that the proportion of cars
waybilled to cars ordered decreased over time. Although CN could justify some
delay in delivering cars, it could not justify the indefinite delay in service
for what turned out to be 40 percent of Emerson’s traffic. In support of this
finding, the Agency adopted a particular view of CN’s obligations under the Act
and then applied that understanding of the Act to the facts before it (at paras.
65-66 and 68):
[65] While the [the fact that a]
service request of a given shipper is unexpected or differs from historical
patterns may justify some delay in delivering cars ordered, they must
nonetheless be delivered and moved by the railway company. The term “without
delay” in paragraph 113(1)(c) of the [Canada Transportation Act]
needs to be interpreted in the context of the specific circumstances of each
case. When faced with an unexpected demand for service, especially if the railway
company did not have sufficient lead time to react, paragraph 113(1)(c)
of the [Canada Transportation Act] will be interpreted as providing a
railway company a reasonable amount of time to fulfill the service request in
question.
[66] However,
this does not mean that a railway company can invoke a lack of lead time
indefinitely and in all cases. Railway companies must, under the [Canada
Transportation Act], ensure that they allocate sufficient resources on an
ongoing basis, to furnish adequate and suitable accommodation for the carriage,
unloading and delivering of the traffic offered for carriage on the railway.
The lack of lead time to plan does not nullify a railway company’s obligations
to receive, carry and deliver, without delay, the traffic ordered.
…
[68] The
Agency finds that the factors led to some delay in delivering cars to [Emerson]
during the complaint period; however, CN did not establish a justification for
the overall poor level of service it provided to [Emerson] over the complaint
period. Specifically…[Emerson] experienced a pattern of poor service such that
CN’s service to EMI deteriorated from the beginning of the complaint period to
the point that for four weeks, beginning in Week 36, [Emerson] received only 49
percent of all the cars it had requested up to that point in time. By the end
of the complaint period, CN had not delivered 40 percent of the total number of
cars requested by [Emerson] during the complaint period.
From this understanding
of the Act and these facts, the Agency concluded that “CN breached its level of service
obligations to [Emerson] over the complaint period” (at para. 70).
[92]
The Agency’s approach to
subsection 113(1) was to look at the situation globally, alive to all the
circumstances of the case, and to assess overall whether CN had fulfilled its
obligations under the Act over a period of time, bearing in mind that, in the
words of Patchett, those obligations are “permeated with reasonableness.” This approach is supportable on the wording of subsection
113(1) as understood under the Patchett standard. The wording of
subsection 113(1) does not require the sort of week-by-week examination that CN
has urged upon us. A global examination of whether the carrier has fulfilled
its obligations may have much to commend it where, as here, cars are being
ordered and delivered every week and shortfalls are periodically occurring.
[93]
Overall, in this case, the
Agency reached factually suffused conclusions founded upon the evidentiary
record and readings of subsection 113(1) of the Act consistent with an
acceptable interpretation of the provision and the Supreme Court’s decision in Patchett.
CN has not demonstrated that the Agency’s decision suffers from the sort of indefensible
flaw or blatant mischaracterization that struck at the foundation of its
decision in Viterra, above. For the foregoing reasons, the Agency’s
decision in this case is acceptable and defensible on the facts and the law
and, thus, reasonable.
C.
Proposed disposition
[94]
I would dismiss the appeal
with costs.
“David Stratas”
“I agree
Johanne
Gauthier J.A.”
“I agree
Mary
J.L. Gleason J.A.”
Email this Content