A-193-90
Canadian Pacific Limited (Appellant)
v.
National Transportation Agency and CSP Foods
Ltd. (Respondents)
INDEXED AS. CANADIAN PACIFIC LTD. V. CANADA (NATIONAL
TRANSPORTATION AGENCY) (CA.)
Court of Appeal, Isaac C.J., Stone and Linden B.A.
—Winnipeg, May 11 and 15, 1992.
Transportation — Appeal from National Transportation
Agency's decision ordering Canadian Pacific to provide CSP
Foods Ltd. with rail freight rates on canola oil and meal
between points within Canada although ultimate destination
U.S.A. — Appellant requested to issue tariff under National
Transportation Act, 1987, s. 115 but refusing to do so — Ques
tion of law or jurisdiction — Agency not exceeding jurisdiction
in ordering appellant to issue individual rates for local traffic
to Winnipeg — New legislation fostering more competition
within railway industry and transportation system generally
Rates no longer established collectively and publicly in all
cases — Act, s. 115(1) not applying only where both origin and
destination of traffic are on railway company's line — Ship
pers having choice of method of fixing rates — Market forces
now primary influence on rates — Order not denying Cana-
dian Pacific right to negotiate joint rates with connecting car
riers.
Railways — Appeal on question of law or jurisdiction under
National Transportation Act, 1987, s. 115(1) — Canadian
Pacific refusing to issue rail freight rates on canola oil and
meal as requested by respondent, CSP Foods Ltd. — S. / l5(1)
construed in context of legislative policy — Agency not exceed
ing jurisdiction in ordering appellant to issue individual rates
for local traffic to Winnipeg — Canadian Pacific seeking to
preserve historic railway industry business methods — New
legislation fostering more competition to render railway system
more efficient by providing transportation at lowest possible
cost — Method of fixing rates for railways moving goods now
determined by competition — Language and policy of new Act
seeking to foster freedom of contract for both shippers and
railways.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
National Transportation Act, 1987, R.S.C., 1985 (3rd
Supp.), c. 28, ss. 3(1), 65(1), 115(1), 121 to 143, 144, 145.
CASES JUDICIALLY CONSIDERED
FOLLOWED:
Northwestern Utilities Ltd. et al. v. City of Edmonton,
[1979] 1 S.C.R. 684; (1978), 12 A.R. 449; 89 D.L.R. (3d)
161; 7 Alta. L.R. (2d) 370; 23 N.R. 565.
APPLIED:
Canadian Pacific Ltd. v. National Transportation Agency
(1989), 105 N.R. 35 (F.C.A.).
AUTHORS CITED
Report of the Royal Commission on Transportation,
Ottawa: King's Printer, 1951. (Chairman: W.F.A.
Turgeon).
APPEAL from a decision of the National Trans
portation Agency ordering appellant to provide CSP
Foods Ltd. with rail freight rates on canola oil and
meal. Appeal dismissed.
COUNSEL:
A. Ludkiewicz for appellant.
Alix Jenkins for respondent, National Transpor
tation Agency.
Marshall E. Rothstein, Q. C., and Marc M. Mon-
nin for respondent, CSP Foods Ltd.
SOLICITORS:
Canadian Pacific Legal Services, Winnipeg, for
appellant.
Deputy Attorney General of Canada for respon
dent, National Transportation Agency.
Aikins, MacAulay, Winnipeg, for respondent,
CSP Foods Ltd.
The following are the reasons for judgment ren
dered in English by
LINDEN J.A.: This is an appeal by Canadian Pacific
Limited from a decision of the National Transporta
tion Agency dated November 24, 1989, which
ordered it to provide CSP Foods Ltd. with rail freight
rates on canola oil and meal being moved in rolling
stock supplied by CSP Foods from Altona and Har-
rowby, Manitoba and Nipawin, Saskatchewan to
Winnipeg, the ultimate destination being in the
United States. This appeal, which was launched with
the leave of this Court pursuant to subsection 65(1) of
the National Transportation Act, 1987, R.S.C., 1985
(3rd Supp.), c. 28 is limited to a question of law or of
jurisdiction.
The National Transportation Agency was repre
sented on this appeal by counsel, Alix Jenkins, as is
its right pursuant to subsection 65(4) of the Act.
Counsel was limited by the Court in her presentation,
however, to matters of jurisdiction as is required by
the decision of the Supreme Court of Canada in
Northwestern Utilities Ltd. et al. v. City of Edmonton,
[1979] 1 S.C.R. 684. In that case Mr. Justice Estey
explained there was a limitation on the role of tribu
nals, whose decisions are "at issue before the Court,
even where the right to appear is given by statute, to
an explanatory role with reference to the record
before the Board and the making of representations
relating to jurisdiction." (See page 709.) This Court
has always accepted this guideline laid down in
Northwestern Utilities and it has followed it in this
case, restricting the role of counsel for the Agency in
this appeal accordingly. In any event, counsel for the
appellant in oral argument has characterized the basis
of this appeal, as one involving the jurisdiction of the
Agency pursuant to section 115 of the National
Transportation Act, 1987.
The impugned decision of the Agency was made
pursuant to subsection 115(1) of the Act which reads:
115. (1) A railway company shall, on the request of a ship
per, and may, in any other case, issue a tariff in respect of the
transportation of traffic on any railway operated by the com
pany.
The respondent CSP Foods had requested Canadian
Pacific Limited to issue a tariff pursuant to this sec
tion hut it refused to do so. Consequently, CSP Foods
applied to the Agency, by letter dated October 5,
1989 for an order requiring Canadian Pacific Limited
to do so. This letter reads, in part:
Pursuant to subsections 1150) and 35(4) of the National
Transportation Act, 1987, we hereby request that CP Limited
(CP Rail) be ordered to provide CSP with rates on canola oil
and meal from Altona, Harrowby and Nipawin to Winnipeg. It
is CSP's intention to utilize the requested rates in conjunction
with rates and movements over other railway companies' lines
for furtherance to destinations in the United States.
On November 24, 1989, the Agency issued its
decision 596-R-1989, the subject of this appeal,
which states, in part:
The Agency ... finds that section 115 of the NTA, 1987,
requires the railway company to issue the tariff requested by
the shipper in respect of the transportation of the traffic on any
railway operated by that railway company. There is no statu
tory requirement that a shipper must request joint rates or stat
utory limitations precluding a shipper from requesting separate
rates.
The appellant's counsel, Mr. Ludkiewicz, contends
that this decision was beyond the jurisdiction of the
Agency. He argues that section 115 applies only
where both the origin and destination of the traffic
are on the line of the railway company, that is, it gov
erns only "local traffic". He suggests that section 115
was not meant to alter the pre-existing system of rates
so drastically, being primarily aimed at reducing the
paperwork burden borne by railways. They would no
longer be required to issue myriads of rates for local
trips, unless requested to do so by a shipper. Cana-
dian Pacific argues that, since CSP Foods' traffic
requires two or more railway companies to ship into
the United States, it is `joint through traffic", so that
it is required only to quote joint through rates, which
it did. Canadian Pacific insists that it is not obligated
to issue a single-line tariff in respect of through traf
fic which is to move over a continuous route, por
tions of which are operated by two or more railway
companies. Relying on the context of the Act, and
placing emphasis on the headings used, Canadian
Pacific urges that only sections 129 to 133 cover the
publication of joint tariffs for joint through traffic, on
which the railway companies involved must agree,
and that section 115 has no application to such rates.
To force the railway to issue rates for individual seg
ments of a continuous journey, it suggests, would
constitute an interference with the railways' right to
freedom of contact, something that Parliament did
not intend.
Canadian Pacific further argues that an alternative
method of achieving "long haul" rates from carriers
other than the original carrier is the "competitive line
rate", which is expressly provided for in sections 134
to 143. This process requires the agreement of all the
railways on the route and, hence, is more time con
suming and controversial. (In fact, CSP Foods even
tually applied for and received competitive line rates
for canola oil, but not for meal.)
Counsel for the appellant conceded that CSP
Foods was entitled to move its traffic under a series
of independent rates as local traffic to a junction
point in Winnipeg and then reship it to the next junc
tion point as local traffic as well, but, he suggests that
access to the interchange where traffic is inter-
switched is denied to the shipper, if it does not ship
under the joint through rate. The interchange cannot
be a destination to which a shipper may direct goods,
he argues, though it may order that goods be deliv
ered to a private siding or team track in Winnipeg or
elsewhere, from where they may be transferred to
another carrier.
I am not persuaded by the above arguments that
the Agency exceeded its jurisdiction in ordering
Canadian Pacific to issue individual rates for local
traffic to Winnipeg as part of a continuous journey
involving other railways leading eventually to the
United States. The contention of Canadian Pacific
seeks to preserve the historic methods of doing busi
ness in the railway industry which prevailed prior to
the enactment of the National Transportation Act,
1987. This new legislation is aimed at changing the
old ways by fostering more competition within the
railway industry and within the transportation system
generally. We prefer the analysis of section 115
offered by Mr. Rothstein, who represented CSP
Foods. Basing himself squarely on the language of
section 115 and on the policy of the legislation
expressed in the Act, Mr. Rothstein submitted that
Canadian Pacific is obligated to issue a tariff contain
ing a rate for its portion of the movement of through
traffic, if it is requested to do so by the shipper.
The National Transportation Act, 1987, declares in
section 3:
3. (I) It is hereby declared that a safe, economic, efficient
and adequate network of viable and effective transportation
services making the best use of all available modes of trans
portation at the lowest total cost is essential to serve the trans
portation needs of shippers and travellers and to maintain the
economic well-being and growth of Canada and its regions and
that those objectives are most likely to be achieved when all
carriers are able to compete, both within and among the vari
ous modes of transportation, under conditions ensuring that,
having due regard to national policy and to legal and constitu
tional requirements,
b) competition and market forces are, whenever possible, the
prime agents in providing viable and effective transportation
services,
c) economic regulation of carriers and modes of transporta
tion occurs only in respect of those services and regions
where regulation is necessary to serve the transportation
needs of shippers and travellers and such regulation will not
unfairly limit the ability of any carrier or mode of transpor
tation to compete freely with any other carrier or mode of
transportation,
and this Act is enacted in accordance with and for the attain
ment of those objectives to the extent that they fall within the
purview of subject-matters under the legislative authority of
Parliament relating to transportation.
It should he noted that there are novel features in
this policy which, inter alia, promote intramodal rail
way competition, underscore that competition and
market forces are the prime agents of an effective
transportation system and protect shippers without
limiting the opportunity of carriers to compete.
Before the enactment of this Act in 1987, regulation
of railway rates was more rigid, more public and
rates were collectively set. With the passage of the
new Act, rates are no longer established collectively
and publicly in all cases; they may be negotiated
individually and confidentially. Rebates and specific
rates are allowed, whereas they were not before. The
system has been rendered more limber.
In the context of this specific legislative policy,
according to which the statute is to he construed, the
language of subsection 115(1) cannot be restricted to
offering rates only for local traffic, as argued by
Canadian Pacific. The tariff it requires is one "in
respect of the transportation of traffic on any railway
operated by the company." Nothing in the section,
which appears under the heading "Tariffs", suggests
that the rates to be given are only for traffic that
originates and terminates on the line of an individual
railway. No words dictate that subsection 115(1) can
not apply where a shipper's cars are destined to a
place beyond the end of the originating carrier's rail
way line. Nor does it specify that the obligation only
covers local traffic and not through traffic. If Parlia
ment had intended to restrict the scope of subsection
115(1), as argued by Canadian Pacific, it could easily
have done so.
Parliament did not enact that, whenever more than
one railway was involved in moving goods, sections
129 to 133 had to be utilized and not subsection
115(1). The language of subsection 129(1) makes it
clear that its purport is quite different:
129. (1) Where traffic is to move over any continuous route
in Canada, portions of which are operated by two or more rail
way companies, those companies shall, at the request of the
shipper intending to move the traffic,
(a) agree on a joint tariff for the continuous route and on the
apportionment of the rate set out in the joint tariff; or
(b) enter into a confidential contract or agreement for an
agreed charge for the continuous route.
The wording of this section, therefore, which appears
in the statute under the heading "Joint Rates", dem
onstrates that it is triggered by the "request of the
shipper intending to move the traffic". This joint rate
approach for a continuous route, consequently, is not
something that can be imposed on shippers by the
railways; rather it is established upon the request of
shippers who wish to use it. The effect of the appel
lant's argument would be to require a shipper to
request a joint tariff under subsection 129(1) when its
language does not do so. Hence, sections 129 to 133
create obligations that are in addition to, not substi
tutes for, the obligations in subsection 115(1).
In a similar vein, the competitive line rate method
may also be utilized to arrive at a rate where there is
a "captive shipper" who must utilize the lines of
more than one railroad. Under the heading "Competi-
live Line Rates", sections 134 to 143 set out the
scheme to be followed. The key subsection is 134(2)
which reads:
134....
(2) Subject to this section and section 135, where a shipper
has access to the lines of only one railway company at the
point of origin or of destination of the movement of the traffic
of the shipper and a continuous route between those points is
operated by two or more companies, the local carrier serving
the shipper at the point of origin or destination, as the case
may be, shall, on the request of the shipper, establish a compe
titive line rate applicable to the movement of the traffic to or
from the point of origin or destination, whichever is served
exclusively by the local carrier, to or from the nearest
interchange with a connecting carrier.
It will be noted that this system is also triggered by
"the request of the shipper". It furnishes another way
of setting rates in different circumstances.
The choice of the method of fixing rates, therefore,
belongs to the shippers. They may choose the tech
nique outlined in subsection 115(1), the mechanism
set out in sections 129 to 133, (Joint Rates), or the
method described in sections 134 to 143 (Competi-
tive Line Rates), whichever appears to them to be in
their best economic interest. (There is also available,
of course, in appropriate circumstances, the new con
fidential contract basis, as explained in section 120
and the agreed charges system mentioned in sections
121 to 128.) Hence, under the new scheme, market
forces are the primary influence in the establishment
of rates whereas under the old system rates were
tightly regulated and sometimes even established by
the railways themselves. The aim of all this is to fos
ter competition so as to render the railway system
more efficient by providing transportation at the low
est possible cost, consistent with the other policy
goals of the act.
No longer does CSP Foods have to rely on Cana-
dian Pacific to negotiate with other carriers in order
to provide it with a joint through rate; it may negoti
ate with those other railways on its own behalf, if it is
advantageous for it to do so. Section 115 provides
CSP Foods with a competitive method of moving
traffic, which prevents Canadian Pacific from impos
ing upon it joint through rates which it has negotiated
with other carriers. Canadian Pacific may still com-
pete and quote joint through rates, but it cannot pre
vent shippers from seeking to achieve better deals for
themselves on their own. As was explained by Mr.
Justice MacGuigan J.A. in Canadian Pacific Ltd. v.
National Transportation Agency (1989), 105 N.R. 35
(F.C.A.), at page 43:
As I read the Act, Parliament has already made a choice
between the perceived danger of railway monopoly and that of
unbridled competition, in favour of the latter.
In other words, competition must now determine the
method of fixing the rates for railways moving
goods, not the techniques used in bygone days.
Whereas, in the past, joint rates may have been effi
cient, leading to less expensive transportation, this is
not necessarily the situation today.
Support for this view may be derived from the
treatment of international rail traffic. Clearly, Cana-
dian legislation cannot require American railways to
agree on a joint through rate. Thus, Canadian rail
ways can offer joint rates only where American rail
ways agree to them (see section 131; Report of the
Royal Commission on Transportation (1951), at page
102.) This would lead to inconsistent treatment of
domestic and international traffic if they could com
pel Canadian railways but not American ones to
agree.
Further evidence that this interpretation is the cor
rect one may he found in sections 144 and 145, which
outline the obligations of railways to provide service.
Subsection 144(1) requires railways to furnish
accommodation for receiving and carrying traffic at
points of origin on its lines and at junctions of its
railways with other railway companies. Subsection
145(1) mandates that railways receive, carry, and
deliver traffic on and from its railways and transfer
traffic between its railways and other railways. Under
subsection 145(3), railway companies whose lines
form part of continuous lines with other railway com
panies must deliver and receive traffic without delay
so as not to obstruct the public from using those lines
as continuous lines of communication. Consequently,
contrary to what was argued by the appellant to the
effect that shippers had no right to insist on service at
interchanges unless they were moving their goods at
a joint through rate, the very opposite is the case.
To contend, as Canadian Pacific does, that the
order of the Agency denies it the right to negotiate
joint rates with connecting carriers is without founda
tion. There is no interference with its freedom to con
tract with whomever it wishes. Rather, to deny CSP
Foods access to other carriers via subsection 115(1)
would be to restrict its right to negotiate contracts on
its own behalf. The language and policy of the
National Transportation Act, 1987 seeks to foster
freedom of contract for both shippers and railways,
not just for railways.
The appellant is confusing the purpose of the new
National Transportation Act, 1987 with that of the
previous legislative regime. The new Act is not con
cerned only with the rights of railways, but rather
with creating a new balance between the rights of
shippers and those of the railways. Its goal is an effi
cient, competitive, reasonably priced transportation
system, not the preservation of the railway industry's
historic way of doing business.
There being no error of jurisdiction or law demon
strated, this appeal will, therefore, be dismissed with
costs.
ISAAC C.J.: I agree.
STONE IA.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.