T-4481-75
Robert W. Blanchette, Richard C. Bond and John
H. McArthur all in their capacity as Trustees of
the Property of Penn Central Transportation
Company; Norfolk and Western Railway Com
pany; Thomas F. Patton and Ralph S. Tyler, Jr.
both in their capacity as Trustees of the Property
of Erie Lackawanna Railway Company; Illinois
Central Gulf Railroad Company and Missouri
Pacific Railroad Company (Plaintiffs)
v.
Canadian National Railway Company; Grand
Trunk Western Railroad Company; Central Ver-
mont Railway Inc. and Canadian Pacific Limited
(Defendants)
Trial Division, Marceau J.—Montreal, November
8; Ottawa, December 10, 1976.
Jurisdiction — Contract — Motion to strike statement of
claim for want of jurisdiction — Application of s. 23 of
Federal Court Act — Whether Quebec North Shore Paper case
distinguishable — Effect of binding provisions of Railway Act
— Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 23 —
Railway Act, R.S.C. 1970, c. R-2, ss. 94(1) and 265.
Plaintiffs are suing for money owed under a contract with the
defendants involving works and undertakings extending beyond
the limits of a province, which relief, they claim, flows from the
provisions of the Railway Act.
Held, the application to strike is granted. Although the
contract concerns works and undertakings extending beyond
the limits of a province, the provisions of the Railway Act cited
do not create a cause of action. Although sections 94(1) and
265 of the Railway Act prescribe the legal relationships be
tween the parties to this action, it cannot be inferred from the
judgment in the Quebec North Shore Paper case that the case
at bar can be excluded from the principle stated therein.
Canadian Pacific Ltd. v. Quebec North Shore Paper Co.
(1976) 9 N.R. 471, applied.
MOTION to strike statement of claim.
COUNSEL:
D. H. Tingley for plaintiffs.
P. Sevigny-McConomy for Canadian Nation
al Railway Company.
M. S. Bistrisky for Canadian Pacific Limited.
SOLICITORS:
Lafleur & Brown, Montreal, for plaintiffs.
Canadian National Railway Company, Law
Department, Montreal, for Canadian Nation
al Railway Company.
Canadian Pacific Limited, Law Department,
Montreal, for Canadian Pacific Limited.
The following are the reasons for order ren
dered in English by
MARCEAU J.: This is a motion on behalf of one
of the defendants, Canadian Pacific Limited, for
an order that the statement of claim be struck by
reason of the absence of jurisdiction of this Court,
ratione materiae to entertain the claim made
therein against it.
The plaintiffs are acting in their capacity as
trustees of the property of Penn Central Transpor
tation Company. Their claims arise out of the
interchange of traffic between them and the
defendants while they were all engaged as common
carriers in the railway traffic required by the
Canada-United States Auto Trade and in the rail
way traffic known as Trailer on flatcar—Contain-
er on flatcar (TOFC-COFT).
The statement of claim clearly describes the
nature of the relief sought. Subparagraphs (b) to
(e) of the prayer for relief indicate the sums
claimed and all this is predicated in subparagraph
(a):
(a) It be declared that the Defendants are indebted to the
Plaintiffs for the difference between the Trailer Train Rates
in force prior to January 1, 1971 and the Trailer Train Rates
from time to time in force since January 1, 1971.
The statement of claim, however, does not state
so clearly the basis for such relief.
By paragraphs 23 and 26, it is explained that
the railway equipment (bi -level and tri -level rack
cars and flatbed cars) the plaintiffs, for their part,
contributed and employed in the Auto Trade and
TOFC-COFT traffic was owned and furnished by
Trailer Train Company, an American company
having its principal place of business in Chicago,
which is described with proper indication as to how
its rates come into being.
Then paragraphs 27 and 28 read as follows:
27. Plaintiffs, as participating members in the use of railroad
equipment furnished by Trailer Train Company, are obligated
by contract to the Trailer Train Company for car hire charges
according to published rates (the "Trailer Train Rates") and,
further, Plaintiffs are primarily liable for all charges accruing
on Trailer Train Company equipment while it is on Plaintiffs'
lines and while it remains on the lines of non-participating
carriers, such as Defendants, with whom such equipment has
been interchanged.
28. Defendants paid Trailer Train in behalf of Plaintiffs the
Trailer Train Rates for the use of equipment furnished by
Plaintiffs from the inception of the Auto Trade in 1966 through
December, 1970.
In paragraphs 29 to 33, it is stated in substance
that in January 1971, and from time to time
thereafter, the Trailer Train Company advised the
plaintiffs and the defendants of changes of the
rates; that the latter, however, always persisted in
refusing to pay the new rates and have continued
to make settlement with Trailer Train on behalf of
the plaintiffs on the basis of those in effect prior to
the first increase.
Then comes paragraph 34 which reads as
follows:
34. Plaintiffs, as members of Trailer Train as alleged in para
graph 27 above, have been and continue to be obliged to
compensate Trailer Train Company for the difference between
the Trailer Train Rates in effect prior to January, 1971 and the
various rates subsequently from time to time in effect.
Of the remaining paragraphs, two ought to be
reproduced:
42. Notwithstanding the foregoing, Defendants continued to
receive and to use or re-use equipment contributed by Plaintiffs
and Defendants even continued to request Plaintiffs to contrib
ute equipment for use in the Auto Trade.
43. Defendants have used and derived an unjust benefit from
the use of such equipment so provided by Plaintiffs to the
prejudice of Plaintiffs since January 1, 1971.
Counsel for the defendant-applicant takes for
granted that it is upon the contract referred to in
paragraph 27 between the plaintiffs and Trailer
Train Company, by virtue of which the former are
obliged to pay certain rates for the use of the latter
company's equipment, that the plaintiffs seek
redress. I do not think that the reading of the
statement of claim gives such a clear and simple
view of the real basis of the action. But I do not
think either that, at this stage, to deal with the
question of jurisdiction, in the light of the principle
laid down by the recent judgment of the Supreme
Court of Canada in the case of Canadian Pacific
Ltd. v. Quebec North Shore Paper Company', it is
necessary to give a precise and positive definition
of the legal grounds on which the action, as it has
been formally launched, can be considered as
being founded.
The jurisdiction of this Court to entertain the
present action must, of course, be found in section
23 of the Federal Court Act, which reads as
follows:
23. The Trial Division has concurrent original jurisdiction as
well between subject and subject as otherwise, in all cases in
which a claim for relief is made or a remedy is sought under an
Act of the Parliament of Canada or otherwise in relation to any
matter coming within any following class of subjects, namely
bills of exchange and promissory notes where the Crown is a
party to the proceedings, aeronautics, and works and undertak
ings connecting a province with any other province or extending
beyond the limits of a province, except to the extent that
jurisdiction has been otherwise specially assigned.
It is clear that the plaintiffs' claims for relief in
this action are in relation to "works and undertak
ings connecting a province with any other province
or extending beyond the limits of a province". But
the question is whether the "remedy is sought
under an Act of the Parliament of Canada or
otherwise".
Until the judgment of the Supreme Court in the
Quebec North Shore case, section 23 was generally
read in the alternative, that is, jurisdiction was
found if the plaintiff could show either that his
claim for relief was made under an Act of the
Parliament of Canada, "or otherwise in relation to
any matter coming within any following class of
subjects ...". But we now know that jurisdiction
under section 23 will only lie if a claim for relief
satisfies the two conditions conjointly; and more
over the interpretation to be given to the words
"under an Act of the Parliament of Canada or
otherwise" is to be very strict: the action has to be
based on a specific federal legislation granting the
relief sought.
The following quotations of the Chief Justice
speaking for the Court in that judgment show very
' (1976) 9 N.R. 471.
clearly that the previous generally accepted inter
pretation was therein specifically rejected and that
the sense to be given to the words "under an Act of
the Parliament of Canada or otherwise" is as strict
as I have just stated:
At page 475:
In the present case there is no Act of the Parliament of
Canada under which the relief sought in the action is claimed.
The question of jurisdiction of the Federal Court hinges there
fore on the words in s. 23 "or otherwise", and this apart from
the additional and sequential question whether the claim is in
relation to any matter coming within any of the classes of
subjects specified in the latter part of s. 23. The contention on
the part of the respondents, which was in effect upheld in the
Federal Courts, was that judicial jurisdiction under s. 101 is
co-extensive with legislative jurisdiction under s. 91 and, there
fore, s. 23 must be construed as giving the Federal Court
jurisdiction in respect of the matters specified in the latter part
of the section, even in the absence of existing legislation, if
Parliament has authority to legislate in relation to them.
At page 480:
Both Anglin C.J.C. in the first Consolidated Distilleries case
and Duff J. in the second case spoke of "laws of Canada" in s.
101 as referring respectively to "laws enacted by Parliament"
and to "enforcement of an obligation contracted pursuant to a
statute of ... Parliament". So too, the Privy Council in the
second Consolidated Distilleries case spoke of the power given
by s. 101 to confer jurisdiction on the Exchequer Court in
actions on bonds executed in favour of the Crown "in pursu
ance of a revenue law enacted by the Parliament of Canada".
Again, the Judicial Committee in dealing with the case before
it indicated that it might be difficult to bring it within s. 30(a)
of the Exchequer Court Act because although the actions were
"cases related to the revenue" it might perhaps be said that no
law of Canada is sought to be enforced in them. This is
consistent with the observations of both Anglin C.J.C. and of
Duff J., already quoted.
Stress is laid, however, on what the Privy Council said in
discussing the application of s. 30(d) of the Exchequer Court
Act, the provision giving jurisdiction to the Exchequer Court in
civil actions where the Crown is plaintiff or petitioner. I do not
take its statement that "sub-s. (d) must be confined to actions
... in relation to some subject matter legislation in regard to
which is within the legislative competence of the Dominion" as
doing anything more than expressing a limitation on the range
of matters in respect of which the Crown in right of Canada
may, as plaintiff, bring persons into the Exchequer Court as
defendants. It would still be necessary for the Crown to found
its action on some law that would be federal law under the
limitation. It should be recalled that the law respecting the
Crown came into Canada as part of the public or constitutional
law of Great Britain, and there can be no pretence that that law
is provincial law. In so far as there is a common law associated
with the Crown's position as a litigant it is federal law in
relation to the Crown in right of Canada, just as it is provincial
law in relation to the Crown in right of a Province, and is
subject to modification in each case by the competent Parlia
ment or Legislature. Crown law does not enter into the present
case.
Addy J. did not deal with the effect of s. 101 of the British
North America Act upon s. 23 of the Federal Court Act, and
appeared to assume that he had jurisdiction if the enterprise
contemplated by the agreement as a whole fell within federal
legislative power. As I have already indicated, the question
upon which he proceeded is not reached unless the claim for
relief is found to be one made "under an Act of the Parliament
of Canada or otherwise". In the Federal Court of Appeal, the
majority judgment of Le Damn J., which he delivered for
himself and Ryan J. and which was concurred in with addition
al reasons by Thurlow J. (as he then was), poses the issue in
terms which also overlook the words just quoted.
At page 483:
Jurisdiction under s. 23 follows if the claim for relief is under
existing federal law, it does not precede the determination of
that question.
It is also well to note that s. 101 does not speak of the
establishment of Courts in respect of matters within federal
legislative competence but of Courts "for the better administra
tion of the laws of Canada". The word "administration" is as
telling as the plural words "laws", and they carry, in my
opinion, the requirement that there be applicable and existing
federal law, whether under statute or regulation or common
law, as in the case of the Crown, upon which the jurisdiction of
the Federal Court can be exercised. Section 23 requires that the
claim for relief be one sought under such law. This requirement
has not been met in the present case....
Applied to the present case, the test is conclu
sive. Be it in contract or otherwise, it is clear to me
that the claim for relief in this action is not one
sought under specific federal legislation. The
provisions of the Railway Act (R.S.C. 1970, c. R-2
as amended) cited by counsel for the plaintiffs in
an attempt to demonstrate that the claim for relief
could be considered as flowing from this Act, do
not in my view create the specific cause of action
required.
I thought for a while that a distinction could be
made between the Quebec North Shore case and
the one at bar. Indeed, in the Quebec North Shore
case, the contract on which the action was based
had nothing to do with federal legislation whereas
here the legal relationships between the parties
were not only foreseen but, in a way, imposed on
them by the provisions of the Railway Act. See,
among others, sections 94(1) and 265 of that Act:
94. (1) The directors of the company may, at any time,
make and enter into any agreement or arrangement, not incon
sistent with this or the Special Act, with any other transporta-
tion company operating as a common carrier either in Canada
or elsewhere, for the interchange of traffic and for the division
and apportionment of tolls in respect of such traffic.
265. (1) All railway companies shall, according to their
respective powers, afford to all persons and companies all
reasonable and proper facilities for the receiving, forwarding
and delivering of traffic upon and from their several railways,
for the interchange of traffic between their respective railways,
and for the return of rolling stock.
(2) The facilities so to be afforded shall include the due and
reasonable receiving, forwarding and delivering by the com
pany, at the request of any other company, of through traffic,
and in the case of goods shipped by carload, of the car with the
goods shipped therein, to and from the railway of such other
company, at a through rate; and also the due and reasonable
receiving, forwarding and delivering by the company, at the
request of any person interested in through traffic, of such
traffic at through rates.
(3) Every railway company that has or works a railway
forming part of a continuous line of railway with or that
intersects any other railway, or that has any terminus, station
or wharf near to any terminus, station or wharf of any other
railway, shall afford all due and reasonable facilities for deliv
ering to such other railway, or for receiving from and forward
ing by its railway, all the traffic arriving by such other railway
without any unreasonable delay, and so that no obstruction is
offered to the public desirous of using such railways as a
continuous line of communication, and so that all reasonable
accommodation, by means of the railways of the several compa
nies, is, at all times, afforded to the public in that behalf.
I finally came to the conclusion, however, that the
distinction between the two cases, although real,
could not be brought in, in the absence of any
passage in the Chief Justice's notes or any logical
inference that can be drawn from his reasoning, to
which such a distinction could be linked.
Since I cannot give but a negative reply to the
question as to whether the claim for relief in the
present action is one sought under specific federal
legislation, I must conclude that this Court has no
jurisdiction, under section 23 of the Federal Court
Act, to adjudicate it.
The application will therefore be granted. As to
the costs, the defendant, Canadian Pacific Lim
ited, is entitled to its costs but only as if its motion
to be struck had been made and dealt with as the
first proceeding after service of the statement of
claim.
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.