A-9-77
Robert W. Blanchette, Richard C. Bond and John
McArthur, as trustees of the property of Penn
Central Transportation Company, Norfolk and
Western Railway Company, Thomas F. Patton
and Ralph S. Tyler, Jr., as trustees of the property
of Erie Lackawanna Railway Company, Illinois
Central Gulf Railroad Company and Missouri
Pacific Railroad Company (Appellants) (Plain-
tiffs)
v.
Canadian Pacific Limited (Respondent) (Defend-
ant)
and
Canadian National Railway Company, Grand
Trunk Western Railroad Company and Central
Vermont Railway Inc. (Mis -en-cause)
Court of Appeal, Urie J. and MacKay and Kerr
D.JJ.—Ottawa, November 18 and December 13,
1977.
Jurisdiction — Practice — Railways — Appeal from order
to strike out statement of claim — Railway equipment leased
by appellants but used by respondent with it paying lessor —
Rate increase — Respondent's advising new schedule accept
able, but continuing to pay lower rate — Appellants obliged to
pay lessor the difference and sought to recover that amount —
Whether relief claimed coming within provisions of Railway
Act — Railway Act, R.S.C. 1970, c. R-2, ss. 2, 262, 263, 265,
269(4), 288, 301.
This is an appeal from an order of the Trial Division striking
out appellants' statement of claim for want of jurisdiction. All
parties are railway common carriers. Appellants leased a sub
stantial amount of equipment and respondent paid the lessor
for use of leased equipment supplied by appellants. After the
lessor effected a rate increase, respondent continued to pay
appellants at the lower rate even though it had advised appel
lants that the new rates were acceptable. Appellants were
obliged to pay the lessor the difference in rates and sought to
recover that amount from the respondent. The sole question is
whether or not the relief sought is found under the only
applicable federal legislation in this case, the Railway Act.
Held, the appeal is dismissed. There is nothing in the Rail
way Act giving a railway company a right of action against
another railway company to recover allegedly unpaid, unau
thorized tolls for the use of equipment. The rates were set by
private agreement or arrangement independent of any au-
thority emanating from the Railway Act and any liability for
payment of those charges flows not from the statute but from
the agreement or arrangement.
Quebec North Shore Paper Co. v. Canadian Pacific Ltd.
[1977] 2 S.C.R. 1054, applied. McNamara Construction
(Western) Ltd. v. The Queen [1977] 2 S.C.R. 654, applied.
APPEAL.
COUNSEL:
J. B. Claxton, Q.C., and D. H. Tingley for
appellants.
M. S. Bistricky for respondent.
P. Sevigny-McConomy for mis -en-cause
CNR.
SOLICITORS:
Lafleur, Brown, de Grandpré, Montreal, for
appellants.
Canadian Pacific Limited, Law Department,
Montreal, for respondent.
Canadian National Railway Company, Law
Department, Montreal, for mis -en-cause
CNR.
The following are the reasons for judgment
rendered in English by
URIE J.: The appellants (plaintiffs), each of
which is itself, or through the named trustees, an
operator of lines of railroad and other works and
undertakings in the United States and, in some
instances, in Canada, are plaintiffs in an action
brought against the defendants named in the style
of cause. The respondent (defendant), Canadian
Pacific Limited, moved to strike out the plaintiff's
statement of claim as against it by reason of the
absence of jurisdiction of the Trial Division in the
matter, which motion was granted by an order
dated December 10, 1976 [[1977] 2 F.C. 431, sub.
nom. Blanchette v. Canadian National Railway
Co.]. It is from that order that this appeal is
brought.
A similar action was brought by different plain
tiffs against the same defendants, plus one addi
tional one, under Court file No. T-2002-76.
Canadian Pacific Limited obtained an order in
that action too, striking out the statement of claim
for the same reason. The appeal [A-8-77] from
that order was heard at the same time by agree
ment since the issues in each case are identical.
All of the parties hereto are engaged, inter alia,
as common carriers in the railway traffic known as
the Canada/United States Auto Trade (the "Auto
Trade") which developed pursuant to the Canada/
United States Auto Pact of 1966. Specially
equipped railway flatcars are used by the plaintiffs
and defendants for the shipment of motor vehicles
and their components manufactured either in
Canada or the United States, to the country other
than the country of manufacture or from point to
point within the respective countries of manufaç-
ture.
The plaintiffs and defendants are also engaged,
inter alia, as common carriers in the railway traf
fic known as Trailer on flatcar—Container on
flatcar (the TOFC-COFC traffic) involving the
inter-line transportation of motorized carrier-trail
ers and containerized freight from the United
States to Canada, from Canada to the United
States and from point to point within each
country.
A substantial portion of the equipment used by
the plaintiffs in the Auto Trade as well as in the
TOFC-COFC traffic is owned by the Trailer
Train Company, a corporation having its principal
place of business in Chicago, Illinois. In para
graphs 27, 28, 29, 30, 31, 32, 33 and 34 of the
statement of claim, it is alleged that:
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.
29. In October, 1970 the Trailer Train Company advised
Plaintiffs and Defendants of a change of rates and published
new schedules of rates which came into effect January 1, 1971.
30. In 1971, Defendants advised Plaintiffs and the Trailer
Train Company that the said revised Trailer Train Rates were
acceptable for the use of Trailer Train equipment.
31. Subsequently, in 1971, Defendants repudiated such advice
and gave notice that they would continue to make settlement at
the Trailer Train Rates in effect prior to January 1, 1971, and
Defendants, except Canadian Pacific which began paying cur
rent Trailer Train Rates in January of 1975, have continued to
pay Trailer Train in behalf of Plaintiffs on this basis over the
objections of Plaintiffs.
32. The Trailer Train Rates were further increased by approxi
mately the following percentages on the following dates:
(a) February 1, 1972: 5%;
(b) April 1, 1973: 4.76%;
(c) April 1, 1974: 5%;
(d) December 1, 1974: 8%;
(e) August 1, 1975: 7%;
the actual stated increased varying with the type of car and its
accessory equipment; and advice of all such increases was given
to Defendants.
33. Notwithstanding the said rates increases, Defendants have
persisted in their refusal to pay them while at the same time
advising Plaintiffs that they are prepared to pay reasonable
rates for the use of Trailer Train equipment furnished by
Plaintiffs.
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.
It should be noted that it is not alleged that the
Trailer Train Company is a railway company and,
as I understand it, it is common ground that it is
not.
Paragraph (a) of the prayer for relief in the
statement of claim reads as follows:
(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 remainder of the prayer for relief sets forth
the specifics of the claims against each defendant
by each plaintiff.
The learned Trial Judge relied on the judgment
of the Supreme Court of Canada in Quebec North
Shore Paper Company v. Canadian Pacific Lim
ited [1977] 2 S.C.R. 1054, in concluding that the
respondent's motion to strike out the statement of
claim, as against it, must be granted.
Among the passages in the reasons for judgment
of Laskin C.J.C. in the Quebec North Shore case,
to which reference was made by the Trial Judge,
the following, found at pages 1063 and 1064 of the
report, provides the two-fold test which must be
met to enable the Federal Court to assume juris
diction under section 23 of its enabling Act.'
Addy J. [the trial Judge] 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". [Emphasis is added.]
And at page 1065 Chief Justice Laskin stated
that:
Jurisdiction under s. 23 follows if the claim for relief is under
existing federal law, it does not precede the determination of
that question.
We agree with the learned Trial Judge [p. 436]
that "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."
It was the appellants' contention that the Trial
Judge erred in this conclusion and that the Rail
way Act, R.S.C. 1970, c. R-2 provides the statu
tory source for their claim for relief. Both refer to
a number of sections as supportive of their respec
tive contentions.
The definition of "company" contained in sec
tion 2, in the context of this action, means "rail-
way company" and as previously indicated, Trailer
Train Company is not a "railway company" within
this definition.
' 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.
Sections 262, 263 and 265 require a railway
company, which term would include the respond
ent, to provide accommodation for traffic and
interchange facilities with connecting lines. Sec
tion 288 prohibits a railway company from pre
venting the carriage of goods from the place of
shipment to the place of destination.
The appellants point out that while these sec
tions do not specify the means by which the rail
way companies furnish equipment and provide
facilities, they do provide sanctions for their fail
ure to do so by empowering the Canadian Trans
port Commission to make directory orders. As a
result, as pointed out in the statement of claim, the
railway companies comply with the statutory
requirements by allocating the burden of furnish
ing a portion of the equipment to be provided for
each model year among those railway companies
engaged in the Auto Trade from the point of origin
to the ultimate destination. In the TOFC-COFC
traffic there is no such pooling of equipment but
equipment moves from one railway interconnect
ing with another as required by section 288.
Section 274 refers to the "tariffs of tolls" that a
company is authorized to issue under the Act. It is
not alleged that there is any applicable tariff in
this case.
Counsel for the appellants submitted that not
only because of the mandatory requirements of the
Railway Act generally to provide the interconnect
ing services to which we have just referred, which
at least by inference recognizes the right to be
compensated for equipment, facilities and services,
claims for tolls may be enforced in the Trial
Division of this Court by virtue of section 301 and
the definition of "Court" set forth in section 2(1).
301. In case of refusal or neglect of payment on demand of
any lawful tolls, or any part thereof, the tolls are recoverable in
any court of competent jurisdiction.
2. (1) ...
"court" means a superior court of the province or district, and,
when used with respect to any proceedings for
•
(a) the ascertainment or payment, either to the person
entitled, or into court, of compensation for lands taken, or
for the exercise of powers conferred by this Act, or
(b) the delivery of possession of lands, or the putting down
of resistance to the exercise of powers, after compensation
paid or tendered,
includes the county court of the county where the lands lie;
and "county court" and "superior court" are to be inter
preted according to the Interpretation Act;
Respondent's counsel on the other hand, said
that for section 301 to apply the "lawful tolls" in
question must be tolls of a railway company
authorized under the Railway Act. Subsection
269(4) which reads as follows:
269. .. .
(4) Except as otherwise authorized by this Act, the company
shall not charge any tolls except tolls specified in a tariff that
has been filed with the Commission and is in effect.
clearly provides, in his submission, that for tolls to
be lawful they must be "specified in a tariff that
has been filed with the Commission and is in
effect." That there are no such tariffs applicable to
the Trailer Train Company charges is, as we
understand it, common ground.
The sole question, it seems to us, is whether or
not the relief sought by the appellants herein is
found under the only applicable existing federal
law, in this case, the Railway Act. This is the first
of the two tests that must be satisfied, on the au
thority of the Quebec North Shore 2 case, to ascer
tain the jurisdiction of the Trial Division under
section 23 of the Federal Court Act.
It is our view that there is nothing in the Rail
way Act or any other existing federal law to which
we have been referred, which gives a railway com
pany a right of action against another railway
company to recover allegedly unpaid, unauthorized
z Since that decision was handed down, but since the decision
of the Trial Division was rendered, the Supreme Court of
Canada again dealt with the question of the jurisdiction of this
Court in McNamara Construction (Western) Ltd. v. The Queen
[1977] 2 S.C.R. 654 and reiterated that the jurisdiction in this
Court to try an action must be based on a cause of action found
in existing federal law.
tolls for the use of equipment. That equipment was
acquired by the appellants as appears clearly from
the pleadings, pursuant to a private arrangement
between them and the Trailer Train Company
which, as above stated, is not a railway company
as defined by the Railway Act. That this is a
private arrangement is seen by the fact that the
appellants are suing for the difference between the
Trailer Train Company rates as at a specified date
or dates and the rates which that non-operating
company saw fit to charge at later dates. Those
rates were set entirely by private agreement or
arrangement independent of any authority ema
nating from the Railway Act. Any liability for
payment thereof, flows not from the statute but
from the private agreement or arrangement be
tween the parties. As a result, we agree with the
learned Trial Judge that the Trial Division is
without jurisdiction to adjudicate the claims.
Accordingly, the appeal should be dismissed.
In light of this disposition of the appeal, it will
be unnecessary for us to deal with the issue raised
by the parties as to whether or not the Federal
Court of Canada is a court of competent jurisdic
tion within the meaning of sections 2 and 301 of
the Railway Act.
* * *
MACKAY D.J.: I concur.
* *
KERR D.J.: I concur.
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.