T-5725-81
496482 Ontario Inc. (Plaintiff)
v.
Attorney General of Canada, Minister of Trans
port for Canada, VIA Rail Canada Inc., Canadian
Pacific Limited, and Canadian National Railways
(Defendants)
Trial Division, Walsh J.—Toronto, February 16;
Ottawa, March 2, 1982.
Judicial review — Equitable remedies — Injunctions —
Interlocutory injunction — Plaintiff a corporation incorpo
rated by members of passengers' association — Whether
plaintiff possessing status to litigate — Tendency to allow
public interest groups to seek relief even if without funds from
which security could be posted — Status a matter of discretion
for Court — Issue should be argued on merits although
corporate plaintiff not personally affected — Plaintiff seeking
to restrain defendants from acting upon Order in Council
discontinuing commuter rail service — Defendants moving to
strike out statement of claim as disclosing no cause of action
— Governor in Council of own motion varied orders of
Canadian Transport Commission and discontinued certain
passenger-train services — Plaintiff's argument that under s.
260, Railway Act, no discontinuation unless applied for by
railway and loss shown — Whether Governor in Council acted
beyond powers — Commission has jurisdiction to deal with
matter under s. 48, National Transportation Act, in view of
earlier application by Canadian Pacific which operated service
prior to its operation by VIA Rail — Commission having
jurisdiction to discontinue all passenger-train service on given
line — Striking out of statement of claim in its entirety
reserved pending argument on question of law as to whether
Governor in Council has power to order discontinuation to take
effect more than one year after order made — Motion for
injunction dismissed as against Attorney General and Minister
of Transport — Motion continued sine die as against other
defendants — Railway Act, R.S.C. 1970, c. R-2, ss. 260, 261,
262 — National Transportation Act, R.S.C. 1970, c. N-17, ss.
3, 48, 64 — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10,
s. 23.
Plaintiff moves for an interlocutory injunction restraining the
defendants from discontinuing or altering the passenger-train
services discontinued by Order in Council P.C. 1981-2171.
Defendants move to strike out the statement of claim. The
plaintiff contends that the Order in Council was to take effect
more than 12 months after its date which is prohibited by
statute. No economic loss was proved as there was no applica
tion by VIA Rail for discontinuance of service and no economic
loss by Canadian Pacific in the year before the Order in
Council ordering the discontinuance, since during that period it
was operated by VIA Rail. The Order in Council discontinued
all passenger-train service on the said line which the plaintiff
contends is contrary to the statute as discontinuance of a
service is not equivalent to abandonment. It is therefore argued
that even the Canadian Transport Commission cannot make
the Order in question which is allegedly contrary to statute and
therefore also beyond the powers of the Governor in Council to
make.
Held, the motion to strike is allowed in part and the motion
for interlocutory injunction is adjourned sine die. Subsection
260(2) of the Railway Act provides that if a company desires to
discontinue a passenger-train service, it shall apply to do so.
Subsection 260(5) provides that if the company incurred no
actual loss in its operation in the last year of the prescribed
accounting years, the Governor in Council shall reject the
application. As to the submission that VIA Rail made no
application for discontinuance and that Canadian Pacific suf
fered no loss in the year before the Order in Council, there was
however an application by Canadian Pacific to discontinue the
service which was rejected in 1971. This was reviewed and in
1976 again rejected. The matter was reviewed again in 1981
and VIA Rail and Canadian Pacific were refused permission to
discontinue the service. Canadian Pacific and VIA Rail are
joined together in Order R-32317 which is set aside by Order in
Council P.C. 1981-2171. Section 48 of the National Transpor
tation Act provides that the Commission may of its own
motion, or shall, upon the request of the Minister inquire into
any matter that under this Part or the Railway Act it may
inquire into upon application or complaint. Whether or not
VIA Rail had itself made an application for discontinuance of
the service as a result of financial losses the Commission could
itself have of its own motion inquired into this. The argument
that the Committee had no jurisdiction to deal with the
application since there was no application by VIA itself to
discontinue the service is unacceptable. The plaintiff contends
that there is an obligation on the railway companies pursuant to
section 262 of the Railway Act to provide suitable accommoda
tion for the receiving and loading of all traffic offered for
carriage including passenger traffic and that a distinction must
be made between discontinuing a passenger-train service and
discontinuing all passenger-train service over a particular route.
Not only does the definition of passenger-train service refer to a
"train or trains" and "trains" could presumably refer to all
trains in such service, but the reductio ad absurdum of plain
tiffs argument would be that once such passenger-train service
had been established, the law would not permit the abandon
ment of it even if it were, for example, carrying only 10
passengers per day and losing $1,000,000 per year, as while this
might be in the interest of the "public" it would not be in the
interest of the "users" of the service. Subsection 260(7) of the
Railway Act states that when the Commission determines that
an uneconomic passenger-train service should be discontinued it
shall fix the date for the "discontinuance of the operation of the
service or parts thereof as to the Commission appears to be in
the public interest." The use of the words "or parts thereof' in
conjunction with the word "service" indicates that it cannot
only be partially discontinued, but also fully discontinued.
Finally there is no doubt that pursuant to section 64 of the
National Transportation Act the Governor in Council was
entitled to vary Order R-32317 of the Commission, but there is
a serious question as to whether in so doing it could contravene
subsection 260(7) of the Railway Act by making the discon-
tinuance effective more than one year after the date of the
Order in Council. This subparagraph of the statement of claim
should not be struck. There shall be a determination of a
question of law as to whether the variation of the Orders in
question by Order in Council P.C. 1981-2171 are invalid
because they purport to take effect more than one year after
the Order in Council was made.
Attorney General of Canada v. Inuit Tapirisat of Canada
[1980] 2 S.C.R. 735, applied. National Indian Brother
hood v. Juneau (No. I) [1971] F.C. 66, applied. Thorson
v. The Attorney General of Canada [1975] 1 S.C.R. 138,
applied. Minister of Justice of Canada v. Borowski [1981]
2 S.C.R. 575, applied. City of Melville v. Attorney Gener
al of Canada [1982] 2 F.C. 3, referred to. Minister of
Transport of Quebec v. Attorney General of Canada
[1982] 2 F.C. 17, referred to. Nicholson v. Haldimand-
Norfolk Regional Board of Commissioners of Police
[1979] 1 S.C.R. 311, referred to. Martineau v. Matsqui
Institution Disciplinary Board (No. 2) [1980] 1 S.C.R.
602, referred to.
MOTION.
COUNSEL:
Ian W. Outerbridge, Q.C. and Fred A. Platt
for plaintiff.
E. A. Bowie, Q.C. for defendants Attorney
General of Canada and Minister of Transport
for Canada.
Michel Huart for defendant VIA Rail
Canada Inc.
T. Moloney for defendant Canadian Pacific
Limited.
L. Band, Q.C. for defendant Canadian Na
tional Railways.
SOLICITORS:
Outerbridge, Toronto, for plaintiff.
Deputy Attorney General of Canada for
defendants Attorney General of Canada and
Minister of Transport for Canada.
Legal Department, VIA Rail Canada Inc.,
Montreal, for defendant VIA Rail Canada
Inc.
Legal Department, Canadian Pacific Limited,
Montreal, for defendant Canadian Pacific
Limited.
Legal Department, Canadian National Rail
ways, Toronto, for defendant Canadian Na
tional Railways.
The following are the reasons for judgment
rendered in English by
WALSH J.: Plaintiff moves for an interlocutory
injunction restraining defendants from acting
upon, under the authority of, or in furtherance of
Order in Council P.C. 1981-2171 [SOR/81-892]
and from otherwise suspending, discontinuing or
altering the passenger-train services purportedly
suspended, discontinued or altered by that Order
in Council. All defendants including defendant
Canadian National Railway Company (incorrectly
styled as Canadian National Railways) have
moved pursuant to Rule 419 of the Federal Court
Rules for striking out the statement of claim and
dismissing the action on the ground that it dis
closes no reasonable cause of action against them,
or alternatively extending the time for delivery of
the statement of defence until 30 days after the
final disposition of the motion. All motions were
argued simultaneously.
Plaintiff is a corporation incorporated by mem
bers of the Toronto—Peterborough—Havelock
Line Passenger Association of Ontario for the
object of promoting transportation by rail. While
the injunction sought by plaintiff only concerns
the Toronto—Havelock passenger-train service
(Schedule IX of the Order in Council) said Order
in Council also dealt with the Toronto—Stouffville
passenger-train service (Schedule VIII) and the
Toronto—Barrie passenger-train service (Schedule
XV of the Order in Council). The validity of
substantially similar Orders in Council has been
dealt with in two cases, both of which I understand
are under appeal but nevertheless stand as author
ity at this time for the findings therein. The first of
these is the judgment of Collier J. in The City of
Melville v. Attorney General of Canada [1982] 2
F.C. 3, concerning certain rail services in Sas-
katchewan. The second is the judgment in the case
of Minister of Transport of Quebec v. Attorney
General of Canada [1982] 2 F.C. 17, concerning
certain rail services in the Province of Quebec.
Both judgments examined the provisions of The
Attorney General of Canada v. Inuit Tapirisat of
Canada' quoting extracts from that judgment
1 [1980] 2 S.C.R. 735.
extensively. The Nicholson and Martineau cases 2
respecting the duty to act fairly were also referred
to in the Quebec judgment and it would be repeti
tious to repeat the said reasons for judgment here,
so that the only issues before the Court in dealing
with the present motions arise from arguments
which may not have been considered in those cases
or from any factual situation which may be suf
ficiently different as to justify a different finding.
Plaintiff's counsel readily conceded this at the
hearing and abandoned any arguments based on
subparagraphs (a), (b), (c), (d), (e), (h) and (j) of
paragraph 19 of the amended statement of claim.
This left the allegations of subparagraphs (f), (g)
and (i) ((i) and (ii)) for consideration. These
subparagraphs read as follows:
(f) extraneous considerations were taken into account such as
the capital funding requirements of Via Rail and the total
operating subsidies to Via Rail without regard to the extent
of these subsidies or the manner in which these subsidies
related to the various passenger-train services to be discon-
tinued—these considerations were errors of law made by the
Governor General in Council.
(g) relevant considerations were not taken into account by
the Governor General in Council, such as the legal obligation
imposed on railway companies by section 262 of the Railway
Act, or alternatively, the Governor General in Council did
not consider that these obligations existed, or alternatively,
the Governor General in Council purported to over-ride
section 262 of the Railway Act by the order in council.
(i) the order in council is not an order that could have been
made by the Commission and therefore is beyond the juris
diction of the Governor General in Council to make, in
particular, no order can be made purporting to discontinue a
passenger-train service
(i) later than one year from the date of the order, and
(ii) operated by CP, if CP has not incurred or the Com
mission has not found that CP has incurred an actual loss
in the preceding year arising from the operation of the
passenger-train service.
The background of the dispute as set out in the
amended statement of claim is that the Minister of
Transport for Canada as the party responsible for
the administration and implementation of the
provisions of the Railway Act, R.S.C. 1970, c.
R-2, and National Transportation Act, R.S.C.
1970, c. N-17, recommended to the Governor in
Council that of its own motion certain orders of
2 Nicholson v. Haldimand-Norfolk Regional Board of Com
missioners of Police [1979] 1 S.C.R. 311. Martineau v. Mat-
squi Institution Disciplinary Board (No. 2) [1980] 1 S.C.R.
602.
the Railway Transport Committee of the Canadi-
an Transport Commission, orders of the Review
Committee of the Canadian Transport Commis
sion, and for the purpose of the present proceed
ings the Final Plan for Eastern Transcontinental
Passenger-Train Service dated June 1979 be
varied. VIA Rail was established to provide an
integrated national railway passenger-train service
to be operated in cooperation with the services
operated and provided by Canadian Pacific Lim
ited and Canadian National Railway Company.
The Canadian Transport Commission established
under the National Transportation Act has a duty
to perform functions vested in it by inter alia the
National Transportation Act, the Railway Act
and the Transport Act, R.S.C. 1970, c. T-14, with
the object of coordinating the operations of carri
ers of all sorts in order to provide an economic,
efficient and adequate transportation system at the
lowest cost in the interest of the users of transpor
tation and to maintain the economic well-being
and growth of Canada. The Governor in Council
has jurisdiction or power in certain circumstances
to vary or rescind orders, decisions, rules or regula
tions of the Commission.
Plaintiff alleges that as a result of section 260 of
the Railway Act the Commission is to determine
whether a passenger-train service should or should
not be discontinued after the railway company
responsible for it applies to discontinue it. In
making such a determination the Commission is
required to determine the actual loss, if any,
attributable to the passenger-train service in each
of the prescribed accounting years, to reject any
application to discontinue service if it finds that
the railway company has incurred no actual loss in
its operation in the last year of the prescribed
accounting years and to consider all matters that
in its opinion are relevant to the public interest
including matters specifically set out in the Rail
way Act before determining whether an uneco
nomic passenger-train service or parts thereof
should be discontinued. On or about August 6,
1981, the Governor in Council of its own motion
on the recommendation of the Minister varied,
pursuant to subsection 64(1) of the National
Transportation Act a number of orders of the
Commission relating to passenger-train service
throughout Canada by the adoption of Order in
Council P.C. 1981-2171 which is the subject of the
present proceedings. It is alleged that three of the
passenger-train services so discontinued in Ontario
accommodate principally persons who commute
between points on the railway providing such ser
vice. The Order in Council to discontinue all
passenger-train services between Toronto and
Havelock was varied by the said Order in Council
of August 6, 1981, so as to discontinue such
services as of September 7, 1982. It is alleged that
the commuters using this service daily require it to
convey them to their respective places of employ
ment. It is further alleged that VIA Rail never
applied for such discontinuance.
Plaintiff's counsel contends that there are four
issues not settled by the aforementioned cases:
1. The Order in Council in question was to take
effect more than 12 months after its date which
is prohibited by statute.
2. No economic loss was proved as there was no
application by VIA Rail for discontinuance of
service and no economic loss by Canadian Pacif
ic in the year before the Order in Council
ordering the discontinuance, since during that
period it was operated by VIA Rail.
3. The Order in Council discontinued all passen-
ger-train service on the said line which plaintiff
contends is contrary to the statute as discontinu
ance of a service is not equivalent to
abandonment.
4. As a result of these arguments even the
Canadian Transport Commission could not
make the Order in question, being contrary to
statute, and hence this was also beyond the
powers of the Governor in Council.
An issue was raised by defendants to the effect
that plaintiff does not have status to bring the
present proceedings because it is a corporation
which could not itself suffer prejudice by the can
cellation of the said train service. This argument
was rejected. The very purpose for which this
corporation was formed was to represent the
individuals who use such service as commuters.
Defendants suggest that a class action could have
been brought, but it would seem that this would
involve unnecessary complications and delay in a
matter which by its very nature should be disposed
of with some urgency. It was also suggested that
an interlocutory injunction is frequently granted
on terms calling on the applicant to post security
or otherwise guarantee respondent against any
damages which may result if the injunction is
eventually dismissed after hearing on the merits,
and that it can be presumed that plaintiff has no
funds, having been merely formed for the purpose
of the present proceedings and having no other
business or assets. It would certainly be premature
to deny status to plaintiff on this basis as the issue
would only arise if an interlocutory injunction
were granted, and there is certainly no authority to
the effect that a person without funds cannot apply
for an interlocutory injunction because in the event
it is later dismissed after a hearing on the merits it
would be unable to compensate defendants for the
damages caused. Moreover there is a tendency to
allow validly formed public interest groups to insti
tute proceedings seeking the relief for which they
have been formed (see for instance National
Indian Brotherhood v. Juneau (No. 1) 3 which
although it dealt with specific provisions of subsec
tion 19(2) of the Broadcasting Act, S.C. 1967-68,
c. 25, considered that the National Indian Brother
hood was a person which could make a complaint
thereunder. In rendering judgment I stated at
pages 68-69:
It may well be that the "person" who makes the complaint
should be someone who has a specific interest in doing so but it
is hard to conceive of a "person" who would have a greater
interest in so doing than the present applicants who represent
the Indians who claim to have been affronted by the film screen
on the C.T.V. network entitled "The Taming of the Canadian
West" which, in their opinion, is "blatantly racist, historically
inaccurate, and slanderous to the Indian race and culture", as
stated in Mr. Plain's affidavit. I therefore dismiss this
objection.).
A number of cases have considered the issue of
status, although the facts in each such case were
substantially different, so I merely rely on some
basic principles which have been stated in the
judgments, which support the finding that it is a
matter of discretion for the Court, although in
some such cases the party had already exhausted
all other possible means of proceeding which is not
the case here. In the case of Thorson v. The
3 [1971] F.C. 66.
Attorney General of Canada 4 Mr. Justice Laskin
[as he then was] stated at page 147:
I am of the opinion that the Court is entitled in taxpayer
actions to control standing no less than it is entitled to control
the granting of declaratory orders sought in such actions. In
short, the matter to me is one for the discretion of the Court,
and relevant to this discretion is the nature of the legislation
under attack.
In the case of Minister of Justice of Canada v.
Borowski [1981] 2 S.C.R. 575, the jurisprudence
on the question was extensively reviewed and at
pages 580-581 in the judgment of Chief Justice
Laskin reference is made to the Thorson case as
follows:
In allowing the taxpayer suit to proceed in the Thorson case,
this Court made it clear that it did so in the exercise of a
controlling judicial discretion, which related to the effectiveness
of process. It went on to say, inter alia, that "Central to that
discretion is the justiciability of the issue sought to be raised"
and that "Relevant as well is the nature of the legislation whose
validity is challenged, according to whether it involves prohibi
tions or restrictions on any class or classes of persons who
would thus be particularly affected by its terms beyond any
effect upon the public at large. If it is legislation of that kind,
the Court may decide ... that a member of the public ... is too
remotely affected to be accorded standing" (at p. 161).
In the present case there is no doubt that the
commuters would be personally affected by the
cancellation of all passenger-train service on the
Toronto—Havelock line and while technically it
may be said that the corporate plaintiff is not
personally affected I believe it would be wrong not
to allow the issue to be argued on its merits merely
because the proceedings were brought by a corpo
ration formed for this express purpose by the
individuals personally affected, rather than by one
or more of such individuals or by class action, and
I exercise my discretion accordingly.
Although, at the suggestion of the Court all
issues were argued simultaneously and arguments
presented not only by counsel for plaintiff but by
counsel for the Attorney General of Canada and
Minister of Transport, by counsel for VIA Rail,
for Canadian Pacific Railway and for Canadian
National Railway, I believe it will be convenient to
deal first with the issues raised by the motions to
4 [ 1975] 1 S.C.R. 138.
strike presented on behalf of all said defendants,
since if they are granted there would then be no
action on which the application for interlocutory
injunction by plaintiff could depend and hence it
would automatically fail.
Plaintiffs principal, argument in opposing the
motions to strike is based on the somewhat surpris
ing proposition, which I believe was not dealt with
in the previous cases, that even the Canadian
Transportation Commission itself could not have
ordered the cancellation of the passenger-train
service in issue in the present case. Plaintiffs first
submission in this connection is based on the inter
pretation of section 260 of the Railway Acts sub
section (2) of which reads as follows:
260... .
(2) If a company desires to discontinue a passenger-train
service, the company shall, in accordance with the rules and
regulations of the Commission in that regard, file with the
Commission an application to discontinue that service.
In this connection it refers to the definition of
passenger-train service in subsection (1) which
reads:
260. (1) In this section and section 261
"actual loss" means, in relation to a passenger-train service,
(a) the excess, if any, of the costs incurred by the company in
carrying passengers by the passenger-train service
over
(b) the revenues of the company attributable to the carrying
of passengers by the passenger-train service;
"passenger-train service" means such train or trains of a com
pany as are capable of carrying passengers and are declared
by an order of the Commission, for the purposes of this
section and section 261, to comprise a passenger-train
service.
Subsections (3) and (4) refer to the provision of
statements of costs and revenues with a view to
enable the determination of actual loss. Subsection
(5) provides that if the Commission finds that in
the operation of passenger-train service with
respect to which an application of discontinuance
was made, the company "has incurred actual loss
in one or more of the prescribed accounting years
including the last year thereof' the Commission
may determine that the passenger-train service is
5 R.S.C. 1970, c. R-2.
uneconomic and is likely to continue to be uneco
nomic and should be discontinued, but if the com
pany incurred no actual loss in its operation in the
last year of the prescribed accounting years it shall
reject the application without prejudice to any
application that may subsequently be made for
discontinuance of it. Subsection (6) provides that
the Commission shall consider "all matters that in
its opinion are relevant to the public interest".
Subsection (7) provides that if it finds that such an
uneconomic passenger-train service should be dis
continued it shall by its order fix the date or dates
for discontinuance of the operation of the service
"or parts thereof as to the Commission appears to
be in the public interest" but the discontinuance
shall be not earlier than thirty days from the date
of the order and not later than one year from the
date of the order. Subsection (8) provides that if
the Commission finds that the operation should
not be discontinued, it must reconsider the applica
tion for discontinuance at intervals not exceeding
five years from the date of the original application
or last consideration thereof. Plaintiff's first sub
mission in contesting the Commission's jurisdiction
is that VIA Rail made no application for discon
tinuance and that Canadian Pacific suffered no
loss in the year before the Order in Council, so
that the Order in Council was therefore not merely
setting aside a decision of the Commission but it
was doing something which the Commission itself
could not have done, being in contravention of the
statute. There was however an application by
Canadian Pacific dated October 31, 1969, to dis
continue the said service which was rejected by the
Railway Transport Committee on May 31, 1971
under Order R-11827. This was reviewed pursuant
to subsection 260(8) of the Railway Act and on
May 31, 1976 Order R-22892 again rejected the
discontinuance. The matter was reviewed again on
May 29, 1981, under Order R-32317 and VIA
Rail and the Canadian Pacific were refused per
mission to discontinue the said service. The Order
referred to the application of Canadian Pacific
Limited to discontinue its said passenger-train ser
vice and goes on to state "the responsibility for
which is now jointly shared by VIA Rail Canada
Inc. (VIA Rail) and Canadian Pacific Limited,
effective April 1, 1979 ...". The actual loss for the
1979 year was set out as $597,599 and for the year
1980 as $888,913 both the said figures being
indicated as representing those submitted but not
as yet approved by the Committee. Figures show
actual revenue decline from $360,009 in 1979 to
$244,066 in 1980. The Committee goes on to find
that VIA Rail in cooperation with the Committee
is currently reworking its costing system and until
the revised system is in place actual losses cannot
be certified, but adds that the figures submitted by
VIA Rail Canada and Canadian Pacific Limited
represent reasonable estimates of the losses
incurred and concludes, "While a final verification
of these estimates may result in minor adjustments
to claimed costs or revenues, the Committee is
satisfied that this will not significantly alter the
magnitude of losses incurred in this service". It
expresses the view that the Toronto—Havelock
service "may be essentially commuter in nature
and therefore of a type for which subsidies may
not be forthcoming" and that it intends to review
the case to decide whether or not the service
should continue to be designated as a passenger-
train service for the purpose of sections 260 and
261 of the Railway Act. Section 261 is the section
that provides that when an uneconomic service is
being operated the Commission "shall certify the
amount of the actual loss" and 80% thereof may
then be paid to the company out of the Consolidat
ed Revenue Fund. Subsection (8) provides that
this does not apply "in respect of a passenger-train
service accommodating principally persons who
commute between points on the railway of the
company providing the service". It is not necessary
for the purpose of the present proceedings to deter
mine whether in fact the said passenger-train ser
vice is a commuter service or not, which eventual
issue would only arise if VIA Rail were ordered to
continue the operation of it in cooperation with
Canadian Pacific Limited as a result of the setting
aside of P.C. 1981-2171 as plaintiff seeks. It is of
some interest to note that even though VIA Rail
itself is a Crown corporation an affidavit submit
ted on its behalf indicates that up to the present it
has been reimbursed by the Government of
Canada for any losses suffered.
What is apparent and significant is that the
Governor in Council can be presumed to have had
before it these figures which, while they were not
finally certified were accepted as being reasonably
accurate by the Commission and that Canadian
Pacific and VIA Rail are joined together in its
Order R-32317 which is set aside by P.C. 1981-
2171 with respect to the line in question.
Reference should also be made to section 48 of
the National Transportation Act 6 which Act must
be read in conjunction with the Railway Act. That
section reads:
48. The Commission may, of its own motion, or shall, upon
the request of the Minister, inquire into, hear and determine
any matter or thing that, under this Part or the Railway Act, it
may inquire into, hear and determine upon application or
complaint, and with respect thereto has the same powers as,
upon any application or complaint, are vested in it by this Act.
Whether or not VIA Rail had itself made an
application for discontinuance of the service in
question as a result of financial losses resulting
from the operation thereof, the Commission could
itself have of its own motion inquired into this.
I do not accept the argument therefore that,
since there was no application by VIA Rail itself
to discontinue the service but the Committee
merely acted on the original application by
Canadian Pacific which now no longer operates
the service or suffers the loss, it had no jurisdiction
to deal with the application.
Plaintiff's second argument as to the lack of
jurisdiction of the Commission to order discontinu
ance of the Toronto—Havelock passenger-train
service is also of a tenuous nature and unaccept
able. Plaintiff makes a distinction between the
discontinuance of a passenger-train service pursu
ant to subsection 260(2) of the Railway Act and
an application for abandonment of an uneconomic
line dealt with in sections 252 and following. Cer
tainly discontinuance of passenger-train service on
a line is not the same thing as abandonment of the
line which may continue to be used for freight.
Plaintiff contends that there is an obligation on the
railway companies pursuant to section 262 of the
Railway Act to provide suitable accommodation
for the receiving and loading of all traffic offered
for carriage, including of course passenger traffic,
and that a distinction must be made between
discontinuing a passenger-train service and discon-
6 R.S.C. 1970, c. N-17.
tinuing all passenger-train service over a particular
route as the Order in Council complained of in the
present action does. Reference was made to section
3 of the National Transportation Act outlining
national transportation policy the preamble to
which reads as follows:
3. It is hereby declared that an economic, efficient and
adequate transportation system making the best use of all
available modes of transportation at the lowest total cost is
essential to protect the interests of the users of transportation
and to maintain the economic well-being and growth of
Canada, and that these objectives are most likely to be achieved
when all modes of transport are able to compete under condi
tions ensuring that having due regard to national policy and to
legal and constitutional requirements ....
It is argued that the users of transportation must
therefore be protected. It is contended therefore
that since subsection (6) of section 260 of the
Railway Act requires that, "In determining wheth
er an uneconomic passenger-train service or parts
thereof should be discontinued, the Commission
shall consider all matters that in its opinion are
relevant to the public interest" the words "public
interest" mean the interest of the members of the
public using the transportation service.
It should be pointed out however that section
262 appears in the section of the Railway Act
headed TRAFFIC, TOLLS AND TARIFFS, with a
subheading Accommodation for Traffic, and
merely sets out what a railway company must do
in connection with the traffic on the lines it is
operating. It is sections 252 to 258 which deal with
abandonment of a railway line while sections 260
and 261 are those dealing with rationalization of
lines or operations. Sections 252 to 261 inclusive
come under the heading ABANDONMENT AND
RATIONALIZATION OF LINES OR OPERATIONS.
Plaintiff's argument that while the law permits the
discontinuance of certain trains operated as
passenger-train service on a given line, it does not
permit under sections 260 and 261 the discontinu
ance of all trains operating such service on said
line and that such an order is beyond the jurisdic
tion of the Commission itself, must be rejected.
Not only does the very definition of passenger-
train service refer to a "train or trains" and
"trains" could presumably refer to all trains in
such service, but the reductio ad absurdum of
plaintiff's argument if it were accepted would be
that once such passenger-train service had been
established, the law would not permit the abandon
ment of it even if it were, for example, carrying
only 10 passengers per day and losing $1,000,000
per year, as while this might be in the interest of
the "public" it would not be in the interest of the
"users" of the service. It is also not without signifi
cance that subsection (7) of section 260 of the
Railway Act states that when the Commission
determines that an uneconomic passenger-train
service should be discontinued it shall by order fix
the date for the "discontinuance of the operation
of the service or parts thereof as to the Commis
sion appears to be in the public interest". Certainly
the use of the words "or parts thereof" in conjunc
tion with the word "service" indicates that it can
not only be partially discontinued but also fully
discontinued.
A serious argument as to whether the Commis
sion itself would have had jurisdiction to issue an
order in the terms of the Order in Council arises
from the wording of subsection (7) of section 260
of the Railway Act (supra) which clearly provides
that the discontinuance date shall not be set later
than one year from the date of the order. It is
therefore correct that the Commission could not
on or about August 6, 1981, have issued an order
for the discontinuance of passenger-train service
from Toronto—Havelock line as of September 7,
1982, which is what the Order in Council did as
this would clearly have been contrary to the stat
ute. The serious question arises therefore as to
whether the Governor in Council could itself issue
an Order in Council which if it had been an order
of the Commission could have been set aside as
being in contravention of subsection (7) of section
260 of the Railway Act. The judgments in the
Saskatchewan and Quebec cases dealing with the
validity of the same Order in Council did not have
to consider the fact that with respect to the Toron-
to—Havelock line and the two other Ontario lines
referred to (supra) discontinuance was not to take
place until more than a year after the date of the
Order in Council. They relied primarily on the
provisions of subsection 64(1) of the National
Transportation Act in sustaining its validity,
which subsection reads as follows:
64. (1) The Governor in Council may at any time, in his
discretion, either upon petition of any party, person or company
interested, or of his own motion, and without any petition or
application, vary or rescind any order, decision, rule or regula
tion of the Commission, whether such order or decision is made
inter partes or otherwise, and whether such regulation is gener
al or limited in its scope and application; and any order that the
Governor in Council may make with respect thereto is binding
upon the Commission and upon all parties.
Reference was made to a number of passages from
the judgment of the Supreme Court in the Inuit
Tapirisat case (supra). In the present case plain
tiff contends that while if those judgments are
correct the Governor in Council may have the wide
powers attributed to it to vary or rescind orders of
the Commission without a prior hearing by the
Commission this power does not extend to making
an order that could not originally have been made
by the Commission itself. According to this argu
ment varying or rescinding an order does not
extend to substituting an order which could not
have been legally made by the Commission and
that in so doing the Governor in Council exceeded
its jurisdiction. Reference was made to the passage
in the judgment of Mr. Justice Estey at page 748
where he stated:
Let it be said at the outset that the mere fact that a statutory
power is vested in the Governor in Council does not mean that
it is beyond review. If that body has failed to observe a
condition precedent to the exercise of that power, the court can
declare that such purported exercise is a nullity.
and again to the passage on page 753:
While the CRTC must operate within a certain framework
when rendering its decisions, Parliament has in s. 64(1) not
burdened the executive branch with any standards or guidelines
in the exercise of its rate review function. Neither were proce
dural standards imposed or even implied. That is not to say that
the courts will not respond today as in the Wilson case supra, if
the conditions precedent to the exercise of power so granted to
the executive branch have not been observed.
At page 756 the judgment states:
The guidelines mandated by Parliament in the case of the
CRTC are not repeated expressly or by implication in s. 64.
The function applies to broad, quasi-legislative orders of the
Commission as well as to inter-party decisions. In short, the
discretion of the Governor in Council is complete provided he
observes the jurisdictional boundaries of s. 64(1).
At pages 758-759 it is stated, dealing with the fact
that the function has been assigned to a tier of
agencies, in that case the CRTC in the first
instance and the Governor in Council in the second
In such a circumstance the Court must fall back upon the basic
jurisdictional supervisory role and in so doing construe the
statute to determine whether the Governor in Council has
performed its functions within the boundary of the parliamen
tary grant and in accordance with the terms of the parliamen
tary mandate.
There is no doubt that pursuant to section 64
the Governor in Council was entitled to vary Order
No. R-32317 of the Commission dealing with this
rail line* which required that a limited passenger-
train service as set out therein be maintained on it,
but there is a serious question as to whether in so
doing it could contravene subsection (7) of section
260 of the Railway Act by making the discontinu
ance effective more than one year after the date of
the Order in Council. While the question may be
somewhat academic in that the Governor in Coun
cil can remedy the situation by now passing
another Order in Council with respect to this line,
and, if desired, the other railway passenger-train
services ordered to be discontinued by September
7, 1982, and registering same under the Statutory
Instruments Act, S.C. 1970-71-72, c. 38, this pos
sibility is not a matter which the Court should take
into consideration in dealing with the present
motion.
For the reasons I have given I find that in
addition to subparagraphs (a), (b), (c), (d), (e),
(h) and (j) of paragraph 19 of the amended state
ment of claim abandoned by plaintiff as a result of
the Saskatchewan and Quebec judgments, sub-
paragraphs (f), (g) and (i)(ii) should also be
struck. Since there is considerable doubt about the
jurisdiction of the Governor in Council to adopt an
Order in Council ordering the discontinuance of a
rail service effective more than one year after the
date of the Order in Council, which the Transport
Commission could not have done itself because of
subsection (7) of section 260 of the Railway Act I
believe that subparagraph (i)(i) should not be
struck at this time. Defendants the Attorney Gen
eral of Canada and the Minister of Transport in
their motion and defendant Canadian National
Railway Company in its motion to strike suggest
the possibility of an alternative order whereby
* Order No. R-31300 dated August 14, 1980, referred to by
Justice Collier [at page 11] as "a pulling together in one Order
of all the passenger-train services existing at the time of the
Order" was also affected by P.C. 1981-2171.
instead of striking the entire statement of claim
such order shall set down for determination by the
Court pursuant to Rule 474 the following question
of law:
Are the variation of Order No. R-32317 of the Railway
Transport Committee of the Canadian Transport Commission,
and the variation of that part of Order No. R-31300 of the
Railway Transport Committee of the Canadian Transport
Commission which affects the Toronto-Havelock passenger
train service, effected by Schedules IX and XVII respectively
of Order-In-Council P.C. 1981-2171, invalid by reason of the
fact that they purport to take effect more than one year after
the Order-In-Council was made?
I adopt this alternative and will order that written
memoranda on this point should be filed within
two weeks from the date of this order and an
application be then made to the Associate Chief
Justice to fix a time and place for argument on this
question of law. If the answer to such question of
law should be in the negative then plaintiff's entire
statement of claim will be struck. It is desirable
that this issue be disposed of rapidly as affidavit
evidence submitted by VIA Rail indicates that
steps have already been taken leading to the even
tual discontinuance of the service on September 7,
1982, and with respect to the company's computer
ized reservation system, tariffs, equipment and
train schedules will require considerable time to
put into effect and even more time and expense to
undo should the discontinuance of the service be
set aside.
Until this question of law is settled it would be
inappropriate to grant plaintiff's motion for inter
locutory injunction, even if there were not other
objections to granting of same which need not be
decided at this time. Serious arguments were
raised as to whether an interlocutory injunction
can be used to stop the application of a legislative
or administrative order, which is binding until set
aside by a tribunal having authority to do so,
before final judgment on the merits. Another argu
ment made which need not be dealt with at this
stage of the proceedings is whether section 23 of
the Federal Court Act, R.S.C. 1970 (2nd Supp.),
c. 10, would exclude the jurisdiction of this Court
with respect to the injunctive relief sought because
jurisdiction is given in wide terms under Part IV of
the National Transportation Act to the Commis
sion to make mandatory orders against the rail
roads. In any event no injunction would lie either
against the Minister of Transport or the Attorney
General of Canada since the Minister of Trans
port, having recommended the Order in Council
complained of, has nothing further to do in con
nection therewith and the same applies to the
Attorney General of Canada who was sued merely
as a party representing the Governor in Council.
The position of the Canadian National Railway
Company is more doubtful. Although plaintiff
496482 Ontario Inc. was incorporated by and for
the members of the Toronto—Peterborough—
Havelock Line Passenger Association and appar
ently has no interest in the lines operated by VIA
Rail on behalf of Canadian National Railway
Company, they were nevertheless included in the
same Order in Council P.C. 1981-2171. The con
clusions of the injunction are quite general and
seek an order restraining said defendant along
with VIA Rail Canada Inc. and Canadian Pacific
Limited from suspending, discontinuing or altering
the passenger-train services discontinued or altered
by the said Order in Council and therefore if relief
were given on the terms sought said defendant
would also be so enjoined. I find therefore that the
motion for injunction should be dismissed as
against the Attorney General of Canada and the
Minister of Transport for Canada but continued
sine die against VIA Rail Canada Inc., Canadian
Pacific Limited and Canadian National Railway
Company to be brought on again on one week's
notice following the decision of the legal issue set
down for determination under Rule 474.
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.