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.—Ottawa, April 26 and
May 5, 1982.
Practice — Motion for leave to further amend statement of
claim, to argue that interlocutory injunctions should issue
against certain defendants and to extend time to file memo
randa — Previous order striking out part of amended state
ment of claim and setting down for determination under Rule
474 question of law, under appeal — New information una
vailable when motion to strike argued — Information to effect
that commuter service to be discontinued ineligible for federal
subsidies under Railway Act, that discontinuation matter of
policy and that commuter services provincial and/or municipal
responsibility — According to plaintiff, decision of Governor
in Council made in excess of jurisdiction because based on
policy rather than law — Issue to be decided as if amendments
already incorporated in amended statement of claim and
according to rules applicable to striking of pleadings —
Renewed argument for interlocutory injunction not considered
as question of law not yet determined — Memoranda re
question of law now filed — No obligation under s. 261 of
Railway Act to subsidize commuter services — Possibility of
subsidizing loss certified by Canadian Transport Commission
not eliminated — Governor in Council may, pursuant • to s.
261(9) of Railway Act, take any action deemed desirable —
Such action question of policy within Governor in Council's
jurisdiction — Courts should not inquire into motivation of
Governor in Council for adopting any Order in Council, save
evident abuse of power — Motion to amend amended state
ment of claim dismissed — Federal Court Rule 474 —
Railway Act, R.S.C. 1970, c. R-2, ss. 261(4),(8),(9), 262.
Plaintiff moves for leave to amend its amended statement of
claim, to argue that interlocutory injunctions sought in a
previous notice of motion should issue against VIA Rail
Canada Inc. and Canadian Pacific Limited and to extend time
to file written memoranda. By previous order of this Court,
part of the amended statement of claim was struck and the
question as to the power of the Governor in Council to order
the discontinuation of all passenger-train services on the Toron-
to—Havelock line to take effect more than one year after the
Order in Council was made, was set down for determination
under Rule 474. That order is now under appeal. Plaintiff's new
information on which it relies in seeking the amendment con
sists of a letter written by the Minister of Transport's Parlia
mentary Secretary. The letter states that a commuter-type
service is ineligible for federal subsidies under the Railway Act,
that discontinuation is a matter of policy, and that commuter
rail services are a provincial and/or municipal responsibility.
Plaintiff argues that the decision of the Governor in Council
was made in excess of jurisdiction, being based on policy rather
than law. Defendants agree that the issue is to be decided as if
the amendments were already incorporated in the amended
statement of claim and according to the rules applicable to the
striking of pleadings.
Held, the motion to further amend the statement of claim is
dismissed, and the question of law is to be heard as soon as
possible, all the parties having filed the memoranda. There is
no obligation to provide subsidies for commuter services, but
merely provision, under subsection 261(9) of the Railway Act,
that this may be done if the Governor in Council deems it
desirable. That is a question of policy, the Governor in Council
evidently taking the position, as shown in the letter, that
commuter-type services should be subsidized, if necessary, by
the provinces or municipalities. The Governor in Council was
not acting contrary to the law when he took policy matters into
consideration. Courts should not inquire into the motivation of
the Governor in Council for adopting any given Order in
Council unless there is an evident abuse of power. If it were
concluded that the service in question is a commuter service,
the railroad could cease operating it proprio motu; the Order in
Council would thus become unnecessary. The issue of law is to
be set down for hearing as soon as convenient. No application
was made to the Court seeking its stay, and it has been settled
by the courts that an appeal does not of itself stay proceedings.
Attorney General of Canada v. Inuit Tapirisat of Canada
[1980] 2 S.C.R. 735, applied. Re Doctors Hospital and
Minister of Health (1976) 68 D.L.R. (3d) 220, distin
guished. Roncarelli v. Duplessis [1959] S.C.R. 121,
distinguished.
MOTION.
COUNSEL:
D. Outerbridge for plaintiff.
E. Bowie, Q.0 for defendants Attorney Gen
eral of Canada and Minister of Transport for
Canada.
M. Huart for defendant VIA Rail Canada
Inc.
C. Wendlandt 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 order ren
dered in English by
WALSH J.: Upon application on behalf of the
plaintiff for:
(a) an order granting the plaintiff leave to amend the
amended statement of claim by adding the following two
subparagraphs to paragraph 19:
(k) the order in council and the recommendation of the
Minister, on which the order in council was made, were
based on the consideration that passenger-train services
accomodating [sic] principally persons who commute be
tween points on the railway of the company providing such
service (or "commuter-type services" as described by the
Minister) are not the responsibility of the federal govern
ment and are not governed by the Railway Act, including
section 262 thereof—this consideration was an error of law
made by the Governor General in Council and applied as a
fixed rule without reviewing its application to the individu
al passenger-train services to which it was applied.
(1) the order in council and the recommendation of the
Minister, on which the order in council was made, were
based on the consideration that passenger-train services
accomodating [sic] principally persons who commute be
tween points on the railway of the company providing such
service (or "commuter-type services" as described by the
Minister) are ineligible for federal subsidies under the
Railway Act—this consideration was an error of law made
by the Governor General in Council.
(b) an order permitting the plaintiff to argue that the
interlocutory injunctions sought by it in its notice of motion
dated November 9, 1981, ought to be granted against Via
Rail Canada Inc. and Canadian Pacific Limited, and permit
ting the defendants, if so advised, to argue that an order
pursuant to rule 419(1)(a) ought to be granted, striking out
these subparagraphs, as well as the subparagraphs previously
struck out in the orders pronounced by the Honourable Mr.
Justice Allison A.M. Walsh on the 2nd day of March, 1982,
(c) an order extending the time within which to serve and file
the written memoranda required pursuant to the orders
pronounced by the Honourable Mr. Justice Allison A.M.
Walsh on the 2nd day of March, 1982,
(d) such further and other order as may seem just;
This is a most unusual motion in view of the fact
that the judgment rendered herein on March 2,
1982 [[1982] 2 F.C. 629] striking paragraph 18
and subparagraphs (a), (b), (c), (d), (e), (f), (g),
(h) and (j) as well as subparagraph (i)(ii) of
paragraph 19 of the plaintiff's amended statement
of claim and setting down for determination as a
question of law pursuant to Rule 474 the allega
tion in subparagraph (i)(i), is now under appeal, so
that it might properly be held that the Court is
functus with respect to any amendments to the
said amended statement of claim. The question of
law has not yet been heard, but at the time it was
understood that if the plaintiff were not successful
in it the result would be equivalent to the striking
of the plaintiff's entire amended statement of
claim, since, although the substantive allegations
of the amended statement of claim were not
struck, the said paragraph 19 contained all the
allegations in which the plaintiff's claim for relief
was based, so that none of the relief sought could
be granted. At the same time the plaintiff sought
an interlocutory injunction which was dismissed
with permission to bring it on again on one week's
notice following the determination of the question
of law. During the hearing serious arguments were
raised as to whether an interlocutory injunction
can be used to stop the application of an adminis
trative or legislative order which is binding until
set aside by hearing on the merits. The Court did
not have to deal with this argument in view of the
finding that no interlocutory injunction application
should be considered in any event until after the
final determination of the question of law. At page
646 the reasons for judgment stated:
Until this question of law is settled it would be inappropriate
to grant plaintiffs motion for interlocutory 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 argument 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 Transporta
tion Act to the Commission to make mandatory orders against
the railroads.
The renewed argument for interlocutory injunc
tion sought by the plaintiff in paragraph (b) of its
present motion will therefore not be considered at
this time.
The information on which the plaintiff now
seeks to amend paragraph 19 by adding subpara-
graphs (k) and (1) was allegedly not available to
the plaintiff at the time the motion leading to the
judgment of March 2, 1982 was argued although
some reference was made to the distinction be
tween a commuter-type service and a passenger-
train service (although the latter may carry
primarily commuters). At page 640 the reasons for
judgment reads, referring to Order R-32317 of the
Railway Transport Committee:
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 Consolidated Revenue Fund. Subsec
tion (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 provid
ing the service". It is not necessary for the purpose of the
present proceedings to determine whether in fact the said
passenger-train service 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.
The new information on which the plaintiff now
relies in seeking the amendment consists of a letter
from the Parliamentary Secretary of the Minister
of Transport to the Toronto—Peterborough—
Havelock Line Passenger Association date-
stamped February 26, 1982 stating that it is writ
ten at the request of the Honourable Jean-Luc
Pépin, the Minister, replying belatedly to a letter
of September 30, 1981 which states, inter alia,
that "The inclusion of this service in the recent
announcement on the restructuring of railway pas
senger services was not because of its revenue to
cost ratio but because its nature as a commuter-
type service made it ineligible for federal subsidies
under the Railway Act". The letter points out that
55% of the passengers board and leave the train at
the last two stops before the Union Station and
within the area served by both GO-Transit services
and the Toronto Transit Commission. It discusses
the definition of commuter service and points out
that a report by the Toronto Commissioner of
Planning and Development so considers it and that
the subsidy for passengers would be reduced if the
traffic was shifted to GO-Transit and T.T.C. ser
vices. Government policy is then discussed and it is
pointed out that: "If we are to revitalize the pas
senger train services in Canada then it is essential
to have VIA concentrate on the high-density,
inter-city service, and to allow provinces and mu
nicipalities to develop commuter services to fit
their special needs". This letter was annexed to an
affidavit in support of the present motion.
The plaintiff attempted to introduce at the hear
ing another letter dated March 18, 1982 by
another Parliamentary Assistant to the Minister of
Transport addressed to one Robert L. Sillcox,
whom counsel identifies as being a member of a
Barrie rate-payers association. It was not annexed
to any affidavit, does not state that it is written at
the request of the Minister of Transport and in any
event a perusal of same indicates that it does not
add much to the statements in the previous letter
save perhaps to corroborate that the abandonment
of commuter-type services is a matter of policy
which is that commuter services are a provincial
responsibility. I do not believe this letter should be
formally accepted in evidence.
As indicated at the commencement I do not
believe that amendments should be permitted to a
proceeding under appeal. However, since the
matter is of considerable urgency as the abandon
ment is to take place on September 7, 1982 I will
deal with the present motion on its merits. While
the normal procedure is to the effect that for
purposes of a motion to strike it must be assumed
that the allegations sought to be struck are true
and, then decide whether they could give rise to an
arguable case as to the right claimed, it would
merely cause additional delay to admit the amend
ments on this basis which order would be immedi
ately followed by a motion to strike, at which time
the question of whether the amendments can give
rise to the right claimed would be determined. The
defendants agree that the Court may consider the
matter as if these paragraphs had already been in
the amended statement of claim at the time the
motion to strike was heard, and that in deciding
whether to permit the amendments or not it can
decide the matter on the basis of whether if they
had been in the amended statement of claim at
that time they would have been struck along with
the other subparagraphs of paragraph 19 which
were so struck.
The plaintiff's argument is that the decision of
the Governor in Council to order the cessation of
the service in question was based on policy rather
than on the law and that it therefore exceeded its
jurisdiction in doing so. Reference was made to the
Inuit Tapirisat case [1980] 2 S.C.R. 735 at page
748 in which it is 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.
At page 750 reference is made to a statement in
the case of Border Cities Press Club v. Attorney-
General of Ontario [1955] 1 D.L.R. 404 in which
it was stated [at page 412]:
In exercising the power referred to, the Lieutenant-Governor in
Council is not, in my opinion, exercising a prerogative of the
Crown, but a power conferred by statute, and such a statutory
power can be validly exercised only by complying with statu
tory provisions which are, by law, conditions precedent to the
exercise of such power.
Subsections (8) and (9) of section 261 of the
Railway Act, R.S.C. 1970, c. R-2, read as follows:
261... .
(8) Subsections (2) to (7) do not apply in respect of a
passenger-train service accommodating principally persons who
commute between points on the railway of the company provid
ing the service.
(9) Where, by virtue of subsection (8), a claim cannot be
made under this section in respect of an uneconomic service,
the Commission shall after an investigation certify the actual
loss, if any, that in its opinion is attributable to the service and
report thereon to the Governor in Council for such action as he
deems necessary or desirable to provide assistance in respect of
such loss.
It was probably erroneous therefore for the Par
liamentary Secretary who wrote the letter of Feb-
ruary 26, 1982 to state, as he did, that a commut-
er-type service is ineligible for federal subsidies
under the Railway Act. Even if it were conceded
that this is a commuter service, and that has not
been determined, this would only make it ineligible
for the 80% subsidy of its losses as a passenger-
train service provided for in subsection (4) and not
eliminate the possibility of subsidizing a loss certi
fied by the Commission (which has not yet been
done in this case) by taking "such action as he
deems necessary or desirable to provide assistance
in respect of such loss", provided for in subsection
(9).
In other words there is no obligation to provide
subsidies for commuter services, but merely provi
sion that this may be done if deemed desirable,
which is merely a question of policy, the Governor
in Council evidently taking the position that such
services should be subsidized if necessary by the
provinces or municipalities. It does not appear to
me that by taking such policy matters into con
sideration the Governor in Council was acting
contrary to the law. Moreover it is not desirable
that the courts should inquire into the motivation
of the Governor in Council for adopting any given
Order in Council, unless there is an evident abuse
of power. Reference was made in this connection
to the case of Roncarelli v. Duplessis [1959]
S.C.R. 121 but that is clearly distinguishable as a
flagrant example of abuse of power. The same
applies to the case of Re Doctors Hospital and
Minister of Health (1976) 68 D.L.R. (3d) 220
where the Order in Council set aside was clearly
adopted in contravention of the objects and policy
of the statute.
In the Inuit Tapirisat case (supra) Estey J. in
commenting on the wide powers given the Gover
nor in Council in subsection 64(1) of the National
Transportation Act, R.S.C. 1970, c. N-17, stated
at page 753:
The executive branch cannot be deprived of the right to resort
to its staff, to departmental personnel concerned with the
subject matter, and above all to the comments and advice of
ministerial members of the Council who are by virtue of their
office concerned with the policy issues arising by reason of the
petition whether those policies be economic, political, commer
cial or of some other nature.
and again at page 755:
It is my view that the supervisory power of s. 64, like the power
in Davisville, supra, is vested in members of the Cabinet in
order to enable them to respond to the political, economic and
social concerns of the moment.
and at page 756:
On the other hand, it is apparently the judgment of Parliament
that this is an area inordinately sensitive to changing public
policies and hence it has been reserved for the final application
of such a policy by the executive branch of government.
I do not conclude therefore that the Governor in
Council was not entitled to take policy matters
into consideration in ordering cessation of passen
ger service on the said line.
I might add that if it were concluded that this
was a commuter service, then it is my view that the
railroad would not have to apply to the Commis
sion for the right to cease operating it and hence
the Order in Council was not even necessary if the
railroad could cease operating this service proprio
motu.
Since I have concluded that the amendments if
permitted would properly be struck I refuse per
mission to make the said amendments.
With respect to the hearing of the issue of law
under Rule 474, this was an interlocutory matter
and there is no application before the Court for the
stay of it. Jurisprudence has held that an appeal
does not of itself stay proceedings resulting from
the judgment appealed from, and in fact that
appeals from interlocutory judgments are not
desirable (see for example Cercast Inc. v. Shell-
cast Foundries Inc. [1973] F.C. 28 at pages 34, 35
and [1973] F.C. 674).
In the present case I believe that the question of
law to be determined under Rule 474 should be
heard as soon as possible, all of the parties having
now filed memoranda in connection therewith.
If this judgment is appealed or there is an
appeal from the decision on the question of law as
is likely, it is desirable that all appeals should be
joined for hearing if the Court of Appeal so orders,
so that all issues may be dealt with by it at the
same time and without delay.
ORDER
The plaintiff's motion to amend its amended
statement of claim is dismissed with costs. The
issue of law directed to be set down pursuant to
Rule 474 by judgment herein of March 2, 1982
should be set down for hearing as soon as conven
ient to the parties on a regular motion day in
Toronto or such special date as may be set by the
Associate Chief Justice.
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.