A-786-81
The Jasper Park Chamber of Commerce and
Sterndale Holdings Ltd. (Appellants)
v.
Governor General in Council as represented by the
Attorney General of Canada, VIA Rail Canada
Inc., and Canadian National Railway Company
(Respondents)
Court of Appeal, Heald, Le Dain JJ. and Hyde
D.J.—Calgary, May 13 and 14; Ottawa, Septem-
ber 20, 1982.
Railways — Appeal from judgment of Trial Division strik
ing out statement of claim on ground facts alleged therein
failed to disclose reasonable cause of action — Statement of
claim alleging impugned Order in Council passed under s. 64,
National Transportation Act varied orders of Canadian
Transportation Commission which had effect of discontinuing
certain passenger-train services; that effect of impugned Order
in Council was to discontinue passenger trains declared as
such by Order R-31300 without VIA and C.N.R. having made
application to C.T.C. as required by s. 260, Railway Act; that
because requirements of s. 260 were not satisfied Order in
Council void and that Order in Council is regulation within
meaning of Statutory Instruments Act and because not regis
tered with Clerk of Privy Council as required by the Act did
not come into force — Whether Governor in Council had
jurisdiction under s. 64(1) of National Transportation Act to
make order — Whether Trial Judge erred in finding Order in
Council in force notwithstanding failure of Governor in Coun
cil to comply with s. 5 of Statutory Instruments Act — Based
on Inuit Tapirisat case, exercise of Governor in Council's
power under s. 64(1) is subject to review by courts if Governor
in Council fails to observe condition precedent to exercise of
power Condition precedent involves existence of valid and
subsisting order of C.T.C. and requires that order be relevant
in that variation deals with same subject-matter — Governor
in Council not entitled under s. 64(1) to do, under guise of
variation something of entirely different nature — Constrained
to deal with same type of order as Commission dealt with
Trial Judge did not err in finding Order in Council in force
notwithstanding failure of Governor in Council to comply with
s. 5 — Based on reasoning in Melville case requirement in s. 5
that regulation be transmitted for registration within 7 days
directory not mandatory — As to whether statement of claim
discloses reasonable cause of action, claim should be struck
only when Court satisfied case beyond doubt — While certain
paragraphs of statement of claim without merit, claim for
declaration Order in Council invalid and void not beyond
doubt In that at time of hearing respondents had not
pleaded to statement of claim and appellants therefore had
option under R. 421 to amend pleadings without leave, Court
could not conclude action as it relates to that claim could not
succeed — Whether judgment has practical effect is irrelevant;
no branch of government is above law and if it acts contrary to
statute courts entitled to declare so — Appeal allowed —
National Transportation Act, R.S.C. 1970, c. N-17, ,s. 64 —
Railway Act, R.S.C. 1970, c. R-2, ss. 260, 261 — Statutory
Instruments Act, S.C. 1970-71-72, c. 38, s. 5(1) — Federal
Court Rules 419(1 )(a), 421.
Practice — Motion to strike pleadings — Appeal from order
of Trial Division striking out statement of claim as not
disclosing reasonable cause of action — Appeal allowed —
Certain paragraphs without merit but Court unable to con
clude claim for declaration as to invalidity of Order in Council
cannot succeed — Possibility of amending pleadings without
leave under R. 421 — Federal Court Rules 419(1 )(a), 421.
This is an appeal from a judgment of the Trial Division
granting the motions of the respondents for an order striking
out the appellants' statement of claim and dismissing the action
against them. The action is in relation to a number of orders by
the Governor in Council which established a passenger-train
service for western Canada. The statement of claim alleged
that the impugned Order in Council, purportedly passed under
the authority of section 64 of the National Transportation Act,
varied certain Canadian Transport Commission (C.T.C.)
orders which had the effect of discontinuing passenger train
services that connected Winnipeg, Saskatoon, Edmonton,
Jasper, Kamloops and Vancouver. It further alleged that the
effect of the Order in Council was to discontinue passenger-
train services which had been declared as such in a previous
order without VIA and C.N.R. having made application to the
C.T.C. as required by section 260 of the Railway Act and that
the Order was therefore invalid and void. Finally it alleged that
the Order in Council was a regulation within the meaning of
the Statutory Instruments Act and that because it was not
registered with the Clerk of the Privy Council as required by
section 5 of the Act, it was invalid. The appellants contend that
the Trial Judge erred in finding that the Governor in Council
had jurisdiction under section 64 of the National Transporta
tion Act to pass the impugned order and that he erred in
finding that Order valid notwithstanding the failure of the
Governor in Council to comply with the provisions of the
Statutory Instruments Act.
Held, the appeal is allowed. With regard to the issue of
whether the Governor in Council had jurisdiction under subsec
tion 64(1) of the National Transportation Act to make the
impugned order, two Schedules of that order are relevant:
Schedules XV and XVI. The relevant group in Schedule XVI is
group 17 which has the effect of amending the passenger-train
service connecting Winnipeg, Saskatoon, Edmonton, Jasper,
Kamloops and Vancouver as declared by Order R-31300. The
Inuit Tapirisat case is authority for the proposition that the
exercise of power under subsection 64(1) is subject to review by
the courts if the Governor in Council fails to observe a condi
tion precedent to the exercise of that power. This condition
precedent involves the existence of a valid and subsisting order
of the C.T.C. and the requirement that the order be relevant in
that the variation made deals with the same subject-matter as
the order it purports to vary. Order R-22346 is not a relevant
order for the purposes of the discontinuing order contained in
Schedule XV, section 2 because the service which is the
subject-matter of Order R-22346 is not the same service as that
ordered to be discontinued in that section. The original passen-
ger-train service which was declared by Order R-6751 and
continued by Order R-22346 was changed by the Final Plan for
Western Transcontinental Passenger Train Service as noted in
Order R-31300. Because of the change effected by the Final
Plan the service ordered to be discontinued was different from
the service that the C.T.C. ordered not be discontinued by the
C.N.R. in Order R-22346. The Governor in Council is not
entitled under subsection 64(1) to do, under the guise of a
variation, something of an entirely different nature. Under that
subsection Cabinet is constrained to deal with the same type of
order as the Commission was dealing with. It does not author
ize the Governor in Council to vary any and all Commission
orders no matter when they are issued or regardless of their
subject-matter.
With regard to section 3 of Schedule XV which purportedly
amends Order R-26520; Order R-26520 amended Order
R-6751 and is therefore dependant for its validity on the
existence of that Order. After Order R-6751 was repealed
Order R-26520 could no longer be considered a valid and
speaking Order. Based on this when Schedule XV, section 3
was passed the condition precedent was not fulfilled and the
section is therefore invalid. There is also a problem of relevance
in respect of section 3. Order R-26520 deals with the declara
tion or definition of a passenger-train service; not with its
discontinuance. However, section 3, while calling itself a
"variation" orders discontinuance of certain segments of pass-
enger-train service.
However, the Governor in Council did act within his jurisdic
tion in respect of Schedule XVI and that schedule, which
amends Order R-31300, is valid. The portion of Order R-31300
which the schedule purports to amend by deleting certain
segments and decreasing minimum frequency, is that which
"declared", within the meaning of subsection 260(1) of the
Railway Act, as a passenger-train service, the C.N.R. service
from Winnipeg through Saskatoon, Edmonton, Jasper, Kam-
loops to Vancouver. The Commission clearly had the power to
make that declaration under subsection 260(1) and it was,
therefore, a validly speaking Commission order which the
Governor in Council was entitled to vary or rescind pursuant to
subsection 64(1) of the National Transportation Act. It was
also a relevant Order for the purposes of Schedule XVI because
it was an Order declaring or defining a passenger-train service
and not a discontinuance Order.
The Trial Judge did not err in finding that the Order in
Council had come into force notwithstanding the failure of the
Governor in Council to comply with section 5 of the Statutory
Instruments Act. Based on the reasoning in the Melville case
the requirement in section 5 that a regulation be transmitted
for registration within 7 days is directory not mandatory.
With regard to the issue of whether the statement of claim
discloses a reasonable cause of action; on such a motion all
facts pleaded in a statement of claim are deemed to have been
proven. The claim should be struck out or the action dismissed
only where the Court is satisfied that the case is beyond doubt.
Based on the Court's conclusions in relation to the foregoing
issues and adopting the criteria applied in the Inuit Tapirisat
case, the paragraphs of the statement of claim claiming a
declaration that the impugned Order in Council has not come
into force and that the plaintiffs are entitled to receive passen
ger train service from VIA and C.N.R. as set out in R.T.C.
Order R-31300 and claiming an injunction restraining the
defendants from discontinuing service affecting Jasper as set
out in R.T.C. Order R-31300 are clearly without merit. How
ever, the claim for a declaration that the Order in Council is
invalid and void is not beyond doubt. Since, at the time of
hearing the respondents had not yet pleaded to the statement of
claim, pursuant to Rule 421 it is still open to the appellants to
amend their pleadings without leave. At this point, therefore,
the Court cannot conclude that the action as it relates to the
claim in subparagraph a) could not succeed. The argument that
the statement of claim should not be allowed to stand because
any relief granted under subparagraph a) would not have any
practical effect fails. Regardless of whether a judgment has
practical effect, no branch of the government is above the law
and if it acts contrary to a statute the courts are entitled to
declare so: Kelso v. Her Majesty The Queen. Therefore, if the
Governor in Council has enacted an Order in Council which is
partly or wholly invalid the courts are entitled to make a
declaration of invalidity. While a declaration of invalidity
might have legal effect but little practical effect in so far as the
respondents are concerned, the matter is not beyond doubt and
should, therefore, be allowed to proceed. Because the respond
ents are not precluded from moving in the Trial Division for an
order striking out portions of the statement of claim and the
appellants may still amend their claim it would be premature to
order that the parts of the claim relating to Schedule XVI of
the impugned Order in Council be struck out pursuant to Rule
419(1)(a) on the grounds that part of the order is valid and
part is not with the result that only part of the statement of
claim raises a triable issue.
CASES JUDICIALLY CONSIDERED
APPLIED:
The Attorney General of Canada v. Inuit Tapirisat of
Canada et al., [1980] 2 S.C.R. 735; Kelso v. Her Majes
ty The Queen, [1981] 1 S.C.R. 199.
COUNSEL:
J. E. Redmond, Q.C. and B. Zalmanowitz for
appellants.
E. A. Bowie, Q.C. for respondent Attorney
General of Canada.
M. E. Rothstein, Q.C. and L. M. Huart for
respondent VIA Rail Canada Inc.
Grant H. Nerbas and P. Antymniuk for
respondent Canadian National Railway Com
pany.
SOLICITORS:
Milner & Steer, Edmonton, for appellants.
Deputy Attorney General of Canada for
respondent Attorney General of Canada.
Aikins, MacAulay & Thorvaldson, Win-
nipeg, for respondent VIA Rail Canada Inc.
Canadian National Railways Legal Depart
ment, Winnipeg, for respondent Canadian
National Railway Company.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal from a judgment of
the Trial Division [Federal Court, T-5384-81,
judgment dated November 11, 1981] wherein the
motions of the respondents for an order pursuant
to Rule 419(1)(a) striking out the appellants'
statement of claim and dismissing the action
against them were granted with costs. As stated by
the learned Trial Judge, this case is a parallel case
to the action brought by the City of Melville et al.
which also sought a declaration that Order in
Council P.C. 1981-2171 [SOR/81-892] dated
August 6, 1981 (the impugned Order in Council)
was invalid and requesting ancillary injunctive
relief. This appeal was heard immediately follow
ing the appeal in the City of Melville case [1983]
2 F.C. 123.
The basis upon which the learned Trial Judge
granted the motions herein was that the facts
alleged in the statement of claim failed to disclose
a reasonable cause of action. For the purposes of
the motions before him, he assumed the facts
alleged in the statement of claim to be admitted
and true, a proper approach when considering an
application to strike under Rule 419(1)(a).
The statement of claim alleged, inter alia, that
the impugned Order in Council, purportedly
passed under the authority of section 64 of the
National Transportation Act, R.S.C. 1970, c.
N-17, varied certain Orders of the Canadian
Transport Commission (the C.T.C.) which had the
effect of discontinuing certain passenger-train ser
vices which connected Winnipeg, Saskatoon,
Edmonton, Jasper, Kamloops and Vancouver. The
statement of claim went on to allege that the effect
of the impugned Order in Council was to discon
tinue the passenger-train services declared as such
in Order R-31300 without VIA and Canadian
National having made an application to the C.T.C.
as required by section 260 of the Railway Act,
R.S.C. 1970, c. R-2, and that since the require
ments of section 260 were not satisfied, the
impugned Order in Council is therefore invalid
and void.
The statement of claim also alleged (paragraph
14) that the impugned Order in Council: "... is a
regulation within the meaning of the Statutory
Instruments Act, S.C. 1970-71-72, c. 38, as
amended", and "... was not registered with the
Clerk of the Privy Council as required by the
Statutory Instruments Act and therefore has not
come into force."
The appellants base their appeal on two
grounds: firstly, that the Trial Judge erred in
finding that the Governor General in Council had
jurisdiction under section 64 of the National
Transportation Act to pass the impugned Order in
Council and, secondly, that he erred further in
finding that the impugned Order in Council was
valid notwithstanding the failure of the Governor
General in Council to comply with the provisions
of the Statutory Instruments Act.
I propose to deal initially with the submission
that Order in Council, P.C. 1981-2171 was passed
without jurisdiction thereby rendering it invalid
and void.
THE C.T.C. ORDERS
For a proper appreciation of this submission as it
was argued before us by counsel for these appel-
lants, it is necessary, in my view, to refer to a
number of Orders and a "Final Plan" of the
Railway Transport Committee (R.T.C.) of the
C.T.C. Those documents, set out in chronological
sequence, are as follows:
1. Order R-6751—issued September 19, 1969—
That Order, inter alia, declared the Canadian
National Railway (C.N.R.) passenger-trains 1,
2, 3 and 4 (otherwise known as the Super-Conti
nental) to be a passenger-train service for the
purposes of what are now sections 260 and 261
of the Railway Act.
2. Order R-11061—issued February 26, 1971—
That Order was made as a result of an applica
tion by the respondent C.N.R. to discontinue,
inter alla, their Super-Continental trains 1, 2, 3
and 4.' The Committee ordered:
(a) that the Super-Continental service was
uneconomic and was likely to continue to be
uneconomic; and
(b) that C.N.R. should not discontinue the
operation of the Super-Continental trains 1, 2,
3 and 4. The Committee said, in this regard
(A.B., Vol. 1, pp. 91-93):
Pending the development of the integrated plan of ration
alization of transcontinental passenger services of the
main-line railways, we determine that it is in the public
interest that the operation of the Super-Continental
should not be discontinued.
3. Order R-22346—issued February 26, 1976—
That Order was stated to be a reconsideration 'of
C.N.R.'s application to discontinue the opera
tion of the Super-Continental trains 1, 2, 3
and 4 (Order R-11061) pursuant to the provi
sions of subsection 260(8) of the Railway Act. 2
The Committee determined, inter alfa, that the
passenger-train service comprising trains 1, 2, 3
and 4 was uneconomic and was likely to contin
ue to be uneconomic and ordered, inter alla,
' Trains I and 2 operated between Montreal and Vancouver
via Ottawa-Winnipeg-Saskatoon-Edmonton-Jasper, etc. During
the winter months trains 3 and 4 operated between Toronto and
Capreol where they joined trains 1 and 2. In the summer
months, trains 3 and 4 ran between Toronto and Vancouver.
that the C.N.R. should not discontinue opera
tion of the said passenger-train service.
4. Final Plan for Western Transcontinental Pas
senger Train Service—issued by the R.T.C. in
October of 1977
It was said (A.B., Vol. 1, p. 120) that the Final
Plan would feature, inter alia:
(i) a daily Montreal/Toronto-Vancouver train
running on a C.P. rail track via Thunder Bay,
Winnipeg and Calgary with a schedule pat
terned on that of the present "Canadian"; and
(ii) a connecting daily Winnipeg-Vancouver
train running on a C.N. track via Edmonton,
with a schedule basically the same as that of
the train via Calgary.
The Final Plan, as issued in October of 1977,
was not in the form of a Committee Order. The
Committee stated its belief that it would be the
responsibility of the respondents VIA and
C.N.R. and of the Canadian Pacific Railway
(C.P.R.) to implement the Final Plan.
5. Order R-26520—issued March 8, 1978. The
preamble of this Order states, inter alia, (A.B.,
Vol. I, p. 110): "WHEREAS the implementation
of the transitional plan and the Final Plan can
2 Subsection 260(8) reads as follows:
260. ...
(8) If the Commission determines that the operation of an
uneconomic passenger-train service should not be discon
tinued, the Commission shall so order, and thereafter shall
reconsider the application for discontinuance at intervals not
exceeding five years from the date of the original application
or last consideration thereof, as the case may be, for the
purpose of determining whether the passenger-train service
should be discontinued, and if
(a) the Commission finds that the passenger-train service
has, since the last consideration, become an economic
passenger-train service, it shall reject the application for
discontinuance of the passenger-train service without
prejudice to any application that may subsequently be
made for the discontinuance of that service; or
(b) the Commission finds that the passenger-train service
continues to be an uneconomic service, it shall determine
whether the service should be discontinued as provided by
subsection (7) or continued as provided by this subsection.
be achieved only by amending parts of
Schedules I and II of Order No. R-6751;". The
order then purports to make the necessary
amendments to Order R-6751 so as to imple
ment the Transitional Plan.
6. Order R-28543—issued March 21, 1979.
This Order makes certain amendments to Order
R-26520 and is described as the modified Tran
sitional Plan.
7. Order R-29468—issued August 15, 1979.
This Order makes further amendments in order
to implement the Final Plan.
8. Order R-31300—issued August 14, 1980
(A.B., Vol. 2, pp. 144-187). This Order is highly
significant to the issue herein being discussed
and is the last of the Orders, chronologically,
which are relevant to this issue. The preamble to
Order R-31300 reads as follows (A.B., Vol. 2,
pp. 144-146):
RAILWAY TRANSPORT COMMITTEE
ORDER NO. R-31300
August 14, 1980
IN THE MATTER OF Order No. R-6751 of the Committee
dated September 19, 1969, and subsequent Orders pertain
ing to frequency and routing of passenger-train services;
IN THE MATTER OF the minimum frequency required over
the various segments of routes formerly operated by trains
but now operated by means of highway vehicles; and
IN THE MATTER OF responsibility for the provision of
passenger-train services since the advent of VIA Rail
Canada Inc.
File No. 49468.18
WHEREAS subsection 260(1) of the Railway Act defines a
passenger-train service as "such train or trains of a company
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";
WHEREAS subsection 260(2) provides that "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";
WHEREAS the Committee deemed it desirable that one
Order contain the declarations made in respect of all
"passenger-train services" and therefore issued Order No.
R-6751 on September 19, 1969;
WHEREAS Order No. R-6751 fixed minimum frequencies for
the operation of the passenger-train services and designated
areas within which each railway company was to provide
such minimum frequencies;
WHEREAS, since the issuance of Order No. R-6751, many
changes have occurred in frequency and routing and many
Orders and other directives superceding the said Order have
been issued;
WHEREAS it is considered desirable that an explicit state
ment be made of the minimum frequency required over the
various segments of routes formerly operated by trains but
now operated by means of highway vehicles;
WHEREAS the responsibility for most passenger-train ser
vices and substituted highway services has been affected by
the advent of VIA Rail Canada Inc.;
WHEREAS the Committee's Final Plan for Western
Transcontinental Passenger-Train Service issued in October
of 1977, its Final Plan for Eastern Transcontinental Passen-
ger-Train Service issued in June of 1979, and certain Orders
concerning other passenger-train services and substituted
highway services issued since October of 1977 have held that
the railway companies under the jurisdiction of the Commis
sion taking part in the provision of a specific service jointly
share the responsibility for providing that service;
NOW THEREFORE the Committee is of the opinion that it is
expedient to issue a new Order which will list those trains
which comprise "passenger-train services" for the purposes
of Sections 260 and 261 of the Railway Act and their
minimum frequencies and, furthermore, will list the mini
mum frequencies required over the various segments of
routes formerly operated by trains but now operated by
means of highway vehicles.
In respect of Order R-31300, paragraph 10 of the
statement of claim alleges (A.B., Vol. 1, p. 3):
10. The RTC on August 14, 1980 issued order R-31300 which,
inter alia, did the following:
a) replaced order R-6751, referred to in paragraph 5, and
established routing and frequency of passenger train services;
b) recognized the responsibility of Via to provide passenger
train service, and
c) declared that the trains capable of carrying passengers and
operating over certain of the route segments listed in the
schedules attached as an appendix to Order R-31300 com
prised "passenger train services" for the purposes of section
260 and 261 of the Railway Act.
Order R-31300, therefore, created a new and different "passen-
ger train service" within the meaning of section 260 of the
Railway Act which specifically required a passenger train
service connecting the following points at a minimum frequency
per week of seven times:
Winnipeg-Saskatoon-Edmonton-Jasper-Kamloops-Vancouver.
ORDER IN COUNCIL P.C. 1981-2171
(The Impugned Order in Council)
The impugned Order in Council reads as follows
(A.B., Vol. 2, p. 191):
His Excellency the Governor General in Council, on the
recommendation of the Minister of Transport, pursuant to
subsection 64(1) of the National Transportation Act, of its own
motion hereby varies the Canadian Transport Commission
Orders and Decisions referred to in Schedules I to XVII hereto
in the manner set out in those schedules.
For the purposes of this appeal, the relevant
Schedules to the Order in Council are XV and
XVI. Those Schedules read as follows (see A.B.,
Vol. 2, pp. 206 to 217 inclusive):
SCHEDULE XV
Western Transcontinental Passenger-Train Service
Toronto-Barrie Passenger-Train Service
1. Order No. R-22125 of the Railway Transport Committee
of the Canadian Transport Commission dated the 29th day of
January 1976, is hereby varied as follows:
(1) Section 1 on page 2 of the said Order is revoked and
the following substituted therefor:
"I. VIA Rail Canada Inc. and Canadian Pacific Lim
ited shall not discontinue operation of the said passenger-
train service, with the exception of the passenger-train
service between Montréal and Ottawa (via Vankleek Hill)
which shall be discontinued effective the 15th day of
November 1981."
2. Order No. R-22346 of the Railway Transport Committee
of the Canadian Transport Commission dated the 26th day of
February 1976, is hereby varied as follows:
(I) Section I on the second page of the said Order is
revoked and the following substituted therefor:
"1. VIA Rail Canada Inc. and Canadian National
Railways shall not discontinue operation of the said pass-
enger-train service, with the exception of the passenger-
train service provided by trains 168 and 169 (now trains
146 and 147) between Toronto and Barrie, which shall be
discontinued effective the 7th day of September 1982, and
the passenger-train service between Winnipeg and Sas-
katoon and the passenger-train service between Jasper and
Vancouver which shall be discontinued effective the 15th
day of November 1981."
3. The "Final Plan for Western Transcontinental Passenger-
Train Service" of the Railway Transport Committee of the
Canadian Transport Commission dated October 1977 as imple
mented by Order No. R-26520 of the Railway Transport
Committee dated the 8th day of March 1978 and as amended is
hereby varied as follows:
(1) Clauses (i) to (iv) under the heading "The Final Plan"
on page I of the said Final Plan are hereby revoked and the
following substituted therefor:
"(i) a daily Montréal -Toronto-Vancouver train via Thun
der Bay, Winnipeg and Calgary effective the 15th day of
November 1981. The present passenger-train service be
tween Montréal and Ottawa (via Vankleek Hill) shall be
discontinued effective the 15th day of November 1981;
(ii) coach service for the passenger-train services between
Ottawa and Sudbury and between Saskatoon and Edmon-
ton effective the 15th day of November 1981; and
(iii) full service for passenger-train service between
Edmonton and Jasper effective the 15th day of November
1981.
The passenger-train service between Winnipeg and Sas-
katoon and passenger-train service between Jasper and Van-
couver shall be discontinued effective the 15th day of
November 1981."
SCHEDULE XVI
I. Order No. R-31300 dated the 14th day of August 1980, of
the Railway Transport Committee of the Canadian Transport
Commission is hereby varied as follows:
(1) Groups 6, 7 and 23 of Schedule I of the said Order are
revoked effective the 15th day of November 1981.
(2) Groups 1, 3, 5, 16, 17, 22, and 25 of Schedule I of the
said Order are revoked and the following groups dated the
15th day of November 1981 substituted therefor effective the
15th day of November 1981.
For the purposes of this appeal the only relevant
group set out in said Schedule XVI is group 17
(see A.B., Vol. 2, p. 215). The effect of that
purported amendment was to amend the passen-
ger-train service connecting Winnipeg-Saskatoon-
Edmonton-Jasper-Kamloops-Vancouver (at a min
imum frequency of 7 times per week) as declared
by Order R-31300 by deleting therefrom the seg
ments from Jasper to Vancouver and from Win-
nipeg to Saskatoon and by decreasing the mini
mum frequency to 3 times per week between
Edmonton and Jasper.
As stated in the impugned Order in Council, the
respondents rely on the provisions of subsection
64(1) of the National Transportation Act which
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.
Counsel for both the appellants and the respond
ents cited the decision of the Supreme Court of
Canada in The Attorney General of Canada v.
Inuit Tapirisat of Canada et al. 3 as authority for
the view that the power vested in the Governor in
Council pursuant to said subsection 64(1) is sub
ject to review by the Courts if the Governor in
Council fails to observe a condition precedent to
the exercise of that power. There are, however, as
between counsel for the opposing parties, signifi
cant differences as to the nature of that condition
precedent, when related to the case at bar. It was
the submission of counsel for the Attorney General
of Canada, both in his factum and in oral argu
ment, that the required condition precedent was
that there need be merely a valid and subsisting
order of the C.T.C. to be varied. Counsel for the
appellants, on the other hand, submitted that it is
a condition precedent to the exercise of authority
under subsection 64(1) that there be in existence,
at the time of the passing of the Order in Council,
not only a valid and subsisting order of the C.T.C.
but a relevant one as well. In the submission of
counsel, the requirement of relevance is that the
variation made by the Governor in Council must
deal with the same subject-matter as the order
which it purports to vary. It was his view that an
order of discontinuance of passenger-train service
cannot be validly made in purported variation of
an order which deals, not with any application to
discontinue, but with a declaration that certain
trains comprise a passenger-train service for the
purposes of sections 260 and 261 of the Railway
Act. Sections 260 and 261 read as follows:
260. (I) 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;
3 [1980] 2 S.C.R. 735.
"passenger-train service" means such a train or trains of a
company 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.
(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.
(3) Concurrently with the filing of the application to discon
tinue the passenger-train service, the company shall also submit
to the Commission a statement of the costs and revenues of the
company attributable to the carriage of passengers by the
service in each of such number of consecutive financial years of
the company as the Commission may prescribe (hereinafter in
this section referred to as the "prescribed accounting years"),
and the Commission shall cause such public notice of the
application to be given in the area served by the passenger-train
service as the Commission deems reasonable.
(4) If the Commission is satisfied that the application to
discontinue the passenger-train service has been filed in accord
ance with the rules and regulations of the Commission, the
Commission shall, after investigation, and whether or not it has
afforded the company an opportunity to make further submis
sions, review the statement of costs and revenues referred to in
subsection (3) together with all other documents, facts and
figures that in its opinion are relevant, and shall determine the
actual loss, if any, attributable to the passenger-train service in
each of the prescribed accounting years.
(5) If the Commission finds that in its opinion the company,
in the operation of the passenger-train service with respect to
which an application for discontinuance was made, has
incurred actual loss in one or more of the prescribed accounting
years including the last year thereof, the Commission shall,
after such hearings, if any, as are required in its opinion to
enable all persons who wish to do so to present their views on
the discontinuance of the passenger-train service, and having
regard to all matters that to it appear relevant, determine
whether the passenger-train service is uneconomic and is likely
to continue to be uneconomic and whether the passenger-train
service should be discontinued; but if the Commission finds that
in its opinion, the company has incurred no actual loss in the
operation of such passenger-train service 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 that service.
(6) In determining whether 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 including, without limiting the generality of the
foregoing,
(a) the actual losses that are incurred in the operation of the
passenger-train service;
(b) the alternative transportation services, including any
highway or highway system serving the principal points
served by the passenger-train service, that are available or
are likely to be available in the area served by the service;
(c) the probable effect on other passenger-train service or
other passenger carriers of the discontinuance of the service,
or of parts thereof; and
(d) the probable future passenger transportation needs of the
area served by the service.
(7) If the Commission determines that the operation of an
uneconomic passenger-train service should be discontinued, the
Commission shall by order fix such date or dates for the
discontinuance of the operation of the service or parts thereof
as to the Commission appears to be in the public interest; but a
discontinuance date shall be
(a) not earlier than thirty days from the date of the order; or
(b) not later than one year from the date of the order.
(8) If the Commission determines that the operation of an
uneconomic passenger-train service should not be discontinued,
the Commission shall so order, and thereafter shall reconsider
the application for discontinuance at intervals not exceeding
five years from the date of the original application or last
consideration thereof, as the case may be, for the purpose of
determining whether the passenger-train service should be dis
continued, and if
(a) the Commission finds that the passenger-train service
has, since the last consideration, become an economic passen-
ger-train service, it shall reject the application for discontinu
ance of the passenger-train service without prejudice to any
application that may subsequently be made for the discon
tinuance of that service; or
(b) the Commission finds that the passenger-train service
continues to be an uneconomic service, it shall determine
whether the service should be discontinued as provided by
subsection (7) or continued as provided by this subsection.
(9) The Commission shall cause such public notice of any
hearing, finding, determination, order, reconsideration or rejec
tion, made or given in respect of the passenger-train service
pursuant to subsection (4), (5), (7) or (8), to ge given in the
area served by the passenger-train service as the Commission
deems reasonable.
261. (1) In this section
"claim period" means, in relation to any uneconomic passen-
ger-train service, the period
(a) beginning ninety days after the date the application to
discontinue the service has been filed with the Commission in
accordance with the rules and regulations of the Commis
sion, and
(b) ending on the date fixed by the Commission, or as varied
pursuant to section 64 of the National Transportation Act,
for the discontinuance of the service or part thereof;
"fiscal period" means the period commencing on the 1st day of
April in any year and ending on the 31st day of March in the
following year;
"uneconomic service" means a passenger-train service that has
been determined to be uneconomic by the Commission under
section 260.
(2) When an uneconomic service is being operated within a
claim period, the company operating it may file a claim with
the Commission for the amount of any actual loss of the
company attributable to the service in any financial year of the
company within the claim period, or, where only a part of a
financial year is within the claim period, in that part thereof
within the claim period.
(3) A claim under this section shall be filed with the Com
mission not later then three months after the commencement of
the fiscal period next following the financial year of the com
pany in which the actual loss was incurred.
(4) The Commission shall examine the claim and shall
certify the amount of the actual loss, if any, that in its opinion
was attributable to the service and the Minister of Finance, on
the recommendation of the Commission, may, in respect of the
loss, cause to be paid out of the Consolidated Revenue Fund an
amount not exceeding eighty per cent of the loss as certified by
the Commission.
(5) The Commission may, in respect of any such payment,
or the total of all such payments in respect of the actual losses
of the company attributable to the passenger-train service in
earlier years, cause such public notice of such payment or
payments to be given in the area served by the passenger-train
service as the Commission deems reasonable.
(6) The Commission may authorize and direct an adjust
ment to be made in any payment to a railway company in one
fiscal period for or on account of an underpayment or overpay-
ment made under this section to that company in an earlier
fiscal period.
(7) In determining the amount of any actual loss for the
purposes of section 260 or this section, the Commission may
include therein or exclude therefrom such items and factors
relating to costs and revenues as to the Commission seem
proper.
(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.
(10) Where pursuant to any action taken by the Governor in
Council under this section financial assistance is provided a
railway company in any years from moneys appropriated by
Parliament therefor, the payment to such company of such
assistance shall be deemed for the purposes of section 413 to be
a payment under this section.
Relating this requirement of relevance to
Schedule XV of the Order in Council, it is to be
noted that section 2 thereof purports to amend
Order R-22346 by, inter alia, providing for the
discontinuance of the C.N.R. passenger-train ser
vice between Winnipeg and Saskatoon and be
tween Jasper and Vancouver effective November
15, 1981. However, Order R-22346 merely
ordered the continuance of the Super-Continental
passenger-train service as provided by C.N.R.
trains 1, 2, 3 and 4, which had been declared a
passenger-train service for the purposes of what
are now sections 260 and 261 of the Railway Act
(supra) by Order R-6751. Thus, it is submitted,
section 2 of Schedule XV is invalid because the
passenger-train services therein ordered to be dis
continued, were different from and not part of the
passenger-train service which comprised the
subject-matter of the continuance Order
(R-22346).
I find merit in this contention by appellants'
counsel. It is clear from the record that the passen-
ger-train service, the "Super-Continental", which
was declared to be a passenger-train service by
Order R-6751 and was ordered to be continued (or
to not be discontinued) by Order R-22346 was
changed by the "Final Plan" through the introduc
tion of a Winnipeg-Vancouver train on C.N.R.
track through Saskatoon, Edmonton, Jasper and
Kamloops which train connected at Winnipeg with
the existing C.P.R. transcontinental service from
Montreal and Toronto known and designated as
"The Canadian". (See A.B., Vol. 1, p. 120.) It
should be noted at this juncture that this change
made by the "Final Plan" does not appear in the
amendments made to Order R-6751 by Order
R-26520 which purported to implement the "Final
Plan". Nevertheless, said change appears to be
covered by the declaration of passenger-train ser
vices in Order R-31300. Accordingly, whether
Order R-31300 was a mere "pulling together" or
consolidation of changes made in passenger-train
services since Order R-6751 was issued, as charac
terized by the learned Trial Judge, and as accepted
by counsel for the City of Melville in that appeal,
or whether, as contended by counsel for these
appellants, Order R-31300 created a new passen-
ger-train service, the matter of significance, in so
far as the validity of section 2 of Schedule XV is
concerned, is that because of the change effected
by the Final Plan, the passenger-train services
which were ordered to be discontinued were differ
ent from the passenger-train service that C.N.R.
was ordered not to discontinue by Order R-22346.
I agree with counsel for the appellants that the
Governor in Council under the authority given to
it by subsection 64(1) is not entitled, under the
guise of "variation" to do something of an entirely
different nature. I agree that the Cabinet is con
strained under subsection 64(1), when varying a
Commission order, to deal with the same type or
kind of order as the Commission was dealing with.
I do not agree that subsection 64(1) authorizes the
Governor in Council to vary any and all Commis
sion orders no matter when they are issued or
regardless of their subject-matter. In my view,
Order R-22346 is not a relevant Order for the
purposes of the discontinuance Order contained in
section 2 of Schedule XV because as detailed
supra, the passenger-train service which was the
subject-matter of Order R-22346 was not the same
passenger-train service as that ordered to be dis
continued in section 2 of Schedule XV.
Turning now to the question of the validity of
section 3 of Schedule XV, that section purports to
vary Order R-26520. However, Order R-26520
purported to amend Order R-6751 and as such, is
dependant for its validity on that Order. Accord
ingly, it is my view that Order R-26520 cannot be
considered a valid and speaking Order after the
repeal of Order R-6751 (which was accomplished
by Order R-31300). From this it necessarily fol
lows that at the time section 3 of Schedule XV was
passed, Order R-26520 was not a valid and sub
sisting Order and if this was the situation, then the
necessary condition precedent to the exercise of
power under subsection 64(1) was lacking and
would of itself, be sufficient to invalidate said
section 3 of Schedule XV.
Additionally, it seems to me that the relevance
attack on the validity of section 2 of Schedule XV
as developed supra, applies with equal force to
section 3 as well. Order R-26520 concerns itself
with the declaration or definition of a passenger-
train service and not with its discontinuance (or
continuance) whereas section 3 of Schedule XV by
the last paragraph thereof, under the guise of
variation, orders discontinuance of the Winnipeg-
Saskatoon and Jasper-Vancouver segments of that
passenger-train service. Thus, Order R-26520
cannot be said to be a relevant Order for the
purposes of the discontinuance Order contained in
section 3 of Schedule XV.
I come now to Schedule XVI of the impugned
Order in Council. Schedule XVI purports to make
significant amendments to Order No. R-31300. As
stated supra, Order R-31300 revoked Order
R-6751 and declared pursuant to section 260 of
the Railway Act, a passenger-train service con
necting Winnipeg - Saskatoon - Edmonton - Jas
per - Kamloops - Vancouver (at a minimum fre
quency of seven times per week). As I said earlier,
Schedule XVI of the Order in Council purports to
amend that passenger-train service by deleting
therefrom the segments from Jasper to Vancouver
and from Winnipeg to Saskatoon and by decreas
ing the minimum frequency to three times per
week between Edmonton and Jasper. The attack
made by counsel for the appellants on Schedule
XVI was to the effect that the condition precedent
necessary for the promulgation of Schedule XVI
was the existence of a valid speaking discontinu
ance Order by the Commission in respect of those
portions of the Winnipeg-Vancouver C.N.R. ser
vice sought to be discontinued by Schedule XVI.
Turning to Order R-31300, counsel submits that,
as alleged in paragraph 10 of the statement of
claim, that Order created a "new and different"
passenger-train service "within the meaning of
section 260 of the Railway Act" than the passen-
ger-train service declared to be a passenger-train
service under Order R-6751. It is the view of
appellants' counsel that the train service created
by Order R-31300 did not exist prior to 1978.
What existed from and after 1969 (when Order
R-6751 declared the Super-Continental C.N.R.
trains 1, 2, 3 and 4) until 1978 was a C.N.R. train
service from Montreal/Toronto to Vancouver. The
point counsel makes about Order R-31300 is that
there is nothing therein which effectively and val
idly discontinues the previous C.N.R. Super-Con
tinental service. In his submission, subsection
260(1) of the Railway Act gives the Commission
power to declare a "passenger-train service" and
subsections (2) to (9) of said section 260 provide
the code whereby discontinuance may be effected
by Commission order. Thus, in his view, since the
discontinuance provisions of section 260 were not
followed prior to the promulgation of Order
R-31300, that Order cannot be said to be a valid
speaking discontinuance Order. In his submission,
the Governor in Council does not have the right to
legislate a discontinuance in circumstances such as
this where there has never been a discontinuance
order passed by the Commission pursuant to the
code for discontinuance as set forth in subsections
(2) to (9) of section 260 of the Railway Act.
I have difficulty in accepting the view that
because the provisions of subsections 260(2) to (9)
of the Railway Act were not adhered to by the
Commission prior to the issuance of Order
R-31300, that this circumstance operates so as to
invalidate Order R-31300 in its entirety. It is
likely that the practical effect of Order R-31300
was, inter alia, to discontinue the Super-Continen
tal C.N.R. service as discussed supra. However,
that Order also "declared", within the meaning of
subsection 260(1) of the Railway Act, as a passen-
ger-train service, the C.N.R. service from Win-
nipeg through Saskatoon, Edmonton, Jasper,
Kamloops to Vancouver. That is the portion of
Order R-31300 which Schedule XVI purports to
amend. Since the Commission clearly had the
power to make that declaration under subsection
260(1), it was, in my view, a validly speaking
"Commission order" which the Governor in Coun
cil was entitled to "vary or rescind" pursuant to
subsection 64(1) of the National Transportation
Act. It was also a relevant Order for the purposes
of Schedule XVI because it was an Order
declaring or defining a passenger-train service and
not a discontinuance Order. Since a valid, subsist
ing and relevant Order existed when the Order in
Council was passed, it is my opinion that the
required condition precedent in respect of
Schedule XVI was present.
On the basis of a careful review of the Inuit
Tapirisat decision (supra), as it applies to the
factual situation in this case, I conclude that the
only condition precedent necessary for the exercise
of authority under subsection 64(1) by the Gover
nor in Council was the existence of a valid, subsist
ing and relevant order made by the R.T.C. and
since, in my view, for the reasons expressed supra,
such a valid, subsisting and relevant Order did
exist when the Order in Council was passed, the
attack on the validity of Schedule XVI of the
impugned Order in Council must fail.
To summarize then my conclusions with respect
to appellants' submissions that the Governor in
Council did not have jurisdiction under subsection
64(1) of the National Transportation Act to make
the Order in Council in question, it is my view that
the Governor in Council acted within its jurisdic
tion in enacting Schedule XVI to the Order in
Council but acted without jurisdiction in enacting
sections 2 and 3 of Schedule XV thereof.
I propose to now deal with appellants' second
ground of appeal, i.e., that the learned Trial Judge
was in error in finding that the impugned Order in
Council had come into force notwithstanding the
failure of the Governor in Council to comply with
the provisions of the Statutory Instruments Act,
and in particular, section 5 thereof which provides:
5. (I) Every regulation-making authority shall, within seven
days after making a regulation or, in the case of a regulation
made in the first instance in one only of its official language
versions, within seven days after its making in that version,
transmit copies of the regulation in both official languages to
the Clerk of the Privy Council for registration pursuant to
section 6.
The learned Trial Judge held that the provisions of
section 5 requiring transmission for registration of
a regulation within seven days are directory rather
than mandatory. His reasons for so finding are to
be found at pages 657-659 of Volume V of the
Appeal Book in the Melville case which, in his
reasons for judgment in this case were made to
apply to this case.
In my view, his conclusion on this issue was
correct and I am content to adopt his reasons for
so finding as well.
On a motion to strike a statement of claim
because it discloses no reasonable cause of action,
all the facts pleaded in the statement of claim
must be deemed to have been proven. The claim
should be struck out or the action dismissed only in
plain and obvious cases and where the Court is
satisfied that the case is beyond doubt. 4 In this
statement of claim, the appellants claim the fol
lowing relief (A.B., Vol. 1, p. 5):
WHEREFORE THE PLAINTIFFS CLAIM:
a) A declaration that Order in Council PC 1981-2171 is invalid
and void.
b) A declaration that Order in Council PC 1981-2171 has not
come into force.
c) A declaration that the Plaintiffs are entitled to receive the
passenger train service from Via and CN as set out in RTC
Order R-31300.
d) Interim and permanent injunctions restraining the Defend
ants Via and CN from discontinuing the passenger train ser
vices affecting Jasper set out in RTC Order R-31300.
e) Costs.
On the basis of the conclusions I have reached
supra and adopting the criteria applied by Estey J.
in Inuit Tapirisat (supra), it seems clear that
paragraph 14 and subparagraphs b), c) and d) of
the prayer for relief do not disclose a reasonable
cause of action. However, in respect of subpara-
graph a), it is my view that the case is not beyond
doubt at least in so far as portions of Order in
Council P.C. 1981-2171 are concerned. Likewise,
while paragraphs 12 and 13 of the statement of
claim do not allege the invalidity of the Order in
Council for the precise reasons expressed herein
they do, when taken together allege invalidity of
the Order in Council. At the time of the hearing of
the appeal the respondents had not pleaded to the
statement of claim. Pursuant to Rule 421, the
appellants can, without leave, amend the statement
of claim at any time before a statement of defence
has been filed. Since this course of action is open
to the appellants, I cannot conclude at this stage
that the action, in so far as it asks for a declaration
4 The Attorney General of Canada v. Inuit Tapirisat of
Canada et al., [1980] 2 S.C.R. 735, at p. 740, per Estey J.
of invalidity of the impugned Order in Council or
portions thereof, could not possibly succeed.
Another possible argument against allowing the
statement of claim to stand is that, in view of the
conclusions 1 have reached on the other subpara-
graphs of the prayer for relief, to allow subpara-
graph a) to proceed by itself would be wrong since
the relief, if granted following trial, would be
devoid of practical effect. A similar argument was
advanced before the Supreme Court of Canada in
the case of Kelso v. Her Majesty The Queen.'
Dickson J. writing the judgment of the Court,
dealt with that submission in the following
manner:
The final submission of the Crown is that a declaration
should not be issued because it cannot have any practical effect.
It is argued that the Public Service Commission has the
exclusive right and authority to make appointments to the
Public Service. Any declaration by the Court could not have
the effect of precluding the exercise of such authority by the
Commission, thereby depriving the declaration of any possible
practical result.
It is quite correct to state that the Court cannot actually
appoint Mr. Kelso to the Public Service. The administrative act
of appointment must be performed by the Commission. But the
Court is entitled to `declare' the respective legal rights of the
appellant and the respondent.
The Public Service Commission is not above the law of the
land. If it breaches a contract, or acts contrary to statute, the
courts are entitled to so declare.
I would adopt that view of the matter as applying
equally to the case at bar. If the Governor in
Council has enacted an Order in Council which is
partially or wholly invalid, it seems to me that the
courts are entitled to make a declaration of
invalidity.
Nevertheless, addressing the question of the pos
sible practical effect of a declaration of invalidity,
I would refer initially to Schedule XV and observe
that the legal effect of that Schedule is to order
the discontinuance of the passenger-train services
between Winnipeg and Saskatoon and between
Jasper and Vancouver. On the other hand, the
legal effect of Schedule XVI is to remove these
segments from the declaration in Order R-31300
that certain trains comprise passenger-train ser
vices and, consequentially, exempting those seg
ments from the provision in section 260 that they
may not be discontinued without the Commission's
5 [ 1 98 1 ] I S.C.R. 199, at p. 210.
approval. Thus, the C.N.R. would be free to dis
continue those segments without application to the
Commission but it is not ordered to do so. The
result is, however, that the railway cannot claim
for its loss on these services. Accordingly, while
there is a difference in the legal effects of
Schedules XV and XVI in that Schedule XVI does
not order discontinuance, there might well be no
practical significance to this distinction since
Schedule XVI produces an effect, namely--dis
qualification for a claim under section 260—which
makes discontinuance a feasible and practical
course of action. I have thus concluded that a
declaration of invalidity in respect of Schedule
XV, while having legal effect might well have little
or no practical effect in so far as the respondents
are concerned. However, I am far from being
persuaded that the declaration of invalidity sought
by these appellants could not possibly have some
practical effect in so far as they are concerned. In
my view, this is a case where it is clearly arguable
that if the declaration sought is made, it might
possibly produce a practical result. The matter is
not beyond doubt and should therefore be allowed
to proceed.
The remaining question for determination is
whether or not, in view of my conclusion of partial
invalidity, and partial validity of the impugned
Order in Council, those portions of the statement
of claim and prayer for relief relating to Schedule
XVI of the Order in Council should be struck out
pursuant to Rule 419(1)(a) leaving intact in the
statement of claim only those allegations which
relate to the cause of action which raises a triable
issue.
Since the respondents are not precluded by these
reasons or the judgment proposed herein from
moving in the Trial Division for an order striking
out portions of the statement of claim and since, as
observed earlier, it is open to the appellants to
amend their claim, it seems to me that no useful
purpose would be served by striking portions of the
statement of claim at this time. Such action at this
juncture by this Court would, in my opinion, be
premature.
Accordingly and for all of the above reasons, it
is my opinion that the appeal should be allowed
and the order of the Trial Division striking out the
statement of claim should be set aside, the appel
lants to have their costs both here and in the Trial
Division.
LE DAIN J.: I agree.
HYDE D.J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.