Judgments

[2000] 3 F.C. 46

A-731-97

Canadian National Railway Company (Appellant)

v.

Eagle Forest Products Limited Partnership (Respondent)

Indexed as: Canadian National Railway Co. v. Eagle Forest Products Ltd. Partnership (C.A.)

Court of Appeal, Stone, Robertson and Noël JJ.A.— Ottawa, November 2 and December 13, 1999.

Administrative law — Statutory appeals — Certiorari — Standard of review — Appeal from Canadian Transportation Agency’s order requiring removal of restrictions with respect to applicability of rates to Canadian points specified in Tariff — Specialized nature of tribunal, particular expertise in understanding, administering complex regulatory scheme most important factor in determining appropriate standard of review — Agency specialized tribunal possessing particular expertise in deciding matter such as that at issue herein, under somewhat complex regulatory scheme — Had to determine whether respondent’s routing instructions contrary to arbitrator’s decision, in breach of Canada Transportation Act, s. 161(2)(c) undertaking — Interpretation of final offer, undertaking required to decide whether respondent entitled to invoke AAR Accounting Rule 11 in routing instructions or foreclosed by terms of final offer, statutory undertaking from doing so — Question of mixed fact, law whether facts satisfied legal tests — Standard of review reasonableness.

Transportation — Appeal from Canadian Transportation Agency’s order requiring removal from Tariff of restrictions with respect to applicability of rates to Canadian destinations — On final offer arbitration pursuant to Canada Transportation Act, s. 161 arbitrator selecting respondent’s final offer setting out rates to Canadian destinations, formulae to determine rates to destinations in U.S.A. — Respondent providing statutory undertaking to ship goods in accordance with arbitrator’s decision — Subsequently respondent issuing bills of lading for carriage of goods to American destinations indicating shipper arranging to have goods carried from Saint John to American destinations via American connecting carrier — Appellant submitting contrary to arbitrator’s decision, respondent’s undertaking as final offer requiring traffic moving beyond Canada to U.S.A. would be governed by formulae set out therein — Agency holding final offer not containing restriction specifying rates to Canadian points apply only to domestic movements as final destinations, or that cars had to be unloaded at these points — Bearing in mind Agency’s special expertise, legislative context, decision not unreasonable — If goods carried to Saint John, unloaded there, rates specified in final offer chargeable; if appellant left to arrange carriage of goods to shipper’s customers in U.S.A., formulae contained in final offer would control — Agency not erring in concluding final offer, statutory undertaking not obliging respondent to send traffic beyond Saint John under appellant’s auspices — Matter within Agency’s specialized expertise for determination in light of facts, statute, policy considerations.

This was an appeal from an order of the Canadian Transportation Agency requiring the removal of restrictions imposed with respect to the applicability of the rates to Canadian points in Tariff CNR 3030. The appellant is a rail carrier. The respondent manufactures oriented strand board, a product used in the construction of buildings, most of which is sold for delivery by rail to purchasers in the United States. A dispute arose concerning the rates that the respondent would have to pay for the carriage of its goods. The respondent submitted the Canadian portion of the rates for final offer arbitration pursuant to Canada Transportation Act, subsection 161(1), alleging that the appellant had reneged on a previous agreement as to the level of rail freight rates for the carriage of goods from Miramichi, New Brunswick to destinations in Canada and the United States. The submission contained the respondent’s final offer setting out rates to Canadian destinations and formulae to determine rates to U.S. destinations, and the respondent’s statutory undertaking to ship the goods in accordance with the arbitrator’s decision. The arbitrator selected the respondent’s final offer. Shortly thereafter, the respondent issued four bills of lading for the carriage of its oriented strand board by rail to American destinations via Saint John, New Brunswick. Each of the bills of lading contained an identical routing clause which invoked AAR Accounting Rule 11 beyond Saint John. By invoking that Rule, the respondent signalled to the appellant that it had arranged to have the goods carried from Saint John to destinations in the U.S.A. via an American carrier. The appellant took the position that the routing instructions were contrary to the terms of the final offer and in breach of the respondent’s undertaking to ship its goods in accordance with the arbitrator’s decision because the respondent had not incorporated the provisions of Rule 11 for carriage beyond Saint John in its final offer. Thus, according to the appellant, any traffic moving beyond Canadian points to in the United States destinations would be governed by the formulae selected by the arbitration. The appellant held the cars containing the goods pending the receipt of clarification from the respondent of the routing instructions. The respondent filed a complaint with the Agency alleging that the appellant was not fulfilling its common carrier obligation when it refused to deliver the traffic, and requesting that the appellant be ordered to set out the terms and conditions associated with the movement of goods that had been selected by the arbitrator in a tariff. Contemporaneously, the appellant issued the tariff at issue. It provided, inter alia, that “rates would not apply under the provisions of AAR Accounting Rule 11”, and that “rates were applicable only on traffic fully unloaded in Canada”. The Agency concluded that the respondent’s final offer contained “no restriction … specifying the rates to the Canadian points should apply and only to domestic movements as final destinations or that the cars had to be unloaded at these points”. It determined that the respondent’s routing instructions did not offend either the arbitrator’s decision or the respondent’s undertaking.

Under Canada Transportation Act, section 41 an appeal lies, with leave of the Court “on a question of law or a question of jurisdiction” only. The Court has some latitude under subsection 41(3) to draw inferences that are not inconsistent with facts expressly found by the Agency and are necessary “for determining the question of law or jurisdiction”. Section 31 provides that the Agency’s determination “on a question of fact within its jurisdiction is binding and conclusive”.

The issues were: (1) what was the appropriate standard of review of the Agency’s decision; and (2) whether the Agency erred in its decision.

Held, the appeal should be dismissed.

(1) It has been held that the specialized nature of the tribunal and its particular expertise in understanding and administering a complex regulatory scheme is the most important factor in determining the appropriate standard of review. The Canadian Transportation Agency is a specialized tribunal that possesses a particular expertise in deciding a matter such as that at issue herein, under a somewhat complex regulatory scheme. The Agency had to determine whether the respondent’s routing instructions were contrary to the arbitrator’s decision and in breach of the respondent’s undertaking. This involved interpretation of the final offer and the respondent’s undertaking. The Agency had to determine whether the facts satisfied the legal tests, an exercise involving questions of mixed law and fact to which the standard of reasonableness applied.

(2) Bearing in mind the Agency’s special expertise as well as the legislative context in which its decision and order were made, its decision was not unreasonable. While the respondent’s final offer did not explicitly provide for the invocation of AAR Accounting Rule 11, it was reasonably open to the Agency to conclude that it could be invoked. The final offer was aimed at settling the rates that the appellant could charge. If the goods were carried to Saint John and unloaded there, the rates specified in the final offer would be chargeable. On the other hand, if the appellant was left to arrange carriage of the goods to the respondent’s customers in the U.S.A., then the formulae contained in the final offer would control. The Agency did not err in concluding that the final offer and the statutory undertaking did not oblige the respondent to send the traffic beyond Saint John under the appellant’s auspices. This matter fell squarely within the Agency’s specialized expertise for its determination in light of the facts, the statute and the underlying policy considerations.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canada Transportation Act, S.C. 1996, c. 10, ss. 5, 31, 41, 116(1), 161(2)(c), 163(2),(3), 164(1),(2), 165(3), (6).

Competition Tribunal Act, R.S.C., 1985 (2nd Supp.), c. 19, s. 13(1).

Railway Safety Act, R.S.C., 1985 (4th Supp.), c. 32, s. 16(1).

CASES JUDICIALLY CONSIDERED

APPLIED:

Metropolitan Toronto (Municipality) v. Canadian National Railway Co., [1998] 4 F.C. 506 (1998), 229 N.R. 386 (C.A.); Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; (1997), 144 D.L.R. (4th) 1; 71 C.P.R. (3d) 417; 209 N.R. 20; affg (1995), 127 D.L.R. (4th) 329; 21 B.L.R. (2d) 68; 63 C.P.R. (3d) 67; 185 N.R. 291 (C.A.).

CONSIDERED:

Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; (1994), 114 D.L.R. (4th) 385; [1994] 7 W.W.R. 1; 22 Admin. L.R. (2d) 1; 46 B.C.A.C. 1; 92 B.C.L.R. (2d) 145; 14 B.L.R. (2d) 217; 4 C.C.L.S. 117; 168 N.R. 321; 75 W.A.C. 1.

REFERRED TO:

Upper Lakes Group Inc. v. Canada (National Transportation Agency), [1995] 3 F.C. 395 (1995), 125 D.L.R. (4th) 204; 62 C.P.R. (3d) 167; 181 N.R. 103 (C.A.); Canadian Pacific Ltd. v. Canada (National Transportation Agency), [1992] 3 F.C. 145 (1992), 144 N.R. 235 (C.A.); Sharp v. Canada (Transportation Agency), [1999] 4 F.C. 363 (1999), 31 C.E.L.R. (N.S.) 1; 243 N.R. 160 (C.A.).

APPEAL from an order of the Canadian Transportation Agency requiring the removal from Tariff CNR 3030 of restrictions imposed with respect to the applicability of the rates to Canadian points. Appeal dismissed.

APPEARANCES:

Brian A. Crane, Q.C. and Ronald D. Luneau for appellant.

Forrest C. Hume for respondent.

Elizabeth C. Barker for Canadian Transportation Agency.

SOLICITORS OF RECORD:

Gowling, Strathy & Henderson, Ottawa, for appellant.

Forrest C. Hume, Vancouver, for respondent.

Canadian Transportation Agency, Ottawa, for Canadian Transportation Agency.

The following are the reasons for judgment rendered in English by

[1]        Stone J.A.: This is an appeal pursuant to section 41 of the Canada Transportation Act[1] (the Act) from a decision and order of the Canadian Transportation Agency (the Agency) dated July 17, 1997. By its order, the Agency required the appellant to remove from Tariff CNR 3030 “the restrictions imposed with respect to the applicability of the rates to Canadian points specified in Tariff CNR 3030.” The remainder of the order is no longer in issue between the parties.

[2]        The appellant is a rail carrier within the meaning of the Act. The respondent manufactures oriented strand board (a building material) at its newly constructed mill at Miramichi in the province of New Brunswick, most of which material is sold for delivery by rail to purchasers in the United States. In 1996, a dispute arose between the parties concerning the rates that the respondent would have to pay for the carriage of its goods by the appellant from Miramichi to points in Canada and the United States. When the dispute could not be resolved amicably the respondent elected on December 13, 1996 to submit it to the Agency under Part IV of the Act for final offer arbitration. The Agency ruled that a submission for final offer arbitration would need to be limited “to those offers concerning rates, terms and conditions for movement of goods within Canada, and not within the United States,”[2] but indicated that the respondent could resubmit its application “to reflect final offers for domestic movements as well as final offers for other traffic moved by railway to which the Act applies.”

[3]        A second attempt to resolve the dispute by way of final offer arbitration followed on January 22, 1997 which was received by the Agency the following day. In his letter to the Agency of that date, counsel for the respondent stated that the respondent was “dissatisfied with the Canadian portion of the rail freight rates charged by Canadian National Railway … for the movement of oriented strand board … traffic from its mill located at Miramichi, New Brunswick, to destinations in Canada and the United States.” He then set out certain background information in which it was alleged that the appellant had reneged on a previously arrived at agreement as to the level of rail freight rates that would be charged for the carriage of goods from the new mill to destinations in Canada and the United States and on the strength of which the respondent had applied for funds for the construction of the mill at a cost of some C$90,000,000. Counsel asserted as well that in May 1995, while the mill was still under construction, the appellant advised the respondent that it was going to charge rates which were substantially in excess of the level agreed upon previously. In the face of the respondent’s protest, the appellant resiled from that decision, indicating, however, that its original freight rate proposal contained a “clerical error … which caused the rates quoted to be significantly below what CN intended or viewed as required to be competitive.”[3] Construction of the mill proceeded. On March 1, 1996, the appellant presented the respondent with a rate book which outlined freight rates to be charged to some 2,000 points and containing, as counsel stated in the submission, “unacceptably high levels” of freight rates. These again were resiled from after further protest by the respondent. The final straw for the appellant, as indicated at paragraph 9 of the submission, was on September 9, 1996 when the appellant provided the respondent “with a revised level of rates … which raised the rates yet again well beyond the original and subsequent CN commitments.”

[4]        The submission for final offer arbitration then followed in paragraphs 10-18 of the letter of January 22, 1997. The respondent stated at the outset, in paragraph 10, that it wished to submit “the matter of the Canadian portion of [the] rates” in question to the Agency for final offer arbitration pursuant to the Act. There then followed in paragraph 13 the “final offer” per se. That paragraph reads:

13. The final offer of the shipper to the carrier in this matter is as follows:

13.1 Rates to Canadian points:

see Column (A) of Table 1 attached hereto (Tab 10)

13.2 Rates to 19 representative U.S. points:

reductions to be applied by CN to the Canadian portion of the rates issued by CN in its September 9, 1996 rate book, to achieve the level of rates set out in the column entitled “CN March 1, 1996 LDT Rate Book” in Table 2 attached hereto. (Tab 11) This will result in the level of rates which CN committed to EFP.

13.3 Rates to other U.S. points:

reductions to the 19 representative points noted in 13.2 above to be pro-rated on a mileage basis from the closest representative point to all of the remaining destinations listed in CN’s March 1, 1996 Rate Book, said pro-rated reductions to be applied by CN to the Canadian portion of the rates to those destinations. This will result in the level of rates which CN committed to EFP.

The above rates are to apply in CN supplied 52’ 8” boxcars. Any switching costs or other ancillary charges which CN might incur when its cars are interchanged to connecting railways between the origin and destination of the traffic shall be absorbed by CN. Rates for traffic handled in CN supplied 60’ or 52’ “high cube” cars are to be higher by 12% and 14% respectively. Rates applying to CN supplied 50’ boxcars are to be lower by 8%.[4]

As of January 22, 1997, the respondent had already in its hands the appellant’s “last offer” as set forth in the appellant’s letter of September 9, 1996, and which is alluded to in paragraphs 14 and 15 of the respondent’s submission.

[5]        The respondent gave the following undertaking in paragraph 16 of the submission:

16. EFP undertakes to ship the goods to which the arbitration relates in accordance with the decision of the arbitrator, pursuant to paragraph 161(2)(c) of the Canada Transportation Act.[5]

[6]        The appellant’s reactions to the respondent’s submission were twofold. On February 3, 1997 it took the position that the Agency was without jurisdiction to refer the dispute to final offer arbitration. Nevertheless, on the same day the appellant submitted its own “final offer” to the Agency on a “without prejudice” basis. This offer set out the rates which it would charge the respondent to Canadian destinations as well as a number of conditions the fifth of which reads:

5.   Rates will not apply under the provisions of AAR Accounting Rule 11, nor rebill application, nor in the construction of combination rates.

Shortly thereafter, on February 13, 1997, the Agency rejected the appellant’s jurisdictional objection and referred the respondent’s submission to final offer arbitration.[6]

[7]        After receiving information filed by the parties pursuant to subsection 163(2) of the Act and hearing the parties on various dates during the months of April and May 1997, the arbitrator rendered her written decision on May 30, 1997. Paragraph A of that decision reads as follows:

A. The final offer of the shipper, Eagle Forest Products Limited Partnership, submitted to the Canadian Transportation Agency by letter dated January 22, 1997, is the offer selected.

[8]        Shortly thereafter, on June 13 and 17, 1997, the respondent issued four bills of lading for the carriage by the appellant of its oriented strand board. These shipments were consigned to purchasers in the state of New Hampshire and were to be carried by rail to the U.S. destinations via Saint John, New Brunswick. Each of the bills of lading contained an identical routing clause which read: “CN (St. John) St. Rule 11 beyond St. John” “Rule 11” refers to “AAR [Association of American Railroads] Accounting Rule 11,” which is apparently intended for use in the rail industry “to protect confidential prices and to meet customer requirements by providing multiple freight bills on shipments covered by a through Bill of Lading.”[7] By invoking that rule, the respondent signalled to the appellant that it had arranged to have the goods in question carried from Saint John to the U.S. destinations via a U.S. connecting carrier. The instruction in the through bills of lading meant that the appellant was to transfer its rail cars at Saint John to the connecting U.S. rail carrier specified by the respondent and the connecting carrier would transport the strand board to the purchasers at the U.S. destinations.

[9]        The appellant took the position that the respondent’s actions were contrary to the terms of the final offer selected by the arbitrator and in breach of the respondent’s paragraph 161(2)(c) undertaking to ship its goods “in accordance with the decision of the arbitrator.” As a consequence, the appellant held the cars containing the subject goods pending the receipt of clarification from the respondent of the routing instructions.

[10]      On June 20, 1997, the respondent filed a complaint with the Agency pursuant to subsection 116(1) of the Act alleging that the appellant was failing to fulfil its common carrier obligation by refusing to deliver the traffic and, specifically, that the appellant be ordered to “set out the rates and conditions associated with the movement of goods” that had been selected by “the arbitrator in a tariff of the carrier” pursuant to subsection 165(3) of the Act.

[11]      Contemporaneously, on June 20, 1997, the appellant issued Freight Tariff CNR 3030 for carriage, inter alia, of oriented strand board from Chatham/Miramichi, New Brunswick, to five Canadian destinations. It contained the following restrictions:

Rates will not apply under the provisions of AAR Accounting Rule 11, nor rebill application, nor the construction of combination rates. Rates are applicable only on traffic fully unloaded in Canada.[8]

This tariff was to be effective January 23, 1997 and to expire January 22, 1998.

[12]      The respondent’s complaint of June 20, 1997 was finally disposed of by the Agency on July 17, 1997 in the decision and order that are the subject-matter of this appeal.

Positions of the parties

[13]      The appellant’s position before the Agency and before this Court is that the respondent’s routing instructions are contrary to the decision of the arbitrator as well as in breach of the respondent’s paragraph 161(2)(c) undertaking. In the appellant’s submission, it was not open to the respondent to invoke the final offer arbitration process provided for in Part IV of the Act and subsequently contradict the terms of the offer because it was able to negotiate better deals elsewhere. Moreover, the respondent had not incorporated the provisions of AAR Accounting Rule 11 for carriage beyond Saint John, New Brunswick in its “final offer” whereas the appellant explicitly excluded the application of that rule in its own final offer. By acting as it did in issuing the four bills of lading in June 1997, therefore, the respondent had attempted to rewrite its final offer. That offer, in the appellant’s submission, required the respondent to ship all of its oriented strand board traffic to Canadian points at the rates specified in that offer. Any traffic moving beyond Canadian points to destinations U.S. destinations would be governed according to the formulae selected by the arbitrator as set out in paragraphs 13.2 and 13.3 of the respondent’s final offer.

[14]      The Agency rejected these arguments. In determining that the respondent’s routing instructions did not offend either the arbitrator’s decision or the respondent’s paragraph 161(2)(c) undertaking, the Agency concluded that the respondent’s final offer contained “no restriction … specifying the rates to the Canadian points should apply and only to domestic movements as final destinations or that the cars had to be unloaded at these points.”[9] In the submission of the appellant this conclusion was “dead wrong.”

[15]      The respondent contends that its final offer as selected by the arbitrator was directed at settling a dispute as to the freight rates to be charged to the respondent by the appellant in respect of the traffic to both Canadian and U.S. destinations. It argues that nothing in the offer or undertaking required it to commit the traffic for ongoing carriage beyond Canadian points under arrangements made by the appellant with the U.S. carrier or carriers. In its submission the final offer was sufficiently flexible to allow it to invoke AAR Accounting Rule 11 after shipping the goods with the appellant as far as Saint John. In this way, it argues, it is able to deliver its goods through Canada to U.S. destinations at the lowest possible cost consistent with the stated policy expressed in section 5 of the Act and recognized by the Agency in its decision. The respondent emphasizes as well that the appellant was the only railway serving its mill. The respondent was thus in the position of a “captive shipper,” and this was a matter that the arbitrator was required to consider under subsection 164(2) of the Act. That subsection provides that in making a decision the arbitrator must have regard to “whether there is available to the shipper an alternative, effective, adequate and competitive means of transporting the goods to which the matter relates.”

ANALYSIS

[16]      The Court is faced with two discrete issues on this appeal. It has first to determine by what standard it is to review the Agency’s decision and then to conduct the review in the light of the applicable standard.

Standard of review

[17]      Section 41 of the Act provides for an appeal from the Agency. It reads in part:

41. (1) An appeal lies from the Agency to the Federal Court of Appeal on a question of law or a question of jurisdiction on leave to appeal being obtained from that Court on application made within one month after the date of the decision, order, rule or regulation being appealed from, or within any further time that a judge of that Court under special circumstances allows, and on notice to the parties and the Agency, and on hearing those of them that appear and desire to be heard.

…

(3) An appeal shall be heard as quickly as is practicable and, on the hearing of the appeal, the Court may draw any inferences that are not inconsistent with the facts expressly found by the Agency and that are necessary for determining the question of law or jurisdiction, as the case may be.

Thus an appeal lies, with leave of this Court, “on a question of law or a question of jurisdiction” only. Some latitude is allowed the Court under subsection 41(3) for the drawing of inferences that are not inconsistent with facts expressly found by the Agency and are necessary “for determining the question of law or jurisdiction.” These provisions must, however, be read in light of section 31 of the Act that the Agency’s findings or determination “on a question of fact within its jurisdiction is binding and conclusive.”

[18]      The issue of the applicable standard of review was very recently addressed by the Court in Metropolitan Toronto (Municipality) v. Canadian National Railway Co.[10] in the light of the earlier decision of the Court in Upper Lakes Group Inc. v. Canada (National Transportation Agency)[11] and that of the Supreme Court of Canada in Canada (Director of Investigation and Research) v. Southam Inc.[12] Metropolitan Toronto, supra, involved an appeal from the Agency requiring the Municipality and CN to share equally the cost of fencing constructed along the CN right of way in the lower Don Valley. In so deciding, the Agency determined that the fence was a “railway work” and that the Municipality “stands to benefit from the completion of that work within the meaning of subsection 16(1) of the Railway Safety Act.”[13] Guided by the reasoning in Southam, supra, Strayer J.A. concluded in Metropolitan Toronto, supra, that, at bottom, the determinations of whether the fencing was a “railway work” and the municipality “stood to benefit” involved questions of mixed law and fact rendering the Agency’s decision subject to a standard of “reasonableness” rather than to one of “correctness.” In short, the question was “whether the facts satisfy the legal test.”

[19]      Southam, supra, addressed the issue of the appropriate standard of review of a decision of the Competition Tribunal under the Competition Tribunal Act.[14] While that statute did not contain a privative clause, subsection 13(1) provided for a fairly broad right of appeal to this Court from any decision or order of the tribunal “as if it were a judgment of the Federal Court of Canada—Trial Division.” Under subsection 13(2) an appeal on a “question of fact” lay only with leave of the Court. In determining what limits an appellate court should observe in the exercise of its statutory appellate function, the Court had regard to the nature of the problem before the tribunal, the applicable law properly interpreted in the light of its purpose and the expertise of the tribunal. Iacobucci J. went on to identify a tripartite classification of the nature of the problem before the tribunal, namely, “questions of law”, “questions of fact” and “mixed questions of law and fact.” He explained and illustrated these distinctions as follows:[15]

Section 12(1) of the Competition Tribunal Act contemplates a tripartite classification of questions before the Tribunal into questions of law, questions of fact, and questions of mixed law and fact. Briefly stated, questions of law are questions about what the correct test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal test. A simple example will illustrate these concepts. In the law of tort, the question what “negligence” means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question of whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact. I recognize, however, that the distinction between law on the one hand and mixed law and fact on the other is difficult. On occasion, what appears to be mixed law and fact turns out to be law, or vice versa.

He later explained that if an error is made by a tribunal “in applying the law to the facts … that is a matter of mixed law and fact.”[16] Iacobucci J. offered a further illustration. He observed that the question in Pezim v. British Columbia (Superintendent of Brokers)[17] of whether to regard newly acquired information as a “material change” in the affairs of a company was a question of law rather than one of mixed law and fact. This was principally “because the words in question were present in a statutory provision and questions of statutory interpretation are generally questions of law, but also because the point in controversy was one that might potentially arise in many cases in the future; the argument was about kinds of information and not merely about the particular information that was at issue in that case.”[18]

[20]      In selecting the appropriate standard of review in that case, Iacobucci J. laid much stress on the specialized nature of the tribunal and its particular expertise in understanding and administering a complex regulatory scheme.[19] Indeed, he regarded that factor as “the most important consideration.”[20] It seems to me that the Agency can rightly be considered to be a specialized tribunal that possesses a particular expertise in deciding a matter such as that which is in issue on this appeal, under a regulatory scheme that is somewhat complex.

[21]      The central issue before the Agency in its decision and order of July 17, 1997 was whether to sustain or reject the respondent’s subsection 116(1) complaint that in holding the cars of oriented strand board at points in New Brunswick and refusing to connect them at Saint John to the U.S. rail carrier that was specified by the respondent, the appellant was failing to fulfil its common carrier obligation and should be ordered to comply with the arbitrator’s decision of May 13, 1997. In deciding as it did, the Agency had to determine whether the respondent’s routing instructions were contrary to the arbitrator’s decision and in breach of the respondent’s paragraph 161(2)(c) undertaking. The task facing the Agency directly involved the interpretation of the final offer and the undertaking in deciding whether the respondent was entitled to invoke AAR Accounting Rule 11 in its routing instructions or, on the contrary, was foreclosed by the terms of its final offer and statutory undertaking from doing so. It appears to me that the Agency had here to determine whether “the facts satisfy the legal tests.”[21] This exercise largely involves questions of mixed law and fact to which the standard of reasonableness applies.

[22]      As the Agency itself noted,[22] section 5 of the Act contains a number of policy objectives which “are most likely to be achieved when all carriers are able to compete, both within and among various modes of transportation,” under conditions ensuring that “competition and market forces are, whenever possible, the prime agents in providing viable and effective transportation services.” This Court has noted the significance of this stated policy objective on the role of the Agency.[23] Moreover, this Court noted in Metropolitan Toronto[24] that the Agency is “an expert tribunal with the cumulative experience of a century acquired by it and its predecessors, with an expert staff.”

[23]      I conclude that the standard of review in the present case should be that of reasonableness.

Merits

[24]      I begin by examining the legislative framework. By subsection 161(1) of the Act a shipper “who is dissatisfied with the rate or rates charged or proposed to be charged by a carrier for the movement of goods, or with any conditions associated with the movement of goods” may submit the matter to the Agency for final offer arbitration. Within 15 days after the reference by the Agency, the parties are required by subsection 163(3) of the Act to “exchange the information that they intend to submit to the arbitrator in support of their final offers.” Subsection 164(1) of the Act then directs the arbitrator to “have regard to the information provided to the arbitrator by the parties in support of their final offers.” In the present case, information was exchanged and provided to the arbitrator pursuant to these provisions. Subsection 164(2) of the Act imposes an additional obligation on the arbitrator to “have regard to whether there is available to the shipper an alternative, effective, adequate and competitive means of transporting the goods to which the matter relates.” Subsection 165(3) required the carrier, without delay after the arbitrator’s decision, to “set out the rate or rates or the conditions associated with the movement of the goods that have been selected by the arbitrator in a tariff of the carrier” unless the carrier is entitled to keep the rates or conditions confidential. In the absence of agreement between the parties, paragraph 165(6)(a) renders the arbitrator’s decision on a final offer arbitration “final and binding and … applicable to the parties as of the date on which the submission for arbitration was received by the Agency from the shipper” and enforceable “as if it were an order of the Agency.”

[25]      As I read it, the respondent’s sole purpose for requesting final offer arbitration, as stated in paragraph 10 of counsel’s letter to the Agency of January 22, 1997, was for resolving the respondent’s dissatisfaction with the Canadian portion of the “rates” as proposed in the appellant’s letter of September 9, 1996. The submission was thus confined. Correspondingly, the paragraph 161(2)(c) undertaking imposed on the respondent an obligation to pay the rates that were either specified or to be reckoned by application of the formulae contained in the selected final offer. The appellant argues that the Agency erred in concluding that the respondent enjoyed the option of invoking AAR Accounting Rule 11 in its routing instructions beyond Saint John. It points out that AAR Accounting Rule 11 was not incorporated in the respondent’s final offer. Moreover, the appellant’s final offer of February 3, 1997 explicitly excluded the application of AAR Accounting Rule 11. The result, in the appellant’s submission, is that the respondent’s final offer as selected by the arbitrator and the respondent’s paragraph 161(2)(c) undertaking should have led the Agency to determine that the respondent was obliged to have all of its oriented strand board traffic through Canada from the Miramichi mill to Canadian and U.S. destinations carried by the appellant in accordance with the terms of the final offer.

[26]      In order to assess the merits of the competing arguments the Agency had first and foremost to interpret the terms of the final offer as well as the provisions of paragraph 161(2)(c) of the Act requiring the respondent’s statutory undertaking and the undertaking itself. I am satisfied that the Agency kept these tasks in mind as it proceeded with its analysis. It is important to note as well that the Agency had regard to the statement of policy contained in section 5 of the Act. Indeed, it made express reference to that declaration appearing at the beginning of that section as well as to the language of paragraph (b) thereof.

[27]      Keeping in mind the special expertise of the Agency as well as the legislative context in which its decision and order were made, in my view it was not unreasonable for it to decide as it did. To adopt the language of Iacobucci J. in Southam, it cannot be said that the decision is not supportable by “any reasons that can stand up to a somewhat probing examination”[25] or that it is “clearly wrong.”[26] While the respondent’s final offer did not explicitly provide for the invocation of AAR Accounting Rule 11, it was reasonably open to the Agency to conclude that it could be invoked by the respondent. The final offer made no mention of that Rule. Rather, the offer was aimed at settling the rates that the appellant could charge as carrier of the goods. If the goods were carried to Saint John and unloaded there the rates specified in final offer would be chargeable. On the other hand, if the appellant was left to arrange on-carriage of the goods to the respondent’s customers in New Hampshire, then the formulae contained in paragraph 13.3 of the final offer would control.

[28]      I do not see that the Agency, by concluding that the final offer and the paragraph 161(2)(c) undertaking did not oblige the respondent to send the traffic beyond Saint John under the appellant’s auspices, erred in a way that would justify our intervention in this appeal. It seems to me that this was a matter falling squarely within the Agency’s specialized expertise for its determination in the light of the facts, the statute and the underlying policy considerations expressed in section 5 of the statute.

[29]      I would dismiss the appeal with costs.

Robertson J.A.: I agree.

Noël J.A.: I agree.

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