A-766-80
Canadian National Railways (Applicant)
v.
Canadian Transport Commission (Defendant)
and
Honourable Minister of Transport of the Province
of Quebec, Denis de Belleval, and Yves Godbout,
Patrick Rinneau, Gaétan Pelletier, Laurent Mar
quis, Fernand Nadeau, Rolland Sarlarous, Eudore
Allard, Martin Pelletier, Bernard Lemaire,
Paulette Bourgouin, Jacques Landry, Roma
Pépin, Normand Morin, Charles Guérette, Claude
Guérette, Roger Robitaille (Defendants) (Inter-
venors before the Railway Transport Committee
of the Canadian Transport Commission)
Court of Appeal, Pratte, Le Dain JJ. and Lalande
D.J.—Quebec City, November 26; Ottawa,
December 15, 1981.
Railways — Appeal pursuant to s. 64(2) et seq. of the
National Transportation Act, R.S.C. 1970, c. N-17, from
order of Railway Transport Committee dismissing application
by appellant under s. 253 to abandon branch line and directing
appellant, pursuant to s. 262, to repair line — Whether in
considering application under s. 253 of the Railway Act,
Commission required by s. 254 to make determination as to
whether branch line economic before ruling on application to
abandon, regardless of manner in which line operated or
whether operated at all — Whether, based on audi alteram
partem rule, Commission required to give appellant opportu
nity to be heard before making order pursuant to s. 262
requiring appellant to repair line — Whether Commission
empowered by s. 71(1) of the National Transportation Act to
make order under s. 262 of the Railway Act ex parte —
Appeal allowed — National Transportation Act, R.S.C. 1970,
c. N-17, as amended, s. 71(1) — Railway Act, R.S.C. 1970, c.
R-2, ss. 253, 254, 256, 262(1),(3).
The appellant filed an application pursuant to section 253 of
the Railway Act for leave to abandon the operation of a railway
line between Rivière -du-Loup and Edmundston. In the course
of public hearings before the Railway Transport Committee, it
was established that the appellant had, without leave, already
ceased operation of its branch line between Rivière -du-Loup
and Cabano and that since 1976 trains had only operated
between Cabano and Edmundston on request, if the state of the
line permitted. It was also established that the railway was in a
deplorable state of repair, that the appellant had done little to
prevent its decay and that the appellant offered bad service,
demanded high prices and made little effort to make this part
of its operations profitable. An expert witness for the appellant
gave evidence that the operation of the branch line would
always be a losing proposition even if the line were rebuilt and
the appellant were able to take the place of all other kinds of
transport. The Commission refused the application on the
grounds that because the line had never been properly operated
it could not make a decision as to whether the line was
economic. In addition, the Commission directed the applicant,
pursuant to section 262 of the Railway Act, to repair the line.
The appellant was not notified before the order was made that
the Commission viewed it as having contravened subsection
262(1) and was considering making such an order.
Held, the appeal is allowed. With respect to the first issue,
the Commission contravened section 254 of the Railway Act by
dismissing the application to abandon without first deciding
whether the operation of the branch line was economic. Sec
tions 253 and 254 of the Railway Act require that when the
Commission has before it an application to abandon a branch
line it must first determine whether that line is being operated
at a loss. If the answer is affirmative the Commission must then
determine whether the operation of the branch line can be
economic. If its determination on this question is in the nega
tive then the Commission must consider whether, in view of the
public interest, the application to abandon should be allowed.
The fact that an applicant has operated a line badly or has
never operated it at all does not relieve the Commission of its
duty to make these determinations. That part of the order that
relates to the appellant's application to abandon is therefore
unlawful. With respect to the second issue, assuming that, in
the circumstances, the Commission could make an order under
section 262 of the Railway Act, it could not do so without first
giving the appellant an opportunity to be heard. The Commis
sion had before it an application to abandon and public hear
ings were held for the sole purpose of discussing that applica
tion. After the hearings the Commission could, therefore, make
a ruling on the application to abandon but could not make an
order requiring the appellant to rebuild the branch line as it
had not been given an opportunity to defend itself. With respect
to the third issue, subsection 71(1) of the National Transporta
tion Act does not apply in this case as no urgency existed. That
part of the order made pursuant to section 262 is, therefore,
also unlawful.
APPEAL.
COUNSEL:
S. A. Cantin for applicant.
G. W. Nadeau for defendant.
N. Bossé for the Chambre régionale de com
merce, industrie et tourisme du Grand-Por
tage.
G. Pelletier for the Conseil de promotion
économique de Cabano Inc. and Papier Cas
cade Cabano Inc.
SOLICITORS:
Legal Department, Canadian National Rail
ways, Montreal, for applicant.
Legal Services, Canadian Transport Com
mission, Hull, for defendant.
Lebel, Pelletier, Rioux et Associés,
Rivière -du-Loup, for the Chambre régionale
de commerce, industrie et tourisme du
Grand-Portage.
Lebel, Pelletier, Rioux et Associés,
Rivière -du-Loup, for the Conseil de promo
tion économique de Cabano Inc. and Papier
Cascade Cabano Inc.
The following is the English version of the
reasons for judgment delivered by
PRATTE J.: This appeal is pursuant to subsec
tions 64(2) et seq. of the National Transportation
Act, R.S.C. 1970, c. N-17, from an Order made by
the Railway Transport Committee of the Canadi-
an Transport Commission on April 18, 1980. By
that Order, the Committee dismissed an applica
tion submitted by the appellant pursuant to section
253 of the Railway Act, R.S.C. 1970, c. R-2,
seeking leave to abandon the operation of a rail
way line between Rivière -du-Loup in Quebec and
Edmundston in New Brunswick; by the same
Order, the Committee also directed the appellant
to proceed with repair of the branch line which it
wished to abandon. This appeal is from these two
decisions, contained in the Order of April 18,
1980.
On August 6, 1976, the appellant filed with the
Commission, pursuant to section 253 of the Rail
way Act, an application for leave to abandon the
operation of a railway line for the carriage of
goods between Rivière -du-Loup and Edmundston.
As section 253 requires, this application was
accompanied by a statement of the costs and reve-
nues of the appellant relating to this railway line.
Under section 253 and the Regulations, the Com
mission had first to determine whether the appel
lant had incurred losses as the result of operating
the Rivière-du-Loup—Edmundston branch line in
1975, 1976 and 1977. Having reached an affirma
tive conclusion on this point, the Commission then,
under the terms of subsection 254(1), had to
"determine whether the branch line is uneconomic
and is likely to continue to be uneconomic and
whether the line should be abandoned". Before
arriving at a conclusion on these various points,
the Commission held public hearings at Rivière -
du-Loup and Notre-Dame-du-Lac on September
18 and 20, 1979. It was established in the course of
these hearings that the appellant had, without
leave, ceased to operate its railway line between
Rivière -du-Loup and Cabano, and that since 1976
trains had only operated between Cabano and
Edmundston on request when the state of the line
permitted; that this railway line was in a deplor
able state of disrepair and that the appellant had
done little to prevent its decay; and finally, that
persons operating industries and businesses in the
area had complained, perhaps not without reason,
of the bad service offered by the appellant, the
high prices which it demanded and the very small
effort which it had made to make this part of its
operations more- profitable. At the same hearings,
an expert witness for the appellant stated, with
supporting figures, that operation of the branch
line would always be a losing proposition even if
the line were rebuilt and the appellant were able to
take the place of all other kinds of transport. This
evidence was not contradicted. Several months
after these hearings, the Commission made the
Order a quo.
The reasons given by the Commission in support
of its Order indicate that it dismissed the appel
lant's application to abandon solely for the reason
that the latter had operated the line it wished to
abandon so badly that it was impossible to say
whether the line was economic, as long as it was
not operated properly. These reasons also indicate
that the Commission relied on section 262 of the
Railway Act in ordering the appellant to proceed
to repair the line.
As I have already mentioned, the appellant is
challenging the two decisions contained in the
Commission's Order.
1. Dismissal of the application to abandon.
The first reason for the objection by the appel
lant to this part of the Order a quo is that, in its
submission, the Commission contravened section
254 of the Railway Act by dismissing the applica
tion to abandon without having first decided
whether operation of the branch line was
economic.
This argument appears to be correct. Under
sections 253 and 254 of the Railway Act, when the
Commission has before it an application to aban
don a branch line, it must first determine whether
that line is being operated at a loss. If, as in the
case at bar, the Commission answers this first
question in the affirmative, it must then rule on
whether operation of the branch line can be eco
nomic. If it decides that such operation is econom
ic, it must dismiss the application; if not, it must
rule on the question of whether, in view of the
requirements of the public interest, the application
to abandon should be allowed. However, in all
cases where the Commission finds that a branch
line is uneconomic, a company which has con
tinued to operate it after filing an application to
abandon is entitled to compensation under section
256. I think it is clear, therefore, that the Act
imposes a duty on the Commission, before ruling
on an application to abandon a branch line, to
decide whether that line is economic. It is unques
tionably easier for the Commission to decide on
this point if the applicant company has always
operated the line it wishes to abandon correctly.
However, this does not mean that the Commission
is relieved of its duty to rule on whether a branch
line is economic solely because it has been badly
operated by the company wishing to abandon it. It
is always possible, especially for an agency that
has the resources of the Commission, to determine
whether the operation of a business can be eco
nomic, despite the fact that it has been poorly
operated or even never operated at all.
I consider, therefore, that the first part of the
Order a quo is unlawful in that, under section 254
of the Railway Act, the Commission cannot reject
the application to abandon of the appellant with
out having first decided whether the branch line
which the appellant wishes to abandon is
economic.
2. Repair of the line.
The Commission ordered the appellant to
rebuild the line between Rivière -du-Loup and
Edmundston because it found that the appellant
had failed to perform the obligations imposed on it
by subsection 262(1) of the Railway Act, and that
the Commission was accordingly required to exer
cise the power conferred on it by subsection 262(3)
to order the applicant to provide "such [necessary
facilities and] accommodation".
The appellant's chief argument against this
second part of the Order is based on the audi
alteram partem rule. Assuming that this is a case
in which the Commission could make an order
under section 262, it could not do so without first
giving the appellant an opportunity to be heard.
However, the appellant has never been able to
make its case on this point because it was never
told, before the Order a quo was made, that the
Commission considered that it had contravened
subsection 262(1) and was thinking of directing it
to rebuild the railway between Rivière -du-Loup
and Edmundston.
This argument would also seem to be correct.
The Commission had before it an application to
abandon; public hearings were held for the sole
purpose of discussing this application. After these
public hearings, the Commission could make a
ruling on the application to abandon; however, it
could not make an order against the appellant
without first having given it an opportunity to
defend itself. Contrary to what was argued in this
Court, this is not a case to which subsection 71(1)
of the National Transportation Act can be
applied. That section enables the Commission to
make ex parte orders "upon the ground of urgen
cy, or for other reason appearing to the Commis
sion to be sufficient". There was no urgency in the
case at bar and the Commission did not even
inquire whether reasons existed which could justify
its acting ex parte.
The second part of the Order would accordingly
also appear to be unlawful.
For these reasons, I would allow the appeal and
would say that Order R-30741 of April 18, 1980 is
unlawful for the following two reasons:
(a) because the Commission cannot rule on an
application to abandon a branch line made pur
suant to section 253 of the Railway Act if it has
not first ruled on whether that branch line is
economic; and
(b) because the Commission could not make an
order against the appellant under section 262
without telling it that it was thinking of making
such an order, and without giving it an opportu
nity to be heard on this point.
LE DAIN J.: I concur.
LALANDE D.J.: I concur in these reasons.
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.