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RAILWAYS - Regulation - Grain shipper’s access to rail cars

Tuesday, May 30, 2017 @ 8:42 AM  

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Appeal by Canadian National Railway Company from a decision of the Canadian Transportation Agency determining that the appellant owed the respondent service at four locations under the Canada Transportation Act (Act). The appellant argued the Agency committed procedural unfairness and rendered an unreasonable decision due to the Agency’s failure to give effect to the doctrine of res judicata and its unacceptable interpretation of the relevant provisions of the Act. The respondent shipped oats on the appellant’s rail network. The respondent’s facility did not connect to any portion of the network, but was located eight kilometers from the track. For 25 years, the respondent had moved its shipments from its facility to the track and the appellant, and accepted the shipments there without any formal agreement with the appellant regarding the use of the track. In March 2013, the parties entered into a temporary licence agreement for the use of the track. It was to expire in 2015. When a new agreement was not reached, the respondent filed an application with the Agency complaining that the appellant refused to provide it with service after 2015, alleging that the refusal to provide adequate and suitable accommodation for the receiving and loading of the respondent’s traffic at the expiry of the temporary licence agreement was a breach of the appellant’s level of service obligations under the Act. The Agency held the appellant was improperly denying service to the respondent and identified four points of stopping at which a level of service obligation could be owed to the respondent. The Agency found that accommodation could reasonably be provided at two of the four points of stopping and that the appellant had breached its level of service obligations by refusing to load the respondent’s traffic at these points of stopping.

HELD: Appeal dismissed. The Agency did not breach its duty of procedural fairness or expand the scope of the application by finding that four additional locations were stopping points at which the respondent was potentially owed service. The respondent’s application was not restricted to the track near the respondent’s facility. If, during the proceedings, the appellant felt that matters were going beyond the scope of the application, it should have made an objection at the earliest opportunity. The appellant had an opportunity during the hearing to adduce evidence and make submissions to the effect that one or more of the points of stopping could not or should not be used for the respondent’s traffic, was otherwise unreasonable for that use, or should be subject to conditions. The appellant availed itself of that opportunity. While the respondent had previously applied for the same relief before the Agency, the Agency did not err in finding that it had not decided the issue at that time and that the doctrine of res judicata did not apply. The Agency did not err in determining that the appellant owed service level obligations to the respondent under the Act, despite the expiry of the respondent’s commercial right to access the appellant’s rail infrastructure. The Agency proceeded upon an acceptable methodology in reaching this conclusion and did not err in its interpretation of the level of service provisions of the Act. When the Agency interpreted s. 113(1) of the Act, it legitimately drew upon its regulatory experience, its knowledge of the industry and its expertise in the transportation sector. Provided the Agency adopted a defensible interpretation of s. 113(1) and a defensible methodology or test for determining reasonable conduct, and provided it applied these things in a manner that was alert and responsive to the evidence before it, the decision was owed deference.

Canadian National Railway Co. v. Emerson Milling Inc., [2017] F.C.J. No. 415, Federal Court of Appeal, D.W. Stratas, D.G. Near and Y. de Montigny JJ.A., April 26, 2017. Digest No. TLD-May292017003