The appeal by Canadian National Railway (CNR) and Canadian Pacific Railway (CPR) from the Canadian Transportation Agency’s (the “Agency”) dismissal of their preliminary objection to the hearing and disposition of an application filed by the Southern Ontario Locomotive Restoration Society (SOLRS) was allowed, the Agency’s decision was set aside and the matter remitted back to the Agency with instruction that it decline to deal with SOLRS’ application for want of jurisdiction. The Agency acted beyond its jurisdiction when it disposed of SOLRS’ application, despite the fact that it was filed after the six month limitation period had expired.

Administrative law – Decisions of administrative tribunals – Transportation Agency – Limitations – Judicial review – Compliance with legislation – Jurisdiction of tribunal – Standard of review – Correctness

Canadian National Railway Co. v. Canada (Canadian Transport Agency), [2008] F.C.J. No. 862, Federal Court of Appeal, May 29, 2008, Desjardins, Nöel and Blais JJ.A.

The Appellants sought to discontinue the operation of a section of railway line and invoked the statutory process of giving notice to interested parties. The notice contained a six month limitation period, during which negotiations had to be completed, failing which, the Appellants were required to offer their interests to public authorities at net salvage value. On April 29, 2005, the Appellants indicated their intention to discontinue the operation of a section of railway line and published the required notice on May 1, 2006. On May 15, 2006, SOLRS notified the Appellants it was interested in acquiring ownership in the advertised section of the railway line. In accordance with the Statutory provision, the date by which interested persons had to make their interest in acquiring the line known to the Appellants was June 30, 2006. This was the trigger date for the six month limitation period. After several months of negotiation, SOLRS delivered an Offer to Purchase the railway, which the Appellants did not accept. As of the December 31, 2006 deadline, when no agreement had been reached, CN agreed to continue discussions with SOLRS until January 25, 2007. The parties were unable to come to an agreement. On January 25, 2007, SOLRS made an application to the Agency, requesting determination of the net salvage value of the line. On January 29, 2007, the Appellants made an offer to the Province of Ontario and the local Municipality, pursuant to the Statute, to sell the line for an amount not to exceed its net salvage value. On January 30, 2007, the Appellants asked the Agency not to address SOLRS’ application before considering a preliminary objection going to jurisdiction, specifically that the Agency lacked jurisdiction to consider SOLRS’ application, since it was filed after the Statutory limitation period had expired. The Agency ruled that it had authority to deal with the application, despite the fact that it was made after the six month limitation period. The Agency indicated that it would make its net salvage value determination within 120 days and that SOLRS had a further period of at least 10 business days to continue the negotiations after the Agency’s eventual determination of the net salvage value.

The Court of Appeal held that the standard of review on the question of jurisdiction was correctness. In this case, the conclusion reached by the Agency was not correct, as they had interpreted an implied authority to extend the limitation period, based on a request for a remedy that was made within the six month limitation period. The Court found that, while the filing of a bad faith application suspended the running of the six month limitation period, there was no need to read in a power to extend this timeframe in order to give effect to a request for the net salvage value determination. At all times, the parties were aware of the six month limitation period and nothing prevented a party who was interested in obtaining such a determination from applying earlier in the process. The Court held that the Statutory provisions were a complete code which operated in accordance with a definite time line. The Statutory language was couched in mandatory terms and the detailed steps which must be followed left no doubt as to when the process began and when it ended. The corresponding right of local governments to acquire the line at its net salvage value at the expiry of the six month period eliminated the possibility that the parties, on consent, or the Agency by Order, could extend the six month Statutory period. Neither the parties, nor the Agency, could effectively do away with the right which accrued to public bodies by the operation of the Statute. In the result, the appeal was allowed, the decision of the Agency was set aside, and the matter was remitted back to the Agency, with instruction that it decline to deal with SOLRS’ application for want of jurisdiction.

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