Federal Appeal


Federal court erred in law by applying correctness standard instead of reasonableness

This was appeal of decision quashing order-in-council. Railway company and coal company entered into confidential transportation contract with respect to transportation of coal that included fuel surcharge from published tariff. Railway company gave notice to customers that it would be reducing fuel surcharge in accordance with new tariff but it refused to apply new tariff to coal company’s contract. Coal company made application to Canadian Transportation Agency for order establishing reasonable fuel surcharge. Railway company successfully brought motion for order dismissing application on basis that agency lacked jurisdiction. At request of coal company’s trade association, governor-in-council issued order-in-council rescinding agency’s decision. Railway company applied for judicial review of order-in-council. Federal Court applied standard of review of correctness. Application for judicial review was granted and order-in-council was quashed. Appeal allowed. Federal Court judge correctly characterized trade association’s petition to be request that agency review tariff for reasonableness without regard to confidential conflict. Judge correctly characterized nature of governor-in-council’s decision. Effect of governor-in-council’s decision was to impugn agency’s factual determination that coal company’s application sought order requiring new fuel surcharge rates to apply to confidential contract for carriage of its traffic by railway company. Governor-in-council substituted its view of nature of coal company’s application for that of agency. In governor-in-council’s view, coal company’s application was for benefit of all shippers. Agency incorrectly framed issue before it. Characterization by governor-in-council of nature of coal company’s application to agency was question of fact or question of mixed fact and law with factual component being predominant. Decision was to be reviewed on standard of reasonableness. Federal court erred in law by applying correctness standard. Applying reasonableness standard of review to decision of governor-in-council, decision was reasonable. There was basis upon which governor-in-Council could reasonably conclude that coal company’s application was for benefit of all shippers subject to alleged charge. Decision was supported by evidence and by reasons and it fell within range of outcomes that were defensible in respect of facts and law. Federal Court Judge erred by entering into interpretive exercise of agency’s home statute.

Canadian National Railway v. Canada (Attorney General) (Nov. 2, 2012, F.C.A., Dawson, Gauthier and Stratas JJ.A., File No. A-438-11; A-440-11) Decision at 208 A.C.W.S. (3d) 210 was affirmed. 223 A.C.W.S. (3d) 247.

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